M4 Course Questions

c) The goals of the Consumer Financial Protection Bureau

"Creating easier-to-use mortgage disclosure forms," "Improving consumer understanding," "Aiding in comparison shopping for borrowers," " Preventing surprises at the closing table" are BEST described as: a) The goals of TILA b) The goals fo the Dodd-Frank Act c) The goals of the Consumer Financial Protection Bureau d) The goals of the Federal Reserve

TRUE

A federally related loan is one that is directly or indirectly supported by federal regulation, insurance, guarantees, supplements, or assistance. FALSE TRUE

c) mortgage banker

Sandi went to John, a loan officer at Ace Lending, and filled out an application for a mortgage loan. The loan was approved and Ace Lending funded the loan. Ace Lending is a: a) None of these are correct. b) mortgage interloper c) mortgage banker d) mortgage broker

b) to obscure the identity of or limit the liability of the true owner/owners of real property

Shell companies are often used: a) to carryout the illegal transferring of assets abroad b) to obscure the identity of or limit the liability of the true owner/owners of real property c) by real estate professionals and investors to increase market competition d) for purchasing investment real estate to receive a tax shelter

a) receipt of the forms

Signing the Loan Estimate and Closure Disclosure forms constitutes which of the following? a) receipt of the forms b) accuracy of the information contained c) acceptance of the loan d) understanding of the provisions

b) It allows Texas veterans to buy land at below-market rates with low down payments.

What is the function of the Texas Veterans Land Board (VLB) loan program? a) It gives Texas veterans special deals on apartment rentals. b) It allows Texas veterans to buy land at below-market rates with low down payments. c) It allows Texas veterans to save on mortgages for homes anywhere in the country. d) It allows Texas veterans to apply for loans with a fixed interest rate that will be used to purchase homes.

b) Federal Open Market Committee.

The committee that is a part of the Federal Reserve System and is responsible for buying and selling securities is the: a) Securities Committee. b) Federal Open Market Committee. c) None of these. d) Federal Sales Committee.

a) All mortgage loan originators must be licensed in accordance with national standards.

What does the SAFE Act require? a) All mortgage loan originators must be licensed in accordance with national standards. b) Veterans should be offered below-market rates with low down payments. c) The Loan Estimate form must be completed. d) Investors and businesses should report their profit and loss.

d) real estate investment trust

What does the acronym REIT stand for? a) real equity investment trust b) real estate improved in Texas c) REALTORS energize industrial topics d) real estate investment trust

a) Tax deductions for businesses in affluent areas

What is NOT a business incentive in Texas? a) Tax deductions for businesses in affluent areas b) Financing for customized job training programs c) Local cash grants d) Permitting fee waivers

c) Increasing real estate sales

What is NOT a sign of recession? a) Less economic activity b) High unemployment c) Increasing real estate sales d) Low retail sales

d) Loans and servicing rights are sold to investors.

What is TRUE about the secondary market? a) Lenders would stop at the finite amount they could take on. b) Mortgages are first created by connecting lenders to borrowers. c) It sells loans to the primary market. d) Loans and servicing rights are sold to investors.

a) It doesn't require down payments.

What is TRUE of USDA loans? a) It doesn't require down payments. b) It is used for home improvement specifically. c) Only first time homebuyers are eligible for it. d) It is only available in economically distressed areas.

b) Sales prices are more negotiable for buyers.

What is TRUE of a buyer's market? a) Sellers can easily sell a home for more than the list price. b) Sales prices are more negotiable for buyers. c) Sellers won't have to pay for the closing costs. d) Supply of properties are low in real estate market.

a) The unemployment rate rises.

What is TRUE of recession? a) The unemployment rate rises. b) People spend more on real estate. c) It lasts for less than 6 weeks. d) Economic activity thrives.

b) a large payment due at the end of a loan

What is a balloon payment? a) a large payment that comes in bunches b) a large payment due at the end of a loan c) a large payment due at the beginning of a loan d) a payment that gets larger as time goes on and eventually bursts

b) The investor's overall cost of owning a property for the time period before it's sold

What is a holding cost? a) The investor's cost of repairs b) The investor's overall cost of owning a property for the time period before it's sold c) The investor's cost of utilities for the time period before a property is sold d) The owner's original cost of taxes

c) Any claim on a property belonging to someone other than the owner

What is an encumbrance? a) The document that proves an owner has the right to a property b) Anything that suppresses the value of a property c) Any claim on a property belonging to someone other than the owner d) An owner's right to use their property

d) prevent the excessive risk taking that led to the financial crisis of 2008

What is the goal of the Dodd-Frank Act? a) lets banks offer a bigger variety of services to consumers b) separate investment and commercial banking activities c) protect lenders from unscrupulous or irresponsible borrowers d) prevent the excessive risk taking that led to the financial crisis of 2008

a) a REIT has real property as collateral, and a REMT has mortgages as collateral

