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Which of the following statements about the principal-agent problem in the mortgage market are true? I. The agent is the entity that buys the loan
Which of the following statements about the principal-agent problem in the mortgage market are true?
I. The agent is the entity that buys the loan
II. Agents may act in their own best interests in a way that hurts the principal
III. The principal-agent problem arises in this setting because the loan originator is not sufficiently incentivized to ensure that the loans they make are to creditworthy buyers
A. I and II
B. I only
C. II and III
D. III only
E. I, II, and III
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