TX 30 Hour Real Estate Finance
The median credit score for most consumers is _______.
670-739
Which of the following is NOT required to transfer ownership of a note?
Assignment of the note to the new owner
Ava is borrowing money to buy some commercial property for her business. The loan agreement she signs includes a lock-in clause. What does that mean?
Ava will not be allowed to pre-pay the loan prior to the date specific in the loan agreement.
The FHA Energy Efficient Mortgage allows modifications such as solar panels as long as ______.
The cost of the modification is within limits based on the value of the home
Which of these best describes a home equity loan?
The funds are often used for home renovations or to fund a college education.
How does a 3-2-1 buydown work?
The interest rate starts low but increases by 1% each year for three years until it reaches the rate stated in the note.
The FHA has helped to significantly improve the mortgage market through ______.
The introduction of the long-term amortized loan
In a deed of trust, who is the trustee?
A neutral third party
Which of these statements about a buydown is true?
A permanent buydown will cost more than a temporary buydown.
What type of property is Gerald appraising if he's using the cost approach?
An industrial warehouse
Special mortgage loan programs for ______ include the FHA248 and HUD 184 programs.
Native Americans living on tribal land
Both the Housing and Economic Recovery Act and the American Recovery and Reinvestment Act funded a program called the ______ program, which provided emergency assistance grants to states to purchase and redevelop foreclosed and abandoned homes and residential properties.
Neighborhood Stabilization
Yancey purchased a home six months ago using a VA loan. Due to an inheritance, he is suddenly able to pay off his mortgage. Will he pay a pre-payment penalty?
No
With this alternative to foreclosure, a borrower hands over the property to the lender rather than face foreclosure proceedings.
Voluntary conveyance of deed
Who or what entity directs the activities of credit unions?
A board of directors
Robin has great credit and was able to secure a loan for her ocean-side dream home. Her 30-year, fixed-rate loan is for an amount that's above conventional loan limits. What type of loan does Robin have?
A non-conforming loan
What is a government-sponsored enterprise?
A private company the U.S. Congress created to make certain borrowing easier and cheaper
Which event led to the establishment of the FDIC?
Bank failures during the Great Depression
To qualify as a Texas veteran, a person must ______.
Be at least 18 years old
When HUD pursues actions that are designed to reduce housing discrimination and help communities recover from disasters, which of its goals is it supporting?
Build strong, resilient, and inclusive communities
Which of these items is a liability on a residential loan application?
Child support
Calvin purchased a house for $220,000, financing $200,000 using a 30-year conventional mortgage at 4% interest. His monthly payment is $955, including both principal and interest. The annual property taxes are $1,400 and the combined annual insurance premium is $900. What's Calvin's PITI payment each month?
Combine annual property taxes and annual insurance premiums ($1,400 + $900) then divide by 12 ($2,300 ÷ 12 = $191.67). Add the monthly property taxes and insurance to the monthly principal and interest: $191.67 + $955 = $1,146.67.
In a loan to purchase which of the following property types is NOT eligible for purchase by Fannie Mae?
Commercial space
Which real estate finance instrument includes the promise to repay and the security instrument within the same document?
Contract for deed
Which of the following actions did the Federal Reserve take in response to the 2007 financial crisis?
Decreased rates
The rate at which a bank can obtain a loan from its Federal Reserve bank when using commercial paper as collateral is called the ______ rate.
Discount
River City Bank needs to cut back on lending. For several months, the bank has seen more withdrawals from customers than deposits. This has led to a decrease in deposits typically used for lending. What term can be used to describe what the bank has experienced?
Disintermediation
The ______ clause protects the borrower's assets that aren't part of the voluntary lien from a deficiency judgment in case of foreclosure.
Exculpatory
Which of the following is a cooperative?
FHLB
Which of the following resources will give you reports and statistics including house price index, foreclosures, and refinancing?
Federal Housing Finance Agency
Which of the following entities buys loans primarily through thrifts?
Freddie Mac
Which of the following can you offer to your low-income buyer clients with a small down payment?
Housing choice vouchers
Which type of real estate investment trust derives its income from the rent or sale of property and interest dividends?
Hybrid REIT
David purchased a house three years ago for $300,000. Considering historical property value fluctuations, what is the likely value of the property today?
It's difficult to tell. Historically, property values fluctuate up and down in the short term.
What type of provision is standard with either the mortgage or the deed of trust, but is included in the promissory note rather than the security instrument?
Late charge
Ralph and Mort are neighbors. Ralph is selling, Mort is buying, and Ralph is offering a second loan to help Mort with his down payment, using a contract for deed. When Mort presents this idea to his lender, his lender balks. Why might that be?
Lenders don't like contract for deed arrangements.
Life insurance companies participate in real estate in the ______ arena.
Mortgage blocks from secondary mortgage market
Babs is buying Kirk's property. Babs needs help with the down payment, and Kirk offers to supplement Babs' bank loan with a second loan, allowing her to meet her lender's down payment requirements. Which finance instrument(s) may be used for the agreement between Babs and Kirk?
Mortgage or deed of trust
Lendright Home Loans asked a trustee to begin foreclosure proceedings as permitted by the power-of-sale clause in the security instrument. This action does not need to involve the courts. What type of foreclosure process is being used?
Non-judicial foreclosure
Which type of partnership may involve several mortgagors financing a multi-family dwelling?
Partnership among mortgagors
Which of the following may a lender request to verify an applicant's work history and earning information?
Pay stub
Which of the following is a piece of general data an appraiser may gather?
Population size
Which clause is standard in a deed of trust and affects the foreclosure process that can be used if the borrower defaults?
Power of sale
Which of the following is an example of an inquiry initiated by a creditor (without the consumer's permission) that may appear on a credit report?
Pre-approved credit
What does the lump sum payment at the end of an interest-only mortgage loan consist of?
Principal only
Which of these describes the My First Texas Home program?
Provides down payment and closing cost assistance to low-to moderate income buyers
Which of these describes the Texas Mortgage Credit Certificate program?
