CMP - Certified Mortgage Processor Property Types and Eligibility Questions and Answers Flashcards
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Read the first 6 CMP - Certified Mortgage Processor Property Types and Eligibility Questions and Answers flashcards as text
What is the typical minimum down payment required for a 1-unit investment property under conventional guidelines?
Answer: 25%
Conventional guidelines generally require a 15–25% down payment for investment properties, with most standard programs requiring at least 15% for 1-unit and 25% for 2-4 unit investments.
When processing a loan for a mixed-use property (e.g., ground floor commercial, residential above), which concern is most relevant?
Answer: Whether the property meets agency guidelines for residential use and the commercial portion does not exceed allowable thresholds
Mixed-use properties must meet specific agency guidelines, including thresholds on commercial square footage relative to total space, to remain eligible for residential mortgage financing.
What is a 'deed restriction' and how might it affect a mortgage processor's file?
Answer: A legal restriction on property use recorded in the deed that could limit resale or use, requiring lender review
Deed restrictions limit how a property can be used or sold; lenders review them to ensure they don't impair the collateral's marketability or violate agency eligibility guidelines.
A borrower is purchasing a cooperative (co-op) apartment in New York. What does the borrower actually own?
Answer: Shares in the cooperative corporation and a proprietary lease to occupy the unit
In a co-op, the buyer purchases shares in the corporation that owns the building and receives a proprietary lease granting the right to occupy a specific unit.
What is a 'site condominium' and how does it differ from a traditional condominium for mortgage purposes?
Answer: A detached single-family home on a platted lot where ownership is structured as a condominium but the unit has no shared walls — typically treated more like a single-family home for underwriting
Site condominiums are legally structured as condos but are detached units; lenders and agencies may treat them similarly to single-family detached homes, simplifying eligibility review.
Why would a property located in a 'declining market' require a higher down payment or lower LTV from the processor's perspective?
Answer: Lenders and agencies add LTV restrictions to protect against collateral value loss in markets with falling property values
In declining markets, lenders reduce maximum LTVs to protect against the collateral losing value after origination, which would increase loss severity in a default.