FinanceIntermediateDelaware Exam

What is a 'correspondent lender' versus a 'mortgage broker' in Delaware mortgage lending?

ABoth terms describe the same type of mortgage professional

BA correspondent lender funds the loan from its own capital and sells it on the secondary market; a mortgage broker acts as an intermediary arranging loans from other lenders without funding them directly — Delaware borrowers work with both typesCorrect

CA correspondent lender lends only ever to commercial borrowers; a mortgage broker serves only ever residential borrowers instead, though the underlying details naturally shift somewhat depending on the county, the property type, and the specific facts of the transaction at hand

DCorrespondent lenders charge higher fees; brokers offer lower rates

Why A correspondent lender funds the loan from its own capital and sells it on the secondary market; a mortgage broker acts as an intermediary arranging loans from other lenders without funding them directly — Delaware borrowers work with both types Is Correct

Answer B: A correspondent lender funds the loan from its own capital and sells it on the secondary market; a mortgage broker acts as an intermediary arranging loans from other lenders without funding them directly — Delaware borrowers work with both types

A correspondent lender originates and initially funds mortgage loans using its own capital, then sells them to investors (Fannie Mae, Freddie Mac, or other investors) in the secondary market. A mortgage broker matches borrowers with lenders and earns an origination fee but does not fund the loan.

Exam Tip: Finance

Finance questions often involve calculations. Master the T-bar method, understand the difference between conventional and government-backed loans, and know key ratios like LTV and DTI.

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Key Terms to Know

Private Mortgage Insurance (PMI)

Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.

Loan-to-Value Ratio (LTV)

The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.

Debt-to-Income Ratio (DTI)

A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.

Discount Points

Prepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.

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