Provides eligible homeowners the opportunity to reduce their federal tax liability
Which of the following resources are extremely helpful when working with investors?
REIT analysts and bond rating agencies
Which of these acts has special provisions for borrowers who are victims of over-charging?
Real Estate Settlement Procedures Act
What's the term for a loan modification in which the outstanding loan balance is reconfigured?
Recasting
In which phase of the real estate market cycle would you expect to see property under valued and a large supply of homes on the market?
Recovery
Gertrude is buying Sam's house, and Sam has agreed to finance the purchase. Gertrude is aware that a seller-financed transaction creates certain risks for her that a conventional loan wouldn't. Which of the following is an issue that Gertrude is protected from via her loan agreement?
Sam could sell the property to another person at any time, canceling Gertrude's equitable interest in the property and her right to possess it.
When the Treasury collects fewer funds than what is needed to pay the government's bills, what action might it take?
Sell securities
Which of the following requirements must a person meet to qualify as a Texas veteran?
Serve at least 90 active duty days
Which of these items did the Federal Housing Administration (FHA) implement to stabilize and improve the mortgage market?
Set construction standards for homes purchased with FHA loans
Which agency sets the guidelines for qualified mortgages?
The Consumer Financial Protection Bureau
What's another name for the Homeowner's Protection Act?
The PMI Act of 1998
Which of the following should be taken into account when considering refinancing a mortgage loan?
The timeline for the loan repayment may be extended.
Who should sellers consult before agreeing to carry part of a loan for a buyer?
Their financial advisor
What must a prudent lender do with the information received on a loan application?
Verify it
A lapse in property insurance coverage can result in borrower default because it leaves the lender ______ should something happen to damage the property.
Vulnerable
Which governmental legislation established the Consumer Financial Protection Bureau?
Wall Street Reform and Consumer Protection Act (Dodd-Frank Act)
Molly's father has a service-related disability. He lives with Molly and her family in a home that she owns. Can funds from a VA-specific housing grant be used to modify Molly's home to accommodate her father's disability?
Yes, the smaller Special Housing Adaptation grant may be used to adapt a home owned by a family member where the eligible veteran lives.
Chapo's property was foreclosed on and he is facing a deficiency judgment so the lender can recover losses incurred from the foreclosure process. What type of lien may the lender levy against Chapo until the losses are paid?
Blanket lien
Because of the Mortgage Disclosure Improvement Act, the only advance fee that a creditor can charge to a consumer before providing required loan disclosures is a(n) ______ fee.
Credit report
The amount of the ______ a veteran must pay depends on factors such as military status, down payment amount, and whether the veteran's entitlement is being used for the first time or a subsequent time.
Funding fee
Jarod has obtained an FHA loan for which he pays an annual mortgage insurance premium. How will he likely make this payment?
He will pay 1/12 of it monthly with his mortgage payment.
Which of the following best describes the state of the market during the recovery phase of the real estate cycle?
High but stabilized unemployment and a high number of foreclosures
With this common loan type, the home is used as collateral and the loan creates a second mortgage if the first mortgage hasn't been paid off.
Home equity
How do VA loan programs compute "residual income"?
Income minus shelter expenses and debts
In the early years of a mortgage loan term, which portion of the payment is likely to be the largest?
Interest
With a straight mortgage, what type of payments are made up until the end of the loan term?
Interest
Which of the following is a true statement about deducting interest on mortgages taken out in tax years between 2018 and 2025?
Interest on the first $750,000 of mortgage debt is deductible for married couples filing jointly or $375,000 for married couples filing separately.
Which of the following is a true statement about HUD's Good Neighbor Program?
It allows qualified individuals to buy a home at a 50% discount.
Normal wages are considered when a lender is evaluating an applicant's income. Which of the following must be true for overtime pay to be considered?
It must have been received regularly over the last two years.
What impact did the authorization of the Credit Union Membership Access Act have on credit unions?
It removed the union-worker-only membership restriction.
Maggie has a neighbor, Jim, who is facing foreclosure. She likes Jim and wants to help him out, so they agree to do a "subject to" purchase. What does this mean?
Maggie will take over Jim's loan payments without telling his lender she's doing so.
Which of the following is an example of an involuntary, specific, statutory lien?
Materialman's lien
Which of the following is a true statement about FHLBanks?
Member banks can borrow for up to one year without collateral.
Betty is purchasing a home and has received Loan Estimates from three lenders. As she compares the terms of the loans being offered, where can she find the section that allows her to make comparisons between loans with different interest rates?
Page three
Borrower Max is reviewing his Closing Disclosure to check the amount of prepaid mortgage insurance, taxes, and interest. In addition to itemizing what his borrower-paid closing costs are, the prepaid section includes ______ for each item.
The applicable time period
Sarah is selling her home and must provide proof of ownership. She's received an abstract of title. Which of the following statements is NOT correct?
The attorney's opinion provides a guarantee of title.
The upfront MIP on an FHA loan is calculated on ______.
The base loan amount
Who holds the promissory note while it's being repaid?
The payee
What role did CMOs play in the financial crisis of 2007?
They increased market speculation.
FHA offers a program for loan insurance on adjustable-rate mortgages under ______ of the National Housing Act.
Title
A quitclaim deed does which of these?
Transfers without warranty any interest or title the grantor has when conveying it
What program allowed the U.S. Treasury to spend hundreds of billions of dollars to stabilize our financial system, boost credit markets, help families avoid foreclosure, and promote economic growth?
Troubled Asset Relief Program
To be eligible for a ______, an applicant must have participated in farm or ranch management for at least three years.
USDA loan through the Farm Service Agency
This could happen if a factory were put in next door that changed and impacted property value.
External obsolescence
When establishing guidelines for conforming loans, Fannie Mae and Freddie Mac use loan limits set by which entity?
Federal Home Financing Agency
Which of the following is a significant drawback to an FHA loan as compared to conventional financing?
Required mortgage insurance must remain in place for the life of the loan.
Section 255 of the Title II FHA-insured loan program covers ______ mortgages for borrowers age 62 or older.
