A Mortgage Pool Is Divided into A,B,C,and Z-Tranches as Discussed

question 71

Multiple Choice

A mortgage pool is divided into A,B,C,and Z-tranches as discussed in the textbook.What happens to the initial interest payment for the Z tranche?

• A) It is immediately passed through to holders of Z tranche securities.
• B) It is accumulated and held until the Z tranche securities mature.
• C) It is exchanged for principal from the A tranche.
• D) It is exchanged for principal from the B tranche.
• E) It is exchanged for principal from the C tranche.

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Definitions:

Lodger

A person who has the use of property without actual or exclusive possession of it.

Direct Owner

Refers to the person or entity that has legal possession and full control over a property or asset.

License

A grant of permission to do a particular thing, to exercise a certain privilege, to carry on a particular business, or to pursue a certain occupation; an agreement that gives no property right or interest in land but merely allows the licensee to do certain acts that would otherwise be a trespass; a privilege granted by a state or city.

Possessory Estate

An interest in real property that grants the holder the right to possess or occupy the land for a certain period.