Discuss SOFE AFE Exam Topic 4 Question 112

Generally, residential loans are open to prepayment at any time without penalty. To protect against a deficiency, mortgage loans should not exceed the market value of the mortgaged property and in fact are usually made for:

ANo more than 80 percent of the value

BNot less than 80 percent of the value

CNo more than 90 percent of the value

DNot less than 70 percent of the value

Suggested Answer: A

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21 comments · newest first

Shawana 1 month ago

A is the best choice. Keeps equity in check.

Christoper 1 month ago

D is too low. Better to stick with A.

Virgilio 1 month ago

C could work, but it's high risk.

Arlene 2 months ago

I feel like B is risky. Too much debt.

Stephane 2 months ago

Agreed, A makes sense. Protects lenders.

Han 2 months ago

I think it's A, no more than 80 percent. Seems safe.

Barrett 2 months ago

D seems too low. Better to stick with A or C.

Pamella 2 months ago

I feel like B is risky. Too much debt.

Edison 2 months ago

A is definitely the standard. Keeps risk low.

Serina 3 months ago

I’m leaning towards C, no more than 90 percent. More flexibility.

Albina 3 months ago

I agree with A. Protects lenders from losses.

Theola 3 months ago

I think it’s A, no more than 80 percent. Seems safe.

Yolando 3 months ago

Seems low, are you sure about that?

Derrick 3 months ago

Nope, 80% is the norm to avoid risk.

Shonda 4 months ago

Wait, I thought it was 90% for some loans?

Tesha 5 months ago

Totally agree, that's standard practice!

Omer 5 months ago

A) No more than 80 percent of the value is correct.

Hyman 6 months ago

I recall that most lenders prefer not to exceed 80 percent of the property value to mitigate risk, so I would go with A) No more than 80 percent.

Tracey 6 months ago

I’m a bit confused here. I thought it was more about the lender's risk, so maybe it could be C) No more than 90 percent?

Deandrea 6 months ago

This question feels familiar! I practiced one like it where the answer was also related to loan-to-value ratios. I think it’s A) No more than 80 percent.

Oretha 6 months ago

I think I remember something about the 80 percent rule being common for loans, but I'm not entirely sure if it's a maximum or minimum.

SOFE AFE Exam - Topic 4 Question 112 Discussion