Real Estate Finance
Sylvia, a real estate license holder, decides to prospect for new customers by handing out flyers which highlight her qualifications and also provide information about special loan programs. She works in a metropolitan area where the housing market continues to grow, and many new homes are being built in an area where zero-down USDA financing can be used. Victor, an RMLO, volunteers to pay for the flyers and take care of all of the printing and set up if the flyers can be co-branded in order to help them both generate new business at the same time. Sylvia had some ideas about what she wanted the flyers to say about loans, but Victor assures her that he can do an excellent job at writing the information for that section of the flyer. Which of the following should Sylvia and Victor avoid adding to their advertising flyers because it is considered a trigger by Truth-In-Lending? "No down payment." "Monthly payments $300" "Financing available." "Low down payment."
"Monthly payments $300"
What is the largest denomination Federal Reserve note ever issued for public circulation?
$10,000
Garth is representing Mr. and Mrs. Wu who have just decided to buy a home. Garth advised the couple to get prequalified before viewing any more homes. Mr. and Mrs. Wu trust Garth and want to do their own research and get Garth's advice before talking to a loan originator. They are disheartened by the realization that closing costs are typically more than they had thought, so they are considering pursuing an FHA loan, so that they can make a smaller down payment. However, they do not like the fact that the MIP makes the house payments higher. Mr. and Mrs. Wu have a combined gross monthly income of $9,000. For the home they want, the estimated monthly payment would be $2,700 on a 30-year loan. If the Wus buy the home that they want, their house payments would be approximately $2,700 per month. If they go with a conventional loan, the front ratio of their house payment (PITI) cannot exceed $ _______ or 28% of their gross monthly income.
$2,520
The FDIC insures deposits in banks and thrift institutions for up to:
$250,000
Agent Sidney is representing an investor buyer Alfonso who is looking at a single-family home to purchase. Alfonso wishes to lease the property after purchasing it and has asked Sidney to analyze the price of the property. Sidney believes, after careful analysis, that the property will lease for $1400 a month. Similar homes in the neighborhood have sold for $225,000 and typically lease for $1250 a month. Using the GRM, what price should the investor offer for the purchase of this property?
$252,000
In Texas, the minimum withdrawal on a HELOC is:
$4,000
Bob and Sarah decided to purchase their first home. They have decent credit and have some longevity in their respective jobs. The big issue for them is that they have not saved up enough for a substantial downpayment on a home. The home that they want to purchase is in the range of $150,000. Bob's parents have offered to loan them up to $6000 to help them with the downpayment. Sarah's parents have offered to give them, as a gift, up to $10,000. Neither Bob nor Sarah have any military experience, eliminating a VA loan as a possibility. Bob and Sarah are hoping to put a minimum downpayment on the home with the hope of buying a bit of furniture and landscaping after they move in. Given a $150,000 sales price and a minimum downpayment, what will their downpayment be on an FHA loan?
$5,250
Rita and Henry have been told that the monthly payment of PITI on the home that they have selected to purchase is $1,507. If area lenders are qualifying at 28%, what gross monthly income must they show to qualify?
$5382.14
Garth is representing Mr. and Mrs. Wu who have just decided to buy a home. Garth advised the couple to get prequalified before viewing any more homes. Mr. and Mrs. Wu trust Garth and want to do their own research and get Garth's advice before talking to a loan originator. They are disheartened by the realization that closing costs are typically more than they had thought, so they are considering pursuing an FHA loan, so that they can make a smaller down payment. However, they do not like the fact that the MIP makes the house payments higher. Mr. and Mrs. Wu have a combined gross monthly income of $9,000. For the home they want, the estimated monthly payment would be $2,700 on a 30-year loan. If the Wus decide to purchase a $250,000 home with an FHA loan, what is the minimum amount of money that they would be required to put down?
$8,750
Doug is interested in purchasing a new home. He is a veteran of the U. S. Army, and previously owned a home that he had financed using a VA loan. The loan was paid off when he sold the home five years ago. Doug has good credit and some available cash. Because he plans to do some remodeling after closing, he wants to minimize his downpayment, preserving his cash for future projects. The home he is looking at is in the $200,000 range. Given a $200,000 sales price and a minimum downpayment, what will his downpayment be under the proposed loan?
0%
RESPA regulates closing on _______________ with federally related financing.
1 to 4 family residential transactions
There are ____________ Federal Home Loan Banks.
12
Agent Sidney is representing an investor buyer Alfonso who is looking at a single-family home to purchase. Alfonso wishes to lease the property after purchasing it and has asked Sidney to analyze the price of the property. Sidney believes, after careful analysis, that the property will lease for $1400 a month. Similar homes in the neighborhood have sold for $225,000 and typically lease for $1250 a month. What is the GRM for similar homes in this neighborhood?
180
The FHLB was created by Congress in:
1932
The FDIC was created in:
1933
When was the FHA created?
1934
Fannie Mae began as an agency of the U.S. government in _______________.
1938
A notice of sale must be given at least _______________ before the date of a foreclosure sale in a non-judicial foreclosure.
21 days
On a 90% LTV, fixed rate mortgage, investors require _______________ MI coverage.
25%
A borrower must receive the Closing Disclosure from the lender no later than ______________ before closing.
3 business days
The Homeowners Protection Act (HPA) requires that borrower-paid PMI be cancelled once the borrower has paid down the loan to an LTV of _______________.
78%
Internal Revenue Service
A bureau of the Department of Treasury that collects taxes
Mortgage
A conditional transfer or a pledge of real estate as security for the payment of debt
Judicial Foreclosure
A court proceeding that begins when the lender files a complaint and records a notice in the public records announcing a claim on the property to potential buyers
Credit Report
A detailed breakdown of a person's credit history as reported by one of the three major credit bureaus
Verification Of Deposit
A document authorizing the lender to examine deposit records from a bank of the borrower to determine eligibility for a loan
Recession
A downturn in economic activity
Loan Estimate
A estimate of charges associated with a mortgage loan that must be given to a borrower no later than 3 business days after the borrower has made loan application
Home Equity Line Of Credit
A form of open-end account that may be debited from time to time, under which credit may be extended from time to time
Chunking
A get rich quick scheme using multiple loan applications submitted to various lenders without disclosing the intent to purchase other properties
Bob and Sarah decided to purchase their first home. They have decent credit and have some longevity in their respective jobs. The big issue for them is that they have not saved up enough for a substantial downpayment on a home. The home that they want to purchase is in the range of $150,000. Bob's parents have offered to loan them up to $6000 to help them with the downpayment. Sarah's parents have offered to give them, as a gift, up to $10,000. Neither Bob nor Sarah have any military experience, eliminating a VA loan as a possibility. Bob and Sarah are hoping to put a minimum downpayment on the home with the hope of buying a bit of furniture and landscaping after they move in. What will Bob and Sarah need from her parents to show that the money for downpayment is a gift?
A gift letter
Specially Adapted Housing Grants
A grant to servicemembers and veterans to certain permanent and total service-connected disabilities to help purchase or construct an adapted home or modify an existing home to accommodate a disability
Creditworthiness
A history of making on-time payments of loans
Which of the following must be a judicial foreclosure in Texas?
