If the mortgage loan is going to be packaged with similar loans and then resold to investors as part of a commercial mortgage-backed security, the originating lender may rely more heavily on examining which of the following ratios in order to determine the maximum amount they are willing to lend to the borrower? (Note: This ratio indicates the cash-on-cash return the lender would earn on its invested capital if it had to foreclose on the property immediately after originating the loan)

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The originating lender may rely more heavily on examining the debt yield ratio in order to determine the maximum amount they are willing to lend to the borrower if the mortgage loan is going to be packaged with similar loans and then resold to investors as part of a commercial mortgage-backed security. The debt yield ratio indicates the cash-on-cash return the lender would earn on its invested capital if it had to foreclose on the property immediately after originating the loan.

If the Mortgage Loan Is Going to Be Packaged with Similar