Unit 12: Review Questions

All of the following agencies are participants in the secondary mortgage market except: a. CalHFA b. Fannie Mae c. Ginnie Mae d. Freddie Mac

a. CalHFA

The Federal Housing Finance Agency (FHFA) regulates: a. Fannie Mae, Freddie Mac, and the FHLB b. HUD, FHA, and the Federal Reserve c. HUD, FHA, and Cal-Vet d. FHLB, FHA, and DVA

a. Fannie Mae, Freddie Mac, and the FHLB

Which of the following statements regarding Fannie Mae guidelines is TRUE? a. Loans with a higher than 80% LTV require private mortgage insurance b. Maximum loan limits are set annually by each individual lender c. The seller may contribute up to 6% towards borrower's closing costs d. Homebuyer education and counseling is required of all borrowers

a. Loans with a higher than 80% LTV require private mortgage insurance

Fannie Mae debt-to-income ratios requirement is: a. 25/30 b. 28/36 c. 20/27 d. 30/40

b. 28/36

Which agency guarantees that investors will receive timely payments of principal and interest on mortgage-backed securities backed by the FHA or DVA? a. Federal Home Loan Bank b. Ginnie Mae c. Fannie Mae d. Freddie Mac

b. Ginnie Mae

Loan originators that sell mortgages to Fannie Mae can: a. follow their own underwriting standards b. continue to service the loans c. continue to count the loans as assets in their portfolios d. repurchase the loans at a later date

b. continue to service the loans

The BEST description of a nonconforming loan is one that: a. exceeds loan limits set annually by Fannie Mae and Freddie Mac b. does not meet Fannie Mae and Freddie Mac qualifying guidelines c. is restricted to four-family units d. is limited to low-income housing

b. does not meet Fannie Mae and Freddie Mac qualifying guidelines

Which of the following types of loans do lenders generally keep in their own investment portfolios rather than sell on the secondary market? a. reverse mortgage b. jumbo c. conventional d. adjustable-rate

b. jumbo

Freddie Max was originally chartered to: a. compete with Fannie Mae b. provide a secondary market for savings associations c. purchase government loans d. provide mortgage loans for qualified applicants

b. provide a secondary market for savings associations

Fannie Mae is a: a. government agency regulated by the Fed b. sub-agency of HUD c. a quasi-private corporation with government oversight d. branch of the U.S. Treasury

c. a quasi-private corporation with government oversight

Fannie Mae currently buys loans at: a. a premium b. a free market auction c. an administered price d. par

c. an administered price

The term used to describe loans that conform to the Fannie Mae/Freddie Mac qualifying guidelines is: a. standard b. regular c. conforming d. conventional

c. conforming

When Fannie Mae purchases mortgage loans from lending institutions, they are packaged into: a. real estate mortgage investment conduits b. debentures c. mortgage-backed securities d. pass-through certificates

c. mortgage-backed securities

Freddie Mac is a(n): a. sub-agency of the DVA b. insuring agency of the FHA c. secondary market player d. originator of junior loans

c. secondary market player

Which of the following agencies is a government-sponsored enterprise (GSE)? a. FNMA b. FHA c. FHFA d. GNMA

d. GNMA

Which statement regarding Ginnie Mae is TRUE? a. Ginnie Mae purchases loans from primary market lenders b. Ginnie Mae works with both issuers and investors of mortgage-backed securities c. Ginnie Mae is an independent stockholder owner corporation d. Ginnie Mae is under the supervision of HUD

d. Ginnie Mae is under the supervision of HUD

The MOST important role played by Ginnie Mae today is: a. originating FHA loans b. purchasing DVA loans c. the oversight of Fannie Mae and Freddie Mac d. guaranteeing mortgage-backed securities payments

d. guaranteeing mortgage-backed securities payments

Fannie Mae and Freddie Mac are able to replenish their own funds, enabling them to purchase loans from primary lenders by: a. borrowing from the Federal Reserve Bank b. borrowing from each other c. requesting grant funds through HUD d. selling mortgage-backed securities

d. selling mortgage-backed securities

The agency established to ensure the financial safety and soundness of Fannie Mae and Freddie Mac is: a. the Federal Deposit Insurance Corporation (FDIC) b. the Office of Thrift Supervision (OTS) c. the Federal Reserve System (FED) d. the Federal Housing Finance Agency (FHFA)

d. the Federal Housing Finance Agency (FHFA)

Lenders may order either a mandatory or standby commitment to sell loans to Fannie Mae through: a. the federal open market b. the stock exchange c. the free market auction d. the administered price system

d. the administered price system