Chapter 28 — Self-Check Quiz

Twenty-six questions. Questions 1–18 are multiple choice in the style of the SAFE MLO test; 19–26 are short answer. Answer key at the bottom in a collapsed block — write your answers down before you open it.

Illustrative figures where they appear are the chapter's constructed teaching values (a 0.250% servicing fee, a 0.375% guarantee fee, a 6.000% pass-through coupon on a 6.625% note rate). Real fees and prices change; verify current values at the source.

Multiple choice

1. Which entity does not purchase mortgage loans?

A. Fannie Mae B. Freddie Mac C. Ginnie Mae D. A correspondent aggregator

2. Mortgage-backed securities guaranteed by Ginnie Mae are backed by:

A. The capital of the issuing lender only B. The full faith and credit of the United States government C. An implied federal guarantee that has never been made explicit D. Private mortgage insurance on each underlying loan

3. Fannie Mae and Freddie Mac have operated under conservatorship since September 2008. The conservator is:

A. The Department of Housing and Urban Development B. The Consumer Financial Protection Bureau C. The Federal Housing Finance Agency D. The U.S. Department of the Treasury

4. Which loans may be pooled behind a Ginnie Mae–guaranteed security?

A. Any conventional loan meeting agency guidelines B. Jumbo loans exceeding the conforming limit C. Loans insured or guaranteed by a federal program, such as FHA, VA, or USDA D. Any loan an approved issuer chooses to pool

5. Which statement about Fannie Mae is true?

A. It originates mortgage loans to qualified borrowers B. It approves or denies individual borrowers through Desktop Underwriter C. It purchases loans from approved sellers and guarantees the resulting securities D. Its securities carry the full faith and credit of the United States

6. A borrower's note rate is 6.625%. The servicing fee is 0.250% and the guarantee fee is 0.375%. The pass-through rate is:

A. 5.750% B. 6.000% C. 6.375% D. 7.250%

7. In a To-Be-Announced trade, which of the following is not agreed at the time of the trade?

A. The coupon B. The par amount C. The specific pools that will be delivered D. The settlement date

8. The guarantee fee compensates the enterprise for:

A. Servicing the loan and collecting the borrower's payment B. Guaranteeing timely payment of principal and interest to the security holder C. Underwriting the borrower's file D. Originating the loan in the primary market

9. Which is a government-sponsored enterprise?

A. Ginnie Mae only B. Fannie Mae and Freddie Mac C. Fannie Mae, Freddie Mac, and Ginnie Mae D. The Federal Housing Administration

10. A mortgage servicing right generally increases in value when:

A. Interest rates fall and refinancing accelerates B. Interest rates rise and prepayments slow C. Home prices decline D. The servicer's cost to service increases

11. Ginnie Mae's role in a securitization is best described as:

A. Buying government loans and issuing securities backed by them B. Guaranteeing securities issued by approved private issuers C. Underwriting FHA and VA loans before they are pooled D. Setting credit score and debt-to-income requirements for government loans

12. A lender sells a closed loan for cash at a price expressed as a percentage of the unpaid balance, transferring the loan itself. This is a:

A. Securitized execution B. Whole loan sale C. Warehouse advance D. Credit risk transfer

13. Which document holder certifies that the original note physically exists and matches the data delivered to the agency?

A. The closing agent B. The servicer C. The document custodian D. The capital markets desk

14. Freddie Mac's automated underwriting system is:

A. Desktop Underwriter B. Loan Product Advisor C. TOTAL Scorecard D. Ginnie Mae Issuer Portal

15. Which is true of loans that exceed the applicable conforming loan limit?

A. They are ineligible for any securitization B. They must be insured by FHA C. They are non-agency loans, financed through portfolio lending or private-label securitization D. They carry the full faith and credit of the United States

16. In a private-label securitization, credit losses are absorbed by:

A. The guaranteeing enterprise B. Ginnie Mae, through its full faith and credit guarantee C. The subordinate tranches, in order from the bottom up D. The servicer's own capital, without limit

17. The single most important reason a lender can lock a borrower's rate weeks before closing is:

A. The lender holds enough deposits to fund the loan itself B. The enterprise guarantees the rate for thirty days C. Securities backed by loans that do not yet exist can be sold forward in the TBA market D. Rate locks are required by Regulation Z

18. An approved Ginnie Mae issuer's borrower misses a payment. Who must make certificateholders whole on schedule, first?

A. Ginnie Mae, immediately B. FHA or the VA, out of the loan-level insurance C. The issuer, which must advance the payment D. The subordinate tranche holders

Short answer

19. State, in one sentence each, what Fannie Mae, Freddie Mac, and Ginnie Mae each do. Your three sentences must use three different main verbs.

20. Explain, without using the word "government," why an investor might accept a lower yield on a Ginnie Mae security than on a comparable Fannie Mae security.

21. A borrower asks whether their loan being sold could change their interest rate. Answer in two sentences and name the document that settles it.

22. On \$365,750.00 at 6.625%, first-month interest is \$2,019.24. Show the three-way split using the chapter's illustrative stack, in dollars.

23. Why does a mortgage servicing right lose value when interest rates fall? Answer in two sentences, and name the borrower behavior that drives it.

24. Your borrower's file has a 706 representative score at 95% loan-to-value. Explain in three sentences why those two facts change the rate, naming the fee involved.

25. A repurchase demand arrives on a loan sold three years ago. Name who is demanding what from whom, and name the chapter that covers the contractual mechanism.

26. Name three things a pool disclosure summary shows an investor and three things it does not, and say what that contrast implies about your documentation work.