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fixed income: MBS: non-comforming loan

what is MBS non-comforming loan ? Thanks.

Generally it’s because the borrower of the note is of poor credit aka subprime, it’s a jumbo mortgage, or the mortgage is exotic. The GSEs do not purchase mortgages that fit one of the above criteria.

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In addition to the poor credit rating mentioned by Chuckrox8, other reasons why the loan may be non confirming are (a) it exceeds the maximum loan-to-value ratio and (b) that it doesn’t have the necessary mortgage insurance.
Check out page 358 in reading 57. Cheers

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