CE Finances Courses
Special mortgage loan programs for _______________ include the FHA248 and HUD 184 programs.
Native Americans living on tribal land. It guarantee loans to purchase, build, or rehabilitate homes on federal trust land. (Victims of a presidentially declared disaster)
Qualified mortgages require debt-to-income ratios of no more than ______________.
43% (38%)
Which of the following is Fannie Mae most likely to purchase?
A conventional fixed-rate mortgage issued by a commercial bank (A commercial loan being used to purchase a new warehouse)
Albert wants to sell his house to his cousin, who's willing to assume the loan. What clause in Albert's mortgage requires him to obtain the lender's permission to do this?
Alienation clause requires the property owner to obtain lender permission to transfer title to the property, or risk having the loan accelerated. (Non-recourse clause)
What is one way that the FHA has helped to stabilize and improve the mortgage market?
By requiring appraisers to be state licensed or certified to evaluate property for FHA-insured loan, it created a higher standard for appraisals that reduces the risk for borrowers and lenders. (By setting standards for interest rates on FHA-insured mortgage loans)
What other banking-related entity shares similarities with the purpose and function of NCUA? (National Credit Union Administration)
FDIC - Federal Deposit Insurance Corporation
Mortgage revenue bonds are a variety of what other type of bond?
Industrial development bond (Mortgage revenue bonds can be used to finance industrial developments including senior and assisted-care living centers)
On the Loan Estimate form, the information provided about the loan term, purpose, product, type, and rate lock should ________________.
Match what the lender discussed with the consumer (Include a check-box for the consumer to indicate acceptance of the loan terms)
Your client, Yolanda, is a nurse. Does she qualify for the Good Neighbor Program?
No; The Good Neighbor Next Door program offers specific FHA-foreclosed properties to owner-occupied individuals who are law enforcement officers, K-12 teachers, firefighters, or EMTs.
On the Loan Estimate under "Loan Costs," the points, application fee, and underwriting fee are considered ______________.
Origination charges (service charges)
Information about how the lender will handle assumptions and late payments is included on ___________ of the Loan Estimate.
Page 3 (page 2)
The _____________ clause allows the borrower to prepay principal on the loan at any time without penalty.
Prepayment clauses are standard in gov loans (Early release)
American Recovery and Reinvestment Act (ARRA).
Recovery legislation that was enacted to avert another subprime mortgage crisis and stimulate the economy
What does the Unruh Civil Rights Act require of real estate licensees?
That they treat all customers and clients fairly and equally, without discrimination The Unruh Act requires all businesses, including real estate brokerages, to treat all customers and clients equally, without discrimination.
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 (The "L" is a code indicating that the amount is still an estimate)
If the Treasury encounters a deficit, what actions might it take?
The Treasury may sell securities in the form of treasury bonds, bills, or notes as a way to raise additional funds to pay bills. The Treasury does not control interest rates. (Buy securities)
In a deed of trust, who is the beneficiary?
The beneficiary is the lender; the trust is held by a neutral third party on behalf of both the borrower and the beneficiary.
Lewis is reviewing his Loan Estimate and notices under "Other Costs" that there are items listed that don't include an amount. What does this mean?
The item is not part of the transaction for which Lewis is obtaining a loan (The amount for that item is included in a total at the bottom of the page)
Page four of the Closing Disclosure lists specific disclosures about the loan, such as the penalty for late payments, whether a demand feature applies, whether the loan can be assumed, and ______________.
The use of an escrow account (Refinancing options)
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 (Changes in market conditions that are beyond the lender's control).
The FHA Section 203(h) program assists __________________ with an insured mortgage.
Victims of a presidentially declared disaster
Danny and Wendy recently relocated to California. They are buying a three-bedroom home in an established neighborhood where they look forward to raising a family. Their real estate agent, Brunhilda, thinks that their income, which is on the low side, and the property could make them eligible for _____, which would offer reduced, fixed interest rates on a loan.
A CalHFA loan product
Which of these HUD programs allows mortgage lenders to obtain a better price for their mortgage loans in the secondary mortgage market?
A Ginnie Mae guarantee makes it easier for mortgage lenders to obtain a better price for their mortgage loans in the secondary mortgage market. (FHA)
Which of these is a reason that the deed of trust is the standard security instrument used in California real estate transactions?