A home equity lien
Foreclosure
A legal procedure whereby property used as security for a debt is sold to satisfy the debt in the event of default in payment of the mortgage note or default of other terms in the mortgage document
Portfolio Lender
A lender that does not sell its mortgage loan into the secondary market
FHA Direct Endorsement Lender
A lender that is authorized to approve loans for FHA insurance without prior submission to FHA
Closed-End Loan
A loan or type of credit where the funds are dispersed in full when the loan closes and must be paid back
Conforming Loan
A loan that is originated to adhere to the standards of Fannie Mae and Freddie Mac
Subordinate Instruments
A loan that takes a lower lien position than another mortgage loan
Amortizing Loan
A loan where the monthly payment includes an amount that is applied first to the interest that is due, with the remainder of the loan payment applied to the outstanding loan balance
Secondary Mortgage Market
A market for the purchase and sale of existing mortgages, designed to provide greater liquidity for mortgages; also called the secondary money market
Package Mortgage
A method of financing in which the loan that finances the purchase of a home also finances the purchase of certain items of personal property such as specified appliances
Wraparound Mortgage
A method of financing that preserves the low, existing interest rate on the original loan with the wraparound as seller financing
Bonds
A method of raising funds used by corporation and government entities
Mortgage Broker
A middleman between the borrower and the lender, negotiating, selling, or arranging loans to be delivered to larger investors
Pre-Approval
A more involved process than pre-qualification requiring a loan application from the borrower.
Participation Loan
A mortgage in which the lender participates in the income of the mortgaged venture beyond a fixed return or receives a yield on the loan in addition to the straight interest rate
Budget Mortgage
A mortgage in which the monthly house payment includes principal, interest, taxes and insurance (PITI)
Reverse Annuity Mortgage
A mortgage loan for homeowners who are 62 or older borrowing against the equity in their property
Reverse Mortgage
A mortgage loan for homeowners who are 62 or older borrowing against the equity in their property
Shared Appreciation Mortgage
A mortgage loan in which the lender, in exchange for a loan with a favorable interest rate, participates in the profits (if any) the mortgagor receives when the property is eventually sold
Native American Direct Loan
A mortgage loan program that provides direct home loans from VA to eligible Native American Veterans to finance the purchase, construction, or improvement of homes on Federal Trust land
Blanket Mortgage
A mortgage loan that covers more than one parcel of real estate
Balloon Loan
A mortgage loan that has a final payment that is considerably larger than the required periodic payments because the loan amount was not fully amortized
Open-End Mortgage
A mortgage loan that permits additional borrowing on the same note and mortgage
Subprime Loan
A non-conforming risked-based loan with the interest based on the risk of the loan
VA Loan Guaranty
A partial guaranty on a loan protecting the lender against loss if the payments are not made
Employment Qualification
A process used by mortgage lenders to review the employment history of a borrower to determine the borrower's job stability and cross-reference income history
Verification Of Employment
A process used by mortgage lenders to review the employment history of a borrower to determine the borrower's job stability and cross-reference income history
Troubled Asset Relief Program
A program created in 2008 to restore the nation's financial stability and restart economic growth
Interest Rate Reduction Refinancing Loan
A refinance of a VA loan at a lesser interest rate without using additional entitlement
Title Commitment
A report outlining the current condition of the title - title report
Lien
A right given by law to certain creditors to have debts paid out of property of a defaulting debtor, usually by means of a court sale
Private Lenders
A small but important category for funding residential mortgage loans who have a relationship with one or more loan originators investing in mortgages that might not otherwise have a ready buyer in the secondary market
Federal Home Loan Bank System (FHLB)
A system of regional banks from which local lending institutions everywhere in America borrow funds to finance housing, economic development, infrastructure, and jobs
Federal Home Loan Banking System (FHLB)
A system of regional banks from which local lending institutions everywhere in America borrow funds to finance housing, economic development, infrastructure, and jobs
Credit Scoring
A systematic process that uses statistical models to assess an individual's creditworthiness based on their credit history and current credit accounts
Open-Market Operations
A tool of monetary policy for buying or selling government securities
Adjustable-Rate Mortgage
A type of mortgage loan in which the interest rate may increase or decrease at specified intervals over the life of the loan
Contract For Deed
A type of seller financing when the owner retains title to the property while the purchaser takes possession of the premises and pays on the principal
In the event of default, the entire amount of the principal becomes due and payable
Acceleration clause
According to the Taxpayer Bill of Rights, taxpayers have the right to: Be informed Pay no more than the correct amount of tax Privacy According to the Taxpayer Bill of Rights, taxpayers have all of these rights
According to the Taxpayer Bill of Rights, taxpayers have all of these rights
A(n) _______________ is a loan with an interest rate that fluctuates as the market changes.
Adjustable-rate mortgage
The appraiser sites any easements, encroachments, zoning problems, or other adverse or positive characteristics of the property being appraised in the section titled:
Adverse conditions
Buyers and sellers both sign a document called _______________ certifying that he or she is who they claim to be.
Affidavit of Identity
RESPA Section 8 requires the disclosure of:
Affiliated Business Arrangements
Which of the following is NOT a protected class under Federal Fair Housing? Sex Age Color Race
Age
Also known as the due on sale clause
Alienation clause
A contract for deed is risky for the buyer because:
All are risks for the buyer in a contract for deed
The Texas Veterans Land Board's Home Loan Program is for:
All honorably discharged veterans
Sellers may be interested in financing a property because: The secured note may be a good investment The property being sold may be a type that is difficult to finance through regular mortgage lenders. The buyer may have credit issues that prevent financing from regular mortgage sources but may still be a reasonable risk. All of these are reasons a seller may be interested in seller financing.
All of these are reasons a seller may be interested in seller financing.
Which of the following is one of the FHFA's strategic goals? Ensure safe and sound regulated entities Manage Fannie Mae and Freddie Mac's ongoing conservatorships Ensure liquidity, stability, and access in housing finance All of these are strategic goals of the FHFA
All of these are strategic goals of the FHFA
Bob and Sarah decided to purchase their first home. They have decent credit and have some longevity in their respective jobs. The big issue for them is that they have not saved up enough for a substantial downpayment on a home. The home that they want to purchase is in the range of $150,000. Bob's parents have offered to loan them up to $6000 to help them with the downpayment. Sarah's parents have offered to give them, as a gift, up to $10,000. Neither Bob nor Sarah have any military experience, eliminating a VA loan as a possibility. Bob and Sarah are hoping to put a minimum downpayment on the home with the hope of buying a bit of furniture and landscaping after they move in. What will the lender require Bob and Sarah to pay along with the monthly principal and interest on their loan? 1/12th of the Annual Mortgage Insurance 1/12th of the Annual Homeowner's Insurance 1/12th of the Annual Property Taxes All three of the above will be required
All three of the above will be required
Real Estate Mortgage Conduits (REMIC)
Allows for the indirect investment in mortgages through the sale of securities by purchasing pools of mortgages
Hard-Money Loan
Also known as a collateral dependent loan which is a specific type of asset-based financing in which a borrower receives funds secured by the value of a parcel of real estate
Deed In Lieu Of Foreclosure
An alternative to foreclosure wherein the lenders accept a deed rather than funds to settle the debt. Also called friendly foreclosure or voluntary deed
Fixed-Rate Mortgage
An amortizing loan with an interest rate that stays the same for the entire term of the loan
Reserve Requirements
An amount of deposits that must be set aside a member of the Federal Reserve System as either cash on hand or as a reserve account balance at a Reserve Bank
Mortgage Banker
An entity that provides its own funds for mortgage financing
Mortgage Banker
An entity that provides its own funds to for mortgage financing
Commercial Banks
An entity that uses depositors funds for mortgage financing
Monetary Inflation
An excess of money supply in the market
Farm Credit Administration (FCA)
An independent federal agency that regulated, examines, and oversees entities like Farmer Mac
Deed Of Trust
An instrument used to create a mortgage lien by which the mortgagor (trustor) conveys his or her title to a trustee
Real Estate Investment Trust
An investment vehicle created by Congress to make it possible for small investors to invest in larger commercial properties
Real Estate Mortgage Trust
An investment vehicle created by Congress to make it possible for small investors to invest in mortgages or mortgage-backed securities
Promissory Note
An unconditional written promise of one person to pay a certain sum of money to another at a future, specified time
Predatory Lending
An unscrupulous lender taking advantage of a consumer's lack of knowledge regarding lending practices
Insurance cost based on the loan-to-value ratio
Annual premium
Encumbrance
Any lien that may diminish the value of a property; a cloud against clear, free title to property limiting the rights of the property owner
The appraiser describes and evaluates the condition of the kitchen equipment in this section of the appraisal.
