A lender wants to sell non-conforming loans that exceed the conforming loan limit. Which secondary market option would be most appropriate?
Correct Answer
C) Private investors or securitization
Jumbo loans that exceed conforming loan limits cannot be purchased by Fannie Mae or Freddie Mac. These must be sold to private investors or through private securitization channels, often called the 'private label' secondary market.
Why This Is the Correct Answer
Jumbo loans that exceed conforming loan limits cannot be purchased by Fannie Mae or Freddie Mac. These must be sold to private investors or through private securitization channels, often called the 'private label' secondary market.
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 property is valued at $500,000. The borrower is obtaining a first mortgage of $400,000 and a HELOC of $50,000. Six months later, the property value drops to $450,000. What is the current CLTV ratio?
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