20 Real Estate Exam Questions On The Secondary Mortgage Market

Описание: #realestateexampracticequestions

1. What is the secondary mortgage market?
a) The market where borrowers obtain loans from lenders
b) The market where existing mortgages are bought and sold
c) A government program that provides direct loans to homebuyers
d) A program for low-income homebuyers

Answer: b) The market where existing mortgages are bought and sold
Explanation: The secondary mortgage market allows lenders to sell mortgages to investors, freeing up capital to issue more loans.

2. Which of the following is NOT a key player in the secondary mortgage market?
a) Fannie Mae
b) Freddie Mac
c) Ginnie Mae
d) Federal Housing Administration (FHA)

Answer: d) Federal Housing Administration (FHA)
Explanation: FHA insures loans but does not buy or sell them in the secondary mortgage market.

3. What is the primary purpose of the secondary mortgage market?
a) To regulate interest rates for home loans
b) To provide liquidity to lenders by purchasing existing mortgages
c) To offer direct loans to borrowers
d) To issue government grants for homebuyers

Answer: b) To provide liquidity to lenders by purchasing existing mortgages
Explanation: The secondary mortgage market allows lenders to sell loans and reinvest funds into new mortgages, ensuring stability in the housing market.

4. Which of the following entities is a government-sponsored enterprise (GSE) in the secondary mortgage market?
a) VA
b) HUD
c) Freddie Mac
d) USDA

Answer: c) Freddie Mac
Explanation: Freddie Mac is a GSE that buys mortgages from lenders and sells them as mortgage-backed securities.

5. What is a mortgage-backed security (MBS)?
a) A loan backed by private mortgage insurance
b) A financial instrument representing a pool of bundled mortgage loans
c) A type of government bond used to finance FHA loans
d) A security backed by gold reserves

Answer: b) A financial instrument representing a pool of bundled mortgage loans
Explanation: MBS are investment products backed by pools of mortgages, sold to investors to provide liquidity to lenders.

6. Which government agency guarantees securities backed by federally insured loans?
a) Ginnie Mae
b) Fannie Mae
c) Freddie Mac
d) The Federal Reserve

Answer: a) Ginnie Mae
Explanation: Ginnie Mae guarantees securities backed by FHA, VA, and USDA loans, ensuring investors receive timely payments.

7. What is the difference between Fannie Mae and Freddie Mac?
a) Fannie Mae purchases loans from larger banks, while Freddie Mac buys from smaller lenders
b) Freddie Mac only buys FHA loans, while Fannie Mae buys conventional loans
c) Fannie Mae is privately owned, while Freddie Mac is a government agency
d) There is no difference between them

Answer: a) Fannie Mae purchases loans from larger banks, while Freddie Mac buys from smaller lenders
Explanation: Fannie Mae works with large banks, while Freddie Mac primarily deals with smaller lenders like credit unions.

8. What type of loans are typically sold on the secondary mortgage market?
a) Personal loans
b) Auto loans
c) Residential mortgages
d) Payday loans

Answer: c) Residential mortgages
Explanation: The secondary mortgage market primarily deals with home loans,