The problems with the mathematical models started when banks started offering mortgages without knowing a borrower’s assets or income. (These were called “NINjA” loans, as in “No Income? No Assets?
Here is a loan anyway.”) Models don’t generally run very well unless you have good data to plug into the model; therefore, analysts were forced to make what amounted to an educated guess as to the
chance that a NINjA loan would end in default. …