National Finance

Under which of the following would one MOST likely see an estoppel certificate? A lender sells a loan and the new mortgagee wants to know the existing balance A lender attempts to prevent a loan assumption to an unqualified party A developer attempts to have a parcel released from under a blanket mortgage A lender calls for full payment of a note

A lender sells a loan and the new mortgagee wants to know the existing balance

Who is NOT an originator of primary loans? Savings and loans Credit unions Mortgage brokers FHA

FHA

The Federal National Mortgage Association is authorized to purchase which of the following types of mortgage loans? FHA only VA only FHA and VA, but not conforming conventional FHA , VA, and conventional

FHA, VA, and conventional

Who is the largest purchaser in the secondary market? Ginnie Mae Fannie Mae FHA Freddie Mac

Fannie Mae

Which of the following is true of a second mortgage? It has priority over a first mortgage. It cannot be used as a security instrument. It is not negotiable. It is usually issued at a higher rate of interest.

It is usually issued at a higher rate of interest.

The Smiths' purchased a residence for $75,000. They made a down payment of $15,000 and agreed to assume the seller's existing mortgage, which had a current balance of $23,000. The Smiths' financed the remaining $37,000 of the purchase price by executing a second mortgage whereby the seller became a mortgagee. This type of loan is called a Wraparound mortgage Package mortgage Balloon note Purchase money mortgage

Purchase money mortgage

The finance charges recorded on the Truth in Lending statements would include all of the following EXCEPT: Loan fees charged by the lender Insurance premiums for mortgage insurance payment Discount points and service fees Recording fees and title insurance premiums

Recording fees and title insurance premiums

A Budget Mortgage is a loan, which has a payment composed of the following? Principal and interest only Principal, interest, taxes and insurance Interest only Principal and compound interest

Principal, interest, taxes and insurance

If a property sold at a court foreclosure does not sell for an amount sufficient to satisfy the outstanding mortgage loan debt, the mortgagee may sue for a judgment by default. a deficiency judgment. a satisfaction of mortgage. damages.

a deficiency judgment.

Which mortgage clause allows a lender to regain their investment if the borrower does not pay his payment? Alienation Defeasance Acceleration Prepayment

acceleration

The clause in a trust deed or mortgage which permits the mortgagee to declare the entire unpaid sum due upon a default by a mortgagor is called a(n) ______________ judgment clause. acceleration clause. escalator clause. forfeiture clause.

acceleration clause

The two major sections of the Truth In Lending law, includes advertising and Annual Percentage Rate (A.P.R.). Consumer Protection Rate (C.P.R.) and Annual Percentage Rate (A.P.R.) advertising and disclosure of material facts. lender profit transparency and Annual Percentage Rate (A.P.R.).

advertising and Annual Percentage Rate (A.P.R.)

A mortgage where the interest rate fluctuates and is usually tied to an index; payment amount increases are capped for each period and for the term of the loan is called a Reverse Annuity Mortgage (RAM). a wraparound mortgage. a participation mortgage. an Adjustable-rate Loan (sometimes called an ARM).

an Adjustable-rate Loan (sometimes called an ARM).

A buyer wants to take out an FHA loan. The broker should refer the buyer directly to ______________ any approved lending institution such as a bank or savings and loan association. an FHA appraiser in the area. the Federal Housing Administration office. the Federal National Mortgage Association.

any approved lending institution such as a bank or savings and loan association.

A mortgage broker _____________ arranges loans between borrowers and investors. is a lender. buys mortgages in the secondary mortgage market. buys mortgages and resells them at a profit.

arranges loans between borrowers and investors

A settlement agent must provide the seller with the Closing Disclosure three days before consummation of the mortgage. at consummation of the mortgage. three business days before consummation of the mortgage six business days before consummation of the mortgage

at consummation of the mortgage.

Most lenders require an impound or escrow account to cover future payments of negative amortization. homeowners insurance and real estate taxes. title insurance premiums. transfer taxes.

homeowners insurance and real estate taxes.

Usury MOST nearly means ______________ making loans without the benefit of co-signors. lending money at fluctuating interest rates. being capable of multiple usage. illegal interest.

illegal interest

A lender charges discount points on a loan to make their ads more attractive. lower the borrower's down payment. improve the lender's yield. be competitive in the market place.

improve the lender's yield.