Appliances
The United States Treasury is responsible for all of the following except: Raising funds to finance operations of the government. Implementing economic sanctions against foreign threats Applying monetary policy to manage the growth of the economy Advising the president on economic and financial issues
Applying monetary policy to manage the growth of the economy
Money
Assets which have immediate purchasing power
Allows a new borrower to take over the payments on an existing loan
Assumption clause
Equity Of Redemption
At any time up to the moment of the foreclosure, the borrower has the right to step in and pay what is owed and reclaim property forfeited due to mortgage default
To save time, the loan officer can gather information over the phone and run the loan through an _______________, reducing the documentation the borrower has to gather before the initial meeting.
Automated Underwriting System
The ratio of the borrower's total recurring monthly debts
Back ratio
The Request for Verification of Deposit is used by the lender to verify _______________ information of the borrower's accounts.
Balance
A _______________ may be beneficial to a borrower who is planning to move prior to the last payment of the loan.
Balloon loan
Partially-amortized loan with a substantially larger final payment
Balloon loan
A loan with a _______________ has a final payment that is much greater than the amount of the other monthly payments.
Balloon payment
A loan which covers more than one piece of property
Blanket mortgage
A _______________ is a debt instrument used to lend money to a firm of government entity.
Bond
A corporation is obligated to repay the _______________.
Bondholders
An instrument of corporate or governmental debt
Bonds
The Fannie Mae 1003 Application is used to collect pertinent information of the _______________ so the loan may be properly underwritten.
Borrower
The promissory note is the _______________ unconditional promise to repay.
Borrower's
Default of the terms of the loan may cause damage to the _______________ and could lead to loss of the property through foreclosure.
Borrower's credit score
A contract for deed is also known as a(n) ____________.
Both a land contract and an installment contract
Default
Breach or nonperformance of the terms of a note or covenants of a mortgage
Through which avenue does the U.S. Treasury promote economic growth and job opportunities?
By promoting conditions to enable economic growth and stability at home and abroad
The Interstate Land Sales Full Disclosure Act requires developers to file a property report with:
CFPB
Which of the following is NOT a function of the Department of the Treasury? Campaign finance reform Currency and coinage Enforcing federal finance and tax laws Supervising national banks and thrift institutions
Campaign finance reform
A _______________ is a form of a purchase-money loan from the seller.
Carryback loan
In a _______________ refinance the borrower pays off an existing loan with the proceeds of the new mortgage on the same property but draws equity out of the property.
Cash-out
The Four Cs of Good Lending include:
Character, Capacity, Collateral, Capital
Office Of The Comptroller Of The Currency
Charters, regulates, and supervises all national banks and federal savings associations as well as federal branches and agencies of foreign banks
_______________ occurs when a fraudster promises to show investors how to get rich by buying investment properties.
Chunking
Excessive selling/lending activities to generate fees and commissions is called _______________.
Churning
Excessive selling/lending activity for the purpose of generating fees and commissions
Churning
Ratio of total recurring monthly debts to GMI
Closing
The consummation of a contractual real estate transaction in which all appropriate documents are signed and the proceeds of the mortgage loan are then disbursed by the lender
Closing
The RESPA - TILA Integrated Disclosure Rule mandates the use of two disclosures: the Loan Estimate and the _______________.
Closing Disclosure
In addition to Freddie Mac and Fannie Mae, Wall Street is a source of funds in the secondary market through the sale of:
Collateralized Mortgage Obligations
Any seller _______________ which exceeds 4% of the established reasonable value of the property is considered excessive and unacceptable for VA-guaranteed loans.
Concession
The three approaches to appraisal are all of the following, except: Condition approach Income approach Cost approach Sales comparison approach
Condition approach
A loan that is originated adhering to Fannie Mae or Freddie Mac's standards so it may be sold in the secondary market is called a(n):
Conforming Loan
Adheres to Fannie Mae and Freddie Mac requirements for purchase of a mortgage
Conforming loan
Conventional loans that conform to FNMA/ FHLMC standards
Conforming loan
Advantages of ARM loans include all of the following, except:
Confusion
All of the following are HUD's major programs except: Community Development Block Grants Consumer Financial Protection Bureau Federal Housing Administration Section 8 Housing
Consumer Financial Protection Bureau
The finalization or closing of the real estate transaction is called:
Consummation
A sales contract in which the buyer agrees to make regular payments to the seller for equitable title
Contract for deed
In a contract for deed, the seller promises to _______________ to the buyer when all payments have been made.
Convey legal title
A _______________ is an entity or person that processes, underwrites, closes, and funds its own mortgage loans through a warehouse line of credit, selling the loans to another lender once the loan is closed.
Correspondent Lender
Someone who processes, underwrites, closes and funds their own files in their name and then sells the loans to other mortgage lenders
Correspondent Lender
The systematic process that uses statistical models to assess an individual's creditworthiness based on their credit history and current credit accounts is called _______________.
Credit Scoring
_______________ are not-for-profit organizations that exist to serve its members.
Credit Unions
Member-owned depository institutions
Credit union
An essential component of the underwriting process is determining the _______________ of the borrower.
Creditworthiness
Money laundering through the purchase of real estate is an example of:
Criminal purposes beyond fraud
The _______________ states that in the event of default on the primary instrument, the secondary instrument automatically defaults.
Cross-default clause
In a _______________ the borrower voluntarily deeds the property to the lender.
Deed in lieu of foreclosure
Breach or nonperformance of the terms of a note or covenants of a mortgage
Default
When the price at auction on a foreclosed property is insufficient to cover the unpaid balance of the loan, the lender may sue for a _______________.
