REE Week 3

Celia was obtaining a conventional loan, and she put $50,000 down as a down payment. Why might her lender also require her to obtain private mortgage insurance? A. Her down payment of $50,000 isn't at least 20% of the purchase price. B. Her lender is a subprime lender. C. PMI is triggered at the $50,000 down payment amount. D. She has poor credit.

A

How's interest defined as it's related to a mortgage loan payment? A. A fee paid to lenders for the use of their money B. A fee to keep other borrowers from taking interest in your property and buying it out from under you C. Extra money paid to cover any unexpected bank fees D. Random charges

A

The lender requires documentation from the borrower although no property is yet identified. A. Pre-approval B. Pre-qualification C. Application

A

A mortgage is a legally binding document that creates a lien on a piece of property and gives the lender the right to foreclose on the property if the borrower defaults. Who or what entity is considered the mortgagee? A. Borrower B. Lender C. Loan D. Property

B

The lender performs no verification of information the consumer provided. A. Pre-approval B. Pre-qualification C. Application

B

An exclusive right-to-sell agreement provides the ________ with a commission no matter who brings the buyer to the transaction. A. Buyer's agent B. Cooperating agent C. Listing agent D. Sub-agent

C

Information the consumer provides will be validated during loan processing. A. Pre-approval B. Pre-qualification C. Application

C

Private mortgage insurance protects the lender in case the borrower takes which of the following actions? A. Chooses to prepay B. Decides to sell C. Defaults on the loan D. Refinances

C

The consumer works with the lender to select a loan product. A. Pre-approval B. Pre-qualification C. Application

C

The lender will charge a one-and-a-half-point origination fee and two loan discount points. What will be the total due for points on a $115,000 loan? A. $1,725 B. $2,300 C. $4,025 D. $575

C

What would happen if your client's rate lock expires three days prior to closing? A. Nothing, there is a three-day grace period after the date of the lock expiration. B. The interest rate lock can be extended by paying an additional fee. C. The interest rate will revert to the current rates. D. The interest rate will revert to the rate at the time of the application.

C

When a deed of trust is used as a security instrument, who holds the deed and the note? A. The lender holds the deed and the note B. The lender holds the deed, and the trustee holds the note. C. The trustee holds the deed, and the lender holds the note. D. The trustee holds the mortgage and the note.

C

Which mortgage clause requires the lender to discharge the mortgage lien once the borrower has paid in full? A. Acceleration B. Alienation C. Defeasance D. Due-on-sale

C

Which of the following is NOT a valid way to terminate a listing agreement? A. Expiration B. Mutual agreement C. The buyer requests it D. The property sells and closes

C

Generally, there are covenants between the borrower and the lender within a mortgage document. Which of the following is a mortgage covenant? A. Agree to refinance only with the current lender. B. Give the lender first right of refusal. C. Move all checking and savings account to the lender's institution. D. Pay any charges and assessments against the property.

D

May listing agreements be terminated without penalty? A. Only by the seller B. Only when they expire C. Yes, at any time since they're not binding D. Yes, if both the listing broker and the seller's agree in writing

D

Which of the following is one reason a lender might charge a prepayment penalty? A. Because the lender is a subprime lender B. To cover the costs of processing an early payoff C. To deter buyers from ever paying off their mortgage D. To recover the money lost in anticipated interest

D

Leonard is offered a loan at 5.75%. Because he plans to be in his home for several years, he chooses to pay points up front to have the rate reduced to 5.25%. What's this an example of? A. Discount points B. Down payment C. Gap financing D. Usury

A

Stacy has gone into default on her mortgage. Her lender is demanding that the entire loan balance be paid in full. Which mortgage clause permits her lender to do this? A. Acceleration B. Alienation C. Defeasance D. Due-on-sale

A

Ted's property is in foreclosure, but he has some equity in his property. An investor suggests that she and Ted enter into a sales contract for a substantially higher price than the investor would actually pay. The investor pockets the cash and allows the house to be foreclosed on. What sort of scheme is this? A. Equity skimming B. Inflated appraisal C. Silent second D. Straw buyer

A

The Real Estate Settlement Procedures Act protects consumers by _______. A. Eliminating illegal kickbacks and referral fees among settlement service providers and requiring lender disclosures as part of a residential real estate transaction involving credit B. Prohibiting settlement service providers—including real estate professionals—from discriminating during a residential real estate transaction C. Requiring all settlement service providers to restrict their fees to only those types and amounts that Regulation X allows D. Requiring that settlement companies provide an attorney to represent the borrower's interests, at no cost to the borrower, as part of a residential real estate transaction involving credit

A

The intent of the Consumer Credit Protection Act, which includes the Truth in Lending Act, is to safeguard the consumer by ______. A. Requiring full disclosure of the terms and conditions in any offers of credit B. Requiring lenders to maintain documentation of their commitment to honesty C. Requiring lenders to provide consumers with HUD-approved education regarding the use of credit D. Requiring the lender to work with consumers to identify options that would not require the use of credit

A

Which of the following is an acceptable ad based on Regulation Z? A. Get a low interest rate of 4.75% (4.925% APR) with as little as 10% down payment and a 30-year fixed rate with no points. B. Get a low interest rate of 4.75% on a monthly payment of $900. C. Get a low interest rate of 4.75%, with 85% loan to value. D. Get a low interest rate of 4.75% with as little as 3% down.