An increase in the availability of money would lead to which effect? Interest rates would go up. Interest rates would go down. Interest rates would NOT be affected due to RESPA guidelines. Interest rates would NOT be affected due to TRUTH IN LENDING.

interest rates would go down

In an installment land contract, what type of title did the seller retain? Joint Legal Equitable Record

legal

The discount points charged by a lender on a federal VA or FHA loan are a percentage of the ________________ sale price. appraised price. loan amount. down payment.

loan amount

A mortgage or deed of trust must be recorded. may be recorded. is never recorded. may only be recorded by the borrower upon default.

may be recorded

Remember for purposes of determining the new loan balance, you will not have to know how to determine the principal portion of the loan payment. interest portion of the payment. payment amount. monthly interest amount.

payment amount

As a group, the three secondary mortgage market participants; Fannie Mae, Ginnie Mae and Freddie Mac insure mortgage loans originated by primary market lenders. regulate the low cost housing market. provide an outlet for primary lenders to sell their mortgage loans. guarantee any losses suffered by primary lenders.

provide an outlet for primary lenders to sell their mortgage loans.

Protection to an owner of property against losses sustained as a result of a defective title to real estate can be accomplished by title search. title abstract. title Insurance. title Opinion.

title insurance

What is the purpose of FHA? To loan money for first mortgages To loan money for second mortgages To act as an insurance company of first mortgages To loan money in areas of high risk

to act as an insurance company of first mortgages

The purchaser of real estate by deed or the buyer under a contract for deed is called the beneficiary. vendor. vendee. obligor.

vendee

The Loan Estimate must be delivered to an applicant at the time the loan request is first made. within three calendar days prior to closing. within three calendar days of loan application. within three business days of loan application.

within three business days of loan application.

RESPA requires lenders to provide a HUD "Guide to Settlement" booklet and a Good Faith Estimate (GFE) of all costs related to settlement to borrowers within 5 days of loan application. 3 days of loan application. 2 days of loan application. at time of loan application.

3 days of loan application

On an 8% straight term loan of $6,071 the borrower paid total interest of $1,700. What is the term of the loan? 30 months 36 months 42 months 48 months

42 months

The buyer was required to pay $4,000 in discount points. The loan balance was $80,000. How many points did the lender require? 3 4 5 6

5

If a borrower purchases a property for $200,000, and borrows $160,000 he/she is said to have a LTV ratio of? 100% 80% 90% Cannot be determined.

80%

A house sold for $42,000. The buyer made a 20% down payment. Monthly interest on the loan was $252. What was the interest rate on the loan? 5% 7% 9% 11%

9%

______ is the cost per thousand that is required to create the principal and interest payment necessary to pay off a loan. A rate A point A factor A power

A factor

The following real estate financing statements all contain trigger terms under Regulation Z of the Truth in Lending Act, except "Only $12,000 down and $750 a month payments". "Owner financing available at 6%." "Great assumable low interest rate loan". "Easy to qualify on this 30 year loan."

"Great assumable low interest rate loan"

If advertised alone, which would be in violation of TRUTH IN LENDING? "FHA financing available" "Assumable loan" "No down payment required" "Easy financing terms"

"No down payment required"

The Pickets are purchasing a home for $78,000 and the lender is giving them a 90% loan at 10% interest, plus a 2% loan origination fee. How much is the loan origination fee? $1,404 $1,560 $1,650 $7,020

$ 1, 404

On a $50,000 loan the borrower is required to pay 2 points. How much does the borrower have to pay the lender? $49,000.00 $50,000.00 $51,000.00 $52,000.00

$ 51,000.00

Determine the monthly interest on a loan with a balance of $168,300, a monthly payment of $1,356.80, and an interest rate of 7.75%? $1,086.94. $1,304.33 $866.67 Cannot be determined.

$1,086.94.

Which of the following advertised financing terms would NOT trigger a full disclosure under Regulation Z $265,000 sale price 5.5% interest on second mortgage Only 8% down Monthly payments of only $1,200

$265,000 sale price

A standardized yardstick expressing the true annual cost of borrowing is expressed as a/an ECOA Regulation Z APR RESPA

APR

Which of the following describes a mortgage that requires principal and interest payments at regular intervals and calls for the liquidation of the debt by periodic installments until the debt is satisfied? Amortized loan Annuity loan Acceleration loan Assemblage loan

Amortized loan

Which of the following is considered a conventional loan? FHA insured VA guaranteed Commercial bank ARM loan FNMA mortgages

Commercial bank ARM loan

The lender is not insured or guaranteed against a loss, by reason of the borrower's default in repayment, under which type of loan? FHA Conventional VA GI

Conventional

S&Ls are now regulated by the Federal Housing Finance Board (FHFB) and deposits are insured by the Deposit Insurance Fund for at least $250,000. Federal Deposit Insurance Corporation for up to $250,000 per account. Deposit Insurance Fund for at least $100,000. Federal Deposit Insurance Corporation for up to $1,000,000 per account.

