Section 6

Which of the following is a cooperative?

FHLB

Conforming loan limits vary based on two factors: the number of units being purchased with the property and what else?

Location

What's the term for a group of loans packaged together and then sold to investors on the secondary market?

Mortgage-backed security

Which of the following is NOT a benefit government-sponsored enterprises receive?

Non-profit status

How do falling interest rates impact investors in mortgage-backed securities?

Returns on investments decrease.

A buyer with which of the following debt-to-income ratios can obtain a qualified mortgage?

38%

Horace recently purchased 1,000 shares of a security that's made up of hundreds of mortgages. The principal and interest that borrowers of these underlying mortgages pay are eventually passed through to Horace and the other investors. What did Horace purchase?

A mortgage-backed security

What is a government-sponsored enterprise?

A private company the U.S. Congress created to make certain borrowing easier and cheaper

Assuming a CMO uses the sequential pay structure, how is interest passed through from borrowers paid to investors?

All tranches receive interest payments.

Synergy National Bank issued a conventional loan that is eligible for purchase by Fannie Mae. When Fannie Mae purchases the loan, what will Synergy National Bank receive in return?

Collection fee

In a loan to purchase which of the following property types is NOT eligible for purchase by Fannie Mae?

Commercial space

______ sets conforming loan limits for mortgages.

The Federal Home Financing Agency

What role did CMOs play in the financial crisis of 2007?

They increased market speculation.

Which of the following is regulated by the Federal Housing Finance Agency?

Fannie Mae

Which secondary market player would be interested in purchasing a loan from a commercial bank?

Fannie Mae

______ works with lenders to make long-term credit available to homeowners and businesses in agricultural and rural communities, including farmers and ranchers.

Farmer Mac

Which entity guarantees mortgage-backed securities which have the full support of the U.S. government?

Ginnie Mae

Ginnie Mae only guarantees mortgage-backed securities that contain loans ______.

Insured or guaranteed by U.S. government agencies

What could be a consequence if there were no secondary mortgage market?

Lenders might not have funds available to make new loans to the public.

Conforming loan limits vary based on two factors: location and what else?

Number of units being purchased with the property

Several actions take place on the secondary mortgage market. Which of these is a common activity?

Packaging loans into mortgage-backed securities

What are the types of institutions that issue loans directly to consumers commonly called?

Primary market players

What is the benefit Ginny Mae investors have over those who invest in other MBSs?

They're able to collect timely principal and interest payments.

Government-Sponsored Enterprises (GSEs) were created by the U.S. Congress for what purpose?

To make a percentage of loans available to low and moderate income borrowers