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It is said that investors of MBS have inferior information about the underlying mortgages compared to the banks who originate them. In other words, the
It is said that investors of MBS have inferior information about the underlying mortgages compared to the banks who originate them. In other words, the banks have additional soft information because they deal with the borrowers directly. Give an example of this type of soft information, which the banks know and the investors do not. Explain why this soft information matters.
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