A

What's a discount point? A. An upfront charge to make up for the difference between the rate the borrower is receiving and the rate the lender normally requires B. The amount a borrower charges a lender for using its money, charged either monthly or annually C. The amount a lender charges to initiate a loan D. The interest rate at which a bank is allowed to borrow money from the Fed; this rate changes with the stock market

A - Discount points are actually prepaid interest to compensate the lender for the difference between the rate the borrower is receiving and the rate the lender normally requires.

A "homes for sale" magazine contains the following ad: "One-bedroom condo. Corner unit with beautiful ocean views. Financing available, 5.25% APR." Which of these statements is true? A. The ad is in compliance with TILA because condominiums aren't covered under Regulation Z. B. The ad is in compliance with TILA because providing the APR doesn't trigger the required disclosure of all credit terms. C. The ad is not in compliance because TILA requires all financing terms to be stated if the APR is stated. D. The ad is not in compliance with TILA because it mentions financing without including all of the terms of the financing.

B

Alyssa's mortgage loan is secured by the note and the mortgage. Which of the following is true if she lives in a lien theory state? A. Her lender can foreclose on her without advance notice. B. She holds title to the property, and the mortgage becomes a lien on the property. C. The lender can never legally foreclosure on her home. D. The lender doesn't need to involve the court to foreclose.

B

Bob wants an open listing agreement. Why might this not be in Bob's best interest? A. He'll have to pay multiple commissions. B. He won't get full representation from any one licensee. C. It presents an inherent conflict of interest. D. It prevents him from selling the property himself and not paying a commission.

B

Callum is working with Darby, who received an honorable discharge from the Air Force. Callum is preparing to discuss options for down payment assistance with Darby. Which of the following would be Callum's best resource for information for this specific client? A. Department of Human Services B. Department of Veterans Affairs C. Real Estate Assessment Center D. USDA Rural Development Program

B

In a title theory state, which of the following is a true statement? A. A promissory note creates a lien against the property used as security for the loan. B. It's generally much easier for a lender to foreclose on a property. C. The lien makes non-judicial foreclosure typical. D. The mortgage creates a lien against the property used as security for the loan.

B

Paulo signed an open listing agreement with Debbie, his real estate agent. Which of the following statements is true? A. Debbie will receive her commission regardless of who brings the buyer to the property. B. If Paulo finds a buyer on his own, he doesn't owe anyone a commission. C. Paulo may not have more than one open listing D. Paulo won't owe a commission if he finds the buyer, but the buyer will have to pay the commission.

B

Sondra, a buyer, signs all the required mortgage documentation, promising to make all payments to her lender. Unfortunately, Sondra falls on hard times and misses multiple payments, and the bank indicates that it's going to foreclose on her. The foreclosure proceedings are more difficult for the lender because Sondra holds the deed to the land. What kind of state does Sondra live in? A. A deed of trust theory state B. A lien theory state C. An intermediary theory state D. A title theory state

B

There is usually no cost to the consumer. A. Pre-approval B. Pre-qualification C. Application

B

What agency agreement is between the seller and the brokerage that's representing the seller? A. Buyer representation agreement B. Listing agreement C. Rental agreement D. Sales contract

B

What do property taxes in a mortgage payment pay for? A. Taxes have no real purpose in a mortgage payment, except to fatten government coffers B. The cost of public services as a percentage of the property value C. The cost of the local community budget divided by the total number of homes in the area D. The cost of the property divided by the local population

B

What does the "T" in PITI stand for? A. Tariff B. Taxes C. Term D. Territory

B

What's the purpose of the Equal Credit Opportunity Act? A. It requires financial institutions to maintain, report, and publicly disclose information about their mortgages. B. It requires lenders to make credit equally available to all creditworthy applicants, regardless of the applicant's protected class status. C. It requires that lenders disclose all credit terms in any advertisement that offers credit, allowing consumers to make informed comparisons. D. It requires that lenders invest in development and rehabilitation efforts that enable low- and moderate-income individuals and families to afford a home.

