FI HW6 - Explain why you agree or disagree with each of the...

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Chapter 10 17. Explain why you agree or disagree with each of the following statements: a. Only borrowers with highly impaired credit can obtain high LTV loans. b. An alt-A loan is a conventional, conforming loan. c. An alt-B loan is a subprime loan. a. I disagree with the statement that only borrowers with highly impaired credit can obtain a high LTV loan. A traditional, conforming loan required the borrower to make a 20% down payment when qualifying for the loan. A high LTV loan allows borrows to make a smaller or even no down payment when obtaining a mortgage. This results in a loan with higher LTV than that of a traditional, conforming loan. However, high-LTV loans are only available to borrowers with good credit. Thus, borrowers with highly impaired credit do not qualify for a high-LTV loan, making the statement false. b. I disagree with the statement that an alt-A loan is a conventional, conforming loan. For a mortgage to be conventional, the lender must make the loan based on the credit of the borrower and the collateral
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This note was uploaded on 04/02/2009 for the course AEM 4260 taught by Professor Bogan,v. during the Fall '06 term at Cornell.

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FI HW6 - Explain why you agree or disagree with each of the...

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