Kentucky Essential of Real Estate Finance Course - Session Quizzes

A couple will need to have 3.5 percent of the sales price to qualify for their FHA loan. They may NOT obtain the funds from which of the following sources?

Correct Answer: Gift for parents

Which of the following is NOT a primary market financial institution?

Correct Answer: Ginnie Mae.

Which statement regarding a home equity line of credit (HELOC) is FALSE?

Correct Answer: HELOC funds must be received in a lump sum.

Which of the following is NOT a well-paired match?

Correct Answer: HUD and Treasury

All mortgage originators must report information relating to the income level, racial characteristics, and gender of mortgage applicants, according to the

Correct Answer: Home Mortgage Disclosure Act.

Which of the following BEST describes the lien theory?

Correct Answer: Lender has equitable rights; borrower has legal rights.

Which of the following statements would NOT trigger Regulation Z, requiring full disclosure of all aspects of the financial involved?

Correct Answer: Low down payment requirements

Which of the following is NOT an example of a physical encumbrance?

Correct Answer: Mortgage lien

A new federally chartered savings bank will come under the regulation of the

Correct Answer: Office of the Comptroller of Currency.

The responsibility for supervising the thrifts has been transferred from the Office of Thrift Supervision ot the

Correct Answer: Office of the Controller of the Currency (OCC).

The new Loan Estimate and Closing Disclosure forms that go into effect on August 1, 2015 replace all of the following EXCEPT

Correct Answer: RESPA regulations

Which of the following is NOT one of the primary activities of HUD?

Correct Answer: Regulating thrifts

A bank's trust department would probably agree to provide any of the following services EXCEPT

Correct Answer: manage a man's small individual retirement account (IRA) account.

The VA funding fee may be added to the loan amount but must not exceed the

Correct Answer: maximum loan based on the loan guarantee.

Money can be viewed as all of the following EXCEPT

Correct Answer: measure of personal worth.

The SAFE Act was passed in provide protection for the public from

Correct Answer: mortgage loan originators.

A form of financing that does not require a note but is a complete financing and sales agreement is called any of the following EXCEPT

Correct Answer: note and mortgage.

A participation mortgage is an example of a

Correct Answer: partnership of mortgagees and mortgagors.

The three types of REIT's include all of the following EXCEPT

Correct Answer: pass=through REIT.

A borrower was surprised when he attempted to pay off his current loan and was told that he must pay 2% of the loan balance in addition to the balance due. His loan must have included a

Correct Answer: prepayment penalty clause.

The Federal Housing Administration (FHA) was organized in 1934 to do all the following EXCEPT

Correct Answer: provide direct funding for mortgage loans.

All of the following are related in some way to Ginnie Mae EXCEPT

Correct Answer: qualified residential mortgages.

Double-digit interest rates in the 1980s led to all of the following EXCEPT

Correct Answer: reducing capital gains tax rate.

The focus of lenders shifted in the 1990s to

Correct Answer: refinancing existing mortgage loans.

Nationally chartered commercial banks must join the Federal Reserve System and are required to do all of the following EXCEPT

Correct Answer: sell mortgage-backed securities to the Fed.

Life insurance and casualty insurance companies are regulated by

Correct Answer: state laws and regulations.

A veteran is willing to allow his VA loan to be assumed but wishes to regain his ability to obtain another VA loan. He must ask the borrower to provide him with a

Correct Answer: substitution of entitlement.

A major slum-clearance and rehabilitation project that is projected to repay the costs of redevelopment through increased property values for the area would generally be financed by

Correct Answer: tax increment financing.

Responsibility for enforcing the SAFE Act now falls under

Correct Answer: the CFPB

All of the following government programs have the potential to lower a homeowner's monthly mortgage payment EXCEPT

Correct Answer: the Dodd-Frank Act.

As a result of the tightened required qualifying standards because of the financial crisis, the predominant lender for low-income mortgage loans became

Correct Answer: the Federal Housing Administration (FHA).

The federal agencies empowered to control the supply and cost of money include all of the following EXCEPT

Correct Answer: the Office of Thrift Supervision.

All of the following are factors that affect the cycles of real estate EXCEPT

Correct Answer: the gross national debt.

The FHA section of 203(K) loan would provide defects.

Correct Answer: the purchase and rehabilitation of a property.