What is the difference between a REIT and a REMT? a) a REIT has real property as collateral, and a REMT has mortgages as collateral b) a REIT has collateral and a REMT does not c) a REIT has mortgages as collateral, and a REMT has real property as collateral d) a REIT is part of the secondary market, and a REMT is part of the primary market

c) Fannie Mae deals with larger commercial banks

What is the main difference between Fannie Mae and Freddie Mac? a) Freddie Mac does not engage in conventional conforming mortgage loans. b) Freddie Mac deals with larger commercial banks. c) Fannie Mae deals with larger commercial banks. d) Fannie Mae does not engage with government-supported loans.

All of these are correct.

What is the purpose of the Federal Home Loan Bank System? a) Provide access to special affordable housing programs. b) Support residential mortgage lending and related community investment. c) Provide access to reliable, economical funding and technical assistance. d) All of these are correct.

b) get pre-approved for a loan

What should an agent ask a new buyer client to do? a) estimate monthly payments from online listings b) get pre-approved for a loan c) pick out properties before getting pre-approval d) use a specific lender

a) Mortgage lenders and borrowers come together to negotiate and create new mortgages.

What takes place in the primary market? a) Mortgage lenders and borrowers come together to negotiate and create new mortgages. b) Borrowers with good credit take advantage of prime lending rates. c) Freddie Mac and Fannie Mae purchase pools of home mortgages. d) TREC accepts proposals for lending regulations.

d) It's considered low-risk compared to stocks.

Why do life insurance companies tend to invest in commercial multifamily real estate? a) Insurance policy holders favor real estate investment. b) Short-term investments let them take the money out quickly. c) It's high risk and therefor high reward. d) It's considered low-risk compared to stocks.

a) They want to be sure they can recover their investment if they foreclose on the property.

Why is it important for the lender to qualify the property being financed? a) They want to be sure they can recover their investment if they foreclose on the property. b) They don't want property in a bad neighborhood. c) The lender wants property in areas of at least medium income. d) If their financed property is in a high crime area, it may end up in the news.

c) limited

With a thorough evaluation of the buyer's credit, the lender's risk would be: a) erased b) maximized c) limited d) stabilized

a) interest only for a set time

With interest-only loans, borrowers pay _________. a) interest only for a set time b) off the principal balance before paying any interest c) only once the interest rate is above a certain percentage d) an upfront fee instead of interest on the loan

c) three years

A consumer is considered a first-time homebuyer if they have not owned a home in ________. a) two years b) one year c) three years d) six months

a) inflation

A decrease in the dollar's purchasing power is called ______. a) inflation b) above average cost c) wealth reduction d) deflation

d) self-directed

A(n) _____ IRA is a retirement account that allows for alternative investments (like real estate) that traditional IRAs do not. a) unconventional b) unrestricted c) real estate d) self-directed

a) increase

Increases in the cost of financing, cost of construction, and land values can cause the price of real estate to: a) increase b) decrease c) deflate d) become stagnant

TRUE

Interest rates are manipulated by either giving or restricting money flow to commercial banks. TRUE FALSE

a) a roofer filing a lien against a property owner after the owner fails to pay their bill

All of the following are an example of a voluntary lien EXCEPT: a) a roofer filing a lien against a property owner after the owner fails to pay their bill b) a homebuyer taking out a mortgage to purchase a home c) an individual giving their iPad to the pawn shop in exchange for a loan d) a homeowner taking out a second mortgage to remodel their kitchen

b) They determine the federal interest rates for the primary mortgage market.

All of the following are true about REMIC's EXCEPT: a) They issue bonds from pools of mortgages to sell to investors on the secondary mortgage market. b) They determine the federal interest rates for the primary mortgage market. c) They hold commercial and residential mortgages in trust. d) They assemble mortgages into pools based on risk.

c) Funds must be deposited in the buyer's bank account on closing day

All of the following are true of gift funds, EXCEPT: a) Gift funds can be given by the buyer's fiancee. b) There is a maximum limit on tax-free gift funds. c) Funds must be deposited in the buyer's bank account on closing day. d) Gift fund givers cannot request to have the money paid back.

d) The FHA

All of these are major participants in the secondary mortgage market EXCEPT: a) Freddie Mac b) Ginnie Mae c) Fannie Mae d) The FHA

c) The agent is dealing with a money launderer.