Because CA foreclosure laws allow a statutory right of redemption of up to one year with a judicial foreclosure. (Because CA is a lien theory state)
Conrad has purchased a home in California and, as a veteran, he's been able to take advantage of the CalVet home loan program. How does this loan program work?
CalVet holds the legal title to the property until the loan is paid off. (CalVet offers loan products with reduced interest rates through approved, private lenders)
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, which can be a significant source of income for loan originators. (Origination Fee)
Which of the following is designed to make consumer financial products and services fair and transparent?
Consumer Financial Protection Bureau This is the mission of the CFPB, which was established by the Dodd-Frank Act of 2010. (Home Affordable Refinance Program (HARP))
Which agency sets the guidelines for qualified mortgages?
Consumer Financial Protection Bureau (Federal Housing Finance Agency)
Craig's loan is secured by a mortgage. Who holds legal title when this security instrument is used?
Craig: The borrower holds legal title to the property that secures the loan when a mortgage instrument is used (Craig's lender)
Which of the following is an example of a government-sponsored enterprise (GSE)?
Fannie Mae, Freddie Mac (Federal Housing Finance Agency)
The interest rate on a Section 251 adjustable rate mortgage will _____________.
Go up or down, but can't change more than a maximum number of points allowed by the FHA over the life of the loan The FHA sets a maximum number of percentage points that the interest rate on a Section 251 ARM may change over the life of the loan.
Conforming loan limits vary based on location and _________.
Number of units being purchased with the property (Type of ownership)
The signature lines on the multi-state Fannie Mae promissory note are set up for _____________ to sign.
Only the borrower, as maker of the promise, is required to sign the note.
The buying and selling of government securities as a way to influence the money supply and balance economic growth describes _________.
Open market operations involve the trading of government securities (Discount window)
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 of the Loan Estimate includes a section called "Comparisons" that make it easy for a consumer to compare the costs of loans
Lenders who ______________ can underwrite and approve FHA loans without requiring the FHA to review each borrower's qualifications.
Participate in the direct endorsement program allows lenders to perform all of the steps for qualification and approval of FHA loans, following FHA guidelines, when they participate in the direct endorsement program. (Are insured by the FDIC).
Includes the Housing and Economic Recovery Act (HERA)
Recovery legislation that was enacted to avert another subprime mortgage crisis and stimulate the economy
Hugh works as a loan officer at a bank. Because of the _____________, he must be registered with the Nationwide Mortgage Licensing System.
SAFE Act
Disclosures under the _________________ are required when the seller is extending credit to the buyer or anyone other than the buyer or seller is paid in any way to arrange financing.
Seller Financing Disclosure Law
The section on the Loan Estimate called "Services You Cannot Shop For" includes fees for
Services performed by a third party that is selected by the lender. (Services performed by the lender)
Which act made some mortgage insurance premium deductions available to certain taxpayers?
The American Taxpayer Relief Act of 2012, which expired in 2014, made some mortgage insurance premium deductions available to certain taxpayers. (Mortgage Forgiveness Debt Relief Act of 2007)
A mortgage banker licensed under the _________ may make, sell, and service residential mortgage loans.
The CA Residential Mortgage Lending Act allows mortgage bankers to make and service residential mortgage loans. They may also purchase and sell federally related mortgage loans. (CA Mortgage Banking Act)
Which of these HUD programs is primarily responsible for providing mortgage insurance on home loans?
The FHA provides mortgage insurance for home loans (Community Development Block Grant)
Which of these names is also known as the California Real Property Loan Law?
The Mortgage Loan Broker Law, the Necessitous Borrower Act, and Article VII of the RE Law
The FHA __________ program allows a borrower to refinance an FHA loan without verifying income or assets.
The program is called a Streamline Refinance because no verification of income or assets is needed, although the borrower must be currently using an FHA-insured loan.
Under the "Summaries of Transaction" on page three of the Closing Disclosure, the "Seller's Transaction" table is completed by _____________.
The settlement agent (The lender
How does the Community Development Block Grant program assist in supporting HUD's mission?
They make competitive grants available to communities to meet needs as defined by local government, such as improving public facilities or building affordable housing. (Provides home financing grants to low-income home buyers).
Why are life insurance companies less concerned with liquidity than long term security of an investment?
They prefer financing larger projects such as shopping centers or apartment complexes, which inherently have a more long-term security.
