What is the primary difference between Fannie Mae and Freddie Mac in terms of their loan acquisition methods?
Correct Answer
B) Fannie Mae typically purchases whole loans while Freddie Mac typically purchases participation interests
Traditionally, Fannie Mae purchases whole loans from lenders, while Freddie Mac purchases participation interests or pools of loans from lenders, though both methods are used by both GSEs today.
Why This Is the Correct Answer
Traditionally, Fannie Mae purchases whole loans from lenders, while Freddie Mac purchases participation interests or pools of loans from lenders, though both methods are used by both GSEs today.
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 balloon mortgage requires full payment of the remaining balance after 7 years. If this loan is considered a 'qualified mortgage' under the ATR rule, which condition must be met?