CFA Practice Question

There are 490 practice questions for this study session.

CFA Practice Question

A mortgage loan may fail to be conforming because ______

I. the loan balance exceeds the maximum permitted by the underwriting standard.
II. the loan-to-value ratio is too high.
III. the payment-to-income ratio is too high.
IV. the average life is too short.
Correct Answer: I, II and III

Loans that do not qualify are called non-conforming loans and are not included in a mortgage pool underlying an agency mortgage-backed security.

User Contributed Comments 4

User Comment
danlan2 What does conforming mean?
danlan2 Conforming: qualified for agency as MBS
quanttrader conforming -- ie. agency mbs
warnggg Why iii? I couldn’t find it anywhere
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