Chapter 1-6 Finance

Credit unions were first set up in: a. 1870 b. 1970. c. 1990. d. 2006.

b. 1970

Lending in the absence of discrimination based on race, sex, color, religion, national ancestry, marital status, or handicap is known as: a. Politically Correct Lending. b. Fair Lending. c. Safe Lending. d. Equal Rights Lending.

b. Fair Lending.

The study and description of the population of an area is called: a. regentrification. b. demographics. c. psychographics. d. demonstrative study.

b. demographics.

The requirement that all pertinent information about a property or a loan be provided to enable a consumer to make informed choices is referred to as: a. disintermediation. b. disclosure. c. preapproval. d. underwriting.

b. disclosure.

A loss of savings deposits to higher yielding competitive investments is referred to as: a. deficit savings. b. disintermediation. c. pass-through deposits. d. mediation investing.

b. disintermediation.

The intentional misrepresentation or omission of material facts by applicants to improperly influence a mortgage loan lender is referred to as: a. fictitious underwriting. b. mortgage fraud. c. negative posturing. d. risk management.

b. mortgage fraud.

When an investor has an "undivided interest" in the mortgage pool, it is commonly referred to as a: a. liquid investment. b. pass-through security. c. subordinate pass-through. d. mortgage-backed security.

b. pass-through security.

The effective yield on a loan is referred to as: a. the nominal rate. b. the annual percentage rate (APR). c. the discount rate. d. the total finance charge.

b. the annual percentage rate (APR).

How many Federal Reserve Districts are there across the nation? a.3 b. 12 c.6 d.8

b.12

Private mortgage insurance is required on all loans that exceed what percentage of the value of a property? a. 60% b. 70% c. 80% d. 90%

c. 80%

The role of FNMA (Fannie Mae) was further expanded in 1970 with the passage of the: a. Federal National Mortgage Act. b. Urban Development Act. c. Emergency Home Finance Act. d. Home Entitlement Act.

c. Emergency Home Finance Act.

The FHFA refers to the: a. Federal Harvest and Farm Agency b. Federal Housing Freedom Act. c. Federal Housing Finance Agency. d. Farm Housing Financing Agency.

c. Federal Housing Finance Agency

Who has the power of currency issue? a. Congress b. The President of the United States c. The Federal Reserve d. The United States Treasury

c. The Federal Reserve

A loan where the lender assumes a percentage of ownership is called: a. a percentage loan. b. a quasi-ownership loan. c. a participation loan. d. an unseasoned loan.

c. a participation loan.

Finance charges include: a. interest charges and discount points. b. mortgage insurance fees. c. both a & b. d. none of the above.

c. both a & b.

The Closing Disclosure Form integrates and replaces the: a. HUD-1 form. b. Final TILA Disclosure Form. c. both a & b. d. neither a nor b.

c. both a & b.

The SAFE Act defines a Mortgage Loan Originator (MLO) as an individual who: a. takes a residential mortgage loan application. b. offers or negotiates terms of s residential mortgage loan for compensation or gain. c. both a & b. d. None of the above

c. both a & b.

When prices begin to fall and production tapers off, the period is called a: a. low economy. b. seller's market. c. buyer's market. d. balanced market.

c. buyer's market

Banks who supply capital for business ventures and construction activities on a short term basis are called: a. savings and loans. b. credit unions. c. commercial banks. d. none of the above.

c. commercial banks.

Ethics differs from law in that ethics: a. is the minimum standard of behavior. b. is always a written code. c. is what is right. d. is usually illegal.

c. is what is right.

How many days prior to consummation can a revised Loan Estimate generally be provided to the borrower? a. no later than 1 day prior to consummation. b. no later than 3 days prior to consummation. c. no later than 7 days prior to consummation. d. no later than 1 day after consummation.

c. no later than 7 days prior to consummation.

A loan held by a lender rather than sold into the secondary market is referred to as a: a. seasoned loan. b. retainment loan. c. portfolio loan. d. nonliquid loan.

c. portfolio loan.

The different classes of securities are called: a. caste systems. b. mortgage levels. c. tranches. d. fiat classes.

c. tranches

The minimum number of hours of mandatory pre-license education for MLOs is: 10 20 8

20

The degree of risk in a real estate loan: a. can be controlled by qualifying a buyer and a property before a loan is made. b. refers to the likelihood of default by the borrower. c. refers to the ability of the lender to recover loan proceeds through foreclosure. d. All of the above

All of the above

The Truth in Lending Law is supervised by the: a. Department of Justice. b. Consumer Financial Protection Bureau. c. Federal Deposit Insurance Corporation. d. United States Treasury.

Consumer Financial Protection Bureau.

The rate of interest charged by the Fed to member banks is called the: a. Federal Funds rate. b. Discount rate. c. Prime rate d. Usury rate

Discount rate

A loan can often be seasoned in: a. 6-12 months. b. 12-18 months. c. 2 years. d. 5 years.

a. 6-12 months.

A scheme where the property and borrower are non-existent is referred to as a(n): a. Air Loan Fraud Scheme. b. Houdini Loan Scheme. c. Ninja Loan Scheme. d. Shell Game Loan Scheme.

a. Air Loan Fraud Scheme.

The act that establishes uniform standards for credit reporting and strengthens consumer protection against identity theft is known as the: a. Fair and Accurate Credit Transaction Act (FACTA).This is the correct answer. b. Home Mortgage Disclosure Act (HMDA). c. Consumer Credit Protection Act (CCPA). d. FTC Red Flags Rule (FRFR).

a. Fair and Accurate Credit Transaction Act (FACTA

FAMC is also referred to as: a. Farmer Mac. b. Fannie Mac. c. Fannie Mae. d. FICO Mac.

a. Farmer Mac.