Deficiency Judgment
The unpaid balance of a foreclosed mortgage, payable by court order
Deficiency judgment
HUD's Community Development Block Grant Program funds are used to meet all of the following goals except: Aiding low and moderate-income persons Developing shopping centers and other commercial areas Preventing or eliminate slum or blight conditions Meeting an urgent need that threatens health or safety
Developing shopping centers and other commercial areas
The yield on a loan is determined by the rate of interest charged on the loan and the _____________ charged by the lender at closing.
Discount Points
Set by the board of directors of the Federal Reserve Banks, subject to approval by the Board of Governors
Discount rate
The act of moving funds from one investment arena to another
Disintermediation
The process of moving savings funds from one arena to another is called:
Disintermediation
Stockholders anticipate receiving a _______________, which is profit that is distributed to the stockholders.
Dividend
A veteran's entitlement to VA home loan benefits, based on military service
Eligibility
_______________ is the veteran's entitlement to a VA home loan benefits under the law, based on military service.
Eligibility
The FDIC examines banks for compliance with all of the following consumer protection law, except: Fair Credit Reporting Act Truth In Lending Act Emergency Economic Stabilization Act Community Reinvestment Act
Emergency Economic Stabilization Act
___________ was a federal law enacted in 2008 to promote the stability and liquidity of the financial system through the authorization of TARP.
Emergency Economic Stabilization Act
The VOE is completed by the borrower's _______________.
Employer
What is the number one determinant for demand?
Employment
A claim, lien, charge, or liability attached to and binding real property
Encumbrance
Under FHA's Direct _______________ program, approved lenders may underwrite and close mortgage loans without FHA's prior review or approval.
Endorsement
Mortgage Companies
Entities that provide financing for real estate purchases usually through a
The _______________ the borrower has built up over time may be used to obtain a subordinate finance instrument, using the property as collateral.
Equity
At any time prior to the foreclosure, the borrower has the right to step in and pay what is owed. This is called _______________.
Equity of redemption
Allows the lender to raise the existing interest rate
Escalation clause
The servicer of a loan must submit an annual statement for each _______________ within 30 days of the completion of the computation year.
Escrow Account
Churning
Excessive selling/lending activity to generate fees and commissions
Limits the borrower's personal liability in the event of a default on a loan, protecting other property from becoming collateral
Exculpatory clause
A(n) _______________ loan is exempt from a deficiency judgment.
FHA
Bob and Sarah decided to purchase their first home. They have decent credit and have some longevity in their respective jobs. The big issue for them is that they have not saved up enough for a substantial downpayment on a home. The home that they want to purchase is in the range of $150,000. Bob's parents have offered to loan them up to $6000 to help them with the downpayment. Sarah's parents have offered to give them, as a gift, up to $10,000. Neither Bob nor Sarah have any military experience, eliminating a VA loan as a possibility. Bob and Sarah are hoping to put a minimum downpayment on the home with the hope of buying a bit of furniture and landscaping after they move in. What is the best type of loan for Bob and Sarah?
FHA loan
Government Loans
FHA, VA, or USDA loans that are insured or guaranteed by the federal government
Common occurrences that can result in foreclosure in all of the following except:
Failure to follow a deed restriction
A Section 205 loan is an USDA Rural Development Guaranteed Housing Loan Program.
False
A married couple has a capital gain exemption if the property has been their primary residence for more than 1 year.
False
A participation loan is when two or more builders share in the construction of a large commercial building.
False
An individual may have a tax-free capital gain on the sale of real property up to $250,000 if the property were his or her principal residence for at least two of the last five years.
False
Section X of the Fannie Mae 1003 is used to qualify the borrower for the loan.
False
Signing the Loan Estimate locks the borrower into the loan described in the LE form.
False
The Farm Service Agency is an agency of the FHA.
False
The Section 502 loan is for loans up to 90% loan to value.
False
The USDA Rural Development Guaranteed Housing Loan program, Section 502 loan is for a farm or ranch.
False
The gain or loss on the sale of real estate is a simple calculation of the sales price minus the original purchase price.
False
The owner of a single-family home can depreciate the property for tax purposes.
False
The Federal National Mortgage Association is also known as:
Fannie Mae
The two largest issuers of REMICS are Freddie Mac and _______________.
Fannie Mae
_______________ is a government-sponsored enterprise with the mission of providing a secondary market for agricultural real estate mortgage loans.
Farmer Mac
Due to the financial crash of 2007, the _______________ placed Freddie Mac and Fannie Mae into conservatorship.
Federal Housing Finance Agency
__________ is currency that is not backed by any precious metals at all.
Fiat money
The trustee in a deed of trust has a _______________ with the lender.
Fiduciary relationship
Under the Texas Constitution, before lenders commence foreclosure, they must give the borrower time to do one of the following, except:
File suit against the lender in court
The potential negative impact of mortgage fraud is on _______________.
Financial institutions
All of the following are primary monetary policy tools the Fed uses to influence the cost and availability of credit except: The discount rate Reserve requirements Open market operations Fiscal policy
Fiscal policy
Relates to federal government spending
Fiscal policy
_____________ relates to government spending.
Fiscal policy
A _______________ is a loan that has an interest rate that remains the same throughout the term of the loan.
Fixed-rate mortgage
In a _______________ plan, the borrower pays part of the delinquency each month along with the borrower's regular monthly installment.
Forbearance
Legal procedure by which secured property may be sold to satisfy an unpaid note
Foreclosure
The legal procedure whereby the secured property may be sold to satisfy the unpaid promissory note
Foreclosure
The legal process whereby the property is sold to satisfy the unpaid promissory note is called _______________.
Foreclosure
Garth is representing Mr. and Mrs. Wu who have just decided to buy a home. Garth advised the couple to get prequalified before viewing any more homes. Mr. and Mrs. Wu trust Garth and want to do their own research and get Garth's advice before talking to a loan originator. They are disheartened by the realization that closing costs are typically more than they had thought, so they are considering pursuing an FHA loan, so that they can make a smaller down payment. However, they do not like the fact that the MIP makes the house payments higher. Mr. and Mrs. Wu have a combined gross monthly income of $9,000. For the home they want, the estimated monthly payment would be $2,700 on a 30-year loan. If Mr. and Mrs. Wu are pre-approved for a mortgage, what form will they receive?
Form B Conditional Approval Letter
The Interstate Land Sales Full Disclosure Act was passed in 1968 to protect consumers from ______________ in the sale or lease of land.
Fraud
_______________ is a misrepresentation and/or concealment made by a borrower or other party in order to qualify for a mortgage loan.
Fraud for housing
_______________ is a federally chartered corporation established as the Federal Home Loan Mortgage Corporation in 1970.
Freddie Mac
Life Insurance Companies
Funded by premiums paid by the insured to create savings by reinvesting to produce capital
The process of transferring funds to a title or escrow company for disbursement
Funding
With few exceptions, the law requires that the VA be paid a(n) _______________ on guaranteed loans.
Funding fee
Gift Funds
Funds from relatives as a source of down payment on a loan
Pensions/Retirement Account
Funds held with the anticipation of distribution when the client reaches retirement age
Debt instrument which attaches to all the property of the debtor not exempt from forced sale
General lien
______________ funds are acceptable and may be used for the entire down payment on an FHA loan.
Gift
All of the following are acceptable sources of the borrower's downpayment, except: Gift from seller Gift from relative Stocks Earnest money deposit
Gift from seller
_______________ is a wholly-owned government association that operates the mortgage-backed securities program designed to facilitate the flow of capital into the housing industry.
