KIC000017 - RMBS FIN 428 Prof. Hood Sectors of the RMBS...

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RMBS FIN 428 Prof. Hood Sectors of the RMBS Market o The residential mortgage market can be divided into two subsectors based on the credit qual ity of the borrower: prime mortgage market and subprime mortgage markel, o The prime sec/or includes i. leans {hat satisfy the underwriting standard of Ginnie Mae, Fannie Mae, and Freddie Mac [i.e., conforming loans) ii. loans that fail 10conform for a reason other IhM credit quality or because the !DlU1 is nOI a first lien Oilthe property (i.e., noncooformmg loans). D The subprime morrgage sector is the market for loans provided to borrowers with an impaired credit rating or where the loan is a second lien; these loans are nonconforming loans. Sectors of the RMBS Market (continued) o All offhe prime and subprime loans can be securitized in different sectors of the RMBS market. o Loans that satisfy the underwriting standard of the agencies are typically used to create RMBS that are referred to as agency mortgage-backed securities (MBS),
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KIC000017 - RMBS FIN 428 Prof. Hood Sectors of the RMBS...

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