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That's not how it works. What happens is a bunch of mortgages of varying quality get thrown into a pool. The pool is then sliced up into a bunch of different investment vehicles. The lowest risk (and lowest return) investments get paid off first, and the highest risk (and highest return) investments get paid off last.

The 2.7m -> 36k transition is on one of the higher-risk portions of the pool. The investor who paid in 2.7m basically bet that there would be plenty of money left over after the low-risk betters below him got paid off. He was wrong.

The total value of the total pool probably only went down by 30% or so, but that's enough to completely wipe out the highest-risk level investor. Add on the fact that they were probably leveraged to get into the position in the first place, and now you understand why 2008 was a major clusterfuck.



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