Final answer:
The statement that mortgage assumption does not require mortgagee approval is false, as the lender needs to vet the new borrower's creditworthiness. Securitization can lead to less stringent lending practices, like the issuance of NINJA loans. Also, in proprietary colonies, proprietors had governance and development responsibilities, not just profit collection.
Step-by-step explanation:
The statement that mortgage assumption is easy and does not require approval of the mortgagee because the property will remain as security is false. In most cases, a mortgage assumption will require the lender's approval. This is because the lender needs to ascertain that the new borrower is creditworthy and capable of making the required payments. Despite the property remaining as security, the lender still runs the risk if the new borrower defaults. The original lending decision was based on the financial situation and credit history of the initial borrower, not the party assuming the mortgage. With regard to the concept of securitization, when a bank originates a mortgage and plans to sell it, they might sometimes be less stringent in their lending standards, leading to the issuance of riskier subprime loans. During the mid-2000s, these practices led to the creation of NINJA loans, which have been widely criticized for their role in the financial crisis. Concerning proprietary colonies, the statement that Proprietors only have the responsibility to collect profits is false. Proprietors typically held responsibilities for the governance and development of the colony, in addition to seeking profits.