Ginnie Mae
The Fed uses open market operations for buying or selling of ___________.
Government Securities
A(n) _______________ sells municipal bonds to fund major capital investments.
Government entity
The _______________ program is designed for borrowers who cannot afford their current mortgage and need to transition to more inexpensive housing.
HAFA
The _______________ allows the Treasury to work with loan providers to refinance existing loans to achieve a 31% front-end ratio.
HAMP
The interest rate on a subordinate instrument is typically _______________ the market rates for primary instruments due to increased risk on the part of the lender.
Higher than
The appraiser should indicate in the section titled _______________ the best use for the property.
Highest and best use for the property
Loans that are collateralized by a non-purchase money mortgage or deed of trust on the borrower's principal residence
Home equity loan
A _______________ occurs when a contractor targets owners of homes in need of repair referring the homeowner to lenders encouraging the homeowner to refinance to cover the repair costs.
Home improvement scam
The Texas Reverse Mortgage is for older homeowners who are described as ____________.
House-rich and cash-poor
The _______________ was enacted in July of 2008 creating the Federal Housing Finance Agency.
Housing and Economic Recovery Act
In Section III of the Fannie Mae 1003, the borrower will provide information regarding all of the following, except:
Income
All of the following affect the borrower's credit score except: Income ratios Payment history Length of credit history Current level of indebtedness
Income ratios
A Real Estate Mortgage Investment Conduit allows for the _______________ investment in mortgages through the sale of securities.
Indirect
Private Mortgage Insurance
Insurance that indemnifies a lender against a borrower default on a conventional residential mortgage loan
According to the site, which of the following is an FHFA value?
Integrity
In a REMIC, the repayment of principal and interest is channeled through to the _______________.
Investors
Foreign Lenders
Investors in the secondary market from outside of the U.S.
Calculating Cash to Close _________________.
Is a summation of sections A, B, C, E, F, G, and H
Fannie Mae works to accomplish all of the following housing objectives except:
It funds loans for credit poor areas
In a _______________, the lender files suit with the judicial system and the borrower receives a note in the mail demanding payment.
Judicial foreclosure
Payments in excess of the reasonable value of goods provided or services rendered
Kickback
Serviceman's Readjustment Act
Known as the GI Bill of Rights, Serviceman's Readjustment Act is a law that provides servicemen and women with medical benefits, educational benefits, and low-interest loans to help the veteran assimilate back into civilian life
Foreclosure
Legal procedure by which secured property may be sold to satisfy an unpaid note
VA loans are made by a _______________, such as a mortgage company, savings and loan, or a bank.
Lender
Predatory lending typically affects all of the following groups of people except: Low-income Challenged credit borrowers Senior citizens Lenders
Lenders
Savings And Loans
Lending institutions that were organized by groups of people who lacked the sufficient savings to purchase their own home
The loan-to-value ratio is the percentage of the _______________ of the appraised value or sales price that the lender will lend.
Lesser
The Texas Department of Savings and Mortgage Lending
Licenses or registers RMLOs in the state of Texas
_______________ are funded by premiums paid by those insured.
Life Insurance Companies
The secondary market is designed to provide greater _______________ to the residential real estate mortgage market by providing for a steady supply of funds from investors.
Liquidity
Private lenders can create novel and unique _______________ products.
Loan
The borrower receives a credit on the disclosure for which of the following:
Loan Amount
A mortgage loan originator who receives an application for a federally related mortgage loan is required to provide the borrower this document within three business days of the loan application:
Loan Estimate
The loan amount will be found in the _______________ section of the Loan Estimate.
Loan Terms
_______________ is a practice in which a lender encourages repeated refinancing by existing customers tacking thousands of dollars in additional fees or other charges to the loan each time.
Loan flipping
The process of collecting information about a borrower in order to build a loan file that will be used to make an underwriting decision
Loan processing
Conventional Loans
Loans made with real estate as security and not involving government participation in the form of insuring of guaranteeing the loan
Conventional Loans
Loans made with real estate as security and not involving government participation in the form of insuring or guaranteeing the loan
To be sold into Fannie Mae or Freddie Mac in the secondary market, loans adhere to all of the following standards, except:
Loans must be held in portfolio first
Home Equity Loans
Loans that are collateralized by a non-purchase money mortgage or deed of trust on the borrower's principal residence
Prohibits prepayment of the loan prior to a certain date
Lock-in clause
All of the following are disadvantages of ARM loans, except: Unpredictable mortgage payments Confusion Lower than market initial interest rate Need for early refinancing
Lower than market initial interest rate
The sum of currency held by the public and transaction deposits at depository institutions is referred to as:
M1
M1 plus savings deposits, small-denominations time deposits, and retail money market mutual fund shares is __________.
M2
The FHA provides mortgage insurance on single-family, multifamily, and _______________ homes throughout the United States and its territories.
Manufactured
The most probable price a property should bring on the open market
Market value
An excess in money supply causes __________.
Monetary inflation
When there is an excess of money supply in the market
Monetary inflation
Policy that deals with interest rates and the supply of money in the US economy.
Monetary policy
The maintenance of a stable money supply that provides growth in the economy while keeping inflation in check is ______________.
Monetary policy
The _______________ pledges the property as security for a debt.
Mortgage
_______________ is a person, corporation, or firm not otherwise in banking that provides its own funds for mortgage financing.
Mortgage Bankers
A _______________ is a middleman between a borrower and a lender.
Mortgage Broker
A _______________ specializes as the middleman between the borrower and the lender.
Mortgage Broker
Typically specialize as middlemen between borrowers and lenders
Mortgage Brokers
The _______________ allows taxpayers to exclude income from the discharge of debt on their principal residence.
Mortgage Debt Relief Act of 2007
If a borrower is in default, the _______________ may start the foreclosure process.
Mortgage Servicer
Up-Front Mortgage Insurance Premium
Mortgage insurance charged to the borrower at closing on an FHA loan, determined as a percentage of the base loan amount
The _______________ is the person or entity that receives the pledge as security for a debt.
Mortgagee
An Equity Estate REIT purchases all of the following except:
Mortgages
The _______________ is the person who pledges the property as security for a debt.
Mortgagor
Direct loans for construction or improvement on Federal Trust Land
Native American Direct Loan
_______________ occurs when the borrower's payment does not cover all of the interest due each month.
Negative Amortization
The _______________ of the appraisal report is a narrative entry that includes a general discussion of the type of homes in a neighborhood.
Neighborhood Description
The appraisal report has a section that describes the neighborhood's geographical boundaries, called:
Neighborhood boundaries
Bob and Sarah decided to purchase their first home. They have decent credit and have some longevity in their respective jobs. The big issue for them is that they have not saved up enough for a substantial downpayment on a home. The home that they want to purchase is in the range of $150,000. Bob's parents have offered to loan them up to $6000 to help them with the downpayment. Sarah's parents have offered to give them, as a gift, up to $10,000. Neither Bob nor Sarah have any military experience, eliminating a VA loan as a possibility. Bob and Sarah are hoping to put a minimum downpayment on the home with the hope of buying a bit of furniture and landscaping after they move in. When will the Annual Mortgage Insurance be removed from the loan?