Reverse
Which of the following made mortgages attractive investments?
Rising home prices
Under current tax law, what's the maximum tax-free gift an individual can give to another individual annually?
$15,000
Ken and Sue are purchasing a home but are short on the down payment required by their lender. Sue's mother offered to give them cash to help with the down payment. How much can Sue's mother give under current tax laws?
$30,000
What is the formula for calculating the total debt ratio?
(Monthly debt payments ÷ gross monthly income) × 100
What is the formula for calculating the total housing ratio?
(Monthly housing expenses ÷ gross monthly income) × 100
John wants to do a 1031 tax exchange. He just sold his property. How many days does he have to close on a new property?
180
John wants to do a 1031 tax exchange with a property he just sold. How many days does he have to identify a new property for the exchange?
45
Which range of credit scores do most consumers fall into?
670 to 739
Client Bette asked licensee Frank about a home equity line of credit versus home equity loan. Which of the following offers an brief overview of what a home equity line of credit is?
A borrower borrows against the equity in the house and pays back the amount withdrawn plus interest.
Which of the following results from the Treasury selling securities?
A decrease in money in the economy
There are three types of international buyers: those who have work visas and are looking for a home to purchase while they're in the U.S., those who are looking for a vacation home in the U.S., and those who are looking for ______.
A luxury home to purchase as an investment
Captain Kirk is a veteran who sells his home to Leonard. Leonard is also a veteran, and they agree to let Leonard assume Captain Kirk's VA loan for the property. They agree to a novation, which is ______.
A new contract with the lender using a substitution of entitlement
Which of the following is a true statement about the use of a promissory note?
A promissory note is a legal instrument that's similar in nature to a contract.
What type of professional must an investor use to conduct a tax-deferred exchange?
A qualified intermediary
What is a carryback loan?
A second loan financed by the seller
Which project would a life insurance company be most likely to finance?
A shopping mall
What type of property is Valerie appraising if she's using the sales comparison approach?
A single-family residence built six years ago
In which of the following situations is a lender prohibited from enforcing an alienation clause?
A transfer between parent and child
Seller Jerome found financing that would include his current mortgage inside the buyer's mortgage. What type of mortgage is this?
A wrap-around mortgage
How are account numbers displayed in a credit report?
Accounts numbers are truncated for security purposes.
The ______ was enacted in 1946 in response to the creation of several new federal agencies. It established a process for how the agencies could propose and establish regulations.
Administrative Procedure Act
Regional State Bank has made a lot of loans to consumers in the community and is running low on funds. It seeks a loan from the Federal Home Loan Bank. This loan is called a(n) ______.
Advance
Barb is considering a refinance. She wants to stick with a conventional loan. Why might she be wary of an introductory rate?
After an initial low rate, her payments may increase beyond the level of affordability.
Paulina is buying her first house. Which of these costs will she NOT be expected to pay?
Agent's commission
Fannie Mae's multi-state note includes a due-on-sale clause, also known as a(n) ______ clause.
Alienation
Which act made some mortgage insurance premium deductions available to certain taxpayers?
American Taxpayer Relief Act of 2012
Regional State Bank is a member bank of the Federal Home Loan Bank. In exchange for mortgage collateral, Regional State Bank received a loan from the FHLB so it can make additional loans to consumers. What is the loan called that Regional State Bank received?
An advance
The energy efficient mortgage program insured by the FHA requires an energy consultant to provide the lender with a report listing recommended modifications for energy efficiency, an estimate of the cost for each recommendation, and ______.
An estimate of the energy savings that would result
What is a reverse exchange?
An investor finds and closes on an investment property and then decides to immediately sell another investment property.
For borrowers who already have an FHA loan, the Streamline Refinance program offers the benefit of ______.
An unlimited loan-to-value ratio
Andrea's lender has notified her of its intent to foreclose. Her loan is secured with a deed of trust. What rights does she have to redeem her property?
Andrea can cure the default and reinstate the loan.
Remy's mortgage payment is $1,256.28. His annual property taxes are $809, and his annual insurance premium is $712. How much of his payment goes toward the principal and interest?
Annual taxes ($809) and insurance ($712) are divided by 12 ($1,521 ÷ 12) to get the monthly amount for these items ($126.75), and this is subtracted from the total payment ($1,256.28) to get the principal and interest portion.
Which consumer inquiry has Zachary initiated that may appear on a credit report?
Application for a loan
The Federal Housing Administration's qualifying standards for a mortgage loan ______, but the mortgage insurance the FHA provides balances the risk for the lender.
Are somewhat less stringent than standards for conventional loans
By when must a borrower be provided with a closing disclosure?
At least three days prior to closing
Which of the following is a likely effect when the discount window is closed?
Banks don't have access to additional funds.
Which of the following describes mutual savings bank loans?
Banks focus lending offerings on local businesses and residents.
A short-term security issued by the Treasury that has a maturity term of one year or less is called a Treasury ______.
Bill
Bill's loan is secured by a mortgage. Who holds legal title when this security instrument is used?
Bill
As part of a deficiency judgment sought by a lender, a ______ may be placed on any current and future property the borrower owns until the lender recovers all losses.
Blanket lien
A long-term security issued by the Treasury that has a maturity of 30 years is called a Treasury ______.
Bond
In a deed of trust, who is the trustor?
Borrower
Which of the following situations would make a borrower ineligible for a loan modification?
Borrower has filed for bankruptcy
During which phase of the real estate cycle does a real estate professional have the most direct impact?
Buying/selling
Under which section of the Loan Estimate will you find any credits provided by the seller?
Calculated Cash to Close
Chuck needs to make a few repairs and upgrades to his home, but he needs some cash to do it. He decides to tap into the equity in his home, which he purchased using a VA home loan. What VA program can Chuck use to do this?
Cash-Out Refinance
Which of the following tells the lender how much entitlement the veteran has available under the VA loan program?
Certificate of eligibility
Kaycie is a new employee at a mutual savings bank. During orientation, she learned that mutual savings banks have limitations that are set by their ______.
Charter
Mutual savings banks have limitations on their lending activities, as specified in their ______.
