Many companies have developed an asset/liability management approach that is founded on
understanding product liabilities. Mortgages meet the primary objective of maintaining:
C
___________ is an amount of money, loaned at interest for a specified term, secured by real estate
and by its improvements such as buildings and infrastructure. This form of instrument itself varies by
jurisdiction, but the debt is always evidenced by an accompanying promissory note.
A
Prepayment of a conventional mortgage loan, prior to its specified maturity, is discouraged through
the general market acceptance of significant prepayment penalties. Often these penalties are
calculated so that when prevailing market interest rates are:
A
These are securities whose underlying assets consist of commercial mortgage loans. The commercial
loans are pooled, which brings diversification and liquidity to the asset class.
What are these?
B
There are many different sources of CMBS. Conduits and aggregate pools generally consist of loans
newly originated, purchased or held by investment bankers until the pool is large enough for an
efficient execution. Government agencies such as the Federal National Mortgage Association (FNMA)
and the Federal Home Loan Mortgage Corp. (FHLMC) are important sources of:
A
_________________ is a special variation on a second mortgage. In this form, the new lender
assumes the original or first mortgage and has the responsibility of collecting all payments and
remitting a portion of these payments to the first lender.
C
Generally, residential loans are open to prepayment at any time without penalty. To protect against a
deficiency, mortgage loans should not exceed the market value of the mortgaged property and in fact
are usually made for:
A
Federal Housing Administration:
A,B
These are the loans in which:
Arrangement is usually called commitment When the structure is completed and put in service, the
loan is paid off from the proceeds of the long term financing, whatever its source Proper controls
would require the lender to obtain documentation for the disbursed portion of the construction loan
and be assured that the cost of the structure to date is equivalent to the disbursed portion of the
construction loan. What are these?
D
________ allow investments to be made, up to a certain percent of invested or total admitted assets,
in assets that do not otherwise meet regulatory requirements. If their domiciliary jurisdiction
regulations have a this, a life insurer with a business purpose for doing so can make a limited amount
of mortgage loans that do not meet regulatory requirements without a reduction in surplus.
However, some jurisdictions do exercise some extraterritorial jurisdiction related to it.
D
Evidences the fair market value of the property that is security for the mortgage loan. The appraisal
value is used to determine that the loan to market value ratio is in compliance with regulatory
requirements. It also is used to determine any non-admitted mortgage loan amount. Appraisals are
obtained from:
D
During the underwriting process, information related to a mortgage loan is collected, and this
information is the basis for a final decision as to whether or not the loan should be made. The
documents generated during this underwriting process are all of the following EXCEPT:
D
Subsequent to the funding of a loan, the most common document/s obtained is/are:
A,B,C
It indicates the lender’s commitment to make a loan in accordance with the terms specified either in
the borrower’s loan application or in the terms the company approves for the loan.
B
Direct serving loans method requires a system of good internal control and requires that the
functions be split between the Accounting Department and the Investment Department. In such a
case the Accounting Department is responsible for all of the following EXCEPT:
D