law of contracts

Read through each of the following pieces of information about buyers' debt obligations and determine which one will qualify for an FHA loan based on the qualifying ratios.

Applicants who fall within the maximum housing ratio of 31% and a maximum debt obligation of 43% will qualify.

Which of the following is an example of an inquiry a consumer initiated that may appear on a credit report?

Application for a loan

The FHA EEM program allows modifications such as solar panels as long as ______.

The cost of the modification is within limits based on the value of the home

What is reconciliation?

The final estimate of value based on results of the appraiser's approaches to value

what does it mean when a life insurance company uses participation financing?

The life insurance company participates by taking partial ownership of the project in exchange for funding the loan.

which of the following characteristics applies to a partnership between mortgagors?

it involves more than one mortgagor as owner, sharing responsibility for payment of a single mortgage

which of the following statements is true about the annual MIP on an FHA mortgage ?

it will decrease each year as the loan is paid down

Which type of bond is used to pay for community improvements?

municipal

What percentage of closing costs can be included in a VA loan?

none

Lucy uses a personal financial plan recommended for licensees. When she receives a commission check, she deposits it in her business checking account. She should now transfer anything not required for business expenses to her ______.

personal checking account

Which of the following is an option that might allow a licensee without much work history or very many assets to finance a real estate investment?

seller financing

What term is used to describe the housing inventory in default or foreclosure?

shadow inventory

How can liens, such as those created by non-payment of federal income tax, result in mortgage default?

New liens can threaten the lender's position as primary lienholder. Default can occur for this reason.

John wants to do a 1031 tax exchange with a property he just sold. How many calendar days does he have to identify a new property for the exchange?

45

borrowers should be wary of lenders who offer mortgages at more than ___ over the current market interest rates

5 %

Your business is booming, and you'd really like someone else to maintain your financial records. Which of the following is the best person for this role?

A bookkeeper

What is a collateralized mortgage obligation?

A debt security holder

Which of the following is an event that has a direct impact on property?

Builders required by the state to recycle aluminum during demolition

Amos is a new licensee who has just earned his first commission check. What should he do with it?

Deposit it into a business account separate from his personal account

River City Bank needs to cut back on lending. For several months, the bank has seen more withdrawals from customers than deposits. This has led to a decrease in deposits typically used for lending. What term can be used to describe what the bank has experienced?

Disintermediation

Which generation financed their homes due to also having other debt obligations?

Echo boomers

Which of the following entities buys primarily conventional loans from large commercial banks?

Fannie Mae

Which entity provides disclosures and public information about the financial condition of FCS?

Federal Farm Credit Banks Funding Corporation

How is a mortgage banker paid?

Fees from originating and servicing loans

Mike has had some financial problems and is considering borrowing from his retirement plan. Which of the following is a true statement?

He should consult with a financial expert before doing so.

A seller buydown can ______.

Help a borrower meet lender qualification standards

Which of these is actually an amendment to the Truth in Lending Act (TILA)?

Home Ownership and Equity Protection Act

Which of the following specifies a requirement of pre-loan counseling for consumers?

Homeowner and Equity Protection Act

What impact did the authorization of the Credit Union Membership Access Act have on credit unions?

It removed the union-worker-only membership restriction.

David purchased a house three years ago for $300,000. Considering historical property value fluctuations, what is the likely value of the property today?

It's difficult to tell. Historically, property values fluctuate up and down in the short term.

The Dodd-Frank Act created the CFPB in part to regulate ______, which were among the largest originators of subprime mortgages prior to the financial crisis of 2007‒2008.

Non-bank lenders were not well regulated prior to the financial crisis and were responsible for a large number of subprime mortgages.

Borrowers must list their liabilities when completing a residential loan application. What are liabilities?

Obligations a borrower owes

PITI

Principal, Interest, Taxes, Insurance

Since the FHA was established, it has taken strategic action to stabilize the mortgage market. Which of these items is one of the FHA's strategies?

Reduce lender risk by establishing borrower qualification standards

When a buyer takes over payments on a loan without telling the lender, this is called a purchase ______.

Subject to existing financing

______ creates a secondary market for agricultural loans by buying the loans, pooling them, and selling them as securities.

The Farmer Mac program buys agricultural loans, pools them, and sells them as securities.

______ sets conforming loan limits for mortgages.

The Federal Home Financing Agency

John uses the VA home loan to purchase property. His mortgage is $200,000. Then, two years later, John defaults on his loan. How much will the VA reimburse the lender?

The VA guarantees one quarter of the loan amount, so the lender in this case will be reimbursed up to $50,000.

Select the choice that best translates this clause into plain English. "Any partial prepayment shall be applied against the principal amount outstanding and shall not postpone the due date of any subsequent monthly installments or change the amount of such installments, unless the Note holder shall otherwise agree in writing."

The borrower is allowed to prepay the loan without penalty.

Which of the following describes the discount rate?

The rate at which a bank can obtain a loan from its Federal Reserve bank when using commercial paper as collateral

Which of the following should be taken into account when considering refinancing a mortgage loan?

The timeline for the loan repayment may be extended.

which of the following is true about mortgage brokers?

They don't service the loan beyond placement.

a quitclaim deed does which one of the following?

Transfers without warranty any interest or title the grantor has when conveying it

Is a homeowner with an FHA loan allowed to obtain a second mortgage?

Yes, if the total of the first and second mortgages is within the maximum loan to value ratio

what is a participation certificate?

a mortgage backed security issued by freddie mac

Who or what entity directs the activities of credit unions?

board of directors

what is meant by pass-through taxation?

business income is taxed on the owners personal return

Which of the following is NOT part of the Other Considerations section of the Loan Estimate?

comparison

Which of the following items directly influences real estate supply?

construction

Which entity sets the requirements for qualified mortgages?

consumer financial protection bureau

Fred is an agricultural lender who helps the ranchers and farmers in his community by providing credit for purchasing land, making repairs to their buildings, and improving their agricultural property. He's able to do this in part because of the ______ offered by the USDA Farm Service Agency.

guaranteed loans

why might a homebuyer use an FHA 203k loan instead of the standard 203 b loan?

to roll the cost of rehabilitating the purchased home into the mortgage

Which veteran loan program offers qualified veterans help with the purchase of land in Texas?

veterans land program

The American Recovery and Reinvestment Act provided mortgage assistance to ______.

wounded servicemen and women