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SOFE AFE Exam - Topic 4 Question 112 Discussion

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:
A) No more than 80 percent of the value
B) Not less than 80 percent of the value
C) No more than 90 percent of the value
D) Not less than 70 percent of the value

SOFE AFE Exam - Topic 4 Question 112 Discussion

Actual exam question for SOFE's AFE exam
Question #: 112
Topic #: 4
[All AFE Questions]

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:

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Suggested Answer: A

by Nenita at Apr 13, 2026, 01:51 AM

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Theola
I think it’s A, no more than 80 percent. Seems safe.
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Yolando
5 days ago
Seems low, are you sure about that?
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Derrick
10 days ago
Nope, 80% is the norm to avoid risk.
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Shonda
15 days ago
Wait, I thought it was 90% for some loans?
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Tesha
2 months ago
Totally agree, that's standard practice!
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Omer
2 months ago
A) No more than 80 percent of the value is correct.
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Hyman
3 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.
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Tracey
3 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?
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Deandrea
3 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.
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Oretha
3 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.
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