If Fannie Mae and Freddie Mac both offer to purchase a conventional loan, but Freddie Mac's price is significantly higher, what might explain this pricing difference?
Correct Answer
B) Different risk assessment models or current portfolio needs
Fannie Mae and Freddie Mac use different risk assessment models and may have different portfolio needs at any given time. These factors can result in pricing differences for similar loans, as each GSE may value certain loan characteristics differently based on their current business strategy and risk appetite.
Why This Is the Correct Answer
Fannie Mae and Freddie Mac use different risk assessment models and may have different portfolio needs at any given time. These factors can result in pricing differences for similar loans, as each GSE may value certain loan characteristics differently based on their current business strategy and risk appetite.
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?
People Also Study
Federal Mortgage-Related Laws
23% of exam
Mortgage Loan Origination Activities
25% of exam
Ethics, Fraud & Consumer Protection
17% of exam
Uniform State Test Content
12% of exam
Previous Question
When a borrower indicates on the URLA Form 1003 that they will occupy the property as their primary residence, this declaration affects which aspect of the loan?
Next Question
A borrower currently owes $180,000 on their home valued at $250,000. They want to obtain a new loan for $200,000 to pay off the existing mortgage and receive $20,000 in cash. What type of transaction is this?