Question

The "modification" of Ginnie Mae modified pass through certificates is:

A. the pooling of mortgages of similar maturities to back the security
B. the guarantee of the U.S. Government
C. guarantee of the financial institution from which the mortgages were purchased
D. the setting of a fixed interest rate for the pool of mortgages backing the security

Answer 1

The "modification" of Ginnie Mae modified pass through certificates is the guarantee of the financial institution from which the mortgages were purchased

Step-by-step explanation:

The "modification" in this case refers to how risk is balanced between the issuer and the investor as opposed to other pass-through certificates.

In the case of modfifed pass through certificates, the investor ins completely protected from default risk as compared to the others where the protection is partial.

Answer 2

B) the guarantee of the U.S. Government

Step-by-step explanation:

Ginnie Mae is the name given to the Government National Mortgage Association. Ginnie Mae's pass through certificates are called modified because they are backed by Ginnie Mae and the federal government. Similar organizations like Fannie Mae and Freddie Mac don´t offer modified pass through certificates because they are not backed by the federal government.