The bundle is a way of mixing different grade paper.
For example you can bundle low risk mortgages with high risk mortgages to create a blended value and risk.
The biggest issue is that people like Reins thought that property was such a good investment that the risk ratio for these instruments only needed to be 2%. Huge mistake.
They also didn’t account for speculators driving up new building and thus creating a surplus of homes in many markets this ultimately helped the bubble to pop and as soon as you have a home that is worth less than the mortgage and you have no down payment at stake you are now basically in the same position as a renter so you might as well leave and pay less for more somewhere else.
It amazes me that we continue to repeat history. Sheeple, sheeple, sheeple.
You see evidence of this with homes marked “below county appraisal” and “for sale less than the purchase price”. People are scrambling to get out of their properties and into cheaper houses.
Right now it is a buyer’s market and a lot of people are getting good deals.