Which of the following explains why mortgages weren't considered securities in the United States prior to 1970?
A)The Federal Reserve Act of 1913 prohibited mortgages from being considered securities.An amendment to the Act was approved in 1970 that allowed mortgages to be considered securities.
B)Until 1970, the average annual increase in housing prices did not allow the buying and selling of mortgages to be profitable.There has been a significant annual increase in housing prices and mortgage values since 1970.
C)Congress passed a law in 1970 stipulating that mortgages could be classified as securities.
D)Prior to 1970, mortgages were rarely resold in the secondary market.
E)Between the end of WWII and 1970 mortgage lending was subject to large swings in volume and interest rates.

Question

Quizplus · Accepted Answer

Prior to 1970, mortgages were rarely resold in the secondary market, which is why they weren't considered securities. The creation of mortgage-backed securities in the 1970s allowed for the bundling and resale of mortgages, changing their classification.

Which of the Following Explains Why Mortgages Weren't Considered Securities