26-8 GNMA helps create pass-throughs by providing timing insurance.

Question

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GNMA (Government National Mortgage Association) provides timing insurance by guaranteeing the timely payment of principal and interest to investors in mortgage-backed securities (MBS), including pass-through securities. This helps to reduce prepayment risk and ensure a steady stream of cash flows to investors. Therefore, GNMA plays a key role in creating and facilitating the issuance of pass-through securities.

26-8 GNMA Helps Create Pass-Throughs by Providing Timing Insurance