Is "securitization" a four-letter word?

Wall Street has continued to create new and exotic financial instruments. The latest rage is "life settlements" - the securitization of life insurance policies. A recent article in the New York Times http://www.nytimes.com/2009/09/06/business/06insurance.html?_r=1&hp describes the idea. You should read the article carefully to see why the market participants (buyers, sellers, and middlemen) in this emerging market expect to benefit, and also what could go wrong.

After reading the article the first time, re-read it but subsitute "mortgage-backed securities" for "life insurance policies." Then review your answer about why market participants expect to benefit and what could go wrong.