PART 3 QUIZ QUESTIONS

The FHA Title II, Section 203(b) program is for loans on A. Condominiums B. Mobile homes C. 1-4 family residential properties D. Apartments with fewer than 20 units

1-4 family residential properties

Unless insured through a PMI, most conventional loans require a __________ down payment. A. $2,500 B. 5% C. $5,000 D. 20%

20%

Within the Fannie Mae guidelines, a borrower's monthly debt-to-income ration cannot exceed A. 25% B. 28% C. 30% D. 36%

28%

Because the payment is stable and there is always the opportunity to pay the balance down or to refinance for a better rate at a later date, the most common fixed-rate loans are A. 20-year mortgages B. 15-year mortgages C. 30-year mortgages D. Bi-weekly mortgages

30-year mortgages

With Freddie Mac, if the borrower has a ___% down payment, a seller can contribute up to ____% of the closing costs. A. 20, 10 B. 5, 10 C. 10, 7 D. 5, 3

5 , 3

Ginnie Mae developed the first mortgage-backed security that was backed by a pool of A. FHA and conventional mortgages B. VA and conventional mortgages C. FHA and HUD mortgages D. FHA and VA mortgages

FHA and VA mortgages

Which type of loan requires that debt-ratio guidelines must not exceed 41 percent? A. Urban Renewal loans B. PMI loans C. FHA loans D. Conventional loans

FHA loans

With which type of lender is the lending done typically through loan correspondents rather than dealing directly with borrowers? A. Mortgage brokers B. Insurance companies C. Limited partnerships D. Mutual savings banks

Insurance companies

When financial institutions use funds from depositors to make mortgage loans, the process is called A. Interference B. Syndication C. Intermediation D. Disintermediation

Intermediation

Which is true about a promissory note? A. It may not be executed in connection with a loan on real property B. It is an agreement to do or not to do a certain thing C. It is the primary evidence of a loan D. It is the term used for a note that is guaranteed or insured by a governmental agency

It is the primary evidence of a loan

What is the function of the index in an adjustable rate mortgage loan? A. It is an amount added to the initial rate of the loan to increase the yield B. It is the starting point for calculating the interest rate for the loan C. It determines how much the interest rate of the loan may be adjusted periodically D. It is the underlying rate of return the lender plans to receive over the loan term

It is the starting point for calculating the interest rate for the loan

In the event of default by the purchaser, the lender has the right to bring legal action through the courts to satisfy the debt. This is called by what name? A. Judicial Foreclosure B. Mortgage Foreclosure C. Short-Sale Foreclosure D. Lien Foreclosure

Judicial Foreclosure

Aside from forfeiture for default in a land contract, what is another option for the seller? A. Deficiency suit B. Non-judicial foreclosure C. Judicial foreclosure D. Eviction

Judicial foreclosure

Which of the following is NOT a mortgage program offered through Freddie Mac? A. Program Plus B. Standard Lease-Up C. Lease Plus D. Premier Lease-Up

Lease Plus

Freddie Mac has guidelines to which _________ must conform. A. Borrowers B. Sellers C. Lenders D. Inspectors

Lenders

Lis pendens means A. The Sheriff is given authority to seize and sell the foreclosed property B. Public notice is given that the property may soon have a judgment issued against it C. Lienholders can foreclose on the property D. The lender can file a suit of deficiency

Public notice is given that the property may soon have a judgment issued against it

In regard to a purchase money mortgage, which of the following is true? A. There are three types of purchase money mortgages B. Purchase money mortgages have lower interest rates than traditional bank mortgages C. Purchase money mortgages are often used by buyers without enough savings to cover a traditional down payment D. Purchase money mortgages are often used by buyers with excellent credit.

Purchase money mortgages are often used by buyers without enough savings to cover a traditional down payment.

