Question

Of the following, which form of mortgage securitization is used the least?

1.      CMO
   B.      Mortgage-Backed Bond
   C.      Mortgage Pass-Through
   D.     Home Equity Loan
   E.      Second Mortgage

7.          Which of the following statements about mortgage markets is/are true?

1.      Mortgage companies service more mortgages than they originate.
   I     Servicing fees typically range from 2% to 4%.
   II    Most mortgage sales are with recourse.
   IV.    The government is involved in the residential mortgage markets.

1.      I, III, and IV only
   B.      II, III, and IV only
   C.      I, II, and IV only
   D.     II and III only
   E.      I and IV only

8.          Which of the following statements about GNMA is/are true?

1.      GNMA provides timing insurance.
   I     GNMA creates pools of mortgages and issues securities.
   II    GNMA insures only FHA, VA, and FmHA loans.
   IV.    GNMA requires that all mortgages in the pool have the same interest rate.

1.      I, II, III, and IV are true
   B.      I, III, and IV only
   C.      I, II, and III only
   D.     II, III, and IV only
   E.      III and IV only

9.          Mortgage fees paid by the homeowner at, or prior to, closing upon the purchase of a house typically include all but which one of the following?

1.      Application fee
   B.      Title search fee
   C.      Title insurance fee
   D.     Appraisal fee
   E.      Prepayment penalty

10.        As compared to fixed-rate mortgages, ARMs result in which of the following for the lender?

1.      Higher interest rate risk
   I     Lower default risk
   II    Greater prepayment penalty fees

1.      I, II, and III
   B.      I and II only
   C.      II and III only
   D.     I and III only
   E.      None of the above

Answer 1

D.- Home Equity Loan is used the least as a form of mortgage securitization.

The following statements about the mortgage market are true:

i)Mortgage companies service more mortgages than they originate & (iv)The government is involved in the residential mortgage markets.

So E- i & iv only

GNMA:

C- i, ii and iii only

Mortgage fees in the given case include all but

(E)-prepayment penalty

As compared to fixed rate mortgage ARM resulted in

i)Higher interest rate risk & (iii)Greater prepayment penalty fees.

So D- i & iii