ARE144SP11MT2_va_KEY

ARE144SP11MT2_va_KEY - Name:_ KEY_ Last 4 digits of your...

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Name:____ KEY_________________________ Last 4 digits of your Student ID Number:__________ Managerial Economics (ARE) 144 University of California, Davis, Spring 2011 Dr. John H Constantine Midterm 2, Friday, May 13, 2011 100 TOTAL POINTS
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1 Part I: Multiple Choice (24 total points; each question is worth 4 points.) There are 6 multiple choice questions, each having only one correct answer. 1) Which of the following clauses leads to higher risk for an ARMs lender? a) Negative amortization is not allowed when interest is not covered by the payment due to a payment cap b) There is floor for payments c) Adjustment interval is longer than one year d) All of the above 2) RESPA requires lenders to disclosure to buyers a uniform settlement statement detailing all closing costs within: a) One day before the real estate closing b) Three days before the real estate closing c) One day after loan application d) Three days after loan application 3) Throughout the process of originating and selling mortgages, mortgage companies face a number of risks. Therefore, it is important for a lending institution to evaluate the risks of mortgage loan default through a process commonly referred to as: a) mortgage fallout b) loan servicing c) warehousing d) loan underwriting 4) Lenders generally require private mortgage insurance (PMI) for conventional loans over 80 percent of the value of the security property. PMI protects a lender against which of the following? a) Losses due to default on the loan b) Legal threat to the lender's mortgage claim c) Physical hazards d) Changes in the index rate associated with an adjustable rate mortgage e) PMI will protect lenders against all of the above (a) thru (b) 5) Federal Housing Administration (FHA) loans differ from conventional loans in a number of ways. All of the following statements regarding FHA loans are true except: a) FHA loans are targeted toward first-time homebuyers who are in slightly weaker financial circumstances than the typical prime conventional borrower. b) FHA loans are more tolerant in terms of qualifying debt-to-income ratios. c) FHA loans require higher credit scores than are needed for prime conventional loans.
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ARE144SP11MT2_va_KEY - Name:_ KEY_ Last 4 digits of your...

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