CMC Residential and Commercial Financing 3

Question 1

A lender quotes a commercial loan with a 1.25 DSCR requirement. If annual debt service is $120,000, what minimum NOI must the property generate?

Accepted Answer

$150,000

Answer

Minimum NOI = Debt Service × DSCR = $120,000 × 1.25 = $150,000.

Question 2

What is the maximum loan-to-value (LTV) ratio typically allowed for a conventional conforming primary residence purchase without PMI?

Accepted Answer

80%

Answer

Conventional loans at 80% LTV or below do not require private mortgage insurance (PMI).

Question 3

In a commercial loan, what is a 'lockout period'?

Accepted Answer

A period during which prepayment is completely prohibited

Answer

A lockout period is a specified timeframe in which the borrower cannot prepay the loan at all, protecting the lender's yield.

Question 4

Which federal regulation implements the Truth in Lending Act (TILA) for residential mortgages?

Accepted Answer

Regulation Z

Answer

Regulation Z implements TILA and requires lenders to disclose key loan terms including APR, finance charges, and total payments.

Question 5

A borrower takes out a $500,000 interest-only commercial loan at 6% annually. What is the monthly payment during the interest-only period?

Accepted Answer

$2,500

Answer

Monthly interest-only payment = $500,000 × 6% ÷ 12 = $2,500.

(CMC) Certified Mortgage Consultant Practice Test