SOFE Accredited Financial Examiner (AFE) AFE Dumps in PDF

Free SOFE AFE Real Questions (page: 3)

Generally, a company earns a servicing fee when it retains the servicing of a block of loans in which it has sold all or part of the block. Service fees received from sales of participations are recorded as:

  1. Gross income and not netted against interest income remitted to the acquiring party
  2. Unearned revenue and not netted against interest income remitted to the acquiring party
  3. Gross income
  4. Netted against interest income remitted to the acquiring party

Answer(s): A



A mortgage servicer performs all of the servicing functions. The servicer remits all funds received on the serviced loans to the company on a monthly or other periodic basis and usually reports all transactions, including foreclosures and transactions related to foreclosed property.The contract between the company and servicer should provide that the:

  1. Company can periodically audit the servicer's records and files pertaining to the loans owned by the company. In lieu of making the audit, the company can agree to receive an annual audit report pertaining to its loans from the servicer's independent certified public accountants. This is the single audit concept
  2. Servicer should not have a fidelity bond and an errors and omission policy of stipulated minimum amounts
  3. Servicer must have a fidelity bond and an errors and omission policy of stipulated minimum amounts
  4. Servicer must have an annual independent audit, with a copy of the audited financial statements sent to the company within a certain period of time after the end of the servicer's fiscal year

Answer(s): A,C,D



A company that has its loans serviced, for whatever reason, is usually charged a servicer's fee. This fee is usually expressed:

  1. As an annual fraction of a percentage of each interest payment
  2. As an annual fraction of a percent of the principal balance of the loans or based on a percentage of each interest payment
  3. As a monthly fraction of a percent of the principal balance of the loans or based on a percentage of each interest payment
  4. As a monthly fraction of a percentage of each interest payment

Answer(s): B



Accounting transactions that occur after the initial investment in a loan and during the period the loan is being serviced fall into two broad categories. Which one of the following is out of those categories?

  1. Processing transactions, which are recurring and similar in nature for all mortgage loans,
  2. processing transactions, which are not recurring and opposite in nature for all mortgage loans
  3. Unusual transactions
  4. None of these

Answer(s): A



The balloon payment technique uses level payments of principal and interest but for a shorter period than is required to retire the loan fully during its term. For example, a loan with a 8.5 percent interest rate utilizing a 25-year amortization schedule with a 7-year maturity results in only $111 of each $l, 000 principal being repaid. Thus, $889 of each $l, 000 originally borrowed constitutes the ____________ balloon amount due at maturity.

  1. 7th-year
  2. 5th-year
  3. 6th-year
  4. 4th-year

Answer(s): A



With the advent of adjustable rate mortgages, amortization schedules are adjusted periodically as dictated by the terms of the loan agreement. A _____________file is used to indicate when to adjust the rate. Most computer software systems can adjust amortization schedules by reminding the company of change dates, accept current rate adjustments, and to produce new schedules.

  1. Automated software
  2. Tickler or reminder
  3. Emergency
  4. Excel

Answer(s): B



Generally, Participation income is an income stream due the company and is based upon the financial results of the borrower and/or borrowing business entity. Although it can take several forms, the more prominent ones are:

  1. Participation in revenue generated by the mortgaged property above a specified sum, such as a percentage of gross sales in excess of a specified dollar volume
  2. Participation in profits from the mortgaged property, such as a percentage of gross income less defined expenses
  3. Percentage of gross sales in excess of a specified dollar volume
  4. percentage of net sales in excess of a specified dollar volume

Answer(s): A,B



Accounting for escrow funds is difficult because of the large number of transactions related to such funds. A separate bank account or a trust bank account may be opened, with all escrow receipts deposited into it to prevent:

  1. Commingling of escrow funds with a company's operating funds
  2. Commingling of escrow funds with a company's liabilities
  3. Commingling of escrow funds with a company's mortgage funds
  4. Commingling of escrow funds with a company's fixed funds

Answer(s): A



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