Loan Servicing and Portfolio Management Flashcards
7 cards from real CMA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Loan Servicing and Portfolio Management flashcards as text
In a short sale, the proceeds from the sale of the property are:
Answer: Less than the outstanding mortgage balance
A short sale occurs when the home sells for less than the mortgage balance owed, requiring lender approval since the proceeds do not fully repay the debt.
A deed in lieu of foreclosure benefits the lender primarily by:
Answer: Avoiding the time and expense of the formal foreclosure process
When a borrower voluntarily deeds the property to the lender, it eliminates the lengthy and costly formal foreclosure process while achieving the same outcome for the lender.
What is the primary distinction between a mortgage servicer and a mortgage lender?
Answer: The lender funds the loan, while the servicer manages it after origination
The lender originates and funds the loan at closing, while the servicer manages day-to-day administration of the loan on behalf of the investor who owns it.
Which statement best describes a 'non-performing loan' (NPL) in a mortgage portfolio?
Answer: A loan on which the borrower has stopped making required payments
A non-performing loan is one where the borrower is in default or has stopped making payments, causing it to generate no expected income for the portfolio holder.
Real Estate Owned (REO) properties are best described as:
Answer: Properties acquired by a lender after an unsuccessful foreclosure auction
REO properties are those a lender takes ownership of when a foreclosure sale does not generate enough proceeds to cover the loan balance, leaving the lender as the property owner.
Prepayment risk in a mortgage portfolio refers to the possibility that:
Answer: Borrowers will repay their loans earlier than expected, reducing future interest income
Prepayment risk occurs when borrowers pay off mortgages early (often by refinancing), eliminating the investor's anticipated stream of interest income.
Under the Dodd-Frank Act's mortgage servicing rules, a servicer must acknowledge receipt of a written borrower request for loss mitigation within:
Answer: 5 business days
Servicers must acknowledge a complete loss mitigation application within 5 business days as required by CFPB mortgage servicing rules under Dodd-Frank.