Finance exam 7
Blanket mortgage
A ______ is often used in commercial applications when two or more properties are pledged as security for repayment of the loan.
Punitive damages up to three times the borrower's actual damages
A borrower sued a foreclosure consultant for violating the Mortgage Foreclosure Consultant Law. The borrower may receive actual damages, legal fees, and, in severe cases ______.
23% The housing ratio is 23%: ($1,000 + $150) / $5,000 = .23 x 100 = 23%.
A buyer anticipates a house payment of $1,000 per month, with monthly homeowner association fees of $150. The buyer also has a car payment of $400 per month. If the buyer earns a monthly gross income of $5,000, what's the housing ratio?
Help a borrower meet lender qualification standards
A seller buydown can ______.
Trustee's deed
A trustee's sale has just occurred. What does the highest bidder receive?
Andrea can cure the default and reinstate the loan.
Andrea's lender has notified her of its intent to foreclose. Her loan is secured with a deed of trust. What rights does she have to redeem her property?
Mortgage or deed of trust
Babs is buying Kirk's property. Babs needs help with the down payment, and Kirk offers to supplement Babs' bank loan with a second loan, allowing her to meet her lender's down payment requirements. Which finance instrument(s) may be used for the agreement between Babs and Kirk?
Identify and analyze your current expenses
Before you can create a budget for your personal finances, you should ______.
Fixed, essential
Chad had some major medical expenses that he didn't plan for, and he wants to slash his budget in order to pay off the debt quickly. He considers selling his home and renting an apartment, which will make a big difference in his _________ expenses.
Borrower purchasing the property
Completing a residential loan application requires providing information about the loan being requested, the property being purchased, and the ________.
USDA Farm Service Agency
Direct farm ownership loans from the ______ may be used to buy farmland, construct and repair buildings, and make farm improvements.
Paying any bills that are due
Don uses one hour each week to perform certain tasks, including ______, as part of his personal financial system.
Farmer Mac
Farm and Country Bank provides credit to the farmers, ranchers, and other rural residents of its community. What government program helps the bank maintain enough capital to fund those loans?
Closing costs are not considered a seller concession
Fatima is using a VA loan to purchase a home from Sue. Sue agrees to pay Fatima's closing costs. Which of the following statements is true?
Mortgage
Financing for a real estate transaction can use a note with a _________ or a note with a deed of trust.
5
How many times per year do self-employed individuals file taxes?
SAFE Act
Hugh works as a loan officer at a bank. Because of the _____________, the must be registered with the Nationwide Mortgage Licensing System.
Covered Loan Law
In 2001, California legislators enacted the ______ to combat predatory lending practices.
120 days
In a judicial foreclosure, if a deficiency judgment won't be sought, how soon after the Notice of Levy is recorded can the Notice of Sale be issued?
Consumers lender
In a residential real estate sale involving a federally related loan, who's required to provide Real Estate Settlement Procedures Act disclosures to the consumer?
MLS
Jack is eager to start his career as a licensee, and one of the expenses he includes in his calculation of start-up fees is the ____________ fee.
The smaller number
Jacqueline found a ready, willing, and able buyer for her client's condo, with a sales price of $20,000 more than the asking price. However, the appraisal came in just under the asking price. Which number will the lender use to calculate the loan-to-value ratio?
Participation
Joe works for a life insurance company that funds commercial investment projects and often insures these projects by insisting on an equity position. What type of financing does this describe?
Non-existent
One common predatory lending practice is to charge fees for unnecessary or ____________ loan products or services.
More than $50,000
Robert and Jill purchased a single-family home in the suburbs for $50,000 nearly 40 years ago. Considering historical property value fluctuations, what is the likely value of the property today?
Premiums and deductibles
Ronald marries and wants to start a family. Which of the following would be important in his selection of an insurance carrier?
Section 251
The Addams family has an FHA-insured loan. The family's mortgage payment has a fixed interest rate, but after the first five years, the rate will adjust annually. Which FHA loan insurance program are they using?
By charging borrowers a mortgage insurance premium
The Federal Housing Administration funds its mortgage insurance program ______.
Insures lenders against loss from borrower default
The Federal Housing Administration's loan program ______.
First-time homeowners
The Homeownership Voucher Assistance program is available to ______ to help pay monthly homeownership expenses.
An estimate of the energy savings that would result
The energy efficient mortgage program insured by the FHA requires an energy consultant to provide the lender with a report listing recommended modifications for energy efficiency, an estimate of the cost for each recommendation, and ______.
Lender
The loan applicant, the depository institution, and the _______ all complete parts of the request for verification of deposit form.
Federal funds rate
The rate at which a bank can obtain an overnight loan from another bank without providing collateral is called ______.
The base loan amount
The upfront MIP on an FHA loan is calculated on ______.
The estimated breakdown of eachmonthly mortgage payment, including any items that will be included in escrow.
Under the "Projected Payments" section of the Loan Estimate, the consumer can review ______.
An amount due from the borrower, which will match the cash to close amount
Under the "Summaries of Transaction" section on page three of the Closing Disclosure, amounts listed for the borrower's transaction are calculated to result in ______.
Loans the Federal Home Loan Bank makes to member banks
What are advances?
It varies by lender
What is the interest rate on a VA loan?
With the first commission check
When should a licensee begin setting money aside for quarterly estimates?
Sell securities
When the Treasury collects fewer funds than what is needed to pay the government's bills, what action might it take?
Schedule B-1
Where can a party reviewing a title commitment find requirements that must be met before a title insurance policy will be issued?
Repayment plan
Which alternative to foreclosure is being utilized when a lender creates a schedule for the borrower to catch up on delinquent mortgage payments?
