CMC Real Estate Finance 3

Question 1

What is a 'jumbo loan' in real estate finance?

Accepted Answer

A mortgage that exceeds conforming loan limits set by the FHFA

Answer

A jumbo loan is a mortgage that exceeds the conforming loan limits established by the Federal Housing Finance Agency (FHFA).

Question 2

Which of the following best describes a 'short sale' in real estate?

Accepted Answer

A sale where the lender agrees to accept less than the outstanding mortgage balance

Answer

A short sale occurs when the lender agrees to accept proceeds from a property sale that are less than the total amount owed on the mortgage.

Question 3

What is the difference between 'discount points' and an 'origination fee'?

Accepted Answer

Discount points reduce the interest rate; origination fees compensate the lender for processing the loan

Answer

Discount points are prepaid interest that permanently lower the mortgage rate, while origination fees compensate the lender for underwriting and processing.

Question 4

A homeowner wants to access equity without refinancing their first mortgage. Which product is most appropriate?

Accepted Answer

Home Equity Line of Credit (HELOC)

Answer

A HELOC allows homeowners to borrow against their equity as a revolving credit line without disturbing their existing first mortgage.

Question 5

Under the Dodd-Frank Act, what is a 'Qualified Mortgage' (QM)?

Accepted Answer

A mortgage meeting specific underwriting standards that provides lenders safe harbor from ability-to-repay claims

Answer

A Qualified Mortgage meets specific ATR underwriting criteria and gives lenders legal protection from borrower claims of inadequate ability-to-repay assessment.

(CMC) Certified Mortgage Consultant Practice Test

(CMC) Certified Mortgage Consultant Practice Test

CMC Real Estate Finance 3