Reading 55: Mortgage-Backed Sector of the Bond Market-LOS k 2010, concerning, statements, following

土豆妮

Session 15: Fixed Income: Structured Securities
Reading 55: Mortgage-Backed Sector of the Bond Market

LOS k: Compare and contrast agency and nonagency mortgage-backed securities.

 

 

 

Which of the following statements is least accurate concerning nonagency mortgage-backed securities (MBS)?

A) They usually require credit enhancement.

B) They are usually backed with “conforming” mortgage loans.

C) They are issued by private entities.

---

 

Nonagency MBS are usually backed by “nonconforming” mortgages, such as those that do not meet the underwriting standards of the agencies.

土豆妮

All of the following are TRUE regarding nonagency securities EXCEPT:

A) the collateral behind nonagency collateralized mortgage obligations is passthrough securities.

B) the collateral behind nonagency CMOs is a pool of loans.

C) loans used to back nonagency CMOs are referred to as nonconforming loans.

---

The collateral behind nonagency CMOs is a pool of loans, not passthrough securities.

土豆妮

Which of the following is a difference between agency and nonagency mortgage-backed securities (MBS)? Nonagency MBS:

A) can be for any type of real estate property.

B) have floating mortgage rates.

C) can only be for commercial real estate property.

---

For agency MBS the underlying mortgages are one to four-single family residential mortgages only. Nonagency securities exist that are backed by second mortgage loans, manufactured housing loans, and a variety of commercial real estate loans, in addition to single family residential mortgages.

土豆妮

All of the following are primary concerns of agency underwriting standards EXCEPT maximum:

A) loan-to-value-ratio.

B) purchase price.

C) payment to income value.

---

All of the following are primary concerns of agency underwriting standards EXCEPT the maximum purchase price.