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Mortgage Burn-out Factor Quiz
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Mortgage Burn-out Factor Quiz

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@StableConflict

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Questions and Answers

What does the burn-out factor represent?

  • The percentage of the mortgage pool that will be paid after the month under consideration
  • The percentage of the mortgage pool that has been prepaid prior to the month under consideration
  • The percentage of the mortgage pool that has been prepaid prior to the sale of the loan (correct)
  • The percentage of the mortgage pool that has defaulted
  • When calculating the burn-out factor, what does 'prepaid' refer to?

  • Payments made before the month under consideration (correct)
  • Payments made after the month under consideration
  • Payments made by defaulting borrowers
  • Payments that will be made in the future
  • Which scenario would increase the burn-out factor?

  • An increase in defaults by borrowers
  • A decrease in prepayments before the sale of the loan
  • A decrease in payments after the month under consideration
  • An increase in payments before the month under consideration (correct)
  • What is NOT a component of the burn-out factor?

    <p>Payments that will be made in the future</p> Signup and view all the answers

    In a mortgage pool with a high burn-out factor, what inference can be made about prepayments?

    <p>Prepayments are high compared to defaults</p> Signup and view all the answers

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