The process began when lenders packaged and sold their loans en masse to Wall Street banks. These banks subsequently combined the loans into complex financial products known as residential mortgage-backed securities (RMBS), which were then marketed globally to investors seeking higher returns.

As a result, these risky loans were transformed into collateralized debt obligations (CDOs), allowing them to receive high credit ratings despite being tied to borrowers with questionable credit histories. This intricate system not only masked the inherent risks but also appealed to investors eager for yield, highlighting the vulnerabilities within the financial system.