The issue was not a bug, it was a fundamental misunderstanding of how real estate markets work. Moody's had a model for pricing mortgages which assumed real es

The issue was not a bug, it was a fundamental misunderstanding of how real estate markets work. Moody's had a model for pricing mortgages which assumed real estate prices never went down. It was basically the real life equivalent of the famous "Assume a spherical cow..." problem.