The Offering Documents Did Not Disclose the Compounded High- Risk Mortgages that Infected the Mortgage Pools Sample Clauses

The Offering Documents Did Not Disclose the Compounded High- Risk Mortgages that Infected the Mortgage Pools. The Offering Documents contained certain statistical measurements of the overall mortgage pools, including measurements of the pools’ weighted average LTVs, credit scores, and debt-to-income ratios (“DTIs”). In addition to the material inaccuracy of much of this data, the Offering Documents did not disclose the compounding of risks in many mortgages in the pools. The representations in the Offering Documents indicated that a high risk according to one measure (say, a bad credit score) would be offset by a low risk according to another measure (say, a good LTV). If the Offering Documents were accurate, then, the mortgage pools would contain few if any mortgages with compounded high risks—with, for example, a bad credit score and a bad LTV. But analysis of the loans in the mortgage pools shows otherwise. Many of the mortgage loans in the pools in fact contained multiple risky factors. The undisclosed presence of a significant volume of loans with these characteristics made the Certificates much more prone to default than the Offering Documents indicated. The prevalence of these compounded high-risk loans tainted the loan pools and contributed substantially to the decline in performance and value of the Certificates.
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