[anamax]

> The fatal mistake was assuming that the same percentage of mortgages would blow up when subprimes were 10% of the market, because the process of going for 1% to 10% means writing many more loans and extending credit to buyers who should never have been buying houses in the first place.

There's another problem - the "market share" of subprime loans was underreported by Fannie and Freddie (and they were the largest single buyer of the relevant securities). So, even if your model of forclosures depended on the share of subprime mortgages and was perfect, you got the wrong results because the inputs were wrong.