This led investment companies to cease purchasing newly originated mortgage pools.

Selling a subordinated class of securities is an alternative to purchasing mortgage pool and special hazard insurance, analysts said.

Each mortgage pool is broken into a number of tranches, which carry different risks and rewards for investors.

The bankruptcy was related to the industry's involvement in "mortgage pools", an early practice similar to mortgage securitization.

Ratings for these mortgage pools are necessary to make them salable to investors in the secondary market.

The refusal to rate these mortgage pools effectively closed the market for home mortgages in the state, which is rushing to rewrite the law.

At that time, the three main credit agencies will again have to consider whether mortgage pools with mortgages from New York State can be rated.

That means there could be damages or penalties assessed that would reduce the value of a mortgage pool and, therefore, the return to investors.

The trend in California is towards mortgage funds or mortgage pools, which are structured and operate similar to commercial banks.

A Restoration-run mortgage pool provided local residents with more than $80 million in mortgages.