Course 10 Practice Test Flashcards
Evaluating the capital stack tells the underwriter:
Whether environmental remediation is in process
The name of the existing lender
The relationship between escrowed reserves and the loan amount
The relationship between debt and equity
The relationship between debt and equity
Which of the following is necessary to minimize risk when securing a FHA insured multifamily loan?
Each loan must include a replacement reserve
The loan must be structured as full recourse
The property must be revalued every 10 years
The loan structure must include at least one credit enhancement
Each loan must include a replacement reserve
If a contractor is involved with a multifamily property, why are the contractor’s financials analyzed?
To evaluate whether or not the would be able to pay any cash shortfalls of the borrower
To ensure they have the working capital available to complete the project
The financials of the contractor are not analyzed
To ensure they can accurately predict the reserves required in 10 years
To ensure they have the working capital available to complete the project
What does the loan to value ratio measure?
The terms of the loan
The past performance of the property
The credit enhancements necessary with the proposed loan
What percentage of the value serves as collateral to the loan
What percentage of the value serves as collateral to the loan
The loan approval package is submitted to the investment committee and will include which of the following?
A recommedation of whether or not to make the loan
Any credit enhancements to minimize the risk of making the loan
The completion of all outstanding items to be completed prior to closing of the loan so the risk is minimized
The lenders counsel’s opinion stating that the loan is low risk
A recommedation of whether or not to make the loan
In addition to HUD, what other party receives the loan package for approval?
Lender’s counsel
Borrower’s counsel
Lender’s investment committee
Ginnie Mae
Borrower’s counsel
A lower LTV ratio indicates the lender will:
Have less protection and greater risk
Decline the loan because the borrower does not have enough equity in the deal
Have more protection and less risk
Limit the size of the loan
Have more protection and less risk
From the Lender’s perspective, the higher the debt service coverage:
Means there is a smaller margin of cash flow availble to pay debt service
Means the lender can increase the loan amount and increase loan fees
Means there is a greater margin of cash flow to pay debt service
Means the lender will not be affected if a property has a downturn in its performance
Means there is a greater margin of cash flow to pay debt service
An FHA multifamily loan cannot exceed ____% of the remaining economic life of the improvements.
70%
72%
75%
78%
75%
How do FHA loans differ from other conventional lending in terms of risk?
Interest rate risk is greater
Risks associated with long term financing are greater
Prepayment risk is greater
Yields on the loan are greater
Risks associated with long term financing are greater