An agent is working with a foreign client who has put a large cash bid on a luxury property. The agent has never met the client in person, the client has never seen the property, and the client is purchasing the property in the name of a corporation that is operating several states away. What is MOST LIKELY true of this situation? a) The agent is dealing with a busy investor. b) The agent is dealing with a seasoned luxury property buyer. c) The agent is dealing with a money launderer. d) The agent is dealing with a VIP client who needs privacy.

b) banks are able to borrow money from the Fed, and must abide by federal reserve rules and regulations

By becoming a member of the Federal Reserve System: a) banks are required to store all deposits within the system, and must keep a public record of banking activities b) banks are able to borrow money from the Fed, and must abide by federal reserve rules and regulations c) banks are able to borrow money from the Fed, and must keep a public record of banking activities d) banks are able to borrow money from the Fed, and are required to store all deposits within the system

a) Yes, and the new owner must provide notice to the borrower.

Can loan ownership be transferred? a) Yes, and the new owner must provide notice to the borrower. b) Yes, and it requires the debtor's signature. c) Yes, and the notice should be provided to the debtor within 15 days of possessing the loan. d) No, only loan servicing can be transferred.

c) economic growth

Falling unemployment causes _____. a) deflation b) a falling economy c) economic growth d) a stagnant economy

a) Federal Home Loan Banks are cooperatives, and their members are shareholders.

Federal Home Loan Banks are ______, and their members are ______. a) Federal Home Loan Banks are cooperatives, and their members are shareholders. b) Federal Home Loan Banks are public institutions, and their members are general partners. c) Federal Home Loan Banks are cooperatives, and their members are limited partners. d) Federal Home Loan Banks are LLCs, and their members are general partners.

FALSE

Foreign lenders like to make loans in the United States because the volatility of market can lead to higher returns on investments. FALSE TRUE

a) George will schedule the appointment.

George works for XYZ Bank as a loan officer. Sam wants to finance an apartment building. He calls George to schedule an appointment to make an application. What will George do? a) George will schedule the appointment. b) George will tell Sam that banks do not make commercial loans. c) George will help Sam determine if he's making a wise investment. d) George will tell Sam that loan officers can only make residential loans.

b) consolidate previous housing legislation into one act

HUD was created with the mission to do all of the following EXCEPT: a) support community development b) consolidate previous housing legislation into one act c) increase homeownership d) increase access to affordable housing free from discrimination

d) Zoning policies can be adopted to either encourage or slow down the growth of the community.

How can local governments influence real estate market economies? a) All mayors have a seat on local real estate boards. b) They can lower interest rates. c) Local governments can raise federal taxes. d) Zoning policies can be adopted to either encourage or slow down the growth of the community.

d) by providing payment assistance

How do Section 502 Loans assist low-income applicants obtain housing? a) by paying up to 100% of the required down payment of the loan b) by offering loan rates the applicant would not otherwise qualify for c) by guaranteeing up to 90% of the loan d) by providing payment assistance

a) It is a secondary market for agricultural loans

How is Farmer Mac different from other GSEs? a) It is a secondary market for agricultural loans b) It does not guarantee their securities. c) It lends actual money. d) Its goal is to decrease liquidity.

b) 5 months

If 12 properties have been sold in the last 3 months in an area, and there are 20 houses for sale now, there is a supply of housing for __________. a) 3 months b) 5 months c) 6 months d) 4 months

a) The loan agreement should be in writing.

If a buyer borrows money from his family to finance a property, ________. a) The loan agreement should be in writing. b) They don't need the Deed of Trust. c) The lender cannot foreclose on the property if the borrower is in default. d) They could draw up the Note themselves.

a) VA

If a buyer purchased a property for $350,000 with a loan for 100% of the purchase price, which type of loan did they most likely use? a) VA b) conventional c) FHA d) USDA

d) property

In addition to qualifying the buyer, lenders also qualify the _____. a) neighborhood b) crime rate c) median income d) property

FALSE

In the United States, it is a federal law that all public and private business adhere to the same monetary acceptance guidelines. TRUE FALSE

a) easement in gross

Jenny has the right to cross her neighbor's property in order to access the boat ramp, but the right ends if she sells her property to another person. What kind of easement does Jenny have? a) easement in gross b) easement appurtenant c) floating easement d) dominant estate

d) the lender John places the loan with

John works for a company that offers loans from different lenders. John gets paid a commission for bringing lenders and borrowers together. Who will fund the loans John gets approved? a) Fannie Mae b) John c) John's company d) the lender John places the loan with

b) the lender

Mortgage Insurance Premium protects _____. a) the property owner b) the lender c) the borrower d) the agent

a) premiums

Payments made to an insurance company in exchange for coverage are called: a) premiums b) PITI c) dividends d) deductibles

c) local banks that lend their own money and do not sell their loans on the secondary market

Portfolio banks are ______. a) local banks that bring together a borrower and a lender in order to create a mortgage b) national banks that package and sell loans to larger investors c) local banks that lend their own money and do not sell their loans on the secondary market d) entities that provide mortgage financing with their own funds

b) All choices are correct.

