Mortgage DepartmentSuppose you are the manager of a mortgage department at asavings bank. Under...Mortgage...

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Accounting

Mortgage Department
Suppose you are the manager of a mortgage department at asavings bank. Under the state usury law, the maximum interest rateallowed for mortgages is 10 percent compounded annually.
Required:
A. If you granted a $50,000 mortgage at the maximum rate for 30years, what would be the equal annual payments?
B. If the current market internal rate on similar mortgages is12 percent, how much money does the bank lose by issusing themortgage described in part(a)?
C. The usury law does not prohibit banks from charging points.One point means that the borrower pays 1 percent of the $50,000loan back to the lending institiution at the inception of the loan.That is , if one point is charged, the repayments are completed asin part(a), but the borrower receives only $49,5000. How manypoints must the bank charge to earn 12 percent on the 10 percentloan?

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4.1 Ratings (796 Votes)

Answer 1 Equal Annual Payments The equal annual payments for the above transaction would be 530396 Stepwise calculations explained as follows Sum mortgaged 50000 N Number of years 30 years Interest Rate See Answer

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In: AccountingMortgage DepartmentSuppose you are the manager of a mortgage department at asavings bank. Under...Mortgage DepartmentSuppose you are the manager of a mortgage department at asavings bank. Under the state usury law, the maximum interest rateallowed for mortgages is 10 percent compounded annually.Required:A. If you granted a $50,000 mortgage at the maximum rate for 30years, what would be the equal annual payments?B. If the current market internal rate on similar mortgages is12 percent, how much money does the bank lose by issusing themortgage described in part(a)?C. The usury law does not prohibit banks from charging points.One point means that the borrower pays 1 percent of the $50,000loan back to the lending institiution at the inception of the loan.That is , if one point is charged, the repayments are completed asin part(a), but the borrower receives only $49,5000. How manypoints must the bank charge to earn 12 percent on the 10 percentloan?