Charter
Two days before closing, Barb reviews her final loan terms and closing costs. She must bring $100,000 to the closing. What document is she reviewing?
Closing Disclosure
Fatima is using a VA loan to purchase a home from Sue. Sue agrees to pay Fatima's closing costs. Which of the following statements is true?
Closing costs aren't considered a seller concession.
Private loan companies may charge higher interest, larger fees, and could require ______ to secure a loan.
Collateral
When obtaining a mortgage to purchase a home, for what does the borrower use the property?
Collateral
When Fannie Mae purchases a loan, they pay the loan originator a(n) ______ fee.
Collection
Synergy National Bank issued a conventional loan that is eligible for purchase by Fannie Mae. When Fannie Mae purchases the loan, what will Synergy National Bank receive in return?
Collection fee
The ______ was a response to the practice of redlining and was enacted in 1977.
Community Reinvestment Act
Which of these individuals may benefit from USDA Rural Development program offerings?
Community-managed lenders
A new apartment building is going up downtown. The owner secured interim financing for the job. Which of these loan types is interim financing?
Construction loan
The ______ uses education, enforcement, and research to promote fairness and transparency for consumer financial services.
Consumer Financial Protection Bureau
When a buyer obtains an FHA loan, the seller may ______.
Contribute up to 6% of the sales price (or appraisal, if that's lower) to the buyer's closing costs
The Baxters are looking at a $425,000 home. They have $90,000 in savings to use as a down payment. What loan type(s) would likely be the best option for them?
Conventional
Which of the following items directly increases the supply of real estate properties on the market?
Conversion of properties
Which appraisal approach is likely the best choice for appraising a movie theater?
Cost
Which of the following describes amortized debt?
Debt that's paid off by making periodic payments
A lender was not able to recover all of the losses incurred during the foreclosure process. What could it pursue to recoup these losses?
Deficiency judgment
The U.S. ______ is the federal agency with the mission to create strong, sustainable, inclusive communities and quality affordable homes for all.
Department of Housing and Urban Development
When a promissory note is sold, how is ownership transferred?
Endorsement of the note
What type of lien is placed on a property as a result of a court order?
Equitable
Your clients, the Nguyens, have signed a contract for deed to purchase a property. What rights do the Nguyens receive?
Equitable title and possession of the property
Chapter 5 of the Texas Property Code set requirements and penalties for ______.
Executory contracts
Lauren obtained a loan that's insured and that only required a down payment of 3.5%. Which of these is most likely the type of loan Lauren has?
FHA
A homeowner may go into default on a home loan due to ______.
Failure to meet loan terms and conditions
Which of the following contributed to the 2007 financial crisis?
Falling home prices
Conventional loans from large commercial banks are the primary target for which secondary market player?
Fannie Mae
Which institution was created as the Federal National Mortgage Association in 1938?
Fannie Mae
Which of the following is an example of a government-sponsored enterprise (GSE)?
Fannie Mae
Which secondary market player would be interested in purchasing a loan from a commercial bank?
Fannie Mae
The Farm Credit System is overseen by the ______, an agency of the federal government.
Farm Credit Administration
Farmer Mac is supervised by which entity?
Farm Credit Services Administration
Farm and Country Bank provides credit to the farmers, ranchers, and other rural residents of its community. What government program helps the bank maintain enough capital to fund those loans?
Farmer Mac
______ creates a secondary market for agricultural loans by buying the loans, pooling them, and selling them as securities.
Farmer Mac
Which entity provides disclosures and public information about the financial condition of FCS?
Federal Farm Credit Banks Funding Corporation
From a secondary market player, Regional State Bank received an advance in exchange for collateral in the form or mortgages. Which entity likely issued this advance?
Federal Home Loan Bank
Federal Home Loan Bank is regulated by what agency?
Federal Housing Finance Agency
The Homeownership Voucher Assistance program is available to ______ to help pay monthly homeownership expenses.
First-time homeowners
Robbie's lender notified him of an impending foreclosure, and told Robbie that his property will be sold at public auction. After the auction occurred, he receives a notice of eviction for which the lender had to petition a court. What does this describe?
Foreclosure by advertisement
Which of these transactions must comply with Appraiser Independence Requirements?
Four-unit residence being purchased with a conventional loan
Which of these agencies is a government-sponsored enterprise?
Freddie Mac
How might a borrower avoid paying the mortgage insurance premium required by an FHA loan?
Get conventional financing
Cindy is buying an older home. It's in reasonably good shape, but she figures she can reduce her energy bills by replacing some of the windows. If she applies for the FHA Energy Efficient Mortgage, what step must she take to receive approval?
Give her lender a report of the cost estimate and energy savings from an energy consultant.
Sam has a mortgage that has a static interest rate, but monthly payments that increase over time according to a set schedule. What type of mortgage does Sam have?
Growing equity
When a real estate transaction is financed using a contract for deed, what advice should real estate agents give to their clients?
Have an attorney review the contract.
Veterans who use the VA's Specially Adapted Housing grant must ______.
Have permanent and total service-connected disability
The three general groups of international buyers that real estate professionals may encounter are those who ______, those who are looking for a vacation home for when they travel to the U.S., and those who are looking for a luxury property as an investment.
Have work visas and are looking for a home to purchase while they're in the U.S.
A seller buydown can ______.
Help a borrower meet lender qualification standards
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?
Her down payment of $50,000 isn't at least 20% of the purchase price.
Stacy is preparing to sell her home, but learns she can't transfer the property until she removes an encumbrance. Which of these is encumbering her property?
Her existing mortgage
Which of the following programs broke the normal 80/20 ratio rule usually required as a loan-to-value and offered favorable interest rates?
Home Affordable Refinance Program (HARP)
Which of the following specifies a requirement of pre-loan counseling for consumers?
Homeowner and Equity Protection Act
Why did investors purchase CMOs prior to the 2007 financial crisis?
Housing price appreciation appeared to be a sure thing.
Read through each of the following pieces of information about buyers' debt obligations and determine which one will qualify for an FHA loan based on the qualifying ratios.