Regulation Z applies to loans that are __________________________. a) closed-ended transactions for personal, family, or household purpose b) All choices are correct. c) subject to a finance charge or paid in more than four payments d) offered to consumers on a regular basis

FALSE

TRUE or FALSE: In both public housing and subsidized housing, the housing authority serves as the resident's landlord. TRUE FALSE

TRUE

TRUE or FALSE: The purpose of the Closing Disclosure form is to help consumers understand their loan options and to avoid costly surprises at the closing table. FALSE TRUE

d) property owned by low income families

Texas offers property tax exemptions for all of the following EXCEPT: a) senior citizens b) disabled citizens c) homestead property d) property owned by low income families

b) A title company representative or a real estate attorney

The Closing Disclosure can be completed by: a) The lender or a real estate attorney b) A title company representative or a real estate attorney c) The listing broker or a title company representative d) A real estate attorney or the listing broker

c) Know Before You Owe

The Consumer Financial Protection Bureau's program that created new, streamlined forms that consumers receive when they apply for and close on a mortgage is known as ____. a) Knowledge Is Power b) Buyer Beware c) Know Before You Owe d) Know Your Loan

FALSE

The Dodd-Frank Act restricted the power of the FDIC regarding liquidating insurance companies and other non-bank financial institutions. TRUE FALSE

FALSE

The FDIC has created their own lending policy that all lenders must use. FALSE TRUE

FALSE

The FDIC is funded by private banks and Congress. TRUE FALSE

c) the discount rate, the reserve requirement, and open-market operations

The Fed has at its disposal three instruments for implementing its monetary policy by influencing the money supply. The three tools are known as: a) the discount rate, open-market operations and the deposit requirements b) the discount rate, the reserve requirement, and Government operations c) the discount rate, the reserve requirement, and open-market operations d) the interest rate, the reserve requirement, and open-market operations

b) insuring deposits

The Federal Deposit Insurance Corporation is an independent agency of the U.S. federal government that preserves public confidence in the banking system by: a) lowering interest rates b) insuring deposits c) issuing home loans d) raising reserve rates

False

The Federal Reserve System acts according to the monetary policy, making all member banks agents of the federal government. False True

d) twelve member banks spread throughout the United States

The Federal Reserve System is composed of: a) Multiple member banks spread throughout the United States with a minimum of twelve public memebers b) a core federal bank backed by twelve government officials c) twelve core banks located in Washington, DC d) twelve member banks spread throughout the United States

c) lend less money

The Federal Reserve can influence the supply of money by changing the discount rate. When they raise the discount rate, lenders tend to: a) lend less money b) stop lending money c) lend more money d) lend the same amount of money

TRUE

The Federal Reserve was ultimately successful as it aimed to provide services to the government, financial institutions, and to the public FALSE TRUE

c) All choices are correct.

The US Treasury manages the government's revenue by: a) strengthening national security against financial threats b) promoting conditions abroad that support economic growth c) All choices are correct. d) promoting national conditions that stabilize the economy

d) exchange rate

The amount of a foreign currency a dollar can buy is called the _____. a) currency count b) trade value c) foreign money value d) exchange rate

b) aid in comparison shopping for the borrower

The goals of the CFPB are to create easier-to-use mortgage disclosure forms, improve consumer understanding, prevent surprises at the closing, and: a) field complaints from minorities to lending companies b) aid in comparison shopping for the borrower c) process borrower loan applications d) regulate the prime rate

c) FDIC

The government agency that was created in 1933 to give confidence to depositors after the bank failures of the 20s and 30s was the ________. a) FHLB b) FED c) FDIC d) IRS

b) pre-approval

The process of obtaining __________ requires that the borrower submit a mortgage application, credit report, and supporting financial documentation. a) pre-loans b) pre-approval c) pre-qualification d) credit scores

b) the sales prices of similar properties that have been sold recently

The sales comparison approach determines value by comparing the subject property to ______________. a) the monthly mortgage payments of property owners in the same neighborhood b) the sales prices of similar properties that have been sold recently c) the highest listing price in the same area d) the down payments of properties that have been sold within the past year

d) low-income families and other underserved populations in Texas who don't have acceptable housing options through conventional financial channels

What demographic is specifically targeted by the efforts of the TSAHC? a) exclusively Texas veterans b) exclusively low-income families in Texas urban areas c) first time home buyers in Texas in both urban and rural areas d) low-income families and other underserved populations in Texas who don't have acceptable housing options through conventional financial channels

c) All choices are correct.

