Module 16 Flashcards
This term refers to the practice of decreasing a client’s mortgage rate after he or she has been approved but before the mortgage transaction has closed:
Select one:
a. Rate Drop
b. Rate Sheets
c. Product Sheets
d. Rate Hold
Correct Answer: Rate Drop
Rationale: Rate Drop typically refers to the practice of decreasing a client’s mortgage rate after he or she has been approved but before the mortgage transaction has closed, when the lender’s interest rate on the product has decreased.
Relevant section(s) of the textbook: 16.7 Key Terms and Definitions
The correct answer is: Rate Drop
This term applies to clients who are self-employed:
Select one:
a. BDM
b. SFD
c. O/O
d. BFS
Correct Answer: BFS
Rationale: BFS: Business For Self. This term applies to those clients who are self-employed.
Relevant section(s) of the textbook: 16.7 Key Terms and Definitions
The correct answer is: BFS
All of the following characteristics typically reflect an individual who may only qualify for a sub-prime mortgage, EXCEPT:
Select one:
a. Self employed
b. Poor credit
c. Previous bankruptcy
d. Requires low LTV financing
Correct Answer: Requires low LTV financing
Rationale: Requires low LTV financing is incorrect, as such individuals would typically require high LTV financing.
Relevant section(s) of the textbook: 16.1 Types of Lenders
The correct answer is: Requires low LTV financing
This term refers to individuals who have money to invest and have decided that mortgage financing offers a profitable rate of return:
Select one:
a. Sub-Prime Mortgage Lending
b. Prime Mortgage Lending
c. Mortgage Investment Entities
d. Monoline Lenders
Correct Answer: Mortgage Investment Entities
Rationale: MIEs are mortgage lenders that provide products characterized by short-term loans (between 6 to 24 months) and higher interest rates. MIEs include mortgage investment corporations (MICs) and other private lenders.
Relevant section(s) of the textbook: 16.1 Types of Lenders
The correct answer is: Mortgage Investment Entities
This term is defined as lending to clients who have excellent credit, provable income, and stable employment:
Select one:
a. Prime Mortgage Lending
b. Private Mortgage Lenders
c. Sub-Prime Mortgage Lending
d. Monoline Lenders
Correct Answer: Prime Mortgage Lending
Rationale: Prime Mortgage Lending is defined as lending to clients who are considered to be prime borrowers. A prime borrower is typically an individual who has excellent credit, provable income, and stable employment. This type of lending is often referred to as, “A lending” or “Prime lending.”
Relevant section(s) of the textbook: 16.1 Types of Lenders
The correct answer is: Prime Mortgage Lending
This term refers to the practice of maintaining a rate for a specific period of time:
Select one:
a. Rate Drop
b. Rate Sheets
c. Rate Hold
d. Product Sheets
Correct Answer: Rate Hold
Rationale: Rate Hold typically refers to the practice of maintaining a rate for a specific period of time, whereby the lender will keep the client’s mortgage rate at the approved amount after he or she has been approved but before the mortgage transaction has closed, when the lender’s interest rate on the product has increased.
Relevant section(s) of the textbook: 16.7 Key Terms and Definitions
The correct answer is: Rate Hold
This term is defined as a non-bank lender that does not take deposits, have store fronts, or provide other non-lending products:
Select one:
a. Sub-Prime Mortgage Lending
b. Monoline Lenders
c. Prime Mortgage Lending
d. Private Mortgage Lenders
Correct Answer: Monoline Lenders
Rationale: A Monoline Lender is a non-bank lender that does not take deposits, have store fronts, or provide other non-lending products. Its sole business is lending. Mono is a prefix that means one, so you can think of this as a one type of product, or line, lender.
Relevant section(s) of the textbook: 16.1 Types of Lenders
The correct answer is: Monoline Lenders
This term is defined as a mortgage market which provides the ability for borrowers who have been or who would be declined by prime lenders to obtain financing:
Select one:
a. Prime Mortgage Lending
b. Private Mortgage Lenders
c. Sub-Prime Mortgage Lending
d. Monoline Lenders
Correct Answer: Sub-Prime Mortgage Lending
Rationale Sub-Prime Mortgage Lending: The increasing sub-prime mortgage market provides the ability for borrowers who have been or who would be declined by prime lenders to obtain financing, either to purchase a home or refinance their existing mortgage. This market has effectively increased the number of potential home buyers by providing financing that would otherwise be unavailable.
Relevant section(s) of the textbook: 16.1 Types of Lenders
The correct answer is: Sub-Prime Mortgage Lending
This is designed to inform the mortgage agent of the terms and conditions that must be met for approval, as well as the features of the mortgage being described:
Select one:
a. Rate Sheets
b. Rate Hold
c. Rate Drop
d. Product Sheets
Correct Answer: Product Sheets
Rationale: Product Sheets are designed to inform the mortgage agent of the terms and conditions that must be met for approval, as well as the features of the mortgage being described, including the maximum LTV, the amortization and so on.
Relevant section(s) of the textbook: 16.2 Understanding Lender Guidelines
The correct answer is: Product Sheets
This is designed to inform the mortgage agent of the rate charged on a product, based on such factors as the LTV and the Beacon or credit score:
Select one:
a. Rate Hold
b. Rate Drop
c. Product Sheets
d. Rate Sheets
Correct Answer: Rate Sheets
Rationale: Rate Sheets are designed to inform the mortgage agent of the rate charged on a product, based on such factors as the LTV and the Beacon or credit score.
Relevant section(s) of the textbook: 16.2 Understanding Lender Guidelines
The correct answer is: Rate Sheets