B

What's the purpose of the fixed/adjustable rate note? A. To convert the interest rate from adjustable to fixed B. To convert the interest rate from fixed to adjustable C. To convert the loan from a fixed rate to an adjustable rate D. To convert the loan from an adjustable rate to a fixed rate

B

When the lender gathers all kinds of information about the borrower's assets, debts, income, employment history, and pulls their credit report, the buyer is ___________________. A. Approved B. Making an application for a loan C. Preparing for the closing D. Prequalified

B

Which of the following is a tactic used by a predatory lender? A. Charging minorities lower interest rates B. Encouraging debt C. Refusing to loan to minorities D. Selling mortgages on the secondary market

B

Your buyer client, Percy, wants to start searching for his dream house and knows he needs to obtain financing to accomplish that. What's his first step? A. Complete a loan application. B. Obtain a pre-qualification letter. C. Sign a purchase agreement. D. Write an offer.

B

You're working with a buyer who's purchasing a home that appraised at $80,000. The buyer is obtaining a 90% loan, and the lender will charge a one-point origination fee at closing. How much will the loan origination fee be? A. $712 B. $720 C. $728 D. $800

B - $80,000 x .9 = $72,000 (loan amount), and 1% of $72,000 = $720

Sheila's financing calls for the use of a promissory note. What's a promissory note? A. A lien on a property B. An agreement for a consumer to buy a new condominium C. The borrower's promise to repay a certain sum of money to another party (the lender or holder of the note) under specified terms D. The lender's promise to repay a certain sum of money to another party

C

Sophia and Antonio are expecting twins. They want to sell their old house and buy a larger home using a conventional loan. In order to be sure they'll get the PMI waived, what will they need to have? A. They'll need a 90% loan-to-value ratio. B. They'll need to put down at least 25%. C. They should have a loan-to-value ratio of 80% or less. D. They will need to qualify for an FHA loan.

C

Which of the following is a promise from the borrower to repay a certain sum of money to another party (the lender or holder of the note) under specified terms? A. Deed of trust B. Mortgage lien C. Promissory note D. Usury

C

Which of the following is the name of a penalty lenders charge when borrowers repay their loans earlier than expected? A. Discount point B. Late fee C. Prepayment penalty D. Usury

C

You represent seller April, who is your Uncle Clyde's girlfriend. You receive an offer from Barry on behalf of a prospective buyer. Whose interests do you represent, and in what order? A. April's first, then Clyde's, then Barry's B. Clyde's first, then April's, but not Barry's C. Only April's D. Your Uncle Clyde's first, then April's, then Barry's

C

Your buyer clients, the Thompsons, told you about a problem they ran into with the lender that handled their mortgage. The Thompsons, who are African American, were given less favorable loan terms than a white couple they know who used the same lender. You know the Thompsons have excellent credit. Which act should you make them aware of? A. Community Reinvestment Act B. Consumer Credit Protection Act C. Equal Credit Opportunity Act D. Home Mortgage Disclosure Act

C

Gus has applied for a home equity line of credit from his federally insured bank so that he can make some renovations to his kitchen. The same bank is his lender for his home mortgage. Will this loan be subject to Real Estate Settlement Procedures Act requirements? A. No, because Gus won't be using a real estate professional. B. No, because there's no transfer of title involved. C. Yes, because RESPA applies to any residential loan transaction from a federally insured financial institution, including equity lines of credit. D. Yes, because the bank is also the lender for his home mortgage. If he'd used a different lender, RESPA would not apply.

C - RESPA regulations apply to loans on one- to four-family residential properties, including assumptions, refinances, home improvement loans, and equity lines of credit.

Patsy's home had been on the market for five weeks, and two brokers had buyers who were ready to make offers. If Patsy accepted one of those offers, the corresponding broker would be the only one to earn a commission. What type of listing does this describe? A. Exclusive agency B. Exclusive right to sell C. Net listing D. Open listing

D

The Morgans are about to close on their home. They're meeting with the lender to complete all the necessary paperwork. They've requested that none of their demographic information be shared with anyone. Which act would they need to be made aware of? A. Community Reinvestment Act B. Consumer Credit Protection Act C. Equal Credit Opportunity Act D. Home Mortgage Disclosure Act

D

Which of the following scenarios accurately describes the similarities between an open listing and an exclusive agency listing? A. In both types of listings, sellers are required to pay a commission to all of the brokers who list the home. B. In both types of listings, the broker owes the commission regardless of who sells the property. C. In both types of listings, the seller may work with multiple brokers to sell the property. D. In both types of listings, the seller who finds the buyer won't owe a commission.

D

Who are the parties to a listing agreement? A. A landlord and a tenant B. Property buyers and property sellers C. Property buyers and their agent D. Property sellers and their agent

D

Rusty received an acceleration letter from his mortgage lender. What is the most likely reason for receiving this letter? A. Rusty failed to pay his property taxes. B. Rusty has paid off his mortgage. C. Rusty is two or three months in default. D. Rusty's mortgage is being sold on the secondary market.

c