Never
Doug is interested in purchasing a new home. He is a veteran of the U. S. Army, and previously owned a home that he had financed using a VA loan. The loan was paid off when he sold the home five years ago. Doug has good credit and some available cash. Because he plans to do some remodeling after closing, he wants to minimize his downpayment, preserving his cash for future projects. The home he is looking at is in the $200,000 range. Will this loan require any on-going mortgage insurance premiums?
No
Bob and Sarah decided to purchase their first home. They have decent credit and have some longevity in their respective jobs. The big issue for them is that they have not saved up enough for a substantial downpayment on a home. The home that they want to purchase is in the range of $150,000. Bob's parents have offered to loan them up to $6000 to help them with the downpayment. Sarah's parents have offered to give them, as a gift, up to $10,000. Neither Bob nor Sarah have any military experience, eliminating a VA loan as a possibility. Bob and Sarah are hoping to put a minimum downpayment on the home with the hope of buying a bit of furniture and landscaping after they move in. Can Bob and Sarah borrow the downpayment from Bob's parents?
No, it must be a gift.
Credit Unions
Non-profit organizations that exist to serve its members by accepting deposits and lending money returning surplus income to its members in the form of dividends
In commercial lending, it provides that the borrower is not personally liable for repayment of a loan
Nonrecourse clause
The TVLB Land Loan Program is for land ____________.
Of at least an acre
The _______________ charters, regulates, and supervises all national banks, federal savings associations, federal branches, and agencies of foreign banks.
Office of the Comptroller of the Currency
Settlement
Often referred to as closing, which is the consummation of a contractual real estate transaction in which all appropriate documents are signed and the proceeds of the mortgage loan are disbursed by the lender
All of the following will hurt a credit score except: Excessive shopping for credit On-time monthly payments Credit cards at capacity Moving balances from one revolving credit card to another
On-time monthly payments
Points
One percent of the loan amount paid as an origination fee to the lender or prepaid interest
Buying or selling government securities by the Federal Reserve.
Open-market operations
The Department of Treasury is organized into two main components: the departmental office and ____________.
Operating bureaus
The process of creating a new mortgage loan
Origination
A(n) _______________ includes both real and personal property in the same loan.
Package mortgage
The seller is debited at closing for:
Pay-off of the First Mortgage
Which of the following is not a benefit of homeownership?
Paying a mortgage
The most common cause of mortgage foreclosure is:
Payment delinquency
Kickbacks
Payments in excess of the reasonable value of goods provided or services rendered
A refinance is the _______________ of an existing loan with the proceeds of a new loan to the same borrower.
Payoff
_______________ are fed by client investment funds.
Pension and Retirement Programs
The promissory note includes all of the following except:
Pledge of the property
Percentages based on the amount of the loan
Points
Loans that are not sold to investors in the secondary market are called:
Portfolio loans
A typical deed of trust contains a _______________ allowing for a non-judicial foreclosure.
Power of Sale clause
Also known as a statutory foreclosure
Power of sale
In a _______________, the mortgage contains a power of sale clause.
Power of sale
A non-judicial foreclosure may occur when a _______________ exists in a mortgage.
Power of sale clause
Taking advantage of a consumer's lack of knowledge regarding lending practices is called _______________.
Predatory lending
The FDIC receives its funding from
Premiums that banks and thrift institutions pay
More than two-thirds of subprime loans have _______________.
Prepayment penalties
The lender charges the borrower if he/she pays the loan off early
Prepayment penalty
On the appraisal report, an estimate of how the neighborhood's parcels are currently improved and developed is called:
Present Land Use %
Federal Deposit Insurance Corporation
Preserves and promotes public confidence in the U.S. financial system by insuring deposits in banks and thrift institutions for up to $250,000
U. S. Treasury
Primarily responsible for raising funds to finance the operations of the United States Government
Commercial banks, credit unions, mortgage companies, and savings and loans are all part of the _______________.
Primary Market
According to the site, who provides VA home loans?
Private Lenders
Which of the following is a document that the buyer would sign at closing?
Promissory note
_______________ is a scam where unsuspecting buyers are sold homes in extreme states of disrepair for prices far above what the houses are actually worth.
Property Flipping
All of the following are examples of liens except: Tax Liens Property Liens Mechanics and Materialman's Liens Mortgages and Trusts Deeds
Property Liens
The primary goal of the Federal Home Loan Bank System is to:
Provide credit and other services to fund housing and other loans in the community
The Office of Consumer Credit Commissioner regulates all of the following real estate transactions except: Secondary Mortgage Purchase Mortgages Home Equity Loans Property Tax Lien Lenders
Purchase Mortgages
Default-related services include all of the following, except: Property inspections Foreclosure costs Purchase costs Property preservation
Purchase costs
A non-judicial foreclosure is a _______________ foreclosure than a judicial foreclosure.
Quicker
Holds mortgages in trust for the benefit of investors
REMIC
A _______________ is an investment vehicle created to allow small investors to invest in larger commercial properties.
Real Estate Investment Trust
Investment vehicle created by Congress in 1960
Real Estate Investment Trust
A _______________ invests in mortgages or mortgage-backed securities.
Real Estate Mortgage Trust
The _______________ should join the buyer or the seller at the closing table to be available to answer questions.
Real estate agent
The re-amortizing of a mortgage
Recasting
_______________ is the process of re-amortizing a mortgage.
Recasting
The practice of refusing to provide financing in a particular area because of location
Redlining
Raising the reserve requirements _______________ the availability of funds for lending.
Reduces
In a _______________ refinance the borrower pays off an existing loan with the proceeds of the new mortgage on the same property.
Regular
Fiscal Policy
Relating to government spending
Allows for a portion of the loan to be paid in exchange for the lender releasing part of the property from the mortgage
Release clause
Sources of income for a Real Estate Mortgage Trust include all of the following, except: Gain from buying and selling mortgages Origination Fees Rent Interest
Rent
The industry term for residential loan originators, as mandated by the SAFE Act
Residential Mortgage Loan Originator
The TDHCA is responsible for all of the following except: Residential Mortgage Loan Originators The manufactured home industry Housing-related community service programs Affordable housing
Residential Mortgage Loan Originators
_______________ income is the amount of money left over each month after all of the borrower's major expenses are paid - including housing, taxes, and debt payments.
Residual
A homeowner who is at least 62 years old may want to use a(n) _______________ to borrow against the equity in their property.
Reverse mortgage
A loan underwritten based upon the home's appraised value and the loan term of the owner
Reverse mortgage
A bond is rated according to its _______________.
Risk
The _______________ offers delinquent borrowers the opportunity to prevent foreclosure by working with lenders to refinance their existing loan.
SMP
A lender may seek a deficiency judgment when the _______________ at the foreclosure auction is less than what is owed on the property.
Sales Price
The down payment is the difference between the _______________ and the LTV.
Sales price
Which of the following is not a role of the agent in regards to the buyer's financing?
Scheduling the appraisal
A(n) _______________ is an instrument subordinate to the primary mortgage.
