1.

A mortgage pool can be described as

a block of loans serving as collateral for an issue of securities.

a pool of loans organized so that the winner takes the highest return.

another type of loan guarantee.

a block of defaulted loans whose risk is shared by a group of mortgage investors.

2.

State and municipal housing authorities are able to offer lower cost home loans because

the money loaned is raised through the sale of tax-exempt bonds.

tax money is used to subsidize the home buyer's costs.

administrative costs are paid for by the government agencies involved.

all issues are of such large scale that costs are lower.

3.

Expansion of the secondary market into conventional loans was made possible by which of the following two events.

Money available in the financial markets and an increase in the number of mortgages.

Growth of available money and the standardization of loan documents.

The creation of uniform mortgage instruments and the expansion of private mortgage insurance.

The shift to private mortgage insurance and the sharp decrease in FHA and VA insured commitments.

4.

The distinguishing feature of a collateralized mortgage obligation, compared with a pass- through, is that:

the collateral is other than mortgage loans.

the cash flows are segmented and distributed to different classes of security holders.

interest payments on all classes are withheld until maturity.

all principal payments are discounted when issued.