Deposit Insurance Fund for at least $250,000

Discrimination is prohibited in lending practices under _____________ ECOA. RESPA. Truth in Lending Act. FNMA.

ECOA

If a single parent is applying for a real estate loan, when would the fact have to be revealed that part of the parent's income is from child support? When applying for a VA or FHA loan if the parent's income is less than $25,000 If more than 50% of the parent's income is non-wage sources If the parent was relying on the income for repayment of the loan This type of income never needs to be disclosed. It would be a violation of ECOA.

If the parent was relying on the income for repayment of the loan

When a lender requires tax and/or insurance amounts to be deposited with the lender by placing the monies in an escrow account, a "Budget Mortgage or Deed of Trust" occurs. These escrow accounts may also be referred to as impound or Reserve Accounts. compound or Reserve Accounts. insured or Restricted Accounts. interlocked and Restricted Accounts.

Impound or reserve accounts

A qualified buyer is one who has demonstrated the financial capacity and credit worthiness required to afford the asking price. In qualifying a buyer the lender looks at these factors? Income, expenses and appraised value Assets, liabilities and net worth Income, net worth and credit history Appraised value, income and credit history

Income, net worth and credit history

Under an FHA graduated payment mortgage, which of the following fluctuates over the term of the loan? Interest rate Monthly payments Finance charge Annual rate

Monthly payments

An owner advertised "beautiful acreage only $5,000 down, owner will personally finance down payment." Would this be in violation of the Truth in Lending Act? Yes, acreage is not exempt from Reg Z. Yes, since a down payment was stated. No, owners are not covered by Reg. Z. No, brokers can advertise the down payment.

No, owners are not covered by Reg. Z.

A buyer assumes the mortgage. How is the owner relieved of the liability? Subject to mortgage Novation Substitution Graduation

Novation

For loans with a LTV that have less than a 20% downpayment, a borrower is required to pay MIP PMI INC DRI

PMI

RESPA would prohibit which of the following acts? Steering Paying of kickbacks Blockbusting Redlining

Paying of kickbacks

In which of the following markets may a lender sell a loan that a mortgage banker has previously originated? Primary market Secondary market Mortgage market Consumer market

Secondary market

Ronald defaulted on his home mortgage loan payments; therefore, the lender obtained a court order to foreclose on the property. At the foreclosure sale, Ronald's house sold for only $29,000 and the unpaid balance of his loan is $40,000. What must the lender do to recover the $11,000 Ronald still owes? Sue for damages Sue for specific performance Seek a judgment by default Seek a deficiency judgment

Seek a deficiency judgment

Which transaction requires a securities' license? Leasing a commercial building Selling a commercial warehouse Selling shares in Fannie Mae Arranging a sale-leaseback on a commercial property

Selling shares in Fannie Mae

In a repayment of a mortgage loan, which type of interest is used? Simple Discount Compound Floating

Simple

The interest on a real estate mortgage loan is what type of interest? Compound Discounted Amortized Simple

Simple

When the amortized payment of a mortgage remains constant over the period of the loan but leaves an outstanding balance to be paid at the end, this payment is called: An escalation payment A balloon payment A satisfaction payment An acceleration payment

a ballon payment

In most states, by paying the debt after a foreclosure sale, the mortgagor has the right to regain the property. What is this right called? Equitable right of redemption Owner's right of redemption Vendee's right of redemption Statutory right of redemption

Statutory right of redemption

Effective October 1, 2015, the real estate industry has new requirements as specified in the HUD-1A Rules. TILT/RESPA Loan Disclosure (TRLD) Rule. Consumer Protection Rules (CPR). TILA/RESPA Integrated Disclosure (TRID) Rule.

TILA/RESPA Integrated Disclosure (TRID) Rule.

