Concept explainers
Mortgage Fees Fannie Mae charges a loan-level price adjustment (LLPA) on all mortgages, which represents a fee on the credit score of the borrower, the amount borrowed, and the loan-to-value (LTV) ratio. The LTV ratio is the ratio of amount borrowed to appraised value of the home. For example, a homebuyer who wishes to borrow with a credit score of 730 and an LTV ratio of will pay of , or . The table shows the LLPA for various credit scores and an LTV ratio of .
(a) Construct a function , where is the loan-level price adjustment (LLPA) and s is the credit score of an individual who wishes to borrow with an LTV ratio.
(b) What is the LLPA on a loan with an LTV ratio for a borrower whose credit score is 725?
(c) What is the LLPA on a loan with an LTV ratio for a borrower whose credit score is 670?
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