Second mortgage
Fannie Mae operates exclusively in the _______________ and provides support to mortgage lending institutions in the primary market.
Secondary Market
The _______________ exists for the purchase and sale of existing mortgages to investors.
Secondary Market
Encompasses the purchase and sale of existing mortgages to investors
Secondary mortgage market
This section of RESPA places limits on the amounts that a lender may require a borrower to put into an escrow account for the purpose of paying taxes and hazard insurance.
Section 10
The Single Family Housing Direct Home Loan is also known as:
Section 502 Direct Loan Program
This section of RESPA prohibits kickbacks and unearned fees.
Section 8
This section of RESPA prohibits the seller from directly or indirectly requiring the buyer to purchase title insurance from a specific title company.
Section 9
To raise money for the purchase of loans, Freddie Mac sells its own _______________.
Securities
A deed of trust is a three-party instrument whose parties include all of the following except: Trustee Borrower Seller Lender
Seller
Sometimes the _______________ is willing to finance the buyer.
Seller
Seller financing may be referred to as a _______________.
Seller carryback
All of the following are part of the section called Due From Borrower at Closing on page 3 of the Closing Disclosure except: Seller's Loan Payoff Closing Costs Paid at Closing Sales Price of the Property Sales Price of any Personal Property
Seller's Loan Payoff
Commonly known as the GI Bill of Rights
Servicemen's Readjustment Act
The ______________ collects the monthly payment, maintains records of payments and balances, collects and pays taxes, remits funds to the note holder, and follows up on delinquencies.
Servicer
The _______________ section has costs associated with the loan that the buyer may not choose the provider of the services.
Services You Cannot Shop For
Sending monthly payment statements and collecting monthly payments, maintaining payment records and following up on delinquencies
Servicing
Sylvia, a real estate license holder, decides to prospect for new customers by handing out flyers which highlight her qualifications and also provide information about special loan programs. She works in a metropolitan area where the housing market continues to grow, and many new homes are being built in an area where zero-down USDA financing can be used. Victor, an RMLO, volunteers to pay for the flyers and take care of all of the printing and set up if the flyers can be co-branded in order to help them both generate new business at the same time. Sylvia had some ideas about what she wanted the flyers to say about loans, but Victor assures her that he can do an excellent job at writing the information for that section of the flyer. How can Sylvia ensure that Victor is properly licensed as an RMLO?
She can look him up in the NMLSR
Conforming Loans
Standardized conventional loans written on uniform documents that meet the purchase requirements of Fannie Mae and Freddie Mac - both loan amount and borrower characteristics must meet the guidelines
A power of sale is a _______________.
Statutory foreclosure
A _______________ owns a share of the corporation.
Stockholder
A _______________ is a person used to buy a property to conceal the actual buyer.
Straw buyer
In a _______________, the lender files a lawsuit of the homeowner that is in default.
Strict foreclosure
Second and third mortgages
Subordinate instruments
The junior mortgage will continue in its position and will not become a first mortgage
Subordination clause
_______________ loans are risk-based financing.
Subprime
What is the primary determinant of real estate value?
Supply and demand
An application for a loan includes all of the following, except: Loan Amount Property Address Survey Estimated Value
Survey
The possession date for the buyer is stipulated in the _____________.
TREC promulgated contract
Retirees, Mark, 75 years of age, and Cindy, 72, have a tight monthly budget, leaving little left over at the end of each month for recreation or travel. They have amassed over $25,000 in credit card debt over the last year due to taxes and medical bills, and even though they are paying $1,000 per month to pay down their cards, the interest rates are high, and it seems to be taking forever to bring down the balances. Marl and Cindy owe $50,000 on their mortgage. Their property has appreciated since they bought it 10 years before, and is currently worth $300,000. Since they are both retired, their monthly income comes from their Social Security at $3,000 per month and from an IRA at $700 per month before taxes. The couple is interested in a reverse mortgage to pay off their mortgage so that they can have more money each month and not rely on credit cards. If Mark and Cindy want equal payments for as long as at least one of them is alive and stays in the house, occupying it as his/her principal residence, which payment plan would be best for them?
Tenure
HECMs have five payment plans, tenure, term, line of credit, modified tenure, and modified _______________.
Term
The Real Estate Settlement Procedures Act is administered by
The CFPB
Who funds the FHA?
The FHA itself
Farmer Mac
The Federal Agricultural Mortgage Corporation is a government-sponsored enterprise with the mission of providing a secondary market for agricultural real estate mortgage loans
Freddie Mac
The Federal Home Loan Mortgage Corporation created in 1970 to purchase mortgages in the secondary market
Fannie Mae
The Federal National Mortgage Association created in 1938 as an agency of the federal government to bring stability to the U.S. housing market
Ginnie Mae
The Government National Mortgage Association is a wholly-owned government association that operates a mortgage-backed securities program designed to facilitate the flow of capital into the housing industry
___________ was created in September 2008 to restore the nation's financial stability and restart economic growth.
The Troubled Asset Relief Program
Liquidity
The ability to sell an asset and convert it into cash at a price close to its true value in a short period of time
Conservatorship
The appointment of a guardian to manage the financial affairs of a person or entity
Pre-qualification
The borrowers provide basic information to the lender including income, debt, and credit history
Federal Reserve
The central banking system of the United States
Servicing
The collecting monthly payments, maintaining records of payments and balances, collecting and paying taxes and insurance (and managing escrow and impound funds), remitting funds to the note holder, and following up on delinquencies
Closing
The consummation of a contractual real estate transaction in which all appropriate documents are signed and the proceeds of the mortgage loan are disbursed by the lender
Appraisal Report
The document used by appraisers to communicate the appraiser's opinion of value for a property
Economic Cycle
The fluctuation of the economy between periods of growth and contraction
Discount Rate
The interest a Reserve Bank charges eligible financial institutions to borrow funds on a short-term basis
According to the website below, what is the prime rate?
The interest rate that is determined by individual banks
Strict Foreclosure
The lender files a lawsuit on the homeowner that has defaulted
Monetary Policy
The maintenance of a stable money supply that provides for growth in the economy while keeping inflation in check
Primary Mortgage Market
The market where borrowers and lenders come together to create and negotiate the terms of a mortgage transaction
At the national level, the value of residential real estate is affected by what factor?
The monetary policies of the Federal Reserve
Annual Premium
The mortgage insurance on an FHA loan that is paid annually divided into 12 monthly payments, determined as a percentage of the balance of the loan
Forbearance
The most common way of resolving a loan default through a plan to suspend payments for a limited time until the borrower is able to begin a repayment schedule
Loan-To-Value
The percent of the price or the appraised value whichever is lower that the buyer is borrowing
Loan Processing
The phase of the loan process where the borrower's file is built
Power Of Sale
The power of sale clause is a clause in the deed of trust where the borrower gives the lender the authority to foreclose in the event of default.
