FDIC TE Set 100 – Questions With Appropriate
Solutions
Capital - Equity Exposures SRWA 300% Correct Answer - Publicly
traded equity exposure (other than a 600% and including ineffective portion
of a hedge pair)
Capital - Equity Exposures SRWA 400% Correct Answer - Equity
exposure not publicly traded (other than 600%)
Capital - Equity Exposures SRWA 600% Correct Answer - An equity
exposure to an investment firm that has greater than immaterial leverage (ie.
hedge fund)
Asset Quality - Bankruptcy Basics Chapter 7 Correct Answer -
Liquidation:
Assets Liquidate
Proceeds distributed
Debts discharged
Asset Quality - Bankruptcy Basics Chapter 11 Correct Answer -
Reorganization
Borrower keeps assets
Debts restructured
All creditors vote on restructuring plan
Majority vote binds minority
Asset Quality - Bankruptcy Basics Chapter 13 Correct Answer -
Reorganization - individuals
individuals <100M unsecured and $350M secured
Only secured creditors entitled to vote
Asset Quality - RE appraisals 3 basic valuation approaches Correct Answer -
Cost Approach -Estimate of reproduction cost of building/improvements less
depreciation plus land value
, Market data/Direct Sales Comparison - Estimate based on sales price of
comparable
Income Approach - Discounted value of future net operating income stream,
including any "reversion" value of property when sold
Asset Quality - RE Appraisal Exemptions Part 323 Correct Answer -
<250M
<1MM business loan and not dependent on sale/ income of collateral
Existing credit if: no new monies advanced (except closing costs); no monies
ok if no material change to RE mkt
CRE < $500M
Abundance of Caution
Lease (unless economic equivalent of purchase)
Lien for purpose other than real estate value
Pooled (MBS) if loans met standard at origination
Gty'd by US Gov't or GSEs (GSEs have their own appraisal requirments)
Qualifies for Gov't program or sale to Gov't
*Top 4 require evaluations
Asset Quality - RE Evaluation Required Part 323 Correct Answer -
<250M
<1MM business loan and not dependent on sale/ income of collateral
Existing credit if: no new monies advanced (except closing costs); no monies
ok if no material change to RE mkt
Solutions
Capital - Equity Exposures SRWA 300% Correct Answer - Publicly
traded equity exposure (other than a 600% and including ineffective portion
of a hedge pair)
Capital - Equity Exposures SRWA 400% Correct Answer - Equity
exposure not publicly traded (other than 600%)
Capital - Equity Exposures SRWA 600% Correct Answer - An equity
exposure to an investment firm that has greater than immaterial leverage (ie.
hedge fund)
Asset Quality - Bankruptcy Basics Chapter 7 Correct Answer -
Liquidation:
Assets Liquidate
Proceeds distributed
Debts discharged
Asset Quality - Bankruptcy Basics Chapter 11 Correct Answer -
Reorganization
Borrower keeps assets
Debts restructured
All creditors vote on restructuring plan
Majority vote binds minority
Asset Quality - Bankruptcy Basics Chapter 13 Correct Answer -
Reorganization - individuals
individuals <100M unsecured and $350M secured
Only secured creditors entitled to vote
Asset Quality - RE appraisals 3 basic valuation approaches Correct Answer -
Cost Approach -Estimate of reproduction cost of building/improvements less
depreciation plus land value
, Market data/Direct Sales Comparison - Estimate based on sales price of
comparable
Income Approach - Discounted value of future net operating income stream,
including any "reversion" value of property when sold
Asset Quality - RE Appraisal Exemptions Part 323 Correct Answer -
<250M
<1MM business loan and not dependent on sale/ income of collateral
Existing credit if: no new monies advanced (except closing costs); no monies
ok if no material change to RE mkt
CRE < $500M
Abundance of Caution
Lease (unless economic equivalent of purchase)
Lien for purpose other than real estate value
Pooled (MBS) if loans met standard at origination
Gty'd by US Gov't or GSEs (GSEs have their own appraisal requirments)
Qualifies for Gov't program or sale to Gov't
*Top 4 require evaluations
Asset Quality - RE Evaluation Required Part 323 Correct Answer -
<250M
<1MM business loan and not dependent on sale/ income of collateral
Existing credit if: no new monies advanced (except closing costs); no monies
ok if no material change to RE mkt