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P3-33 quiz

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Question 1 of 10

1. Question

Why must institutions maintain strong systems and controls when using third‑party originators?

A) To speed up broker compensation reviews
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B) To ensure originations meet lending standards and comply with laws
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C) To allow brokers to set underwriting guidelines
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D) To eliminate due diligence requirements
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Question 2 of 10

2. Question

Monitoring the quality of loans from third‑party originators should track:

A) Total number of broker branches
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B) Loan quality by origination source and key borrower characteristics
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C) Only improvements in credit scores
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D) The number of new loan officers hired
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Question 3 of 10

3. Question

If appraisal or documentation issues are discovered in third‑party originations, institutions should:

A) Wait for regulator notification
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B) Let the broker correct errors without oversight
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C) Continue originations until a complaint is filed
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D) Take immediate remedial action
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Question 4 of 10

4. Question

Institutions with significant secondary‑market activity should maintain:

A) Comprehensive, formal strategies for managing risks
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B) Only pricing guidelines
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C) Only annual lender‑performance summaries
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D) State‑level reporting logs only
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Question 5 of 10

5. Question

Contingency planning for secondary‑market activity should include:

A) Eliminating all nontraditional products
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B) Hiring additional brokers
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C) Adjusting origination fees
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D) Preparing for reduced demand in the secondary market
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Question 6 of 10

6. Question

Why does reputation risk remain even after selling loans to the secondary market?

A) Servicing rights automatically return
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B) Investors require property management
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C) Credit losses may still damage the institution’s reputation
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D) Loans cannot be securitized afterward
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Question 7 of 10

7. Question

Why might an institution repurchase defaulted mortgage loans it is not contractually required to buy back?

A) To protect its reputation and maintain market access
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B) To increase net income
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C) To reduce capital requirements
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D) To avoid federal penalties
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Question 8 of 10

8. Question

Repurchasing loans beyond contractual obligations is considered:

A) A servicing enhancement
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B) Risk‑neutral restructuring
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C) A secondary‑market guarantee
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D) Implicit recourse
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Question 9 of 10

9. Question

Under risk‑based capital rules, implicit recourse requires institutions to:

A) Reduce capital allocations
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B) Adjust origination fees
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C) Hold capital only for delinquent loans
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D) Maintain capital against the entire pool or securitization
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Question 10 of 10

10. Question

Before supporting mortgage pools or repurchasing defaulted loans, institutions should:

A) Raise origination fees
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B) Reduce correspondent relationships
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C) Increase yield‑spread premiums
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D) Familiarize themselves with guidelines governing recourse and capital treatment
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