All of the following statements regarding FHA mortgage insurance are true EXCEPT

Correct Answer: there is no up-front mortgage insurance premium for condominiums.

The system whereby the lender holds title to the property and may dispossess the borrower without notice upon any default of the loan agreement is called

Correct Answer: title theory.

A homeowner might use junior financing for any of the following EXCEPT

Correct Answer: to reduce the balance due on his first mortgage.

In lien and intermediate theory states, title remains with the borrower with lien rights empowering foreclosure assigned to a

Correct Answer: trustee.

Freddie Mae is currently

Correct Answer: under conservatorship.

All of the following may be used as collateral for a loan EXCEPT

Correct Answer: unsecured personal property.

A 45-year old bachelor has lived in his present home for three years and is planning to sell it. The Taxpayer Relief Act of 1997 provides that he

Correct Answer: will be exempt from capital gains tax on profit up to $250,000.

Fixed-rate loans may be designed in all of the following ways EXCEPT

Correct Answer: with gradual increases in the interest rate.

A statutory period of redemption gives the borrower the opportunity to

Correct Answer: make up the outstanding balance after the foreclosure sale.

A couple has a gross monthly income of $5,000. Under Fannie Mae and Freddie standard guidelines, how much will be allowed to cover total housing expense plus all long-term debt?

Correct Answer: $1,800

A couple purchased their home for $180,000 with a first mortgage of $171,000. The home was just reassessed at $240,000. Their private mortgage insurance will be dropped when the LTV reaches

Correct Answer: $140,000.

A couple has a $270,000 mortgage on their home, which they purchased for $300,000. The required private mortgage insurance must be dropped when they reach a loan to value (LTV) of

Correct Answer: $234,000.

All bank accounts are insured by the Federal Deposit Insurance Corporation (FDIC) to the amount of

Correct Answer: $250,000.

Long-term cycles in real estate generally run from

Correct Answer: 10 to 15 years.

The maximum amount that is guaranteed to a lender on a Department of Veterans Affairs (VA) loan is

Correct Answer: 25 percent of the current conforming loan limit.

Which of the following split loans would require private mortgage insurance?

Correct Answer: 85/10/5

Under the FY2009 Omnibus Appropriations Bill, commercial banks are NOT allowed to perform which of the following services for their customers?

Correct Answer: Act as real estate brokers

Enforcement of the Real Estate Settlement Procedures Act regulations now follows under the authority of the

Correct Answer: CFPB.

A developer in Mississippi planning to market residential building lots throughout the mid-Atlantic states must submit which of the following to the buyer?

Correct Answer: Complete property report

Which of the following would have the LEAST effect on local real estate values?

Correct Answer: Decline in the New York Stock Exchange

A lender who refused a loan to an applicant because part of her income was derived from a public assistance program would be in violation of the

Correct Answer: Equal Credit Opportunity Act.

Each individual account on deposit with a savings association is insured by the

Correct Answer: FDIC.

Which of the following is NOT one of the national credit repositories most used today to obtain credit scores for propective borrowers?

Correct Answer: FICO

A loan applicant provides data to Fannie Mae. The automatic underwriting system that is used to analyze the data is called

Correct Answer: FICO.

The office of Federal Housing Finance Agency (FHFA) is responsible for regulating

Correct Answer: Fannie Mae and Freddie Mac.

A package of agricultural loans would MOST likely be purchased by

Correct Answer: Farmer Mac.

A man has an account with a national commercial bank. His account of $98,000 is insured by what fund?

Correct Answer: Federal Deposit Insurance Corporation (FDIC)

Savings and associations, or thrifts, were first regulated by the

Correct Answer: Federal Home Loan Bank System.

Maximum conforming loan limits are set by

Correct Answer: Federal Housing Finance Agency (FHFA)

The purchase and sale of government securities traded on the open-market by the Fed is regulated by the

Correct Answer: Federal Open-Market Committee (FOMC).

The Federal Home Loan Bank System was patterned after the

Correct Answer: Federal Reserve System.

When a developer bought four acres of land with seller financing to build his new subdivision, he needed to ensure that he would be able to obtain a construction loan in the future. Which of the following should he include in the mortgage?

Correct Answer: Subordination clause

Which of the following statements regarding the Federal Deposit Insurance Corporation (FDIC) is NOT true?

Correct Answer: The FDIC is funded through congressional appropriations.

Purchasing which of these does not require up-front mortgage insurance of 1 percent of the loan amount?

