Non agency residential MBS

Question 1

What is liars Poker

Answer 1

It involves wagering on the frequency of digits appearing in the serial numbers of U.S. paper currency.

Question 2

Credit enhancement

Answer 2

Securities without a government guarantee or a GSE guarantee must be structured with additional credit support to receive an investment-grade rating.

Question 3

Structural credit enhancement

Answer 3

refers to the redistribution of credit risks among the bond classes comprising the structure in such a way as to provide credit enhancements

Question 4

What are the two tests credit performance required to be passed before the credit support can be reduced

Answer 4

Delinquency test(delinquency rate exceeds a specified percentage of the then-current pool balance)
Principal loss test (step-down from occurring if cumulative losses exceed a certain limit )

Question 5

Bond class with the highest rating

Answer 5

Senior bond class

Question 6

The percentage of the mortgage balance of the subordinated bond class to that of the mortgage balance for the entire deal

Answer 6

level of subordination

Question 7

Senior interest

Answer 7

the ratio of the balance of the senior bond class to the balance of the entire deal and is equal to 100% minus the subordinate interest.

Question 8

NON agency RMBS

Answer 8

issued by entities such as commercial banks, thrifts, and private conduits. The collateral is sold to a special-purpose entity that then issues the securities.