REE3043 - FINAL EXAM QUESTIONS AND ANSWERS
2026
With respect to bearing the risk of future property price fluctuations, which of the
following lending relationships is viewed as the most risky from the borrower's
perspective? - Answers - Straight debt
An interest-only balloon mortgage loan is commonly referred to as a(n): - Answers -
Bullet loan
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? - Answers - Loan commitment
Relative to residential loans, the underwriting process for commercial loans is more
complicated. The commercial loan underwriting process focuses first on which of the
following? - Answers - Income producing potential of the collateral property
If mortgage rates decline significantly, borrowers may decide to prepay the principal on
their loan even if they face prepayment penalties. One way that lenders protect
themselves from prepayments in such circumstances is by requiring the borrower who
prepays to purchase for the lender a set of U.S. Treasury securities whose coupon
payments replicate the cash flows the lender will lose as a result of the early retirement
of the mortgage. This process is referred to as: - Answers - Defeasance
An alternative vehicle for financing commercial property involves having the lender
acquire an ownership (equity) interest in the property by supplying a portion of the
required equity capital in addition to providing the permanent debt financing. This type
of financing arrangement is commonly referred to as a(n):Joint venture - Answers - Joint
venture
Which of the following statements is least correct? - Answers - Similar to LPs (Limited
Partnerships), LLCs (Limited Liability Companies) permit only the general partner to
participate in management.
The signature risk to Commercial Mortgage lenders is: - Answers - Default Risk
Which of the following statements regarding U.S. commercial real estate equity and
debt ownership and other U.S. assets, as of 2015, is least correct? - Answers - Public
commercial real estate debt, Commercial Mortgage Backed Securities (CMBSs), totaled
approximately $2.926 Trillion while privately held commercial real estate debt totaled
approximately $1.012 Trillion.
2026
With respect to bearing the risk of future property price fluctuations, which of the
following lending relationships is viewed as the most risky from the borrower's
perspective? - Answers - Straight debt
An interest-only balloon mortgage loan is commonly referred to as a(n): - Answers -
Bullet loan
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? - Answers - Loan commitment
Relative to residential loans, the underwriting process for commercial loans is more
complicated. The commercial loan underwriting process focuses first on which of the
following? - Answers - Income producing potential of the collateral property
If mortgage rates decline significantly, borrowers may decide to prepay the principal on
their loan even if they face prepayment penalties. One way that lenders protect
themselves from prepayments in such circumstances is by requiring the borrower who
prepays to purchase for the lender a set of U.S. Treasury securities whose coupon
payments replicate the cash flows the lender will lose as a result of the early retirement
of the mortgage. This process is referred to as: - Answers - Defeasance
An alternative vehicle for financing commercial property involves having the lender
acquire an ownership (equity) interest in the property by supplying a portion of the
required equity capital in addition to providing the permanent debt financing. This type
of financing arrangement is commonly referred to as a(n):Joint venture - Answers - Joint
venture
Which of the following statements is least correct? - Answers - Similar to LPs (Limited
Partnerships), LLCs (Limited Liability Companies) permit only the general partner to
participate in management.
The signature risk to Commercial Mortgage lenders is: - Answers - Default Risk
Which of the following statements regarding U.S. commercial real estate equity and
debt ownership and other U.S. assets, as of 2015, is least correct? - Answers - Public
commercial real estate debt, Commercial Mortgage Backed Securities (CMBSs), totaled
approximately $2.926 Trillion while privately held commercial real estate debt totaled
approximately $1.012 Trillion.
