Prior to 2008, Under What Assumption Were Mortgages Backed by Fan-

question 16

Essay

Prior to 2008, under what assumption were mortgages backed by Fan- nie Mae and Freddie Mac considered to be 'safe' investments? Was this assumptions well founded?

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Definitions:

Contracts under Seal

Formal contracts which are validated by the seal of the signing party, symbolizing a deliberate intention to undertake obligations.

Soft Wax

A material used primarily for aesthetic purposes, such as enhancing the finish of wood or in hair removal procedures.

Impression

The effect or influence that something or someone produces on the mind or feelings; a perception or interpretation of something.

Negotiable Instruments

Negotiable Instruments are written documents guaranteeing the payment of a specific amount of money to the bearer or named party, such as checks, promissory notes, and drafts.