Fannie Mae and Freddie Mac compete against each other in A. Lending to low-to-moderate-income families B. Offering mortgage insurance to first-time homebuyers C. Underwriting second mortgages D. Purchasing loan packages from primary lenders

Purchasing loan packages from primary lenders

The regulation that applies to residential loans but not commercial loans is A. Regulation X B. Regulation Z C. ECOA D. Dodd-Frank Act

Regulation Z

Which regulation requires lenders to disclose to buyers the true cost of obtaining credit so borrowers can compare various lenders? A. Regulation X B. Regulation Z C. Dodd-Frank Act D. Consumer Protection Act

Regulation Z

In a loan agreement, the lender does NOT have the right to A. Receive payment of the debt B. Require the borrower to pay real estate taxes on the property C. Require the borrower obtain credit insurance D. Require the borrower to maintain adequate insurance

Require the borrower obtain credit insurance

Mary is a 70-year-old woman who owns her own home. Her income has declined over the years, and she is having problems making her mortgage payments. What would be a good solution for Mary? A. Home equity loan B. Package loan C. Reverse annuity mortgage D. Bridge loan

Reverse annuity mortgage

If Pat and Bob have a combined monthly income of $4000, what would their maximum payment be under a conventional loan? A. $1,220 B. $1,120 C. $1,160 D. $1,340

$1,120

With Pat and Bob's $4000 monthly income, how much would they be allowed to have in monthly housing and debt obligations with a VA loan? A. $1,120 B. $1,440 C. $1,640 D. $1,120

$1,640

Mark gets a home loan and the lender will charge him 3 points at closing. If the loan is for $68,000, what will Mark be assessed in points? A. $680 B. $1,360 C. $2,040 D. $2,720

$2,040

A lender is charging three points on a $100,000 loan. How much does this amount to for the borrower? A. $3.00 B. $30.00 C. $300.00 D. $3,000.00

$3,000

A loan that is secured by more than one property is called A. A package loan B. A participation loan C. A blanket loan D. A bridge loan

A blanket loan

How does a borrower use private mortgage insurance? A. A borrower can reduce monthly interest rate payments over the life of the loan by getting private mortgage insurance B. A borrower can get a conventional loan with a lower down payment by insuring the loan through private mortgage insurance C. A borrower can get a VA loan with a lower down payment by insuring the loan through private mortgage insurance D. A borrower can get a loan with a higher down payment by insuring the loan through private mortgage insurance

A borrower can get a conventional loan with a lower down payment by insuring the loan through private mortgage insurance

A short-term loan that allows the buyer to close on a newly purchased property while waiting for the proceeds from the sale of a previous property is called A. A blanket mortgage B. A graduated payment mortgage C. A budget loan D. A bridge loan

A bridge loan

Which type of status is viewed as a stronger buying position? A. A buyer who has many charge accounts B. A buyer who has a good rent history C. A buyer who has been prequalified D. A buyer who holds a preapproval letter

A buyer who holds a preapproval letter

What is created when a problem is found with the chain of title of recorded ownership? A. The need for an abstract B. The need for an attorney's opinion C. An invalid title D. A cloud on the title

A cloud on the title

An indication of debt secured by the property is A. A lien B. An encumbrance C. An encroachment D. A cloud on the title

A lien

Which of the following terms describes a financing instrument that pledges the real property described in the mortgage document as collateral for the debt described in the note? A. A deed B. Leverage C. A mortgage D. Abstract of title

A mortgage

Whenever a potential homebuyer borrows money for the purpose of buying a home, he or she will be required to sign a document that describes the amount of money borrowed, the terms under which it will be repaid, and any conditions that relate to either the borrowing of the money, or the consequences in event of default. This document is called A. A deed B. A note C. A deed of trust D. A chain of title

A note

The cost of title insurance is A. Amortized in the loan payments B. Paid annually in a single payment C. Paid in separate monthly installments D. A one-time charge paid at closing

A one-time charge paid at closing

With the Ginnie Mae II MBS, any one pool would not include A. Single family level payment mortgages B. Manufactured home loans C. Single family adjustable rate mortgages D. A single-family pool size of $500,000

A single-family pool size of $500,000

Because of a borrower's default on payments, a mortgage lender calls the entire balance due and payable immediately. The clause in the mortgage document that allows the lender to do this is the A. Alienation clause B. Acceleration clause C. Defeasance clause D. Prepayment clause

Acceleration clause

Loan products and situations that might require special riders include A. Adjustable-Rate Mortgages B. Condominium purchases C. Tax liability for bond issue funding D. All of the above

All of the above

Which of the following is considered an encumbrance? A. A utility right-of-way B. A neighbor's fence or garage encroaching C. A driveway easement through the property D. All of the above

