CMC Residential and Commercial Financing 2

Question 1

A borrower's debt-to-income (DTI) ratio is 48%. Which loan program is most likely to allow this ratio for a conventional mortgage?

Accepted Answer

Fannie Mae with DU approval and compensating factors

Answer

Fannie Mae's Desktop Underwriter (DU) can approve DTIs above 45% when strong compensating factors are present.

Question 2

In commercial real estate lending, what does the term 'recourse' mean?

Accepted Answer

The borrower is personally liable for the debt beyond the collateral

Answer

A recourse loan allows the lender to pursue the borrower's personal assets if the collateral is insufficient to cover the debt after foreclosure.

Question 3

Which of the following best describes a 'blanket mortgage' in commercial financing?

Accepted Answer

A mortgage covering multiple properties under a single loan

Answer

A blanket mortgage uses multiple properties as collateral under one loan, commonly used by developers and investors.

Question 4

What is the primary difference between a fixed-rate mortgage and a hybrid ARM?

Accepted Answer

Hybrid ARMs have an initial fixed period before converting to adjustable rates

Answer

A hybrid ARM (e.g., 5/1 ARM) offers a fixed rate for an initial period then adjusts periodically based on an index.

Question 5

A commercial property generates $180,000 NOI and is valued at $2,000,000. What is the capitalization rate?

Accepted Answer

9.0%

Answer

Cap rate = NOI ÷ Property Value = $180,000 ÷ $2,000,000 = 9.0%.

(CMC) Certified Mortgage Consultant Practice Test