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) is for the purchase of one- to four-unit residences. (Title II, Section 234(c))
Brittany is a real estate licensee with a mortgage loan originator endorsement. When she acts as an MLO, the California Real Property Loan Law requires her to give her clients a disclosure that _____________.
The Mortgage Loan Disclosure Statement informs the borrower about the terms of the loan being offered. The licensee must deliver this disclosure to the prospective borrower within three business days of receiving a loan application. (She is acting as both a real estate lincensee and an MLO)
Adam is a real estate licensee. He gets a call from Brad, who tells him that he's getting married soon, and that he and his partner, Zeke, will need to buy a home that is between their places of work. The area where Adam has active listings is right where Brad and Zeke need to be. Adam doesn't agree that gay marriage should be legal, so he tells Brad that he doesn't have time to help but that he can refer Brad and Zeke to another agent. What California legislation makes Adam's action illegal?
The Unruh Civil Rights Act requires all businesses to provide full and equal service to customers and clients. Adam can't legally refuse to serve Brad and Zeke simply based on his disagreement with their decision to marry. (Housing Financial Discrimination Act)
Which real estate finance instrument includes the promise to repay and the security instrument within the same document?
The contract for deed is both the pledge of collateral and the promise to repay. It can also include the purchase agreement.
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 _____________.
The lender has an interest in the property and the right to foreclose. If the borrower were to default, the lender could obtain legal title to the property. (Equitable title)
The house payment Tim and Vickie are considering would give them a housing ratio of 34% and a total debt obligation of 40%. Their credit score is 640. What do they need to change to meet the underwriting requirements for an FHA loan?
They should look for a home in a lower price range. Although 640 is an acceptable score for an FHA loan, its underwriting requirements specify a housing ratio of no more than 31%. A less-expensive home might help this couple meet the FHA underwriting guidelines for housing ratio.
What does NCUA stand for?
National Credit Union Administration. It's purpose is to manage and charter federal credit unions.
The Mortgage Disclosure Improvement Act amends _______ in terms of the timing of lender disclosures.
TILA
What is a government-sponsored enterprise (GSE)?
A private company created by the U.S. Congress to make certain borrowing easier and cheaper (A corporation that issues home loans on the primary market)
Page three of the Loan Estimate includes information about a consumer's right to receive a copy of the ____________ from the lender.
Appraisal (Mortgage servicing data)
Ed is a home buyer reviewing the Loan Estimate he received from a lender. He notices the loan terms include a prepayment penalty. Because he's a savvy consumer, he ___________.
Asks the lender if there are other options available that would not involve a prepayment penalty. (Checks with his RE agent to make sure that the penalty shown is typical)
The "Calculating Cash to Close" table on page three of the Closing Disclosure explicitly lists
Loan estimate and final amounts side-by-side (All itemized amounts that contribute to the total closing costs)
HUD's _____________ has a goal of increasing the availability of safe and affordable housing to Native American families.
The Office of Native American Programs administers housing and community development programs that benefit American Indian and Alaska Native tribal governments, tribal members, the Department of Hawaiian Home Lands, Native Hawaiians, and other Native American organizations. (Native American Housing Program)
In California, how has state law modified the way the deed of trust works?
It creates a lien on the porperty, and the borrower, not the trustee, holds legal title.
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?
Lisa won't be able to use a contract for deed, and although the mortgage (with note) is an option, if Darwin's lender uses a deed of trust that means it is typical for the state, and would be Lisa's most likely choice. (Assumption agreement)
Jan is a real estate licensee with a mortgage loan originator (MLO) endorsement. When she acts as an MLO, what law limits the amount of commission and fees she can earn for negotiating a loan on behalf of her client?
The California Real Property Loan Law regulates the commission and fees that an MLO may charge for services. This law is also known as the Mortgage Loan Broker Law, the Necessitous Borrower Act, and Article VII of the Real Estate Law (CA Mortgage Loan Origination Law)
Both the Housing and Economic Recovery Act and the American Recovery and Reinvestment Act funded a program called ______________, which provided emergency assistance grants to states to purchase and redevelop foreclosed and abandoned homes and residential properties.
The Neighborhood Stabilization Program The Neighborhood Stabilization Program was funded through recovery legislation. (Community Reinvestment Program)
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?
These are actions designed to support HUD's goal to use housing as a platform for improving quality of life. (Meet the need for quality affordable rental homes)