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Homework answers / question archive / Which of the following statements is entirely correct about determining maximum LTV on real estate financing? A
Which of the following statements is entirely correct about determining maximum LTV on real estate financing?
A. DTI and LTV are used for commercial loans and CLTV and LTV are used for residential loans
B. DSCR and LTV are used for commercial loans and DTI and LTV are used for residential loans
C. DSCR and LTC are used for construction loans, DSCR and LTV are used for commercial loans and WACC and NPV are used for residential loans
D. DTI and LTC are used for commercial loans and LTC and WACC are used for residential loans
2. Brokers obtain warehouse lines of credit to fund mortgage loans.
True/False
3. In the Mortgage Backed Securitization process loans that are not sold to government entities like FNMA or FHA are either kept in the bank’s portfolio or sold to secondary market financial institutions.
True/False
1) The correct option is b.
In the process of underwriting the apartment loan, real estate loan, or conduit loan, the three main ratios namely loan-To-Value Ratio, Debt Service Coverage Ratio (DSCR) and debt ratio that are used by commercial lenders for evaluating the approvability of the request regarding commercial loan.
In case of underwriting the mortgage loan, the commercial lenders use 2 main ratios namely loan to book value ratio and debt to income ratio evaluating the approvability of the request regarding commercial loan.
2) The statement is true.
This is the usual way for the brokers to give loans without making use of its own capital. Warehouse lines of credit are provided to any lenders by the brokers and these lenders want to pay back to the brokers only.
3) The statement is true.
The mortgage backed security is backed by asset and is traded on the secondary market, enabling the investors to gain from the mortgage business.
