REE Unit 7 Exam Questions & Answers
(Grade A+)
When a borrower decides to stop making payments on an existing
mortgage loan despite having the ability to make payments
(typically when the home has lost value), this is more commonly
referred to as a(n):
a) equity redemption
b) statutory redemption
c) strategic default
d) reverse mortgage. -
correct answer ✅c) strategic default
Mortgage originators can either hold loans in their portfolios or sell
them to investors. When a mortgage originator decides to sell
mortgages to another institution, this transaction occurs in what is
commonly referred to as the:
a) primary mortgage market
b) secondary mortgage market
c) over-the-counter market
d) loan origination market -
correct answer ✅b) secondary mortgage market
,REE Unit 7 Exam Questions & Answers
(Grade A+)
Which of the following government agencies insures mortgage
loans made by private lenders that are designated primarily for low-
income housing, nursing homes, cooperative apartments, and
condominiums?
a) Fannie Mae
b) Freddie Mac
c) Federal Housing Administration
d) Veteran's Affairs -
correct answer ✅c) Federal Housing Administration
Mortgage originators often offer many types and forms of available
residential loans as part of their mortgage menu. However, the
predominant form of prime conventional mortgage remains the:
a) (fixed rate) level payment mortgage (LPM)
b) adjustable-rate mortgage (ARM)
c) subprime mortgage
d) Alt-A mortgage. -
correct answer ✅a) (fixed rate) level payment mortgage (LPM)
, REE Unit 7 Exam Questions & Answers
(Grade A+)
Federal Housing Administration (FHA) loans differ from
conventional loans in a number of ways. All of the following
statements regarding FHA loans are true EXCEPT:
a) FHA loans are targeted toward first-time homebuyers who are in
slightly weaker financial circumstances than the typical prime
conventional borrower
b) FHA loans are more tolerant in terms of qualifying debt-to-
income ratios
c) FHA loans require higher credit scores than are needed for prime
conventional loans
d) FHA loans contain lower limits on their maximum size than are
available through conforming conventional loans. -
correct answer ✅c) FHA loans require higher credit scores than are
needed for prime conventional loans
The refinancing decision is sometimes oversimplified into a few
"rules of thumb" that a borrower uses in order to gauge its
potential benefits. Which of the following methodologies is
criticized for its inability to account for a variation in refinancing
benefits due to cost or holding period differences?
(Grade A+)
When a borrower decides to stop making payments on an existing
mortgage loan despite having the ability to make payments
(typically when the home has lost value), this is more commonly
referred to as a(n):
a) equity redemption
b) statutory redemption
c) strategic default
d) reverse mortgage. -
correct answer ✅c) strategic default
Mortgage originators can either hold loans in their portfolios or sell
them to investors. When a mortgage originator decides to sell
mortgages to another institution, this transaction occurs in what is
commonly referred to as the:
a) primary mortgage market
b) secondary mortgage market
c) over-the-counter market
d) loan origination market -
correct answer ✅b) secondary mortgage market
,REE Unit 7 Exam Questions & Answers
(Grade A+)
Which of the following government agencies insures mortgage
loans made by private lenders that are designated primarily for low-
income housing, nursing homes, cooperative apartments, and
condominiums?
a) Fannie Mae
b) Freddie Mac
c) Federal Housing Administration
d) Veteran's Affairs -
correct answer ✅c) Federal Housing Administration
Mortgage originators often offer many types and forms of available
residential loans as part of their mortgage menu. However, the
predominant form of prime conventional mortgage remains the:
a) (fixed rate) level payment mortgage (LPM)
b) adjustable-rate mortgage (ARM)
c) subprime mortgage
d) Alt-A mortgage. -
correct answer ✅a) (fixed rate) level payment mortgage (LPM)
, REE Unit 7 Exam Questions & Answers
(Grade A+)
Federal Housing Administration (FHA) loans differ from
conventional loans in a number of ways. All of the following
statements regarding FHA loans are true EXCEPT:
a) FHA loans are targeted toward first-time homebuyers who are in
slightly weaker financial circumstances than the typical prime
conventional borrower
b) FHA loans are more tolerant in terms of qualifying debt-to-
income ratios
c) FHA loans require higher credit scores than are needed for prime
conventional loans
d) FHA loans contain lower limits on their maximum size than are
available through conforming conventional loans. -
correct answer ✅c) FHA loans require higher credit scores than are
needed for prime conventional loans
The refinancing decision is sometimes oversimplified into a few
"rules of thumb" that a borrower uses in order to gauge its
potential benefits. Which of the following methodologies is
criticized for its inability to account for a variation in refinancing
benefits due to cost or holding period differences?
