Asked by Yujing Huang on May 02, 2024
Verified
The emergence of mortgage-backed securities provided mortgage brokers with an incentive to seek out only the most creditworthy borrowers.
Mortgage-Backed Securities
Financial instruments secured by a pool of mortgages, which generate income from the mortgage payments.
Creditworthy Borrowers
Individuals or entities deemed capable of repaying a loan based on their financial history and current financial status.
- Ascertain the influence of financial tools and regulatory adjustments on the banking industry and economic stability.
Verified Answer
XB
xeshaughn baptisteMay 05, 2024
Final Answer :
False
Explanation :
The emergence of mortgage-backed securities led to a relaxation of credit standards, as lenders were able to sell off the mortgages to investors. This resulted in mortgage brokers and lenders being incentivized to lend to riskier borrowers in order to generate more loans to package and sell as securities.
Learning Objectives
- Ascertain the influence of financial tools and regulatory adjustments on the banking industry and economic stability.
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