Finance . Overcollateralization refers to practice with mortgage backed security pools whereby additionalmortgages are pledged to the pool, above and beyond the stated principal amount of the pool, in orderto protect against defaults and early pre-payments of principal on existing loans in the pool.a. Trueb. False. If your property generates an annual NOI of $200,000 and your bank requires a DCR of 1.3, what is themaximum amount you could borrow for a fully amortizing loan with a rate of 4% and a term of 30 years?HINT: first convert your annual debt service amount into a monthly equivalent (divide by 12).a. $3.846 millionb. $2.685 millionc. $2.155 milliond. $4.135 million

As you have asked multiple questions, we will solve the first question as per policy. Request you to…

Overcollateralization refers to practice with mortgage backed security pools whereby additional mortgages are pledged to the pool, above and beyond the stated principal amount of the pool, in order o protect against defaults and early pre-payments of principal on existing loans in the pool. a. True b. False f your property generates an annual NOI of $200,000 and your bank requires a DCR of 1.3, what is the maximum amount you could borrow for a fully amortizing loan with a rate of 4% and a term of 30 years? HINT: first convert your annual debt service amount into a monthly equivalent (divide by 12). a. $3.846 million b. $2.685 million c. $2.155 million $4. 135 million

Overcollateralization refers to practice with mortgage backed security pools whereby additional mortgages are pledged to the pool, above and beyond the stated principal amount of the pool, in order o protect against defaults and early pre-payments of principal on existing loans in the pool. a. True b. False f your property generates an annual NOI of $200,000 and your bank requires a DCR of 1.3, what is the maximum amount you could borrow for a fully amortizing loan with a rate of 4% and a term of 30 years? HINT: first convert your annual debt service amount into a monthly equivalent (divide by 12). a. $3.846 million b. $2.685 million c. $2.155 million $4. 135 million

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter8: Current And Contingent Liabilities

Section: Chapter Questions

Problem 81.3C

See similar textbooks

Similar questions

1. Which of the following is not a way in which banks lend short-term unsecured loans? Choices: By sending the amount earned from trust and investment products offered by the bank Through a guaranteed credit line that has a commitment fee for any unused amount for the year Through credits cards lines with a certain credit limit By lending a single date maturity loan to a debtor 2. The following are methods of acquiring funds through long-term financing, except Choices: Issuing bonds with semi-annual coupon payment at a discounted price Selling equity securities at an amount above the par value indicated in the stock certificate Issuing a note that indicates a promise to pay the indicated supplier in a future date Selling equity securities with a characteristic of both debt and equity security 3. Which is false about long-term sources of a firm's capital? Choices: Preferred shares are securities whose intrinsic value is based on prospective earnings All types of…
Which of the following is not a way in which banks lend short-term unsecured loans? a. Through a guaranteed credit line that has a commitment fee for any unused amount for the year b. Through credits cards lines with a certain credit limit c. By sending the amount earned from trust and investment products offered by the bank d. By lending a single date maturity loan to a debtor
Explain why it's possible for tranching to make invest ing in a mortgage -backed security more risky than investing in a single subprime loan?
Analysts and theorists have debated over the different factors that caused the subprime mortgage meltdown. According to your understanding of the crisis, which of the following factors led to the financial crisis? Check all that apply. A. Real estate appraisers and rating agencies were lax B. Credit default swaps clamied to insure CDOs C. The Fed kept interest rates low to encourage home ownership D. investors were fully aware of the risks involved, yet still settled with low returns.
Which of the following is not a way in which banks lend short-term unsecured loans? Through credits cards lines with a certain credit limit Through a guaranteed credit line that has a commitment fee for any unused amount for the year By sending the amount earned from trust and investment products offered by the bank By lending a single date maturity loan to a debtor
. Consider a failing bank. How much is a deposit of$290,000 worth to the depositor. if the FDIC uses thepayoff method? The purchase-and-assumption method?Which method is more costly to taxpayers?
If reserves are scarce, how would the federal funds rate change (increase or decrease) if the Fed:(a) sells mortgage-backed securities(b) decreases the (minimum) reserve requirements(c) conducts overnight repo operations(d) conducts overnight reverse repo operations.
What risks might commercial bank operations face by funding long-term loans such as mortgages to borrowers (often at fixed interest rates) with short-term deposits from savers? What steps could the financial institution take to reduce these risks?
Which of the following concerning short-term financing methods is CORRECT? Group of answer choices: Accruals and accounts payables do not carry explicit interest charges. Firms generally have a good control over the level of accruals. Commercial papers typicall have maturities between nine months to one year. Short-term bank loans typically require assets as collateral. Commercial papers typically carry similar interest rates to prime rates.
Given the role of the loan originator in the securitization process of a mortgage loan described in the text,do you think the loan originator will be worried aboutthe ability of a household to meet its monthly mortgagepayments?
Analyse what exposure banking institutions had to the subprime mortgage crisis and how MBSs contributed to this exposure