SOMB II Practice Test questions well
answered to pass
When refinances as a percentage of total originations rise, does profitability at large banks tend
to rise or to fall? - correct answer ✔✔Fall
What are the top three Mortgage lender's main sources of income? - correct answer ✔✔- Fees
negotiated at origination
- Gain on sale
- Interest Income
Interest income earned at the note rate from the date a loan closes until it is sold belongs to? -
correct answer ✔✔The lender
Which type of loan sale generates the most revenue for the lender on the date the loan is sold?
- correct answer ✔✔Servicing released
What are the two additional mortgage lender's main sources of income? - correct answer
✔✔Servicing Release Premium (SRP)
Servicing Income
What are the feature adjustments that could change the price an investor will pay for a loan? -
correct answer ✔✔- Geography
- Loan Amo.
- FICO score
- LTV
- Property Type
- Loan features
, - CRA eligibility
A loan for which an investor pays exactly 100% of the loan's unpaid principal balance is said to
have sold for - correct answer ✔✔Par
As interest rates fall, bond/security/MBS prices - correct answer ✔✔Rise
In a basic REMIC structure, when do the B class holders receive their principal payments? -
correct answer ✔✔After the A class holders have been completely repaid
When short-term interest rates are higher than long-term interest rates, what is the yield curve
is said to be? - correct answer ✔✔Inverted
Is inflation a type of fixed-income risk? - correct answer ✔✔Yes
Which type of a strip security is a natural hedge for a portfolio of MSRs? - correct answer ✔✔A
principal-only strip
Under what conditions are borrowers most likely to "float" a rate quote for a mortgage? -
correct answer ✔✔When interest rates are declining
What loan attributes create a pricing adjustment that increases the rate charged to the
borrower? - correct answer ✔✔- Occupancy status
- Geographical location
For what does SRP stand? - correct answer ✔✔Servicing Released Premium
answered to pass
When refinances as a percentage of total originations rise, does profitability at large banks tend
to rise or to fall? - correct answer ✔✔Fall
What are the top three Mortgage lender's main sources of income? - correct answer ✔✔- Fees
negotiated at origination
- Gain on sale
- Interest Income
Interest income earned at the note rate from the date a loan closes until it is sold belongs to? -
correct answer ✔✔The lender
Which type of loan sale generates the most revenue for the lender on the date the loan is sold?
- correct answer ✔✔Servicing released
What are the two additional mortgage lender's main sources of income? - correct answer
✔✔Servicing Release Premium (SRP)
Servicing Income
What are the feature adjustments that could change the price an investor will pay for a loan? -
correct answer ✔✔- Geography
- Loan Amo.
- FICO score
- LTV
- Property Type
- Loan features
, - CRA eligibility
A loan for which an investor pays exactly 100% of the loan's unpaid principal balance is said to
have sold for - correct answer ✔✔Par
As interest rates fall, bond/security/MBS prices - correct answer ✔✔Rise
In a basic REMIC structure, when do the B class holders receive their principal payments? -
correct answer ✔✔After the A class holders have been completely repaid
When short-term interest rates are higher than long-term interest rates, what is the yield curve
is said to be? - correct answer ✔✔Inverted
Is inflation a type of fixed-income risk? - correct answer ✔✔Yes
Which type of a strip security is a natural hedge for a portfolio of MSRs? - correct answer ✔✔A
principal-only strip
Under what conditions are borrowers most likely to "float" a rate quote for a mortgage? -
correct answer ✔✔When interest rates are declining
What loan attributes create a pricing adjustment that increases the rate charged to the
borrower? - correct answer ✔✔- Occupancy status
- Geographical location
For what does SRP stand? - correct answer ✔✔Servicing Released Premium