Housing ratio of 31%, total debt obligations 40%
Jerry is appraising a five-bedroom home in the suburbs. After identifying the purpose of the appraisal, what does he need to do next?
Identify the data that is needed.
Which approach to finding value would licensed appraiser Christina probably weigh most heavily when appraising a three-unit rental property?
Income
Which of the following are potential private loan resources that may be willing to finance a home?
Individual entrepreneurs
Mark and Nancy purchased a municipal bond to help with the funding of a new school gymnasium. In exchange for their investment, what will they receive?
Interest
Veterans using the ______ program aren't required to submit a COE, get a new appraisal, or verify income.
Interest Rate Reduction Refinance
Which of the following could be different from the amount on the initial Loan Estimate and can impact the monthly payment?
Interest rate
Which of the following may cause the Loan Estimate to be revised?
Interest rate change, switch to fixed-rate loan, down payment amount change, and property appraisal reveals increase in value
Your client has a VA loan and wants to refinance to a lower rate. Which of the following is likely the simplest option?
Interest rate reduction refinance
Construction loans are a type of ______ financing.
Interim
Max has a dog that bit his neighbor. The neighbor sued Max, which resulted in a judgment against him. Max refused to pay the neighbor according to the judgment. The neighbor placed a lien against Max. How is this lien classified?
Involuntary, general
Sean hasn't paid his property tax. The tax collector places a lien on his property. How is this lien classified?
Involuntary, specific
Which of the following characteristics applies to a partnership between mortgagors?
It involves more than one mortgagor as owner, sharing responsibility for payment of a single mortgage.
What is the impact to lenders when mortgage packages are sold?
It provides additional cash flow for new loans.
What is the interest rate on a VA loan?
It varies by lender
What did a 2019 National Association of REALTORS® study say about foreign investment in U.S. real estate?
It's less stable than in previous years.
Joseph's got B-rated credit, and his commercial bank suggested he check with the specialty mortgage company down the street because they deal in subprime loans. What's NOT true about Joseph's situation?
Joseph should avoid taking the commercial bank's advice, since a subprime loan is most likely made by a predatory lender.
Fairwell Lending must seek the court's permission to foreclose on a property used as collateral for a loan that is in default. What type of foreclosure process is likely being used?
Judicial foreclosure
In a deed of trust, who is the beneficiary?
Lender
When consumers make a small down payment, borrow the remaining amount of the purchase price from a lender, and reap the rewards off of the full investment value, they are demonstrating what concept?
Leveraging
Because of the Secure and Fair Enforcement for Mortgage Licensing Act, borrowers can determine if mortgage loan originator is ______.
Licensed and registered
Freddie Mac's mission is to provide ______, stability, and affordability in the U.S. housing market.
Liquidity
Closing costs are itemized on page two of the Closing Disclosure, and all amounts are ______.
Listed according to who paid them: the borrower, seller, or other
Which of the following items directly influences real estate demand?
Loan availability
Zara is reviewing the "Calculating Cash to Close" table on page three of the Closing Disclosure to see what has changed from her Loan Estimate. She found this extremely helpful and easy to understand because the table explicitly lists _______.
Loan estimate and final amounts side-by-side
Which of the following entities commonly acts in the primary market?
Local credit union
An ARM usually offers an initial interest rate that's ______ a fixed rate mortgage for a period of time.
Lower than
The Morris family home went into foreclosure December 15, 2016, and sold January 1, 2017. Their contractor had begun work on May 15, 2015, and was not paid, and finally filed a mechanic's lien on October 1, 2016. What date will be used for lien priority for the mechanic's lien?
May 15, 2015
Two examples of loan adjustments or modifications are recasting and ______.
Moratorium (or forbearance)
Financing for a real estate transaction can use a note with a ______ or a note with a deed of trust.
Mortgage
Which type of real estate investment trust involves both residential and commercial properties?
Mortgage REIT
Who originates their own loans?
Mortgage bankers
Beth needs help with the down payment to buy Mark's property. Mark is going to supplement Beth's bank loan with a second loan, allowing her to meet her lender's down payment requirements. What finance instruments may be used for this agreement?
Mortgage or deed of trust
Which organization manages and charters credit unions?
NCUA
What piece of information would an appraiser NOT find in the Subject and Contract sections of the report?
Neighborhood characteristics
A refinance is always a ______.
New loan
Which is one of the benefits of the USDA loan program?
No down payment is required.
Ron and Dawn hope to qualify for an FHA mortgage so they can buy a home for their family. Their housing ratio is 28%, their total debt obligation is 45%, and their credit score is 650. Do they qualify under FHA underwriting guidelines?
No, they don't meet the total debt obligation requirement. Underwriting requirements for an FHA loan specify a housing ratio of no more than 31%, a total debt obligation that doesn't exceed 43%, and a minimum credit score of 500, with 620 or higher being preferable.
The Dodd-Frank Act created the CFPB in part to regulate ______, which were among the largest originators of subprime mortgages prior to the financial crisis of 2007‒2008.
Non-bank lenders
To qualify for the FHA Streamline Refinance program, a homeowner must ______.
Not be delinquent on mortgage payments
Your client, Yolanda, is a nurse. Does she qualify for the Good Neighbor Program?
Not unless she is also an EMT
Lisa, a seller, is providing Darwin, a buyer, with a seller second on the purchase of her property. Darwin's conventional lender uses a note with deed of trust to secure the first loan. What instrument is Lisa most likely to use for her second loan with Darwin?
Note with deed of trust
Bo's real estate ad states: "Custom homes for sale with scenic mountain views. Easy financing and low down payments." What else must be included in the ad in order for it to comply with TILA?
Nothing
Which of the following statements best describes a foreclosure by advertisement?
Notification of pending auction, public auction, notice of eviction
Conforming loan limits vary based on location and ______.
Number of units being purchased with the property
Which HUD program is responsible for protecting individuals against discrimination in housing based membership in a protected class?