All of the above

Which of the following terms means that some other party has some rights or claim to the property? A. An encumbrance B. An encroachment C. An infringement D. A deed

An encumbrance

Who lends the money for a VA loan? A. Only savings and loans approved by the VA B. Any lending institution approved by the VA C. Only banks approved by the VA D. Only the VA itself

Any lending institution approved by the VA

Calvin wants to purchase a new home. His previous home has not yet sold, but he need a loan for the purchase of the new home. What type of loan would Calvin need? A. Blanket B. Bridge C. Home equity D. Reverse annuity

Bridge

The VA may also actually lend money directly when an eligible veteran A. Has retired from a branch of the US military B. Cannot find other mortgage money locally C. Does not have a 20% down payment D. Purchases a multi-family project

Cannot find other mortgage money locally

The __________ is designed to reflect the recapture rate of an investor's original investment over the economic life of the investment to give an acceptable rate of return on the investment. A. Debt coverage ratio B. Operating expense ratio C. Cap rate D Return on equity

Cap rate

Typically, conventional loans A. Require lower down payments than government-backed loans require B. Are less flexible than government-backed loans C. Have more paperwork than government-backed loans D. Carry prepayment penalties, while government-backed loans do not

Carry prepayment penalties, while government-backed loans do not

Which of the following is NOT an advantage of preapproval? A. Closing costs are less B. The buyer is more attractive to the seller C. Financing contingency will not be a problem D. Buyer with preapproval may win over multiple offers on the property

Closing costs are less

Any lender wanting to sell loans to Fannie Mae must A. Have only conventional loans to sell B. Have already tried to sell to Freddie Mac C. Follow conventional loan requirements D. Conform to Fannie Mae guidelines

Conform to Fannie Mae guidelines

The FHA reimburses the lender for losses due to default by the borrower, including A. Cost of foreclosure B. Cost of PMI C. Cost of MIP D. Cost of collections

Cost of foreclosure

Which type of lender is known for making low cost loans without a lot of junk charges? A. Limited partnerships B. Commercial banks C. Savings and loans D. Credit unions

Credit unions

A Ginnie Mae II MBS ____________ has a single issuer that originates and administers the entire pool. A. Single-issuer pool B. Custom pool C. Pass-through pool D. Manufactured home pool

Custom pool

An alienation clause is also known as a A. Prepayment penalty clause B. Escalation clause C. Due-on-sale clause D. Borrower's right to reinstate after acceleration

Due-on-sale clause

Wesley wants to sells his house to Maria. Maria would like to assume Wesley's mortgage loan. Wesley's lender demands full and immediate repayment of the loan if Wesley completes the sale. The lender can make this demand if the mortgage contains a A. Defeasance clause B. Release clause C. Due-on-sale clause D. Redemption clause

Due-on-sale clause

A borrower's right not to reveal his/her religion is provided by A. Regulation Z B. ECOA C. Contract provisions D. Regulation X

ECOA

_____________ originated as a totally shareholder-owned corporation with the stated purpose to purchase conventional mortgage loan packages from the savings and loans. A. FNMA B. GSE C. GNMA D. FHLMC

FHLMC

Ginnie Mae handles the housing assistance and loan management functions originally managed by A. Freddie Mac B. Fannie Mae C. FHA D. HUD

Fannie Mae

Which of the following is NOT a Fannie Mae guideline? A. Fannie Mae sets loan limits that are adjusted every 5 years B. A borrower's monthly debt payments cannot exceed 28% of the monthly income C. Loans that have a loan-to-value ratio of more than 80% must carry private mortgage insurance D. If the borrower has a 5% down payment, the seller can contribute up to 3% of the closing costs

Fannie Mae sets loan limits that are adjusted every 5 years

The abstract, chain of title, and the title insurance policy must meet the standards of the lender A. Before the lender orders a land survey B. For the title to qualify for the mortgage loan C. To conform with state law D. To determine the amount of the loan

For the title to qualify for the mortgage loan

Which participant in the secondary mortgage market is dedicated to putting homeownership within reach for minority populations? A. Fannie Mae B. Freddie Mac C. Ginnie Mae D. FHA

Freddie Mac

Why type of loans are one of the few remaining IRS income tax deductions, regardless of how the proceeds are used? A. Closed end B. Open end C. Construction D. Home equity

