CMA Loan Servicing and Portfolio Management 3

Question 1

In mortgage portfolio management, which metric is most commonly used to measure the speed at which borrowers are prepaying their mortgages?

Accepted Answer

Constant Prepayment Rate (CPR)

Answer

Loan-to-Value Ratio (LTV)

Answer

Debt-to-Income Ratio (DTI)

Answer

Net Interest Margin (NIM)

Question 2

When Fannie Mae or Freddie Mac purchases a mortgage from a lender, the lender typically retains the right to continue servicing that loan under a:

Accepted Answer

Servicing retained agreement

Answer

Warehouse lending agreement

Answer

Participation certificate

Answer

Recourse obligation

Question 3

The 'servicing spread' in mortgage portfolio management refers to:

Accepted Answer

The difference between the note rate and the rate passed through to investors

Answer

The geographic distribution of loans across a servicer's portfolio

Answer

The spread between fixed and adjustable-rate loans in a portfolio

Answer

The difference in default rates between prime and subprime loans

Question 4

Which government program, introduced during the 2008 financial crisis, provided a framework for servicers to offer standardized loan modifications to eligible distressed borrowers?

Accepted Answer

Making Home Affordable (MHA) / HAMP

Answer

Community Reinvestment Act (CRA)

Answer

Federal Housing Administration (FHA) Streamline

Answer

Truth in Lending Act (TILA) Rescission

Question 5

A mortgage servicer's 'advancing obligation' means that the servicer must:

Accepted Answer

Advance funds to the investor even when the borrower has not made a payment

Answer

Advance the loan closing date at the borrower's request

Answer

Advance the principal payoff amount on behalf of the lender

Answer

Advance insurance claims filed on the property to the borrower

Question 6

Which of the following best describes 'escrow analysis' in loan servicing?

Accepted Answer

An annual review to verify that escrow collections are sufficient to cover upcoming tax and insurance payments

Answer

An audit of borrower income to determine continued loan eligibility

Answer

A quarterly review of the servicer's compliance with RESPA requirements

Answer

An assessment of property value to determine if PMI can be removed

Question 7

When a mortgage is in active foreclosure, which party typically has the authority to approve a short sale or other loss mitigation option?

Accepted Answer

The investor or investor's authorized servicer managing the loan

Answer

The original mortgage broker who originated the loan

Answer

The county recorder's office where the property is located

Answer

The title insurance company that issued the policy at closing