A borrower applied for a VA guaranteed first time mortgage for $50,000; however, the property appraised for $46,000. If the buyer still wanted to buy the property which could happen? The broker could write up a contract, different from the actual offer price, to take to the lender The VA could allow the borrower to make up the difference in cash The VA could make the borrower get a second mortgage for the difference The veteran could not get a VA loan because it appraised for over $35,000

The VA could allow the borrower to make up the difference in cash

A veteran desired a loan to buy a 200 acre residence. There are no VA lenders in the area. Which could happen? The VA could loan the money themselves. The VA cannot loan the money but the Federal National Mortgage Company will. You cannot get a VA loan for a farm. The VA can require local lenders to make the VA loan.

The VA could loan the money themselves.

The primary distinction/s between the primary and secondary mortgage market is? The primary market is not active in the origination of mortgage loans. The secondary market is fundamentally a holding or warehousing process. The homebuyers can get a mortgage from both primary and secondary markets.

The secondary market is fundamentally a holding or warehousing process.

When the lender under a deed of trust required title insurance, who would be the most likely person to pay for it? The mortgagee The trustee The trustor The beneficiary

The trustor

An impound or reserve account MOST benefits whom? The borrower The lender The trustee The trustor

The lender

Which of the following would usually occur in a sale-and-leaseback transaction? The seller gets a return on the purchase in the form of rental payments. The property is sold on the condition that the new owner lease it back to the seller at the time title passes. The buyer keeps capital in inventories rather than in realty. The rent that the seller pays is not income-tax deductible.

The property is sold on the condition that the new owner lease it back to the seller at the time title passes.

All of the following are true of conventional loans except what? They are made to the buyer without governmental insurance or guarantee. The policy requirements of the lenders are not uniform. The requirements to qualify are uniformly fixed by state law. They require a higher down payment than non-conventional loans.

The requirements

Why would a mortgagee (beneficiary) have an appraisal on the property? To make sure the buyer did not pay too much To determine the property's potential for appreciation To protect the buyer from fraud To assure the property value is sufficient to cover the loan

To assure the property value is sufficient to cover the loan

Which of the following laws require(s) that finance charges be stated as an annual percentage rate (APR)? Equal Credit Opportunity Act Real Estate Settlement and Procedures Act Fair Housing Act Truth in Lending Act, Regulation Z

Truth in Lending Act, Regulation Z

A buyer wanted to use a promissory note for consideration on the purchase of a property. Can he do this? Yes, the buyer can do as he wishes since he is making the contract. Yes, this is acceptable as long as the seller agrees. No, only money can be used for consideration. No, only the seller can write a promissory note.

Yes, this is acceptable as long as the seller agrees.

A borrower bought a $74,000 house with no down payment. The loan was probably ______________ a conventional insured loan. a VA loan. a FHA loan. a conventional loan.

a VA loan

A mortgage company makes a number of loans to be assembled into one package and sold to permanent investors. This process is an example of interim financing to the mortgage company and is called: Blanket financing Packing financing Warehousing Discounting

Warehousing

In 1975 a veteran paid off his VA loan and sold his house. Would he be entitled to another VA loan? Yes, veterans can apply for more than one loan in their lifetime as long as the first is paid off. Yes, because he paid off the first loan and sold the mortgaged property. No, a veteran can only have one VA loan in his lifetime. No, because he is only entitled to one allotment in his lifetime even if he paid off his loan and sold the mortgaged property.

Yes, because he paid off the first loan and sold the mortgaged property.

An owner was selling his own home. Can he advertise the down payment? No, because it violates RESPA No, because it violates Regulation Z Yes, as long as it was listed with a broker Yes, because it was his own home

Yes, because it was his own home

A final payment of a mortgage loan that is considerably larger than the other monthly payments because the loan was not fully amortized is called a margin payment. package payment. balloon payment. graduated payment.

balloon payment

The maximum permissible "loan to value ratios" are _____________ based on sale price or appraised value, whichever is lower. not determined by federal statute in the case of FHA loans. based on the banker's competitive market analysis. fixed by law for conventional loans.

based on sale price or appraised value, whichever is lower.

