Jacob is a private investor who is concerned about borrowers' abilities to make their mortgage payments, so he has been reluctant to invest in mortgages in the past. Joe is a mortgage broker who specializes in private mortgages. Joe has a client who has considerable equity, but who is currently unemployed. He is an engineer who lost his job when the company he worked for went out of business. He's had plenty of job offers but is waiting until one offers him at least as much income as he had before his job loss, and is confident of doing so in the next four months. Given this scenario, which of the following statements is most correct? Select one: a. Jacob is not a suitable investor for this borrower b. If the borrower prepays the mortgage payments this will be a suitable investment for Jacob c. Without an income this borrower should wait until he is gainfully employed before borrowing d. If the borrower prepays the mortgage payments this may be a suitable investment for Jacob, but more information is required to be certain Olivia, a mortgage broker, has a client, Grayson, who meets all of the requirements for approval by Olivia's private lender, Joe. Joe has had issues with borrowers missing payments in the past, and has decided to charge NSF fees of $300, a condition that is much higher than normal. However Joe also offers lower rates than Olivia's other investors. Since Grayson has very good credit and debt servicing ratios, would this be a good option for Grayson? Select one: a. Yes, the lower rate offered by Joe will offset the higher NSF fee b. Yes, the lower rate combined with low risk of missed payments makes this a good option for Grayson c. No, the NSF fee is much too high and is therefore not reasonable for Grayson d. No. Grayson is at risk of missing payments and therefore this is not advisable
Jacob is a private investor who is concerned about borrowers' abilities to make their mortgage payments, so he has been reluctant to invest in mortgages in the past. Joe is a mortgage broker who specializes in private mortgages. Joe has a client who has considerable equity, but who is currently unemployed. He is an engineer who lost his job when the company he worked for went out of business. He's had plenty of job offers but is waiting until one offers him at least as much income as he had before his job loss, and is confident of doing so in the next four months. Given this scenario, which of the following statements is most correct? Select one: a. Jacob is not a suitable investor for this borrower b. If the borrower prepays the mortgage payments this will be a suitable investment for Jacob c. Without an income this borrower should wait until he is gainfully employed before borrowing d. If the borrower prepays the mortgage payments this may be a suitable investment for Jacob, but more information is required to be certain Olivia, a mortgage broker, has a client, Grayson, who meets all of the requirements for approval by Olivia's private lender, Joe. Joe has had issues with borrowers missing payments in the past, and has decided to charge NSF fees of $300, a condition that is much higher than normal. However Joe also offers lower rates than Olivia's other investors. Since Grayson has very good credit and debt servicing ratios, would this be a good option for Grayson? Select one: a. Yes, the lower rate offered by Joe will offset the higher NSF fee b. Yes, the lower rate combined with low risk of missed payments makes this a good option for Grayson c. No, the NSF fee is much too high and is therefore not reasonable for Grayson d. No. Grayson is at risk of missing payments and therefore this is not advisable
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
Problem 1CE
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Transcribed Image Text:Jacob is a private investor who is concerned about borrowers' abilities to make their
mortgage payments, so he has been reluctant to invest in mortgages in the past.
Joe is a mortgage broker who specializes in private mortgages. Joe has a client who
has considerable equity, but who is currently unemployed. He is an engineer who
lost his job when the company he worked for went out of business. He's had plenty
of job offers but is waiting until one offers him at least as much income as he had
before his job loss, and is confident of doing so in the next four months. Given this
scenario, which of the following statements is most correct?
Select one:
a. Jacob is not a suitable investor for this borrower
b. If the borrower prepays the mortgage payments this will be a suitable
investment for Jacob
c. Without an income this borrower should wait until he is gainfully employed
before borrowing
d. If the borrower prepays the mortgage payments this may be a suitable
investment for Jacob, but more information is required to be certain
Transcribed Image Text:Olivia, a mortgage broker, has a client, Grayson, who meets all of the requirements
for approval by Olivia's private lender, Joe. Joe has had issues with borrowers
missing payments in the past, and has decided to charge NSF fees of $300, a
condition that is much higher than normal. However Joe also offers lower rates
than Olivia's other investors. Since Grayson has very good credit and debt servicing
ratios, would this be a good option for Grayson?
Select one:
a. Yes, the lower rate offered by Joe will offset the higher NSF fee
b. Yes, the lower rate combined with low risk of missed payments makes this
a good option for Grayson
c. No, the NSF fee is much too high and is therefore not reasonable for
Grayson
d. No. Grayson is at risk of missing payments and therefore this is not
advisable
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