Home equity

PMI loans made after July 1999 are now regulated by Federal law. What is this law called? A. PMI Federal Act B. Homeowners Protection Act C. RESPA D. Interest Payment Act

Homeowners Protection Act

Which of the following agencies does not purchase both government and conventional loan packages? A. Fannie Mae B. Freddie Mac C. Ginnie Mae D. Fannie Mae and Freddie Mac

Ginnie Mae

Which of the following is NOT included in the primary mortgage market? A. Commercial banks B. Savings banks C. Credit unions D. Ginnie Mae

Ginnie Mae

In addition to Section 203(b) loan programs, FHA also offers which of the following programs? A. Home equity loans B. Loans for mobile homes C. Reverse mortgage for owners 65 and older D. Graduated payment loans

Graduated payment loans

Ginnie Mae is a division within A. FHA B. VA C. HUD D. Conventional banking

HUD

Once the lender has established the applicant's monthly income, what does the lender use to determine if the income is enough to pay a loan? A. Income and credit ratios B. Credit and debt ratios C. Income and debt ratios D. Credit and net worth ratios

Income and debt ratios

Which of the following best characterizes 'potential income'? A. Income before debt service B. Income before taxes C. Income before expenses D. Income before vacancy

Income before vacancy

Since the property itself is used as the only protection against default by the borrower, hard money loans have lower ____________ than traditional loans. A. Interest rates B. Monthly payments C. Loan to value ratios D. Interest to principal ratios

Loan to value ratios

FHA loans typically have a higher __________ than conventional loans, enabling a borrower to make a smaller down payment. A. Interest rate B. PMI coverage limit C. Loan-to-value ratio D. Income-to-debt ratio

Loan-to-value ratio

If a letter from a lender states that the loan approval is subject to "verification of the buyers' income and credit information," what type of letter is this? A. Prequalification letter B. Preapproval letter C. Underwriting letter D. Closing notification letter

Prequalification letter

The primary appraisal approach for re-sale homes is the A. Market data approach B. Cost approach C. Income approach D. On-site approach

Market data approach

The property is not required to meet the following FHA standard. A. Quality of construction B. Neighborhood quality C. Type of construction D. Modern architectural style

Modern architectural style

Tom, the borrower, gave Joe, the lender, his mortgage as security for his loan. Under the terms of the mortgage, Tom is identified as the A. Mortgagor B. Mortgagee C. Trustee D. Trustor

Mortgagor

Which type of lender is similar to Savings and Loans in that they are owned by their depositors and focus on home financing? A. Mutual savings banks B. Credit unions C. Pension funds D. Limited partnerships

Mutual savings banks

A land survey shows all of the following EXCEPT A. Location of the land B. Dimensions of the land C. Natural bodies of water on the land A. Any improvements to the land

Natural bodies of water on the land

In order to derive return on investment, the analysis must divide ________ by _________. A. Cash flow; equity B. Price; after-tax income C. Net operating income; cash flow D. Net income; price

Net income ; price

Norm is buying a furnished condo in Chicago. Which type of mortgage is specifically designed for property and contents? A. All Inclusive Mortgage B. Package Mortgage C. Short Sale Mortgage D. Wrapped Mortgage

Package Mortgage

With Ginnie Mae's ____________ , monthly principal and interest payments are collected from the borrower and then forwarded to the investors. A. Mortgage loans B. Mortgage securities C. Pass-through securities D. Investor securities

Pass-through securities

A re-subordination agreement is often included in which type of loan? A. Piggyback B. Home equity C. Purchase money mortgage D. Hard money mortgage

Piggyback

Which of the following is NOT allowed in Indiana? A. Judicial foreclosure B. Power of sale provision C. Forfeiture D. Equitable Redemption

Power of sale provision

Buyers can find out how much of a loan they can qualify for by A. Prequalification, a formal process that can be performed by a real estate agent or by a lender B. Preapproval, a formal process that only a lender can perform C. Prequalification, an informal process that can only be performed by a HUD lender or mortgage banker D. Preapproval, an informal process that a real estate agent or lender can perform

