A private-label MBS is issued without any government sponsorship. Compared to agency MBS (issued or guaranteed by Fannie Mae, Freddie Mac, or Ginnie Mae), which characteristic most accurately describes private-label MBS?

Private-label MBS carry higher credit risk and generally offer higher yields to compensate investors for the absence of a government or GSE guarantee Private-label MBS carry lower credit risk because they are backed by jumbo loans with larger down payments Private-label MBS are exempt from SEC registration requirements because they contain non-conforming loans Private-label MBS typically offer lower yields to investors because of reduced regulatory oversight