A community bank originates mortgage loans but lacks the volume to efficiently sell them individually. What secondary market mechanism would best serve this lender?
Correct Answer
B) Mortgage loan correspondent relationship
Correspondent relationships allow smaller lenders to originate loans and sell them to larger institutions that aggregate loans for secondary market sale. This provides smaller lenders access to secondary market liquidity without requiring large loan volumes.
Why This Is the Correct Answer
Correspondent relationships allow smaller lenders to originate loans and sell them to larger institutions that aggregate loans for secondary market sale. This provides smaller lenders access to secondary market liquidity without requiring large loan volumes.
More Mortgage Knowledge Questions
A borrower is comparing two loan offers: Loan A has no points and 4.5% interest rate, Loan B has 2 points and 4.0% interest rate. The loan amount is $400,000. How much will the borrower pay upfront for the points on Loan B?
A lender charges a 1% origination fee on all loans. For a borrower obtaining a $250,000 mortgage, what is the maximum origination fee that can be charged without violating the points and fees test under the ATR/QM rule for a first-lien mortgage?
Under what circumstances can a Qualified Mortgage include a prepayment penalty?
A borrower is considering paying discount points to reduce their interest rate. Each point costs 1% of the loan amount and reduces the rate by 0.25%. On a $300,000 loan, how much would the borrower pay for 2 discount points?
A borrower asks about the difference between discount points and origination fees. What is the most accurate explanation?
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A borrower receives $2,000 monthly in alimony with 5 years remaining on the court order. They also have $800 monthly in child support obligations with 3 years remaining. How should these be treated in DTI calculations?
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A borrower's employer confirms employment and salary two days before closing, but on closing day, the borrower reveals they gave notice and their last day is tomorrow. The loan has already been funded by the lender. What should occur?