JustasS

Prepayments for manufactured housing-backed securities are less significant because the underlying loans are not as sensitive to refinancing. This is correct for all of the following reasons EXCEPT:

A) Often borrowers are using Federal Housing Administration (FHA) and Veterans Administration (VA) loans, which prohibit refinancing.

B) Loan balances are usually small, reducing the savings resulting from refinancing.

C) Depreciation of mobile homes in the early years can cause the loan outstanding to be greater than the value of the asset.

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Borrowers are not necessarily borrowing through the FHA or VA, and even if they were, they would not be prohibited from refinancing.