Which one of the following is defined as bonds which represent a claim on the cash flows of an underlying pool of mortgages which flow through to bondholders?

1.    Which one of the following is defined as bonds which represent a claim on the cash flows of an underlying pool of mortgages which flow through to bondholders?

 

A.     mortgage bonds

B.     mortgage certificates

C.     mortgage passthroughs

D.     collateralized securities

E.     mortgage collaterals

Answer

conditional prepayment rate
 

2.    Mortgage-backed securities are defined as securities whose investment returns are based on which one of the following?

 

A.     lease payments from the tenants of financed property

B.     interest only on mortgage loans

C.     loan refinancings

D.     condominium fees

E.     pool of mortgages

 

Answer

pool of mortgages

3.    Which one of the following terms is applied to the process of creating mortgage-backed securities from a pool of mortgages?

 

A.     mortgage aggregation

B.     mortgage securitization

C.     mortgage bundling

D.     mortgage pooling

E.     mortgage financing

Answer

mortgage securitization
 

4.    When a borrower pays a fixed monthly amount on his or her home mortgage based on a fixed rate of interest, he or she has which type of mortgage?

 

A.     prepayment-based

B.     open-end

C.     fixed-rate

D.     variable-rate

E.     floating-rate

 

5.    Which one of the following is the amount of a mortgage loan outstanding?

 

A.     mortgage remainder

B.     mortgage face value

C.     mortgage par value

D.     mortgage principal

E.     mortgage accrual

 

6.    Which one of the following terms applies to the process of reducing the mortgage principal over the life of the mortgage according to a schedule?

 

A.     mortgage amortization

B.     mortgage prepayment

C.     mortgage elimination

D.     mortgage securitization

E.     mortgage passthrough

 

7.    Mortgage prepayments are best defined by which one of the following?

 

A.     reducing the mortgage according to a schedule over the life of the mortgage

B.     paying a monthly mortgage payment before the regular due date

C.     paying off the principal faster than required by the amortization schedule

D.     paying a cash deposit when purchasing a property

E.     paying each mortgage payment as scheduled

 

8.    Which one of the following is the government agency assigned the responsibility of promoting liquidity in the home mortgage market?

 

A.     FNMA

B.     GNMA

C.     FHLMC

D.     SPIC

E.     FDIC

 

9.    Which one of the following is the type of mortgage pool that guarantees timely payment of interest and principal?

 

A.     prepaid

B.     refinanced

C.     secured

D.     fully amortized

E.     fully modified

 

10.    Which one of the following is the risk associated with receiving a mortgage bond's principal payments sooner than anticipated?

 

A.     prepayment risk

B.     default risk

C.     amortized risk

D.     market risk

E.     seasoned risk

 

11.    FHLMC and FNMA are government-sponsored enterprises charged with which one of the following duties?

 

A.     providing home mortgages directly to homeowners

B.     purchasing only defaulted mortgages from banking institutions

C.     guaranteeing mortgages with the full faith and credit of the U.S. government

D.     providing guarantees equal to GNMA's to the home mortgage market

E.     promoting liquidity in the home mortgage market

 

12.    What is the probability that a mortgage will be prepaid during a given year called?

 

A.     mortgage reduction rate

B.     amortization rate

C.     filtration rate

D.     prepayment rate

E.     postponement rate

 

13.    Seasoned mortgages are defined as mortgages that are, or have been, which of the following?

 

A.     prepackaged

B.     resold

C.     being paid faster than scheduled

D.     refinanced

E.     over 30 months old

 

14.    Which one of the following statements correctly applies to an unseasoned mortgage?

 

A.     The mortgage is less than 30 months old.

B.     The mortgage is still held by the original mortgage company.

C.     The mortgage has at least one term or provision that is uncommon to most mortgages.

D.     The mortgage has an adjustable interest rate that has not been adjusted to date.

E.     The mortgage was obtained by a first-time home owner.

 

15.    Which one of the following is the prepayment rate for a mortgage pool which is dependent upon the age of the mortgages comprising the pool?

 

A.     unseasoned rate

B.     average life rate

C.     aged payment rate

D.     conditional prepayment rate

E.     amortized rate

 

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