What is MOST TRUE of DEFAULT RISK on a mortgage loan? Group of answer choices It is always lower with lower interest rates. It increases with greater leverage. It increases with a lock-out provision. It does not effect the borrower due to lack of recourse.
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- Which of the following situations are likely to result in higher loan defaults? Mortgages are held by originating institutions in their portfolios. Borrowers have higher equity in their homes. Lenders who require documentation of income, liabilities and asset ownership. Borrowers with low credit scores.When the default risk is high, ___. the debtor charges high interest the debtor earns more the creditor earns less the creditor charges high interest Please answer immediately thanks :)Discuss the two theories of mortgage default. What are the most important factors that influence the likelihood of default? Discuss the alternatives to default from the lender’s perspective and the incentives lenders face to offer them.
- Explain Negative Amortizing, Constant Payment Mortgage (CPM) Loans?Which of the following statement is (are) TRUE of collateralized loan obligation (CLO)? A: A CLO pools a group of loans and creates multiple tranches with different levels of risk B: The less risky tranches in a CLO have a lower pay-off (i.e. lower coupons) C: A tranch of a CLO can have a high credit rating even though the underlying loans in a CLO are risky D: All of the Above Please answer fast i give you upvote.Please explain it why choosing option correct and wrong # Which of the following best describes interest rate risk? The risk that credit ratings will change, affecting the value of assets and liabilities The risk that banks will not be able to meet their liquidity requirements None of the above The risk that interest rates will rise or fall, affecting the value of assets and liabilities
- What factors must be considered when deciding whether to refinance a loan after interest rates have declined?Why might a wraparound lender provide a wraparound loan at a lower rate than a new first mortgage?Collateral does not reduce the risk of a loan per se, becauseA. it is not part of the loan agreementB. the risk of a loan is determined by the borrower’s willingness and ability to repay the loanC. it may be worth less than the bank thinksD. the bank may not have title to the collateral
- Amortized loans with equal principal repayments will result in less interest being paid over the life of a loan than alternative types of amortized loans. True or FalseWhich of the following does not relate to credit risks? Select one: A. Credit risk is the possibility of a loss resulting from a borrower's failure to repay a loan or meet contractual obligations B. Credit risk also describes the risk that an insurance company will be able to pay a claim. C. It refers to the risk that a lender may not receive the owed principal and interest D. Credit risk describes the risk that a bond issuer may fail to make payment when requested E. Credit risk is the possibility of losing a lender takes on due to the possibility of a borrower not paying back a loan
