FIN 364 DeVry Week 7 Homework
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o<br />
o<br />
o<br />
o<br />
A jumbo mortgage<br />
A Ginnie Mae pass-through<br />
A collateralized mortgage obligation<br />
A real estate mortgage investment conduit (REMIC)<br />
Question 6. Question : (TCO 8) If you were a manager of a thrift institution and you expected interest rates to<br />
increase, what type of mortgage would you most like to hold?<br />
o<br />
o<br />
o<br />
o<br />
Balloon payment, 10 years<br />
Rollover mortgage, two years<br />
Adjustable-rate mortgage, monthly<br />
Fixed-rate mortgage, 15 years<br />
Question 7. Question : (TCO 8) Which of the following is not associated with tightened mortgage credit<br />
standards?<br />
o<br />
o<br />
o<br />
o<br />
More time on the current job required.<br />
An increase in the loan/value ratio.<br />
A decrease in the maximum total debt payments per month per amount of monthly income.<br />
Decreased maximums in the payment/income ratio of borrowers.<br />
Question 8. Question : (TCO 8) Which of the following is not true about construction-to-permanent mortgages?<br />
o<br />
o<br />
o<br />
o<br />
Bridge financing is provided by lender over the time frame required by the borrower to purchase land and<br />
construct the house.<br />
Both interest and principal payments are made until construction is completed.<br />
Loan is financed in increments as construction payments have to be made.<br />
On completion of the construction, loan balance is rolled over into the type of mortgage contract desired by<br />
borrower.<br />
Question 9. Question : (TCO 8) Mortgage bankers usually do not<br />
o<br />
o<br />
o<br />
o<br />
permanently fund mortgages.<br />
originate mortgages.<br />
service mortgages.<br />
collect monthly payments from borrowers.<br />
Question 10. Question : (TCO 8) The Tax Reform Act of 1986 increased the popularity of home equity lines of<br />
credit because<br />
o<br />
o<br />
o<br />
o<br />
tax deductibility of interest for homeowners was reduced.<br />
interest incurred under home equity lines was made tax deductible, but interest on other household financing<br />
was not.<br />
banks and savings and loans were given tax incentives to make home equity lines of credit.<br />
the law reduced the rates charged on home equity loans.<br />
Question 11. Question : (TCO 8) Which of the following statements is true?<br />
o All fixed-rate mortgages have interest rate caps.<br />
o All adjustable rate mortgages have interest rate caps.<br />
o An interest rate cap on a mortgage reduces the lender's interest rate risk exposure.<br />
o Usually, an annual interest rate cap on a mortgage is 5%, and a lifetime cap is 1-2%.<br />
Question 12. Question : (TCO 8) The original purpose of the Federal Home Loan Mortgage Corporation (Freddie<br />
Mac) was to