Exam review Bracey

A borrower who has received a certificate of eligibility will qualify for a VA loan under which of the following circumstances?

The borrower also has sufficient credit and income

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. The 95% rule says that your client can identify a whole bunch of properties with no regard to their value if the exchange they're moving into has a total value of at least 95% of the value of the property they're selling.

In the residential mortgage market, charging borrowers more than ______ over market rate for interest is considered a predatory lending practice.

5%, Subprime loans can have interest rates 1% to 5% over the current market rate. Anything over 5% is an indication of predatory lending.

For conventional loans in which the loan-to-value ratio is in excess of a certain percentage, lenders generally require private mortgage insurance. What's this percentage?

80% Loans above 80% don't conform to Fannie Mae/Freddie Mac guidelines, so a lender may require PMI to offset the risk.

What is an encumbrance?

A defect on a title that can be monetary or physical An encumbrance is a defect on a property's title that can be monetary, such as a lien, or physical, such as an easement that limits the owner's use of the property

Fannie Mae's multi-state note includes a due-on-sale clause, also known as a(n) ______ clause.

A due-on-sale clause, also known as an alienation clause. Paragraph 10 of the note describes the right of the lender to accelerate the loan if the borrower transfers ownership of the property.

John sells his single-family home and purchases a new home for his family to reside in. Marcus owns a single-family home, but rents it out to a co-worker while he is on an extended two-year military tour overseas. Donald sells an apartment complex and purchases a new complex in a different part of the city. Which of these consumers is most likely to take advantage of a 1031 tax-deferred exchange?

Donald/ Remember, the property must be held for investment or business purposes. Single-family homes don't qualify

Which of the following is a true statement about tranches?

Each tranche has specific rules for distributing income received from the collateral, and has differing balances, maturities, and risks.

______ is regulated by the Federal Housing Finance Agency

Freddie Mac

Wendy is buying a house from Tom. Tom helps Wendy out by paying for a 2-1 buydown. The lender has given Wendy an interest rate of 5%. Which of the following describes what the buydown will do to Wendy's interest rate?

Her rate will be 3% for the first year, 4% the second year, and 5% after that. The 2-1 buydown reduces the interest rate by 2% the first year, 1% the second year, and then reaches the rate stated on the borrower's note.

Which of the following actions did the Federal Reserve take in response to the 2007 financial crisis?

The Fed decreased the federal funds rate and purchased securities on the open market. These activities made borrowing and lending more affordable and made more money available for lending and purchasing.

Which of the following has a direct responsibility to pay the nation's bills?

U.S. Treasury. One of the U.S. Treasury's responsibilities is to pay the nation's bills. It obtains funds to do this through taxes and Social Security payments.

When considering the liquidity of financial assets, which category is the least liquid?

M3 - Items in the M3 category are less liquid than M1 and M2 items. This includes assets in institutional money market funds.

Which generation financed their homes due to also having other debt obligations?

Millennials. Fully 97% of this group financed their home purchases, with 56% blaming student loan debt for their inability to save.

Which of these are established by the Federal Housing Finance Agency?

Percentage targets for loans made to low- to moderate-income borrowers. The Federal Housing Finance Agency sets targets for loans made to borrowers with low- to moderateincome.

What are securities?

Securities are long- and short-term debt instruments. Those issued by the Treasury are called Treasury bonds, T-bills, or notes, depending on how long it takes them to mature.

What term is used to describe the housing inventory in default or foreclosure?

Shadow inventory/ When property loans are defaulted or foreclosed, it's named shadow inventory.

The Mortgage Disclosure Improvement Act amends ______ in terms of the timing of lender disclosures

The Mortgage Disclosure Improvement Act amends Truth In Lending Act timing requirements.

Which one of the following statements about the Torrens system is true?

The Torrens system isn't a common approach and is only accepted by a handful of states

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. When a borrower allows a property to go into disrepair, it would be difficult for the lender to recoup its investment in the event of a foreclosure. Mortgage agreements require the borrower to maintain the property so its value will not diminish.

What did a 2021 National Association of REALTORS® study say about foreign investment in U.S. real estate?

The pandemic may be affecting some of these purchase numbers. Foreign investors who live abroad accounted for 42% of home purchases, up from 39% percent in the previous year. The report says that this is because the pandemic seems to have kept more foreigners with U.S. land from living in the United States than we've seen in previous years.

The ______ can offer direct loans to farmers and ranchers. The loans are funded by congressional appropriation

USDA Farm Service Agency/ Direct loans are available to farmers and ranchers through the USDA Farm Service Agency, funded by congressional appropriation.

Sylvia is a single mother living in a small town surrounded by ranch and farm land. She would like to buy a house there, but her income level and her status as an independent contractor makes it hard for her to qualify for a conventional loan. What government program might provide her with a direct loan to purchase a home?

USDA's Single Family Housing Programs will make direct loans (as well as loan guarantees) to help low- and moderate-income rural Americans buy safe, affordable housing in rural areas

Which of the following is a description of leveraging?

Using a small amount of cash to obtain a loan of a larger amount