Court Eases Insurer’s Burden In Mortgage Backed Securities Case
A typical pre-Fiscal Crisis mortgage-backed securitization began with a group of mortgage loans originated or acquired by a lender that were sold to a trust. The trust, in turn, issued notes and certificates backed by the loans to investors. Investors were promised a return of principal with interest that depended on an ongoing stream of principal and interest payments on the mortgage loans held by the trusts. Importantly, insurance policies guaranteed that the payments to the investors would be made.
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