These lenders are not going broke because the mortgages are bad. They're going broke because they relied on short-term credit lines to originate mortgages, and

These lenders are not going broke because the mortgages are bad. They're going broke because they relied on short-term credit lines to originate mortgages, and rates have moved hard against them. Now they don't have the ability to rectify the situation without realizing a big loss on the mortgages.