Mortgage pools also suffer from defaults. Explain how defaults are handled in a fully modified mortgage pool.

Question:

Mortgage pools also suffer from defaults. Explain how defaults are handled in a fully modified mortgage pool. In the case of a fully modified mortgage pool, explain why defaults appear as prepayments to the mortgage pool investor.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Fundamentals of Investments Valuation and Management

ISBN: 978-0077283292

5th edition

Authors: Bradford D. Jordan, Thomas W. Miller

See More Books

Question Posted: Sep 19, 2012 05:12 AM

See More Questions

Explain why mortgage defaults during the credit crisis adversely affected financial institutions that did not originate the mortgages. What role did these institutions play in financing the mortgages?
How might this research also help patients who suffer from neurodegenerative diseases such as Parkinson disease?
Explain how manufacturing overhead cost pools and cost allocation are related.
Hombran Doughnuts has current assets of $270 million; property, plant, and equipment of $400 million; and other assets totaling $160 million. Current liabilities are $160 million and long-term...
Show that a line through a focus of a hyperbola and perpendicular to an asymptote intersects that asymptote on the directrix nearest the focus.
Under what conditions would the dollar- value LIFO retail inventory method be useful?
Discuss the different types of HRIS T&D applications and their reporting and decision-support capabilities.
Marienau Suppliers had the following transactions: Mar. 1 Sold merchandise on account to G. Perez $5,000. 20 G. Perez gave a $5,000, 90-day, 6% note to extend time for payment. 30 G. Perez's note is...
Requirement 2 . If next year's assets increased by $ 3 comma 5 0 0 $ 3 , 5 0 0 and equity decreased by $ 3 comma 5 0 0 $ 3 , 5 0 0 , what would be the amount of total liabilities for Cleaning...
A boy imagined 5 positive integer numbers and told his friend that the sums of the four out of five numbers he imagined are 186,203, 214, 228 and 233. What is the middle number that boy imagined?...
Evaluate the following argument: "Prepayment is not a risk to mortgage investors because prepayment actually means that the investor is paid both in full and ahead of schedule." Is the statement...
What is a collateralized mortgage obligation? Why do they exist? What are three popular types?
Should we have bet the kids' college fund at the dog track? Let's look at one specific case of a college professor (let's call him Prof. ME) with two young children. Two years ago, Prof. ME invested...
Why do sociobiologists believe that we are more likely to help our relatives rather than strangers? Why do sociobiologists believe that we are more likely to help our relatives explain. rather than...
Some might argue we put our privacy at risk whenever we engage with a social media platform. Do you agree or disagree with this statement? Use the Cambridge Analytica/Facebook fiasco as an example....
Consider what the idea of Football as an American thing suggests about U.S. culture. What characteristics of the sport reflect our cultural and capitalist values? Think about the way the sport is...
The CFO has negotiated a cheaper deal with mCommerceBank, a competitior of eCommerceBanque. The bank has agreed to provide loan of $2102, for 1 year and the payments are required to be paid monthly...
Would you make a purchase from a business with less than two stars? Why, or why not? Would you not make a purchase from a business with more than four stars?
Statutes of repose establish a limit in years beyond which an injured party could not bring a lawsuit for an injury caused by a product. True/False
What tools are available to help shoppers compare prices, features, and values and check other shoppers opinions?
Assume that you live in a state where heart balm actions can be brought. Dan asks Carol to marry him. Carol says yes. The date is set for the wedding. Two weeks before the wedding, Carol learns that...
The Howland Carpet Company has grown rapidly during the past 5 years. Recently, its commercial bank urged the company to consider increasing its permanent financing. Its bank loan under a line of...
Niendorf Incorporated needs to raise $25 million to construct production facilities for a new type of diskette drive. The firms straight nonconvertible debentures currently yield 14 percent. Its...
Niendorf Incorporated needs to raise $25 million to construct production facilities for a new type of diskette drive. The firms straight nonconvertible debentures currently yield 14 percent. Its...
How would Stephanies investing decisions be affected if she were 35 years old? If she were 50 years old? Amount of Insurance Needed. Considering the information in the previous problem, how much life...
Jamie Lee and Ross have been hearing many stories recently about acquaintances who are passing away without leaving a will, which made Jamie Lee and Ross anxious to review their estate plan with an...
What are the companys top risks, how severe is their impact and how likely are they to occur?

Mortgage pools also suffer from defaults. Explain how defaults are handled in a fully modified mortgage pool.

Question:

Step by Step Answer:

For a fully modified mortgage pool all cash flows are guaranteed to be paid in a timely manner ...View the full answer

Fundamentals of Investments Valuation and Management

Students also viewed these Accounting questions