The loosening of the loan qualifications by Fannie Mae in 1999 was what allowed the current credit crisis to happen. It was not the necessary cause of the crisis but it allowed Wall Street to bundle sub-prime loans into CDO's. Prior to the loosening of the loan qualifications by Fannie Mae, CDO's were made up of other types of loan bundles.
Before I make things more complicated by trying to explain what happened, watch the short video by Marketplace. It is like the UPS Whiteboard guy and an Economist had a baby that was good at explaining Wall Street derivatives. Watch the video and then follow the link to the original transcript. It won't help you get your money back but at least you will now have an idea where it went.
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