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(T/F) Alt-A loans are often securitized into Agency MBS. True False

(T/F) Alt-A loans are often securitized into Agency MBS.
True

False

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Answer #1

TRUE

Alt-A loans generally lie between prime loans and sub-prime loans.

This means that these loans have higher debt to income ratios and loan to value ratios than prime loans and offer higher interest rates as compared to prime loans due to higher risk.

They play key role in risk diverisification in loan portfolios.

Agency Asset backed securities are issued by goverment sponsored agencies against a pool of debt obligations against assets. They are structured in a format offering cash flows to different levels of tranches. They often have Alt A loans to diversify their loan portfolios.

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