Office of Fair Housing and Equal Opportunity
HUD's ______ has a goal of increasing the availability of safe and affordable housing to Native American families.
Office of Native American Programs
When a buyer uses an FHA loan, the down payment amount is calculated ______.
On the lesser of the sales price or the appraised value of the property
What's the definition of a qualified mortgage?
One that meets stringent CFPB guidelines
While Fannie Mae considers total and housing debt-to-income ratios in its underwriting process, Freddie Mac considers ______.
Only total debt-to-income
Which of the following statements is true about conventional loans?
Originators usually package and sell the loans on the secondary market.
In which phase of the real estate market would you expect to see properties selling for more than they're worth, many buyers in the market, and lots of new construction?
Over supply
Several actions take place on the secondary mortgage market. Which of these is a common activity?
Packaging loans into mortgage-backed securities
Information about how the lender will handle assumptions and late payments is included on ______ of the Loan Estimate.
Page three
What's the name of the clause included in a finance instrument that requires the lender to release a portion of the property from the lien when a part of the debt has been paid?
Partial release
Lenders who ______ can underwrite and approve FHA loans without requiring the FHA to review each borrower's qualifications.
Participate in the direct endorsement program
Joe works for a life insurance company that funds commercial investment projects and often insures these projects by insisting on an equity position. What type of financing does this describe?
Participation
Life insurance companies sometimes like to insure their investment in commercial projects by insisting on an equity position. This is known as ______ financing.
Participation
Rhoda is a first-time homebuyer. She has applied for a VA loan to buy a house from Phyllis. When the CRV values the home at less than the sale price, Phyllis refuses to come down on the sales price, so Rhoda must either ______ or find a different home to buy.
Pay the difference between the CRV and sales price in cash
Which of the following statements is true regarding closing costs on a VA loan?
Payment of closing costs may be negotiated.
Kara is a lender who is working with prospective buyer, Stan. What does Kara ask Sam to provide to show his work history and earning information?
Paystub
Which of these are established by the Federal Housing Finance Agency?
Percentage targets for loans made to low- to moderate-income borrowers
The ______ clause in a deed of trust allows the lender to foreclose non-judicially.
Power of sale
What information would an appraiser record in the Site section of the Uniform Residential Appraisal Report?
Property dimensions
Residential property owners don't often default on property taxes. Why not?
Property taxes are usually paid with the monthly mortgage payment.
The two most common methods used when a bank fails are the payout method and the ______ method.
Purchase and assumption
Which of the following actions is completed by the secondary mortgage market?
Purchases loans from lending institutions
How common are interest-only loans today?
Rare
What factors directly affect an adjustable rate mortgage?
Rate, index, and margin
What step of the real estate cycle generally follows recession?
Recovery
Since the FHA was established, it has taken strategic action to stabilize the mortgage market. Which of these items is one of the FHA's strategies?
Reduce lender risk by establishing borrower qualification standards
Annual MIP can be removed from an FHA loan by ______.
Refinancing to a conventional loan
Natalie is a licensee who assists buyers in the purchase of HUD ______ when they're listed for sale.
Repossessed homes
Violet purchased a house from Nick, and assumed the existing loan. Nick wants to make sure he isn't liable if Violet ever defaults. What can he do to remove his name from the loan agreement?
Request a novation
What's the purpose of the Home Mortgage Disclosure Act?
Requires financial institutions to maintain, report, and publicly disclose information about their mortgages
______ is the term that the VA uses to describe the amount of net income remaining after deduction of debts, obligations, such as utility and phone bills, and monthly shelter expenses.
Residual income
How do falling interest rates impact investors in mortgage-backed securities?
Returns on investments decrease.
When interest rates increase, what is the impact on mortgage-backed security investors?
Returns on investments increase.
Monty retired 10 years ago and would like to see the world, but his retirement account won't support his desire to travel. Monty heard of a loan that would allow him to take advantage of the equity in his home by getting monthly payments from the bank by using his house as collateral. What is this type of loan called?
Reverse annuity mortgage (RAM)
The three-business-day period following the latter of either the date that the transaction is consummated or the date the disclosure is made, during which a borrower can cancel their loan, is called the ______.
Right of rescission
Hugh works as a loan officer at a bank. Because of the ______, he must be registered with the Nationwide Mortgage Licensing System.
SAFE Act
Zack and April are purchasing a home. They apply to three different lenders and review the Loan Estimates they receive. Each form includes a field identifying the National Mortgage Licensing System ID number for the lender. What is the act that requires this licensing identification to be available to consumers?
SAFE Act
Which appraisal approach will likely weigh most heavily during the reconciliation step when appraising a single-family residence?
Sales comparison
Where can a party that's reviewing a title commitment find exceptions that aren't covered by the title insurance policy?
Schedule B-2
There are fewer properties available in the market than there are interested buyers. What type of market does this describe?
Seller's market
What is the most common structure for a CMO?
Sequential pay
What term is used to describe the housing inventory in default or foreclosure?
Shadow inventory
Janice is planning to borrow money from her retirement savings. Which of the following is a true statement about her situation?
She should consult with a financial expert before withdrawing the funds.
Marissa is obtaining a VA loan, and she's decided to place 20% down. What's her responsibility for paying the VA loan funding fee?
She won't be required to pay it since she made a large down payment.
Which of the following types of residential dwellings do life insurance companies purchase from the secondary mortgage market?
Single-family on one lot
After bonds are ______, their value goes up and down with the market.
Sold
What did the Troubled Asset Relief Program allow the U.S. Treasury to do in response to the 2007 financial crisis?
Spend billions
Melanie is a buyer who has agreed to purchase Stan's property using a contract for deed. Who holds legal title to the property during the term of the loan?
Stan
What's the first step an appraiser will perform when conducting an appraisal?
State the problem.
The FHA ______ program allows a borrower to refinance an FHA loan without verifying income or assets.
Streamline Refinance
When a buyer takes over payments on a loan without telling the lender, this is called a purchase ______.
Subject to existing financing
A lot in a new subdivision is finished and ready to be sold. The developer needs a clear title in order to transfer the property. Which of the following clauses must be included in a loan agreement?
