REE4303 - Exam 2 2025/2026 Exam
Questions and Answers 100%
1
Guaranteed Success | Already Rated A+
loan term - 🧠 ANSWER ✔✔amount of time during which a borrower makes
payments towards loan
amortization period - 🧠 ANSWER ✔✔time period it will take to pay back the loan
in full
recourse - 🧠 ANSWER ✔✔borrowers are personally liable for debt oblifations
when default
nonrecourse - 🧠 ANSWER ✔✔borrowers are NOT personally liable for debt
obligations when default
interest rate risk - 🧠 ANSWER ✔✔risk that value of the loan declines due to
increasing market rates
prepayment risk - 🧠 ANSWER ✔✔risk that borrowers pay of their loan before
maturity date due to decreasing market rate
100% GUARANTEED PASS
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
PRIVACY STATEMENT. ALL RIGHTS RESERVED
,default risk - 🧠 ANSWER ✔✔risk that borrowers will cease to make payments of
principal and interest
2
financial risk - 🧠 ANSWER ✔✔risk that NOI will be insufficient to cover the
payments of principals and interset (debt service) (does not necessarily lead to
default)
home loans - 🧠 ANSWER ✔✔small loan amount
15 or 30 year loan term
amortization period=loan term
standardized
brief
recourse
CRE loans - 🧠 ANSWER ✔✔large loan amount
3-10 year loan term (lower interest rate risk)
amortization period>loan term (balloon payment)
caries by property type
long and complex
100% GUARANTEED PASS
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
PRIVACY STATEMENT. ALL RIGHTS RESERVED
, typically nonrecourse
Why are CRE loans often nonrecourse? - 🧠 ANSWER ✔✔borrowers are limited
3
partnerships or LLC: cashflows are derived from the property
Does nonrecourse meant "not responsible"? - 🧠 ANSWER ✔✔no, indirect cost
associated with default
lockout provision - 🧠 ANSWER ✔✔prohibition against prepayment
yield maintenance agreement - 🧠 ANSWER ✔✔you need an amount that offsets
the benefit of getting a new loan [NPV(refinancing)=PV of payment savings-
refinancing cost and/or prepayment penalty=0]
defeasance penalty - 🧠 ANSWER ✔✔you need to buy the lender a set of US
Treasury securities that produce cash flows equivalent to those on paid -off
mortgage [NPV(refinancing)=0]
most significant risk of commercial mortgages - 🧠 ANSWER ✔✔default risk
because of balloon payment
indicators of financial risk - 🧠 ANSWER ✔✔Debt coverage ratio (DCR) =
NOI1/DS (≥ 1.35)
Loan-to-value ratio (LTV) = Loan amount/Acquisition price (≤ 60%-80%)
100% GUARANTEED PASS
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
PRIVACY STATEMENT. ALL RIGHTS RESERVED
Questions and Answers 100%
1
Guaranteed Success | Already Rated A+
loan term - 🧠 ANSWER ✔✔amount of time during which a borrower makes
payments towards loan
amortization period - 🧠 ANSWER ✔✔time period it will take to pay back the loan
in full
recourse - 🧠 ANSWER ✔✔borrowers are personally liable for debt oblifations
when default
nonrecourse - 🧠 ANSWER ✔✔borrowers are NOT personally liable for debt
obligations when default
interest rate risk - 🧠 ANSWER ✔✔risk that value of the loan declines due to
increasing market rates
prepayment risk - 🧠 ANSWER ✔✔risk that borrowers pay of their loan before
maturity date due to decreasing market rate
100% GUARANTEED PASS
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
PRIVACY STATEMENT. ALL RIGHTS RESERVED
,default risk - 🧠 ANSWER ✔✔risk that borrowers will cease to make payments of
principal and interest
2
financial risk - 🧠 ANSWER ✔✔risk that NOI will be insufficient to cover the
payments of principals and interset (debt service) (does not necessarily lead to
default)
home loans - 🧠 ANSWER ✔✔small loan amount
15 or 30 year loan term
amortization period=loan term
standardized
brief
recourse
CRE loans - 🧠 ANSWER ✔✔large loan amount
3-10 year loan term (lower interest rate risk)
amortization period>loan term (balloon payment)
caries by property type
long and complex
100% GUARANTEED PASS
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
PRIVACY STATEMENT. ALL RIGHTS RESERVED
, typically nonrecourse
Why are CRE loans often nonrecourse? - 🧠 ANSWER ✔✔borrowers are limited
3
partnerships or LLC: cashflows are derived from the property
Does nonrecourse meant "not responsible"? - 🧠 ANSWER ✔✔no, indirect cost
associated with default
lockout provision - 🧠 ANSWER ✔✔prohibition against prepayment
yield maintenance agreement - 🧠 ANSWER ✔✔you need an amount that offsets
the benefit of getting a new loan [NPV(refinancing)=PV of payment savings-
refinancing cost and/or prepayment penalty=0]
defeasance penalty - 🧠 ANSWER ✔✔you need to buy the lender a set of US
Treasury securities that produce cash flows equivalent to those on paid -off
mortgage [NPV(refinancing)=0]
most significant risk of commercial mortgages - 🧠 ANSWER ✔✔default risk
because of balloon payment
indicators of financial risk - 🧠 ANSWER ✔✔Debt coverage ratio (DCR) =
NOI1/DS (≥ 1.35)
Loan-to-value ratio (LTV) = Loan amount/Acquisition price (≤ 60%-80%)
100% GUARANTEED PASS
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
PRIVACY STATEMENT. ALL RIGHTS RESERVED
