Course 1 Unit 10

The maximum commission that can be charged by a licensee for negotiating a second trust deed of $7,500 for a period of five (5) years is:

15%.

Which of the following statements violates the federal Truth in Lending Act?

3-bedroom, 2 bath, large lot, with 10% down; total price $225,000

The relative cost of credit expressed as a yearly percentage rate.

APR

For a real estate loan, which of the following fees may not be included in the finance charge according to the federal Truth in Lending Act?

Appraisal fees

The secondary mortgage market is for buying and selling existing mortgages from the primary mortgage market or from each other. Which of the following is not a major participant in the secondary mortgage market?

Carlie Mac

Which institutional lender commonly makes short-term construction loans?

Commercial banks

What shows the borrower's payment history, balance of outstanding debt, credit history, number of credit inquiries, and types of credit held?

Credit report

A statistical method lenders use to assess a borrower's credit risk.

Credit scoring

__________ occurred when people moved money from savings and loans into investments paying a higher rate of interest.

Disintermediation

Which Act established the Consumer Financial Protection Bureau and authorized it to regulate consumer financial products and enforce several consumer protection laws?

Dodd-Frank Act

Corporation that insures deposits in all federally chartered banks and savings institutions up to $250,000 per depositor.

FDIC

What federal agency insures deposits in all federally chartered banks and savings institutions?

FDIC

The Real Estate Settlement Procedures Act (RESPA) applies to which of the following?

Hint: RESPA applies to all federally related, 1-4 unit residential mortgage loans. These include most purchase loans, assumptions, refinances, property improvement loans, and equity lines of credit. The Consumer Financial Protection Bureau (CFPB) is responsible for enforcing RESPA.

Which of the following activities is not commonly performed by a mortgage broker?

Mortgage brokers underwrite loans and fund them at closing.

Which of the following lenders frequently uses a warehouse line to make loans to borrowers?

Mortgage companies

If only the annual percentage rate (APR) is disclosed in an advertisement for property, which additional disclosures must be made?

No other disclosures are required

Which economic stimulation tool of the Federal Reserve involves purchasing and selling government securities?

Open market operations

_____ is a federal law that requires disclosure to borrowers of closing costs and procedures by means of a pamphlet and forms approved by the United States Department of Housing and Urban Development (HUD).

RESPA

The use of property's location to deny financing is known as:

Redlining

What regulation implements the Federal Truth in Lending Act?

Regulation Z

Which of the following statements is true regarding the mortgage market?

The primary mortgage market is where lenders make mortgages to borrowers

The broker negotiating the loan must keep a signed copy of the Mortgage Loan Disclosure Statement for how many years?

Three

An economic situation in which the supply of money is limited and the demand for money is high, as evidenced by high interest rates is:

Tight money

Which of the following is not one of the credit reporting agencies used by lenders to research a borrower's credit record?

TransAmerica

_____ is the process of evaluating a borrower's risk factors before the lender will make a loan.

Underwriting

The Seller Financing Disclosure Statement only applies to a(n):

arranger of credit.

The original purpose of Fannie Mae was:

buying and selling FHA and VA loans in the secondary market.

A minimum credit balance that a bank requires a borrower to keep on deposit as a condition for granting a loan.

compensation balance

Lender whose members usually have the same type of occupation.

credit union

The Truth-In-Lending Act (Regulation Z) requires:

creditors to disclose credit terms so consumers can make comparisons.

A process whereby regulatory restraints are gradually relaxed.

deregulation

The process of gradually relaxing regulatory restraints is called:

deregulation.

Federal act ensuring that all consumers have an equal chance to obtain credit.

equal credit opportunity act

The dollar amount the credit will cost the borrower.

finance charge

Document that lists the charges the buyer is likely to pay at settlement.

good faith estimate

All of the following are risk factors that the lender assesses during the underwriting process, except the borrower's:

highest level of education completed.

The percentage of appraised value to the loan.

loan-to-value

Actions taken by the Fed to influence the availability and cost of money and credit as a means of promoting national economic goals

monetary policy

Pools of mortgages used as collateral for the issuance of securities in the secondary market.

mortgage backed securities

Real estate licensee who is a third party originator.

mortgage broker

Lender whose principal business is the origination, closing, funding, selling, and servicing of loans secured by real property.

mortgage companies

California-required statement that disclosed expected maximum costs and expenses of making the loan that are to be paid by the borrower.

mortgage loan disclosure statement

The total interest, fees, and points earned by the lender expressed expressed as a percentage

mortgage yield

Mortgage backed securities that pass through the principal and interest of the underlying loans to investors.

pass-through securities

Market in which lenders make mortgage loans directly to borrowers.

primary mortgage market

The underlying security for the mortgage loan is the:

property.

A company with a minimum of 100 shareholders that owns operates income-producing real estate or engages in financing real estate.

real estate investment trust

A discriminatory lending practice prohibited by the Holden Act.

redlining

The Housing Financial Discrimination Act of 1977 prohibits the discriminatory practice known as:

redlining.

Since the security for a mortgage loan is the property, a lender will want to ensure fair market value for the property by:

requiring an appraisal.

The Federal Real Estate Settlement Procedure Act of 1974 (RESPA) pertains to:

residential properties with 1-to-4 units.

The __________ market is the market that does not originate loans.

secondary mortgage

A resale marketplace for mortgage loans.

secondary mortgage market

The most effective method for the Federal Reserve to create a "tight" money market is to:

sell government bonds and raise the discount rate.

In the field of real estate financing, the term "secondary mortgage market" usually refers to

the resale or transfer of existing trust deed loans.

The type of lenders having the greatest percentage of its assets invested in residential real estate mortgages are:

thrifts.

An economic situation in which the supply of money is limited, and the demand for money is high, as evidenced by high interest rates

tight money

Consumer-protection law passed to promote the informed use of consumer credit by requiring disclosures about its terms and costs.

truth in lending act

The process of evaluating a borrower's risk factors before the lender will make a loan.

underwriting

Revolving line of credit extended to a mortgage company from a warehouse lender.

warehousing