Preapproval, a formal process that only a lender can perform

President Obama introduced a mortgage servicing bill of rights for borrowers in response to what? A. The amendment of Regulation X B. Violations of the ECOA C. Robo-signing practices D. A request by the Consumer Finance Protection Bureau

Robo-signing practices

Which loan program administrator pays the private financier for the loan if the individual borrower defaults on the loan? A. Limited partnerships B. Rural Housing Service C. Rural Economic and Community Development D. Farmers Home Administration

Rural Housing Service

Freddie Mac introduced the first A. Loans to low income homebuyers B. Security backed by conventional loans C. Stock that was held primarily by savings and loan associations D. Mortgage-backed security for FHA loans

Security backed by conventional loans

Those known as unintentional investors are A. Limited partnerships B. Sellers C. Insurance companies D. Mortgage bankers

Sellers

A Ginnie Mae I MBS pool would not consist of A. Manufactured home loans. B. Single family buydown mortgages. C. Project construction loans. D. Single family adjustable rate loans.

Single family adjustable rate loans

The special documents that are often added to regular instruments to describe unconventional financing arrangements are called A. Disclaimers B. Indemnifiers C. Riders D. Sliders

Sliders

An agreement to waive prior rights in favor of another is called A. Subordination B. Alienation C. Subrogation D. Acceleration

Subordination

Which of the following is not covered under VA-guaranteed financing? A. Veteran home purchase B. Veteran home improvement C. Veteran refinance of an existing home loan D. Veteran purchase of any condominium

Veteran purchase of any condominium

If a borrower in a VA-guaranteed loan defaults, A. The VA takes over the property and makes payments to the lender on behalf of the borrower B. The VA reimburses the lender, up to the guaranteed amount, for losses not covered by foreclosure proceeds C. The lender takes the property and also receives the amount guaranteed by the VA D. The VA must pay off the loan balance.

The VA reimburses the lender, up to the guaranteed amount, for losses not covered by foreclosure proceeds

There are two situations in which forfeiture is appropriate in Indiana in relation to a land contract. Which of the following is one of those situations? A. The buyer has failed to maintain adequate insurance on the property B. The buyer has abandoned the property C. The buyer has paid a minimal amount on the property and seeks to cancel the contract D. The seller has not paid taxes, insurance, and other upkeep to preserve the premises

The buyer has abandoned the property

Which of the following conveys title rights in the property over to an assigned trustee? A. The deed of trust B. The deed C. Leverage D. The index rate

The deed of trust

In the case of default on financing where a homeowner has three mortgages on the property, which mortgage holder will be paid off first? A. The first mortgage holder B. The third mortgage holder C. Whichever mortgage holder is owed the most amount of money D. Whichever mortgage holder is owed the least amount of money

The first mortgage holder

The capitalization rate of a property will indicate which of the following? A. How much cash is required to purchase a property B. The investor's rate of return on the investment C. The price of the property D. The property's net income

The investor's rate of return on the investment

The settlement agent usually orders this document of the property, which shows the "footprint" of the house and any deck, patio, garage or carport. This is known a what? A. The land survey B. The appraisal C. The termite inspection D. The title report

The land survey

In the validation of a property for a conventional loan, the appraiser is selected by A. The FHA B. The Appraisal Institute C. The borrower D. The lender

The lender

Who performs the preapproval process? A. The buyer B. The seller C. The broker D. The lender

The lender

Which of the following is true regarding the primary and secondary mortgage loan market? A. The primary market makes individual loans B. The secondary market sells loans to the primary market C. The primary market makes only first priority loans D. The secondary market specializes in higher-risk loans

The primary market makes individual loans

Indiana law permits land contract sellers the right of forfeiture provided A. The buyer has significant equity in the property B. The right is expressly stated in the sale contract C. Judicial foreclosure is not an option D. The borrower is paying the property taxes

The right is expressly stated in the sale contract

Sales of Fannie Mae mortgages usually peak when A. Sales of Freddie Mac mortgages are also peaking B. There are very few VA loans available C. The demand for real estate increases D. There are limited opportunities for other investments

There are limited opportunities for other investments

What do conventional loans typically require income and debt ratios to be? A. Under 28% for income and 36% or lower for debt B. 29% or lower for income and 41% or lower for debt C. 29% for income and 41% for debt D. 36% for income and 29% for debt

Under 28% for income and 36% or lower for debt