Correct Answer: Two-bedroom condominium

The Federal Housing Finance Agency (FHFA) regulates all of the following EXCEPT

Correct Answer: U.S. Department of Housing and Urban Development (HUD).

When Fannie Mae was reorganized in 1954 to include financing by private investors, mortgage loans could be purchased at

Correct Answer: a discount.

The assets listed on a loan application may include all the following EXCEPT

Correct Answer: a loan on the $50,000 life insurance policy.

A small city in Oklahoma might apply for funding from HUD for all of the following EXCEPT

Correct Answer: a major renovation of City Hall.

Recorded documents that "run with the land" would include all of the following EXCEPT

Correct Answer: a mortgage loan of $200,000 on a property.

New provisions provided under the Housing and Economic Recovery Act (HERA) for the FHA Home Equity Conversion Mortgage (HECM) include all of the following EXCEPT

Correct Answer: all types of properties are allowed, except cooperatives.

Because of the cyclial requirements of agricultural lending, consideration must be given to

Correct Answer: allowing farmer borrowers to pay when they can.

At the time of loan application, RESPA requires a lender to provide a prospective borrower with all of the following EXCEPT

Correct Answer: an annual escrow loan statement.

The certificate of reasonable value (CRV) came in at $190,000 on a house that had been purchased for $200,000. The buyer has the option to

Correct Answer: cancel the transaction.

Processing a mortgage loan includes all of the following procedures EXCEPT

Correct Answer: checking the Dun and Bradstreet listing for the lender.

Exemptions to the RESPA referral restrictions include all of the following EXCEPT

Correct Answer: city-wide marketing programs.

Freddie Mac's electronic underwriting system, Loan Prospector® provides the lender with all of the following EXCEPT

Correct Answer: consideration of compensating factors.

The American Taxpayer Relief Act of 2012 extended all of the following EXCEPT

Correct Answer: current tax rates for households earning more than $450,000.

The proposed Qualified Residential Mortgage (QRM) had much opposition from real estate professionals. The final QRM was more aligned with the QM (qualified mortgage) and includes all of the following prohibitions EXCEPT

Correct Answer: debt-to-income ratio of 36%.

A power-of-sale clause will always be a part of a

Correct Answer: deed of trust.

The MOST common way of financing private mortgage insurance today is to

Correct Answer: divide the annual premium by 12 and add to the principal, interest, taxes, and insurance (PITI) payment.

The largest bulge in the population today is created by the

Correct Answer: echo boomers.

The biggest change in mortgage financing procedures has been the

Correct Answer: emphasis on the risk assessment of the purchaser.

A jumbo loan is a mortgage loan that

Correct Answer: exceeds the current Fannie/Freddie maximum loan limit.

Member banks often borrow on a short-term basis from each other without requiring collateral. The interest charged is called the

Correct Answer: federal funds rate.

Although many types of interests in real property may be used as security for a real estate loan, the MOST common is a

Correct Answer: fee simple interest.

Historially, pension fund monies have been invested in

Correct Answer: government securities and stocks and bonds.

Rules and regulations for FHA appraisers require appraisers to do all the following EXCEPT

Correct Answer: guarantee that the property is free of defects.

A young man joins his local teacher's credit union. Membership in the credit union will be open to all of the following EXCEPT

Correct Answer: his wife's boss at the FHA office where she works.

Many unwary homeowners have lost their homes due to predatory lending practices. All of the following are examples of predatory lending EXCEPT

Correct Answer: home equity loans.

Key features of the VA adjustable rate mortgage include all of the following EXCEPT

Correct Answer: initial interest rate is used for underwriting.

Basic functions of the Department of the Treasury include all of the following EXCEPT

Correct Answer: insuring depositor's accounts.

Results of the downfall in the financial market included all of the following EXCEPT

Correct Answer: interest rates rose.

The primary difference in the Ginnie Mae REMIC from other Ginnie Mae mortgage-backed securities is that the REMIC

Correct Answer: is divided into varying payment streams.

A 15-year fixed-rate mortgage provides all of the following benefits EXCEPT

Correct Answer: it provides greater tax deduction.

Private mortgage insurance is issued for the protection of the

Correct Answer: lender.

Changes made under the Dodd-Frank Act that affect the truth-in-lending disclosure include all of the following EXCEPT

raising the exemption threshold from $25,000 to $50,000.