CMP Conventional Loan Programs and Secondary Market

Question 1

What is the primary function of the secondary mortgage market?

Accepted Answer

To purchase existing mortgage loans from lenders, freeing up capital for new loans

Answer

To originate new home loans directly to borrowers

Answer

To set interest rates on conforming mortgage loans

Answer

To insure mortgage loans against borrower default

Question 2

Which automated underwriting system (AUS) is operated by Fannie Mae?

Accepted Answer

Desktop Underwriter (DU)

Answer

Loan Product Advisor (LPA)

Answer

GUS (Guaranteed Underwriting System)

Answer

Total Mortgage Scorecard

Question 3

A conventional loan is classified as 'conforming' when it:

Accepted Answer

Meets the guidelines and loan limits set by Fannie Mae and Freddie Mac

Answer

Is insured by the FHA or guaranteed by the VA

Answer

Has a fixed interest rate for the entire loan term

Answer

Is used exclusively to purchase a primary residence

Question 4

Which federal agency is responsible for setting the annual conforming loan limits for conventional mortgages?

Accepted Answer

Federal Housing Finance Agency (FHFA)

Answer

Consumer Financial Protection Bureau (CFPB)

Answer

Department of Housing and Urban Development (HUD)

Answer

Federal Deposit Insurance Corporation (FDIC)

Question 5

What is the minimum down payment allowed on a conventional loan for a primary residence under Fannie Mae's HomeReady program?

Accepted Answer

3%

Answer

5%

Answer

10%

Answer

20%

Question 6

Private Mortgage Insurance (PMI) is required on a conventional loan when the loan-to-value (LTV) ratio exceeds which threshold?

Accepted Answer

80%

Answer

75%

Answer

90%

Answer

95%

Question 7

A conventional loan that exceeds the FHFA conforming loan limits is commonly referred to as a:

Accepted Answer

Jumbo loan

Answer

Portfolio loan

Answer

Government loan

Answer

Bridge loan