Abstract
Interest rates rose from 2004 through 2007, so adjustable mortgage rates increased and many borrowers fell behind. After home prices topped out in 2006, speculators and some buyers who had overstretched found it impossible to refinance. This caused mortgage insurance claims.
Collateralized debt obligations (CDOs) rapidly lost value. Under mark-to-market accounting, many insurers must immediately reflect the lower values. Some CDOs were backed by guaranty insurers, who took large losses as prices fell. Others were backed by credit default swaps.
Keywords: Enterprise Risk Management
Page
11-13
Year
2008
Categories
Actuarial Applications and Methodologies
Enterprise Risk Management
Publications
Risk Management: The Current Financial Crisis, Lessons Learned and Future Implications
