LOS a: Compare and contrast the U.S. mortgage-backed market with the European mortgage-backed market.

Q1. During a fixed income securities panel session on the European and U.S. mortgage markets, one of the panelists made the following comments.

Which of the following most accurately describes the accuracy of the panelists statements?

         Statement 1                           Statement 2               Statement 3

A)  Correct                                     Correct                                        Correct

B)  Incorrect                                  Correct                                        Incorrect

C)  Correct                                     Correct                                        Incorrect

Q2. During a fixed income securities panel session on the European and U.S. mortgage markets, one of the panelists made the following statements.

Which of the following most accurately describes the accuracy of the panelist’s statements?

               Statement 1                     Statement 2                             Statement 3

A)       Correct                           Correct                                       Correct

B)      Incorrect                           Correct                                       Incorrect

C)     Correct                               Incorrect                                    Incorrect

Q3. During a panel discussion on the European and U.S. mortgage markets, one of the panelists made the following statements.

Which of the following most accurately describes the accuracy of the panelist’s statements?

               Statement 1                   Statement 2               Statement 3

A)      Correct                             Incorrect                                    Correct

B)     Incorrect                             Correct                                       Incorrect

C)     Incorrect                             Incorrect                                    Correct

LOS a: Compare and contrast the ffice:smarttags" />U.S. mortgage-backed market with the European mortgage-backed market. fficeffice" />

Q1. During a fixed income securities panel session on the European and U.S. mortgage markets, one of the panelists made the following comments.

Statement 1:	The mortgage debt-to-GDP ratio in Europe is significantly lower than it is in the U.S.
Statement 2:	The percentage of European citizens that own their own home is slightly less than the percentage of U.S. citizens that own their own home.
Statement 3:	Whole loan products in the U.S. have the advantage of not having to be marked to market.

Which of the following most accurately describes the accuracy of the panelists statements?

         Statement 1                           Statement 2               Statement 3

A)  Correct                                     Correct                                        Correct

B)  Incorrect                                  Correct                                        Incorrect

C)  Correct                                     Correct                                        Incorrect

Correct answer is A)

All of the statements are accurate.

Q2. During a fixed income securities panel session on the European and U.S. mortgage markets, one of the panelists made the following statements.

Statement 1:	In the U.S. market, data availability is fairy constant and standardized credit scoring systems are well established.
Statement 2:	The Fair Issac Corporation (FICO) credit scoring system used in the U.S. considers fewer categories of consumer behavior than most of the existing European scoring systems.
Statement 3:	Accounting differences between Europe and the U.S. have a significant impact on the relative size and growth of the European whole loan market.

Which of the following most accurately describes the accuracy of the panelist’s statements?

               Statement 1                     Statement 2                             Statement 3

A)       Correct                           Correct                                       Correct

B)      Incorrect                           Correct                                       Incorrect

C)     Correct                               Incorrect                                    Incorrect

Correct answer is C)

Statement 2 is incorrect because the FICO credit scoring system considers more categories of consumer behavior than most of the European credit scoring systems.

Statement 3 is incorrect because even though there are accounting differences between Europe and the U.S., these differences do not have a significant impact on the size or growth of the whole loan market.

Q3. During a panel discussion on the European and U.S. mortgage markets, one of the panelists made the following statements.

Statement 1:	Retail deposits represent the major source of mortgage debt funding in the U.S. mortgage markets.
Statement 2:	On a percentage basis, home ownership is slightly greater in Europe than it is in the United States.
Statement 3:	The mortgage debt-to-GDP ratio in Europe is significantly lower than in United States.

Which of the following most accurately describes the accuracy of the panelist’s statements?

               Statement 1                   Statement 2               Statement 3

A)      Correct                             Incorrect                                    Correct

B)     Incorrect                             Correct                                       Incorrect

C)     Incorrect                             Incorrect                                    Correct

Correct answer is C)

Statement 1 is incorrect because securitized debt and agency debt are the major sources of mortgage debt funding in the U.S. mortgage markets.

Statement 2 is incorrect because home ownership, on a percentage basis, is slightly greater in the U.S. than Europe.

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