When refinances as a percentage of total originations rise, does profitability at large
banks tend to rise or to fall? - ANS-Fall
What are the top three Mortgage lender's main sources of income? - ANS-- Fees
negotiated at origination
- Gain on sale
- Interest Income
Interest income earned at the note rate from the date a loan closes until it is sold
belongs to? - ANS-The lender
Which type of loan sale generates the most revenue for the lender on the date the loan
is sold? - ANS-Servicing released
What are the two additional mortgage lender's main sources of income? -
ANS-Servicing Release Premium (SRP)
Servicing Income
What are the feature adjustments that could change the price an investor will pay for a
loan? - ANS-- Geography
- Loan Amo.
- FICO score
- LTV
- Property Type
- Loan features
- CRA eligibility
A loan for which an investor pays exactly 100% of the loan's unpaid principal balance is
said to have sold for - ANS-Par
As interest rates fall, bond/security/MBS prices - ANS-Rise
In a basic REMIC structure, when do the B class holders receive their principal
payments? - ANS-After the A class holders have been completely repaid
, When short-term interest rates are higher than long-term interest rates, what is the yield
curve is said to be? - ANS-Inverted
Is inflation a type of fixed-income risk? - ANS-Yes
Which type of a strip security is a natural hedge for a portfolio of MSRs? - ANS-A
principal-only strip
Under what conditions are borrowers most likely to "float" a rate quote for a mortgage? -
ANS-When interest rates are declining
What loan attributes create a pricing adjustment that increases the rate charged to the
borrower? - ANS-- Occupancy status
- Geographical location
For what does SRP stand? - ANS-Servicing Released Premium
When you sell a loan "servicing-retained" into the capital markets, for what are you
responsible? - ANS-- Pay property taxes and insurance on behalf of the loan borrowers
- Remitting principal and interests to the investor
- Receive and account for monthly payments received from the borrower
Under what circumstances would you buyup a guarantor fee (G-Fee)? - ANS-When
your excess servicing is a positive number
What loan attributes cause investors to pay-up for certain loan pools? - ANS-- Small
loan balances
- Geographic location
- Low LTV's
Which delivery commitment offers a lower purchase price and the least amount of
income? - ANS-Best efforts
If you fail to deliver loans under a best efforts delivery, are you required to pay a pair-off
fee? - ANS-No
Firms are allowed to deliver whole loans to FNMA or FHLMC without being an approved
seller: - ANS-Never
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