Loan servicing includes a number of responsibilities such as collecting monthly mortgage payments from the borrower,remitting principal and interest payments to investors,ensuring sufficient escrow payments are being made by the borrower,and managing default if it should arise.In exchange for these services,mortgage bankers receive a fee.If the outstanding loan balance is $250,000 and the annual servicing fee is 0.35%,what is the monthly fee for servicing the loan?

Question

Quizplus · Accepted Answer

To calculate the monthly fee, we need to first determine the annual fee.

Annual fee = (0.35% of outstanding loan balance) = (0.35/100) * 250,000 = $875

Now, we can divide the annual fee by 12 to get the monthly fee:

Monthly fee = $875 / 12 = $72.92

Therefore, the best choice is B, with a monthly fee of $72.92.

Loan Servicing Includes a Number of Responsibilities Such as Collecting