Subordination
Which of the following is a requirement to qualify for a VA loan?
Sufficient income
Which term describes the legal regulation of a property to the detriment of the owner, and must include reimbursement for the property owner?
Taking
Lender Ron is running Sally's credit report. In which section of the credit report might Ron expect to find information regarding her loan that was paid off on time?
The Accounts in Good Standing section
Rules and regulations that protect consumers of financial services are now the responsibility of ______, which was created by the Dodd-Frank Act.
The CFPB
Dawn and Steve are planning to purchase a home, but are wary of the commitment of a mortgage. However, they have no other way to make home ownership a reality, so they decide to educate themselves on the process for obtaining a mortgage loan. Where would you recommend they go for clear, consumer-oriented education on this topic?
The CFPB website
Which act establishes general requirements that state agencies must follow when adopting rules or conducting contested cases?
The Texas Administrative Procedures Act
The federal SAFE Act required states to enact licensing and registration requirements related to loan originators, and created the Nationwide Mortgage Licensing System and Registry. Which act was Texas' response to the federal act?
The Texas SAFE Act
Which act requires that individuals making more than five "owner-financed" loans per year, obtain a residential mortgage loan origination license?
The Texas SAFE Act
Which of the following is a true statement about borrower qualification standards for a VA-guaranteed loan?
The applicant must have a certificate of eligibility.
In order for earnings from a second or part-time job to be considered as part of a lender's income evaluation, what must be true?
The applicant must have been employed for at least two years, and the employment must be expected to continue.
Which statement best describes the most common approach used to reconcile the three appraisal approaches?
The appraiser may weigh one or two approaches more heavily than the others, as appropriate for the property type.
Which of the following statements about the Torrens system is true?
The approach is only used in a handful of states.
Select the choice that best translates this clause into plain English. "Any partial prepayment shall be applied against the principal amount outstanding and shall not postpone the due date of any subsequent monthly installments or change the amount of such installments, unless the Note holder shall otherwise agree in writing."
The borrower is allowed to prepay the loan without penalty.
Which of the following is a potential concern of a buyer who's entering into a contract for deed with a seller?
The buyer could lose the property after missing only one mortgage payment.
A multibillion dollar online retail distributor has decided to set up operations in Ashland. The population of Ashland is 22,000. What is the potential impact to the area?
The community is potentially put at risk.
Which statement correctly describes a contract for deed?
The contract for deed is usually used in a seller-financed transaction.
Naomi is completing a residential loan application. On the application, she lists her assets and liabilities so that her net worth can be determined. What's net worth?
The difference between a borrower's items of value and obligations
A homeowner who's preparing to sell can't transfer the property until an encumbrance is removed. Which of the following is an encumbrance that would delay the property sale?
The existing mortgage
What is reconciliation?
The final estimate of value based on results of the appraiser's approaches to value
Carla and Sven have a previous foreclosure, but now they are a few years away from that. They make good money with their jobs, and have about $30,000 available to use for a down payment and closing costs. Why might they consider an FHA 203(b) loan, even if they have sufficient down payment for a conventional loan?
The lender can consider compensating factors, even if their credit history isn't great.
Declan has a mortgage on his property, but allows the property to fall into disrepair. Which of these is a possible consequence of this action?
The lender can put Declan's loan in default.
Joe decided to borrow funds from his retirement account to fund the down payment on his new house. It's now two years later and he lost his job. What is true about his pension plan?
The loan must be repaid immediately.
Which of the following is true regarding value?
The principle of substitution means that people won't pay more for a property than they have to
Which of the following is a true statement about when a promissory note is sold?
The promissory note is endorsed to the new owner of the loan.
What is a potential cause for a decrease in local economy driven by the Fed?
The reserve percentage is increased by the Fed.
Larry obtained a mortgage from State Bank. Larry owns the property, controls it, and has all the rights that come along with real property ownership. State Bank has an interest in the property and one other right. What is that?
The right to foreclose if the borrower defaults
The Farm Credit System funds are acquired from ______.
The sale of debt securities and international money markets
Which one of the following statements is true for a sale that's subject to an existing mortgage lien?
The seller's credit score may improve although he's not making any mortgage payments.
The appraiser of Garran's property used the Torrens system to perform a title search. Now a claim has been filed. Who or which entity will be the title guarantor?
The state
When the Torrens system is used to perform a title search, who acts as title guarantor in case a claim is filed?
The state
What is the 95% rule as it relates to tax-deferred exchanges?
The total value of the property (or properties) being exchanged is at least 95% of the value of the property being sold.
Page four of the Closing Disclosure includes consumer education about ______.
The use of an escrow account
The funding fee on a VA loan is waived when ______.
The veteran has a 10% or higher VA disability
When does the need for mortgage insurance end for a borrower who has a VA loan?
There is no mortgage insurance requirement for a VA loan.
Which of the following is true about mortgage brokers?
They don't service the loan beyond placement.
Mutual savings banks prefer to keep their lending activities in their immediate geographic area. Why?
They prefer to personally monitor the loans they issue.
Which of the following statements is true about national lending intuitions?
They sell packaged loans to investors.
What is the benefit Ginny Mae investors have over those who invest in other MBSs?
They're able to collect timely principal and interest payments.
When Stacy's clients ask her if she can recommend a mortgage broker, she promptly gives them the name of the best mortgage broker she knows, Gary Jones. Later, she always receives a check from Gary as payment for the referral. Is this legal or illegal under the Real Estate Settlement Procedures Act?
This is illegal under RESPA because it's considered a kickback between settlement service providers.
How does the VA fund the mortgage guarantee program so that lenders can be reimbursed for any losses from borrower default?
Through a funding fee charged to most borrowers
How is title usually conveyed to the buyer during a foreclosure process?
Through a referee's deed
Beverly has applied for a loan to purchase a Craftsman-style home for herself and her teenage son. Her mortgage broker helps her find an FHA loan program that accommodates her low down payment. Which program will serve Beverly's needs?
