The practice that is implemented with MBBs to compensate for the likelihood that some borrowers will default or make delayed payments on mortgage loans that make up the pool is:

Question

Quizplus · Accepted Answer

Overcollateralization is a practice that involves setting aside additional collateral or assets to cover potential losses from defaulted or delayed mortgage payments. This provides a cushion or buffer that can absorb losses without affecting the overall value of the MBBs.

The Practice That Is Implemented with MBBs to Compensate for the Likelihood