Question

Mortgages with government or private mortgage insurance

____

A)        Are likely to sell at lower prices and lower rates than comparable conventional mortgages

B)        Are less likely to default than conventional mortgages

C)        Offer the investor less default risk than conventional mortgages

D)        Will be written under the credit standards of the originator, and not the standards of the agency or insurance company

Answer 1

Correct option:
C)        Offer the investor less default risk than conventional mortgages

A is incorrect because it does not always happen that such mortgages are cheaper.

B is incorrect as sometimes default probability is even higher

D is incorrect as government mortgages are regulated by a governmental body GNMA