UNIVERSIDAD TECNOLÓGICA CENTROAMERICANA

FACULTAD DE POSTGRADO

Administración del Riesgo

Ph.D. Nelson Lizardo

Preguntas Capitulo 6

ANA DAMARIS CASTRO #21713132

DORIS MARIELA MORALES #21713092

MARLON ERICK DUARTE #21743080

CARLOS JOHAN SALAZAR #21743101

San Pedro Sula, 09 de diciembre del 2018

6.1 Why did mortgage lenders frequently not check on information in the
mortgage application during the 2000 to 2007 period?

Mortgages were frequently securitized. The only information that was retained during
the securitization process was the applicant’s FICO score and the loan-to- value
ratio of the mortgage. The originators knew this and so this was the only information
that they cared about.

6.2 Why do you think the increase in house prices during the 2000 to 2007
period is referred to as a bubble?

There was a short-term imbalance between supply and demand because many
people were persuaded to take out mortgages they could not afford.

6.5 Explain the difference between (a) an ABS and (b) an ABS CDO.

An ABS is a set of tranches created from a portfolio of loans, bonds, credit card
receivables, and so on. An ABS CDO is an ABS created from particular tranches
(e.g., the BBB-rated tranches) of a number of different ABSs.

6.11 What is a mezzanine tranche?

he mezzanine tranche of an ABS or ABS CDO is a tranche that is in the middle as

far as seniority goes. It ranks below the senior tranches and therefore absorbs
losses before they do. It ranks above the equity tranche (so that the equity tranche
absorbs losses before it does).