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REE 4204 Chapter 10 Quiz (1)
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REE 4204 Chapter 10 Quiz (1)
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REE 4204 Chapter 10 QuizA non-conforming mortgage is any conventional mortgage not written to FHA/VA
specifications. - ANS-FALSE*
does not conform to GSE guidelines
A subprime loan is a loan made to a borrower with a less-than-stellar credit record
and usually has a lower interest rate than prime loans. - ANS-false*
higher rates
Default is generally defined as any failure on the part of the borrower to meet the
terms of the promissory note. This does not include payments for property taxes and
hazard insurance. - ANS-FALSE*
Default risk is the risk that the borrower will fail to make timely payments or repay
the principal amount of the loan when it is due. - ANS-TRUE*
FHA mortgage insurance protects the lender and borrower from losses due to foreclosure. -
ANS-False*
In general, the risk of default is greater when property values fall because this
increases the chance that the value of the property will fall below the appraised value. -
ANS-FALSE
Lenders almost never require an appraisal of the property to be performed as part of
the qualification procedure - ANS-false*
No down payment is required on a VA loan if the value of the property exceeds the
purchase price but a down payment is required on its graduated-payment mortgage
because of negative amortization. - ANS-True*
Secondary market agencies such as Fannie Mae and Freddie Mac are under no
obligation to buy non-conforming loans. - ANS-TRUE*
Secondary market agencies which buy mortgages have little influence on the
guidelines for writing mortgages. - ANS-FALSE*
Studies show that ARMs display significantly lower default risk than fixed-rate
mortgages. - ANS-False*
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