Redlining
The practice of refusing to provide financing in a particular area because of the location
Origination
The process of creating a new mortgage loan
Underwriting
The process of making a lending decision through the evaluation of the borrower's loan application
Disintermediation
The process of withdrawing funds from one arena of investment and moved to another
Income Qualification
The proof of income of a borrower using W-2s and/or tax returns
Federal Funds Rate
The rate the Federal Reserve charges banks for unsecured loans, most of which are for a very short term (sometimes for overnight)
Recasting
The re-amortizing of a mortgage
Yield
The return that a lender receives representing the money earned on an investment
Closing Disclosure
The settlement statement that shows a division of debits and credits for a buyer and seller of a real estate transaction and must be given to the borrower/buyer no later than 3 business days prior to closing
Federal tax policy that affects demand for real estate includes all of the following except:
The supply of money
Residential Mortgage Loan Originator
The term mandated by the SAFE Act for the person who originates a mortgage loan
Funding
The transfer of funds to a title or escrow company for disbursement
Eligibility
The veteran's entitlement to VA home loan benefits under the law, based on military service
Deficiency Judgment
Through a motion filed in court, the lender seeks to receive an unpaid balance or deficiency on the original mortgage
The Federal Housing Administration provides mortgage insurance on all of the following purchases except: Single-family homes Timeshares Multi-family homes Manufactured Homes
Timeshares
The contract for deed is a type of seller financing that allows for _______________ by the seller.
Title retention
A common appraisal issue on an agricultural property could include that the property served only by a volunteer fire department.
True
A homeowner can deduct property taxes and interest on a mortgage from their income for federal tax purposes.
True
A shared appreciation mortgage allows the lenders to share in the profitability of the property when it is sold.
True
Agricultural lending is different from residential lending because buyers may be seeking financing on unimproved properties that lack utilities.
True
An installment sale is a sale of property in which the seller receives at least one payment after the tax year of the sale.
True
FSA loans include farm ownership loans, operating loans, and emergency loans.
True
Land is never depreciated.
True
The Declarations section of the Fannie Mae 1003 must be completed with the borrower answering every question in the section.
True
To qualify for a Section 502 loan a borrower may only have up to 115% of the median income of the area where the property is located.
True
The Verification of Employment will be sent to current employers and any previous employers within the last _______________ years.
Two
The appraiser will list the improvements that are normal for similar properties in the section of the appraisal titled:
Typical improvements
Bob and Sarah decided to purchase their first home. They have decent credit and have some longevity in their respective jobs. The big issue for them is that they have not saved up enough for a substantial downpayment on a home. The home that they want to purchase is in the range of $150,000. Bob's parents have offered to loan them up to $6000 to help them with the downpayment. Sarah's parents have offered to give them, as a gift, up to $10,000. Neither Bob nor Sarah have any military experience, eliminating a VA loan as a possibility. Bob and Sarah are hoping to put a minimum downpayment on the home with the hope of buying a bit of furniture and landscaping after they move in. What type of mortgage insurance will be paid at closing by Bob and Sarah?
UFMIP
The _______________ offers rural homeowners to lower their monthly mortgage payment to no more than 31% of their verified monthly gross income.
USDA's special loan servicing
The process of evaluating a borrower's loan application to determine the risk involved for the lender
Underwriting
The seller receives a credit at closing for all of the following except:
Unpaid property taxes
All of the following are mortgage fraud red flags, except: Employer's address is a post office box Lack of accumulation of assets compared to income Down payment in some form other than cash Upgrading to a larger home
Upgrading to a larger home
Back Ratio
Used to qualify a borrower for a loan as a ratio of the borrower's total recurring monthly debts and the borrower's gross monthly income
Front Ratio
Used to qualify a borrower for a loan based upon the proposed house payment and his or her gross monthly income
Correspondent Lender
Usually in smaller scale than mortgage bankers or brokers that extend loans with their funds at their own risk
An example of a lien that would be considered a desirable encumbrance is:
Utility easement
Doug is interested in purchasing a new home. He is a veteran of the U. S. Army, and previously owned a home that he had financed using a VA loan. The loan was paid off when he sold the home five years ago. Doug has good credit and some available cash. Because he plans to do some remodeling after closing, he wants to minimize his downpayment, preserving his cash for future projects. The home he is looking at is in the $200,000 range. What is likely the best type of loan for Doug?
VA
The Request for Verification of Deposit is commonly called _______________.
VOD
Once a mortgage has been approved and the borrower has signed the mortgage documents, a _______________ verification of employment is conducted with all current employers.
Verbal
Form lenders use to obtain borrower balance information
Verification of Deposit
Ratio of proposed loan payment to GMI
Verification of Deposit
Which is acceptable proof of income in section V Monthly Income and Combined Housing Expense Information?
W-2
Doug is interested in purchasing a new home. He is a veteran of the U. S. Army, and previously owned a home that he had financed using a VA loan. The loan was paid off when he sold the home five years ago. Doug has good credit and some available cash. Because he plans to do some remodeling after closing, he wants to minimize his downpayment, preserving his cash for future projects. The home he is looking at is in the $200,000 range. Will the lender require taxes, insurance, and other assessments be paid into an escrow (impound) account?
Yes
Retirees, Mark, 75 years of age, and Cindy, 72, have a tight monthly budget, leaving little left over at the end of each month for recreation or travel. They have amassed over $25,000 in credit card debt over the last year due to taxes and medical bills, and even though they are paying $1,000 per month to pay down their cards, the interest rates are high, and it seems to be taking forever to bring down the balances. Marl and Cindy owe $50,000 on their mortgage. Their property has appreciated since they bought it 10 years before, and is currently worth $300,000. Since they are both retired, their monthly income comes from their Social Security at $3,000 per month and from an IRA at $700 per month before taxes. The couple is interested in a reverse mortgage to pay off their mortgage so that they can have more money each month and not rely on credit cards. Do the couple meet the borrower age requirements?
Yes
Retirees, Mark, 75 years of age, and Cindy, 72, have a tight monthly budget, leaving little left over at the end of each month for recreation or travel. They have amassed over $25,000 in credit card debt over the last year due to taxes and medical bills, and even though they are paying $1,000 per month to pay down their cards, the interest rates are high, and it seems to be taking forever to bring down the balances. Marl and Cindy owe $50,000 on their mortgage. Their property has appreciated since they bought it 10 years before, and is currently worth $300,000. Since they are both retired, their monthly income comes from their Social Security at $3,000 per month and from an IRA at $700 per month before taxes. The couple is interested in a reverse mortgage to pay off their mortgage so that they can have more money each month and not rely on credit cards. Mark and Cindy would like to change their plan, will they be allowed to do so?
Yes. Mark and Cindy can change their payment plan option for a fee.
Sylvia, a real estate license holder, decides to prospect for new customers by handing out flyers which highlight her qualifications and also provide information about special loan programs. She works in a metropolitan area where the housing market continues to grow, and many new homes are being built in an area where zero-down USDA financing can be used. Victor, an RMLO, volunteers to pay for the flyers and take care of all of the printing and set up if the flyers can be co-branded in order to help them both generate new business at the same time. Sylvia had some ideas about what she wanted the flyers to say about loans, but Victor assures her that he can do an excellent job at writing the information for that section of the flyer. Can Sylvia work with Victor, giving his name to her buyers?
Yes. Sylvia can distribute flyers with Victor, but she should provide her buyers with the names of at least three RMLOs to consider.
Return on an investment
Yield
The return on an investment is called the _______________.
Yield
Seller financing is the _______________ common form of mortgage financing.
least