Title II, Section 203(b)
Which of the following will be issued only if title is acceptable and an attorney provides a certificate of title opinion?
Title insurance policy
What's one reason a borrower may choose a piggyback (or split) loan?
To avoid paying private mortgage insurance
Roger is a veteran with a service-connected disability that requires him to use a wheelchair. He is eligible for the VA's Specially Adapted Housing grant. What can he use this grant for?
To remodel a home he owns to accommodate his disability
Why might a homebuyer use an FHA 203(k) loan instead of the standard 203(b) loan?
To roll the cost of rehabilitating the purchased home into the mortgage
Regulation Z codifies the rules of the ______.
Truth in Lending Act
Which of the following statements is true about the Federal Reserve?
Twelve district banks comprise the Fed.
Which of the following has a direct responsibility to pay the nation's bills?
U.S. Treasury
How long does the borrower have to pay private mortgage insurance?
Until the borrower reaches a 22% equity position
Buyers Romy and Steven are looking over closing documents and don't know if the Loan Estimate matches everything on the Closing Disclosure. Usually, amounts shown on the Closing Disclosure that don't exactly match the figures on the Loan Estimate will be due to _______.
Updates to reflect the terms of the borrower's legal obligation when the loan closes
When HUD pursues actions that are designed to end homelessness and promote the health and housing stability of vulnerable populations, which of its goals is it supporting?
Use housing as a platform for improving quality of life.
Sgt. Johnson is an active member of the Marines. He's been serving for 10 years. He wants to buy a home with no money down. What loan option seems like the best fit?
VA
Which veteran loan program in Texas offers qualified veterans help with the purchase of their primary home?
Veterans Housing Assistance Program
Which veteran loan program offers qualified veterans help with the purchase of land in Texas?
Veterans Land Program
Bob is selling a four-bedroom house that he bought as an investment property. Victoria would like to buy it, but she has a low credit rating and can't find a bank that will offer her a loan. After reviewing Victoria's financial situation, Bob feels confident that she's an acceptable risk. He offers to extend her a line of credit for the purchase in the form of a contract for deed. What issue should Bob be aware of?
Victoria could cause an involuntary lien to be placed on the property.
A lender and a borrower sign a mortgage agreement, placing a(n) ______ lien against the borrower's home.
Voluntary and specific
Rich wants to add a room to his house, so he takes out a home equity loan. This creates a(n) ______ lien.
Voluntary and specific
What's the most common way that a seller can help a buyer come up with the funds to complete a real estate transaction?
With a contract for deed
A Treasury bill is a Treasury security ______.
With a maturity term of one year or less
The American Recovery and Reinvestment Act provided mortgage assistance to ______.
Wounded servicemen and servicewomen
Which item would an appraiser find in the Improvements section of the Uniform Residential Appraisal Report?
Year built
Is a homeowner with an FHA loan allowed to obtain a second mortgage?
Yes, if the total of the first and second mortgages is within the maximum loan to value ratio
Nadia uses a VA loan to buy a house for $125,000. She wants to buy the neighboring property, an empty lot, so she can improve the house using the extra land. The lot is for sale for $135,000. Can she use a VA loan for this purchase?
Yes, she should have partial entitlement left.
Greg is selling his home to a veteran who's using a VA loan. When the transaction starts to stall, Greg tries to motivate the buyer by including his giant flat screen TV, valued at $1,200, as a gift. Is Greg allowed to do this?
Yes, this is considered an allowable seller concession
Mario lives in a state that requires an abstract of title for property conveyance. The chain of title is broken approximately 50 years prior to the current date. Which of these properly identifies the status of Mario's title?
Depending on his state's laws, Mario may have marketable title.
A ______ is a mortgage-backed security issued by Freddie Mac.
Participation certificate
What type of partnership is a real estate mortgage investment conduit?
Partnership between mortgagees
What type of partnership is a cooperative?
Partnership between mortgagors
Dana and Phil have evaluated their situation, and have decided to purchase a unit in a cooperative housing project. Which FHA loan program might work for them?
The FHA has a program specifically for the purchase of a unit in a cooperative housing project: Title II Section 203(n).
Which of the following statements is true about the MIP on an FHA loan?
The FHA may adjust the percentage used to calculate MIP on FHA loans.
Maria is a borrower reviewing her Closing Disclosure. She notices that the appraisal fee is listed under "Paid by Others" and has an L listed with the amount. What does this mean?
The L indicates that the creditor pays the item at consummation.
Kendra has applied for a loan from Acme Savings and Loan, but when she compares the Loan Estimate the loan officer gave her with the one from Best Bank, where she also applied for a loan, she decides she'd rather go with the loan from Best Bank. Which of the following is a true statement about this situation?
The Loan Estimate expires in 10 business days if Kendra doesn't tell Acme Savings and Loan that she wants to move forward with it.
Which of the following best describes a home equity line of credit?
Used as an open-end account similar to the revolving credit of a credit card from which borrowers can take advances, repay money, and even borrow money again
Rather than face foreclosure, Tony decides to cut his losses. He voluntarily conveys his property to his lender. What type of foreclosure alternative is this?
Voluntary conveyance of deed
When is a loan modification considered?
When a borrower has missed payments but still has some financial security
Select the choice that best translates this clause into plain English. "Upon payment of all sums secured by this Mortgage, Mortgagee shall discharge this Mortgage without cost to Mortgagor. Mortgagor shall pay all costs of recordation, if any."
When the borrower has fully paid off the loan, the lender will record that the note is satisfied.
In what situation would the U.S. Treasury be most willing to sell securities?
When the government's bills exceed income collected
Identifying the purpose of the appraisal leads the appraiser to do what next?
Identify data needed.
Arnold has gotten behind on his mortgage payments. His lender agrees to temporarily suspend payments to help Arnold catch up. What is this an example of?
Moratorium (or forbearance)
The signature lines on the multi-state Fannie Mae promissory note are set up for ______ to sign.
The borrower
How much of a mutual savings bank's assets come from savings accounts?
More than 70%
Interest-only loans are a form of ______ buyer financing.
Creative
