REAE 3325 Exam 3 - Chapters 11-13 + 16
with Complete Questions and Answers
100% Correct
Mortgage banking companies:
a. Collect monthly payments and forward them to the mortgage investor.
b. Arrange home loan originations, but do not make the actual loans.
c. Make home loans and fund them permanently.
d. None of the above. - ANSWER-a. Collect monthly payments and forward them to the
mortgage investor.
In the last 20 years, the mortgage banking industry has experienced:
a. Nearly complete obsolescence.
b. Decentralization.
c. Limited consolidation.
d. Rapid consolidation. - ANSWER-d. Rapid consolidation.
Currently, which type of financial institution in the primary mortgage market provides the
most funds for the residential (owner-occupied) housing market?
a. Life insurance companies.
b. Thrifts
c. Credit unions.
d. Commercial banks - ANSWER-d. Commercial banks
For conforming conventional home loans, the standard payment ratios for underwriting
are:
a. 28 percent and 36 percent.
, b. 25 percent and 33 percent.
c. 29 percent and 41 percent.
d. 33 percent and 56 percent. - ANSWER-a. 28 percent and 36 percent.
The numerator of the standard housing expense (front-end) ratio in home loan
underwriting includes:
a. Monthly principal and interest.
b. Monthly principal, interest, and property taxes.
c. Monthly principal, interest, property taxes, and hazard insurance.
d. All of these plus monthly obligations extending 10 months or more. - ANSWER-c.
Monthly principal, interest, property taxes, and hazard insurance.
Over the last two decades the reduced importance of certain institutions in the primary
mortgage market has been largely offset by an expanded role for others. Which has
diminished, and which has expanded?
a. Commercial bankers; thrifts.
b. Mortgage banking; commercial banks.
c. Commercial banks; mortgage banking.
d. Thrifts; mortgage banking and commercial banks. - ANSWER-d. Thrifts; mortgage
banking and commercial banks.
Warehousing in home mortgage lending refers to:
a. Short-term loans made by mortgage bankers to commercial banks.
b. Short-term loans made by commercial banks to mortgage bankers.
c. Long-term loans made by commercial banks to mortgage bankers.
d. Short-term loans to finance the construction of builder warehouses. - ANSWER-b.
Short-term loans made by commercial banks to mortgage bankers.
The most profitable activity of residential mortgage bankers normally is:
a. Loan origination.
b. Loan servicing.
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