What is a conventional loan?
Answer to relevant Questions(a) What is meant by conforming limits? (b) What is a jumbo loan? In what sense has the investor in a residential mortgage loan granted the borrower (homeowner) a loan similar to a callable bond? For mortgage loans, what is prepayment risk? Answer the below questions. a. Explain what is meant by a residential mortgage-backed security. b. Describe the sectors of the residential mortgage-backed securities market. Answer the below questions. (a) What factor can be used as a proxy for cash-out refinancing incentives? (b) Why are prepayments attributable to cash-out refinancing likely to be insensitive to changes in mortgage rates?
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