Banking Mortgage Banking

Question 1

What is the primary purpose of the secondary mortgage market?

Accepted Answer

To provide liquidity by buying and selling existing mortgage loans

Answer

To allow banks to issue new mortgages directly to consumers

Answer

To set interest rates for new home purchases

Answer

To insure mortgages against default

Question 2

What does LTV (Loan-to-Value ratio) measure?

Accepted Answer

The loan amount divided by the appraised value of the property

Answer

The borrower's monthly debt payments compared to gross income

Answer

The lender's profit margin on a mortgage transaction

Answer

The ratio of fixed-rate to adjustable-rate mortgages in a portfolio

Question 3

Which government-sponsored enterprise (GSE) is primarily focused on the U.S. mortgage market?

Accepted Answer

Fannie Mae (FNMA)

Answer

Federal Reserve Bank

Answer

Small Business Administration (SBA)

Answer

Export-Import Bank

Question 4

What is a mortgage escrow account primarily used for?

Accepted Answer

Collecting and paying property taxes and insurance on behalf of the borrower

Answer

Storing the borrower's down payment before closing

Answer

Holding reserve funds for lender emergencies

Answer

Managing the lender's investment portfolio

Question 5

What is the standard maximum Debt-to-Income (DTI) ratio used in conventional mortgage underwriting?

Accepted Answer

43%

Answer

28%

Answer

36%

Answer

55%

Question 6

What does mortgage 'amortization' describe?

Accepted Answer

The gradual reduction of the loan balance through scheduled principal and interest payments

Answer

The process of calculating a borrower's credit score for approval

Answer

The penalty fee charged for paying off a mortgage early

Answer

The periodic adjustment of interest rates on variable-rate loans

Question 7

Under the TILA-RESPA Integrated Disclosure (TRID) rule, which document must a lender provide to a borrower within 3 business days of receiving a mortgage application?

Accepted Answer

Loan Estimate (LE)

Answer

Truth in Savings Disclosure

Answer

Notice of Right to Cancel

Answer

HUD-1 Settlement Statement