CMA Loan Servicing and Portfolio Management 2

Question 1

In a short sale, the proceeds from the sale of the property are:

Accepted Answer

Less than the outstanding mortgage balance

Answer

Greater than the outstanding mortgage balance

Answer

Equal to the outstanding mortgage balance

Answer

Held in escrow until the borrower recovers financially

Question 2

A deed in lieu of foreclosure benefits the lender primarily by:

Accepted Answer

Avoiding the time and expense of the formal foreclosure process

Answer

Eliminating the need to obtain a new title policy

Answer

Guaranteeing the property sells at market value

Answer

Requiring the borrower to continue making reduced payments

Question 3

What is the primary distinction between a mortgage servicer and a mortgage lender?

Accepted Answer

The lender funds the loan, while the servicer manages it after origination

Answer

The servicer provides loan funds, while the lender manages ongoing payments

Answer

The servicer sets interest rates, while the lender handles underwriting

Answer

There is no meaningful distinction; the terms are interchangeable

Question 4

Which statement best describes a 'non-performing loan' (NPL) in a mortgage portfolio?

Accepted Answer

A loan on which the borrower has stopped making required payments

Answer

A loan that was recently originated and has not yet had a payment due

Answer

A loan that has been paid off ahead of schedule

Answer

A loan that was sold to a government-sponsored enterprise

Question 5

Real Estate Owned (REO) properties are best described as:

Accepted Answer

Properties acquired by a lender after an unsuccessful foreclosure auction

Answer

Properties purchased directly by mortgage servicers as investments

Answer

Commercial real estate held by investment banks

Answer

Rental properties managed by government agencies

Question 6

Prepayment risk in a mortgage portfolio refers to the possibility that:

Accepted Answer

Borrowers will repay their loans earlier than expected, reducing future interest income

Answer

Borrowers will default before making any payments

Answer

Interest rates will rise, increasing borrower default rates

Answer

The servicer will transfer the loan without proper notice

Question 7

Under the Dodd-Frank Act's mortgage servicing rules, a servicer must acknowledge receipt of a written borrower request for loss mitigation within:

Accepted Answer

5 business days

Answer

3 business days

Answer

10 business days

Answer

30 calendar days