What are the front ratio and back ratio, and how do they differ?
Answer to relevant QuestionsWhat is the difference between a prime loan and a subprime loan? How does the guarantee for a Ginnie Mae mortgage-backed security differ from that of a mortgage-backed security issued by Fannie Mae and Freddie Mac? Answer the below questions. (a) What is meant by prepayments due to housing turnover? (b) What is meant by prepayments due to cash-out refinancing? (c)What is meant by prepayments due to rate/term refinancing? Answer the below questions. (a) Distinguish between a TBA and specified pool trade. (b) What delivery options are granted to the seller in a TBA trade? Explain the role of a support bond in a CMO structure.
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