What does a REMIC do? a) Assembling mortgages into pools b) Issuing bonds to investors in the secondary mortgage market c) All choices are correct. d) Holding commercial and residential mortgages in trust

d) All of these are considered

To qualify a buyer for a loan, lenders consider all of the following except: a) source of down payment b) credit c) income d) All of these are considered

b) primary

When a borrower goes to a mortgage loan officer to apply for a loan, they are talking to someone in which type of market? a) secondary b) primary c) government sponsored d) All choices are correct.

b) when institutional loans are difficult to obtain and interest rates are high

Which financial conditions are more likely to encourage seller financing? a) when it's a seller's market and the economy is stagnant b) when institutional loans are difficult to obtain and interest rates are high c) when stock market returns are high and the economy is growing d) when institutional loans are easy to obtain and interest rates are low

b) All choices are correct.

Which of the following affects the price of real estate? a) demand for property b) All choices are correct. c) unemployment d) supply of money

d) credit unions

Which of the following does NOT generate a profit? a) mortgage brokers b) commercial banks c) mortgage bankers d) credit unions

d) Issuing home loans to qualified homebuyers

Which of the following is NOT a function of the U.S. Treasury Department? a) Borrowing the necessary funds to run the federal government b) Monitoring for money laundering c) Producing coins and currency d) Issuing home loans to qualified homebuyers

b) Lower supply

Which of the following is NOT a major phases of the real estate market cycle? a) Expansion b) Lower supply c) Recovery d) Recession

a) to regulate rates lending institutions can charge

Which of the following is NOT a purpose of the Truth in Lending Act? a) to regulate rates lending institutions can charge b) to protect consumers from unfair and inaccurate credit practices c) to help consumers compare the costs of credit from different lenders d) to standardize the manner in which costs associated with borrowing are calculated and disclosed

b) The borrower is usually a large corporation.

Which of the following is NOT a way agricultural lending differs from residential lending? a) The value of agricultural land might significantly exceed the value of improvements. b) The borrower is usually a large corporation. c) The sale of the property often includes the sale of personal property. d) Buyers want financing on unimproved properties that could lack utilities.

c) Insurance companies

Which of the following is NOT an example of a depository institution? a) Banks b) Credit unions c) Insurance companies d) Savings and loan associations (S&Ls)

b) 30-year, fixed-rate mortgages

Which of the following is NOT exempted from CFPB regulations? a) reverse mortgages b) 30-year, fixed-rate mortgages c) home equity lines of credit d) mobile home loans (when the mobile home is not attached to the real property)

d) Real estate bonds tend to be lower risk than corporate bonds.

Which of the following is TRUE of investment options? a) Real estate bonds are unsecured, meaning they have no collateral. b) Real estate bonds make up the majority of the primary market. c) Corporate bonds are low risk, low reward compared to real estate bonds. d) Real estate bonds tend to be lower risk than corporate bonds.

d) They decrease the value the owner will be taxed on.

Which of the following is true about property tax exemptions? a) Tax exemptions have no effect on taxes. b) They increase the value the owner will be taxed on. c) Taxes are never exempt. d) They decrease the value the owner will be taxed on.

d) All of the choices listed are correct.

Which of the following topics is covered in the monthly report published by the Real Estate Center at Texas A&M? a) Growth of communities b) Statistics on employment c) Housing activity d) All of the choices listed are correct.

d) low prices of raw land

Which of the following would motivate builders to build new houses right away? a) expectation of recession b) low prices of real estate c) high cost of construction d) low prices of raw land

c) mortgage brokers

Which of these have NO money to actually lend: a) commercial banks b) mortgage bankers c) mortgage brokers d) credit unions

b) secured loan

Which type of loan is granted based on the creditworthiness of the borrower AND the value of the collateral? a) lines of credit b) secured loan c) unsecured loan d) secondary loan

b) the borrower

Who is responsible for the foreclosure fees? a) the servicer b) the borrower c) the title company d) the lender

a) Federal Home Loan Bank

Whose purpose is it to support residential mortgage lending and related community investment? a) Federal Home Loan Bank b) Federal Deposit Insurance Corporation c) U.S. Treasury d) U.S. Mint