Alabama Real Estate Practice Exam 2025 – All-in-One Guide to Master Your Real Estate License!

Question: 1 / 400

What describes a conforming mortgage's relation to Fannie Mae or Freddie Mac?

Cannot be guaranteed

Meets their standards and can be guaranteed

A conforming mortgage means that the mortgage loan meets the standards set by Fannie Mae and Freddie Mac. These agencies purchase mortgages from lenders, which allows lenders to have more money to lend out to other borrowers. A conforming mortgage guarantees that the loan will be eligible for purchase by Fannie Mae or Freddie Mac, providing the lender with more security and liquidity. Option A is incorrect because a conforming mortgage can be guaranteed by Fannie Mae or Freddie Mac. Option C is incorrect because a conforming mortgage must not exceed Fannie Mae or Freddie Mac's maximum limits. Option D is incorrect because a conforming mortgage is not limited to VA-insured loans.

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Exceeds their maximum limits

Is primarily for VA-insured loans

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