SOMB II PRACTICE TEST QUESTIONS AND ANSWERS
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
When you sell a loan "servicing-retained" into the capital markets, for what are you responsible? -
CORRECT ANSWER✅✅✅- Pay property taxes and insurance on behalf of the loan borrowers
- Remitting principal and interests to the investor
- Receive and account for monthly payments received from the borrower
Under what circumstances would you buyup a guarantor fee (G-Fee)? - CORRECT
ANSWER✅✅✅When your excess servicing is a positive number
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
When you sell a loan "servicing-retained" into the capital markets, for what are you responsible? -
CORRECT ANSWER✅✅✅- Pay property taxes and insurance on behalf of the loan borrowers
- Remitting principal and interests to the investor
- Receive and account for monthly payments received from the borrower
Under what circumstances would you buyup a guarantor fee (G-Fee)? - CORRECT
ANSWER✅✅✅When your excess servicing is a positive number