The act that requires lenders, mortgage brokers, or servicers of home loans to provide borrowers with the pertinent and timely disclosure of the nature and costs of the real estate settlement process is known as the: a. Real Estate Settlement Procedures Act (RESPA). b. Truth in Lending Act (TILA). c. Equal Credit Opportunity Act (ECOA). d. Fair and Accurate Credit Transactions Act (FACTA).

a. Real Estate Settlement Procedures Act (RESPA).

All licensed/registered MLOs: a. are issued a unique identifier number. b. must be bonded. c. must carry liability insurance. d. all of the above.

a. are issued a unique identifier number.

The Federal Open Market Committee: a. carries out open market operations. b. computes the Consumer Price Index. b. computes the Consumer Price Index. d. All of the above

a. carries out open market operations

When the government is forced to borrow money, making less money available for construction and home loans, it is called: a. deficit spending. b. government spending. c. predatory loan practices. d. disintermediation.

a. deficit spending

An investment is said to be liquid when: a. it can be instantly sold b. it has a high yield. c. it is guaranteed by the government. d. it is difficult to sell.

a. it can be instantly sold

Private, noninsured investment accounts are called: a. money market funds. b. certificates of deposit. c. mutual funds. d. money portfolios.

a. money market funds.

Mortgage bankers/mortgage companies: a. originate, service, and sell loans b. act only as "go-betweens." c. are part of the secondary market only. d. none of the above.

a. originate, service, and sell loans

Participants who make up the secondary mortgage market: a. raise the necessary funds to purchase the mortgages. b. borrow the necessary funds to purchase the mortgages. c. fund the purchase of mortgages with personal funds. d. none of the above.

a. raise the necessary funds to purchase the mortgages.

A real estate cycle refers to the real estate market's reaction to the forces of: a. supply and demand. b. war and peace. c. give and take. d. deposits and withdrawals.

a. supply and demand.

The main purpose of the Home Mortgage Disclosure Act is: a. to expose incidents of redlining. b. to stabilize real estate loan interest rates. c. to stabilize real estate prices. d. to quantify construction trends.

a. to expose incidents of redlining.

FIRREA: a. protects the federal deposit insurance funds. b. applies to all federally related transactions. c. sets procedures for loans in federally related transactions. d. All of the above

d. All of the above

If established as a REMIC, collateralized mortgage obligations may be issued by: a. a trust. b. a corporation. c. a partnership. d. All of the above

d. All of the above

Predatory loan practices include: a. fraud. b. usury. c. Deception d. All of the above

d. All of the above

Prior to getting licensed by the NMLS all applicants must: a. provide fingerprints for a FBI criminal background check. b. provide authorization for NMLS to obtain a credit report. c. pass a 125 question Uniform State Test (UST). d. All of the above

d. All of the above

The TRID rule does not apply to: a. Home Equity Lines of Credit (HELOCs). b. reverse mortgages c. loans secured by a mobile home. d. all of the above.

d. All of the above

The Loan Estimate form must provide: Selected: a. the name and address of the creditor. b. the title "Loan Estimate." c. a statement of "Save this Loan Estimate to compare with your Closing Disclosure." d. all of the above.

d. All of the above.

All state-licensed MLOs must have never: a. Had a mortgage loan originator licensed revoked b. Had a felony in the past seven years c. Had a felony involving fraud, dishonesty, breach of trust, or money laundering d. All of the above

d. All the above

FNMA and FHLMC are: a. government agencies. b. primary lenders. c. funded by the U.S. Treasury. d. Government-chartered private corporation.

d. Government-chartered private corporation.

Any person who receives or represents to the public that he or she will for compensation assist an applicant in obtaining a residential mortgage loan is defined as a: a. Residential Mortgage Loan Expeditor. b. Residential Mortgage Loan Finder. c. Residential Mortgage Loan Processor. d. Residential Mortgage Loan Originator.

d. Residential Mortgage Loan Originator.

A core area containing a substantial population nucleus of 50,000 or more inhabitants is known as a: a. Standard Census Tract. b. Standard Urban Neighborhood. c. Standard Map Grid Section. d. Standard Metropolitan Statistical Area.

d. Standard Metropolitan Statistical Area.

On the Loan Estimate form, the items shown in the section "Services You Cannot Shop For" must be in alphabetical order and may include: a. appraisals. b. credit reports. c. government funding fees. d. all of the above

d. all of the above

According to Reg. Z, Triggers include: a. down payment amount. b. interest rate. c. number and dollar amount of payments. d. all of the above.

d. all of the above.

Good ethics lead to: a. happy clients. b. referrals. c. more income for you. d. all of the above.

d. all of the above.

The primary market consists of: a. mortgage companies. b. savings banks. c. local banks. d. all of the above.

d. all of the above.

Indirect lenders include: a. pension funds. b. mortgage brokers. c. insurance companies. d. both a and c

d. both a and c

In a seller's market: a. supply exceeds demand. b. demand exceeds expectations. c. home prices decline. d. demand exceeds supply.

d. demand exceeds supply.

An order to cease and desist is known as a(n): a. demurer. b. novation. c. judgement. d. injunction.

d. injunction.

The process of tracking and comparing mortgage interest rates held in a pool to current market interest rates is called: a. forecasting the market. b. marking the system. c. coordinating the market. d. marking to market.

d. marking to market.

The four phases of the business cycle are: a. peak, expansion, bottom, recovery. b. peak, depression, bottom, expansion. c. trough, recession, bottom, recovery. d. peak, recession, bottom, recovery.

d. peak, recession, bottom, recovery