If you’re interested in getting a better handle on how the national housing credit crisis came to be check out the three-part series that started yesterday at the Washington Post. The stories trace the boom, bust and aftermath of mortgage financing. (Only the first two are up, stay tuned tomorrow for the last of the three.)

I like how the first story breaks down the concept of a mortgage-backed security, because it can be confusing to understand and difficult to explain yet rests at the core of how the business of home lending got so big and fell so fast.

Here’s a bit of a history lesson, from the first story:

In 1970, when demand for mortgage money threatened to outstrip supply, the government hit on a new idea for getting more money to borrowers: Buy the 30-year, fixed-rate mortgages from the thrifts, guarantee them against defaults, and pool thousands of the mortgages to be sold as a bond to investors, who would get a stream of payments from the homeowners. In turn, the thrifts would get immediate cash to lend to more home buyers.

Wall Street, which would broker the deals and collect fees, saw the pools of mortgages as a new opportunity for profit. But the business did not get big until the 1980s … First Boston, came up with a new idea with a mouthful of a name: the collateralized mortgage obligation, or CMO.

Much of the great stuff in a series like this is in the details: lavish parties thrown by delusionally successful lenders, huge sums lost when not successful, math-wonk immigrants of China and Russia employed to build new math models to price securities, the secret war room set up by Fed Chairman Ben Bernanke, where he quizzed his board in Socratic style to determine how the Fed should respond to the unfolding credit crisis.