Exam 16: Commercial Mortgage Types and Decisions

In order to better understand a borrower's probability of default,lenders have a number of tools at their disposal.The ratio that measures the percentage of the price (or value)of a property that is encumbered by the first mortgage is referred to as the:

In contrast to residential mortgage loans,most fixed-rate commercial mortgages do not allow borrowers to freely prepay the principal on their loan.Which of the following prepayment penalties ties the penalty that borrowers pay to how far interest rates have declined since origination?

Which of the following terms refers to a written agreement that binds the lender to make a loan to the borrower provided the borrower satisfies the terms and conditions of the agreement?

Some commercial mortgages have adjustable,or floating,interest rates.The index rate to which the contract rate is tied is typically which of the following for commercial mortgages?

The use of financial leverage by real estate investors can be a double-edged sword.All of the following statements regarding the use of financial leverage by real estate investors are true EXCEPT:

Prospective borrowers often submit loan requests directly to lenders.However,commercial loan requests can also be submitted through another channel in which a permanent lender agrees to purchase loans or consider loan requests from a mortgage banker or broker.This type of business relationship is more commonly referred to as a(n):

Land acquisition,development,and construction loans used by developers differ significantly from the "permanent" mortgages that traditionally are used to finance the purchase of commercial properties.All of the statements listed below are true regarding land acquisition,development,and construction loans EXCEPT:

Although nonrecourse loans dominate the commercial mortgage lending practices of pension funds,life insurance companies,and commercial mortgage-backed security (CMBS)originators,banks are likely to require some form of a guarantee by the organizer/sponsor of the investment opportunity to make the lender whole in the event the lender suffers a loss on the loan.This protection to the lender is more commonly referred to as a: