For decades, mortgage securities had been the opposite of scary. They were boring financial instruments that individuals and investment funds alike used to diversify their portfolios. The idea behind them was that quantity could offset risk. Each single mortgage held potential for default: the home owner could declare bankruptcy, meaning the bank would never be able to recover all of the money it had loaned. At the other extreme, the borrower could pay back the mortgage ahead of schedule, bringing the flow of interest payments to a halt.