Under Regulation Z, consummation is defined as the time when a consumer requests a loan application. becomes contractually obligated on a credit transaction. is within three days of closing a transaction. is given a completed Loan Estimate.

becomes contractually obligated on a credit transaction

Prior to closing, a final walkthrough of the property should be performed to ensure that everything has remained as stated in the sales contract. The walkthrough is generally completed by the appraiser. lender. seller. buyer.

buyer

In Step 3 what do you subtract from the monthly payment amount to solve for the monthly principal? Annual interest Current monthly interest Last months interest Next months interest

current monthly interest

When a mortgage is paid off, what clause allows the lender to release the mortgage rights and issue a satisfaction piece? Acceleration Defeasance Codicil - change in a will Writ of execution

defeasance

Rural Economic and Community Development (RECD) loans are either made directly by RECD or made by a private lender with RECD guaranteeing a certain percentage. directly by RECD or made by a private lender with the FHA insuring a certain percentage. directly by RECD or made by a private lender with RECD insuring a certain percentage. directly by HUD or made by a private lender with HUD guaranteeing a certain percentage.

directly by RECD or made by a private lender with RECD guaranteeing a certain percentage

The primary purpose of Truth in Lending is to _____________ control interest rates on behalf of the consumer. control the true costs to close a transaction. disclose the true costs of only an FHA loan. disclose the true costs of obtaining credit.

disclose the true costs of obtaining credit.

Which clause protects a lender if he does not want the loan to be assumed by another party? Defeasance Subordination Due on sale (alienation) Subrogation

due on sale (alienation)

A home improvement company was negotiating with a home owner to add two rooms onto a home. The company agreed to take a second mortgage as long as the homeowner also included the rest of the property in the loan. The company and the homeowner agreed to a price and the company provided the necessary disclosure form on Monday and the homeowner signed the agreement at noon the following day. Assuming that the week had five business days, until what time could the homeowner rescind the loan? Tuesday, midnight Thursday, midnight Friday, midnight There is no rescission on a house.

friday, midnight

The Equal Credit Opportunity Act prohibits lenders from discriminating against consumers in the granting of credit based on the following protected classes; race, income, religion, national origin, sex, marital status, age or dependency on public assistance. race, color, religion, national origin, sex, marital status, age or dependency on public assistance. race, national origin, age or dependency on public assistance. race, color, religion, national origin, sex, or dependency on public assistance.

race, color, religion, national origin, sex, marital status, age or dependency on public assistance.

A real estate loan where a homeowner receives monthly payments based on accumulated equity rather than a lump sum and is repaid upon the death of the owner or sale of the property is a (an) open-end mortgage. blanket mortgage. contract for deed. reverse annuity mortgage.

reverse annuity mortgage

A situation where an owner sells his or her improved property and at the same time, signs a long-term lease with the buyer is called a (an) bridge Loan. sale-leaseback. contract for deed. wraparound loan.

sale- leaseback

The two biggest money lenders of residential real estate mortgages are banks and insurance companies. mortgage brokers and mutual banks. savings and loans and banks. insurance companies and mutual savings banks.

savings, and loans, and banks

The Federal Reserve controls lenders by telling lenders what percentage of their assets they can loan. telling lenders what interest rates they can charge. telling lenders how many loans they can make. having a pool of money from which the lenders can make loans.

telling lenders what percentage of their assets they can loan.

Before foreclosure who has the right to reclaim the property forfeited due to a mortgage default the borrower, under the right of Statutory Redemption. the borrower, under the right of Equitable Redemption. the trustee, under the right of Statutory Redemption. the lender, under the right of Strict Redemption.

the borrower, under the right of Equitable Redemption.

Real estate can be a poor investment if the inflation rate is high. the investor plans to hold the investment for a long time. the investor needs ready cash. land values are appreciating in the area.

the investor needs ready cash

Typically, a mortgage loan monthly payment consists of PITI, (P) the amount borrowed from the lender is called the primary loan. the penalty. the principal. the promulgated covenant.

the principal.

When qualifying a buyer the lender will calculate the Debt Coverage ratio, which measures the ratio of monthly net income to annual debt service. the ratio of annual net income to monthly debt service. the ratio of annual net income to annual debt service. the ratio of annual gross income to annual debt service.

the ratio of annual net income to annual debt service

The seller under a land contract is called _____________ the grantor. the grantee. the vendor. the vendee

the vendor

A VA loan may be granted for the purchase of a one-family to four-family if _________________ the veteran certifies the rent collected will equal the mortgage payments. the loan will be amortized for not more than 20 years. the down payment will be at least ten percent. the veteran agrees to live there.

the veteran agrees to live there.