RAM
Connie and John Fink, a married couple ages 69 and 72 respectively, want to stay in their home. The type of mortgage they're considering will allow the lender to make payments to the Finks for a certain period of time, while the lender gains corresponding ownership. Which type of mortgage are they considering?
Payments must have been received for at least one year, and must be expected to continue for at least three more years.
In order for the spousal support Kayla receives to be considered in the lender's income evaluation when Kayla applies for a home loan, what must be true?
Business assets
In the event of a client lawsuit against an independent contractor operating under an LLC, typically, only ______ are at risk.
Page 3
Information about how the lender will handle assumptions and late payments is included on ______ of the Loan Estimate.
Participate in the direct endorsement program
Lenders who ______ can underwrite and approve FHA loans without requiring the FHA to review each borrower's qualifications.
Calculating monthly expenses based on her expense history from the past year
Marion has been a licensee for four years and earns a relatively steady income. Which of the following is a good way for Marion to estimate her monthly business expenses?
No, she should not pay for personal items with her business account.
Mary Francis is on her way home from work and stops at the grocery store. The business account she opened recently gave her an ATM card to go with it. Should she use the card to buy groceries?
$80,000 The VA guarantees up to a quarter of the total loan amount, up to $104,250, so Millie and Jerry's loan is guaranteed for one-fourth of $320,000, which is $80,000.
Millie and Jerry are purchasing a home using their VA loan benefit. The sale price on the home they buy is $320,000, with 100% financing. Assuming that Jerry has a typical level of entitlement, how much of their loan does the VA guarantee?
Principal only
What does the lump sum payment at the end of an interest-only mortgage loan consist of?
A debt security holder
What is a collateralized mortgage obligation?
A private company created by the U.S.Congress to make certain borrowing easier and cheaper
What is a government-sponsored enterprise (GSE)?
Loan modification
What is it called when the borrower and lender work together to restructure the terms of a home loan?
10,000
What is the maximum penalty a licensee can be assessed for MLO-related violations?
Allows a borrower to refinance a first mortgage even when a junior mortgage is in place
What is the purpose of a lifting clause?
To avoid going over the conforming loan limit
What's one reason a borrower would choose a split—or piggyback—loan option?
Late charge provision
What's the name of the clause in a promissory note where this language appears: "If the Note Holder has not received the full amount of any monthly payment by the end of ______ calendar days after the date it is due, I will pay a late charge to the Note Holder"?
Contribute up to 6% of the sales price (or appraisal, if that's lower) to the buyer's closing costs.
When a buyer obtains an FHA loan, the seller may ______.
Substitution of entitlement
When a veteran assumes a VA loan, the ______ agreement can restore the original buyer's level of entitlement as if the loan were repaid in full.
Fannie Mae and Freddie Mac
Which entity sets the criteria for the conforming loan limits?
Bank failures during the Great Depression
Which event led to the establishment of the FDIC?
Increases in hiring, employment, and public confidence, and lots of buyers in the market
Which of the following best describes the state of the market during the expansion phase of the real estate cycle?
Falling home prices
Which of the following contributed to the 2007 financial crisis?
The rate at which a bank can obtain a loan from another bank
Which of the following describes the federal funds rate?
A conventional fixed-rate mortgage issued by a commercial bank
Which of the following is Fannie Mae most likely to purchase?
The buyer/lessee could lose any funds credited to the purchase price if he breaches the lease's terms.
Which of the following is a potential disadvantage for a buyer who enters into a lease with an option to buy contract?
Inability to immediately resell the property for a profit
Which of the following is a risk most associated with wholesaling as a real estate investment strategy?
Mortgage value
Which of the following is the price a lender believes the property will bring at a foreclosure sale?
2 %
Which of the following percentages is an allowable loan origination fee?
FHA
Which of these HUD programs is primarily responsible for providing mortgage insurance on home loans?
Real Estate Settlement Procedures Act (RESPA)
Which of these acts has special provisions for borrowers who are victims of over-charging?
The funds are often used for home renovations or to fund a college education.
Which of these best describes a home equity loan?
Borrower
Who is responsible for paying the underwriting fee in a financed real estate transaction?
$749,216.95 If $3,593.75 of the total payment is interest, that leaves $783.05 to be applied to principal. Subtract this amount from the original loan value, and we have a new principal loan balance of $749,216.95.
A buyer with a $750,000 loan has a monthly principal and interest payment of $4,376.80. If $3,593.75 is interest, what is the new principal balance after the first payment is applied?
Seriously delinquent borrowers
Who is the intended consumer group for the Streamlined Modification Program (SMP)?
CPA
Who would be the best professional to assist with your complicated tax return?
They don't have taxes removed from a paycheck
Why are self-employed individuals required to pay estimated income taxes?
It increases demonstrated income.
Why might self-employed individuals who want to obtain financing for a home purchase, choose not to write off valid expenses on their tax statements?
Negotiate with the seller
Your buyer, Chet, is a veteran trying to buy a house, but the certificate of reasonable value came in $10,000 lower than the agreed-upon sales price. What can Chet do?
No, commercial and business loans are exempt from RESPA requirements.
Maxine is purchasing a small craft shop, including the underlying real estate. She applies for a commercial loan from her federally insured bank to complete the purchase. Is Maxine's transaction covered by the Real Estate Settlement Procedures Act?
Credit report
Kelly is reviewing Steve's loan application. She wants to verify that he has a solid history of paying obligations on time. What should she request to do this?
Involuntary, general
Max has a dog that bit his neighbor. The neighbor sued Max, which resulted in a judgment against him. Max refused to pay the neighbor according to the judgment. The neighbor placed a lien against Max. How is this lien classified?
M1
Which of the following is the most liquid money measure?
The borrower is required to maintain the property and pay property taxes and insurance.
Which of these features is shared by the mortgage and the deed of trust?