RE: Finance Exam Questions

Failure to meet loan terms and conditions

A homeowner may go into default on a home loan due to ______.

Vulnerable

A lapse in property insurance coverage can result in borrower default because it leaves the lender ______ should something happen to damage the property.

Deficiency judgment

A lender was not able to recover all of the losses incurred during the foreclosure process. What could it pursue to recoup these losses?

Reverse annuity mortgage

A loan that's offered based on a homeowner's equity in which funds are drawn over time and the bank gains corresponding property ownership is called a ______.

Non-recourse

A mortgage with a clause that prohibits the lender from suing the borrower for unpaid amounts if foreclosure occurs is called a ______ mortgage

Contract for deed

A vendor and vendee are the parties involved when the finance instrument is a ______.

Home Mortgage Disclosure Act

About 50% of the borrowers in Neighborhood One are Hispanic, while only 4% in Neighborhood Two are Hispanic. The median home price in both neighborhoods is the same. However, statistics show that there is a significantly greater percentage of minority and low-income borrows who were denied financing for loans on properties in Neighborhood Two and were offered lower rates to live in Neighborhood One. What act is intended to prevent this type of potentially discriminatory lending pattern?

Refinancing to a conventional loan

Annual MIP can be removed from an FHA loan by ______.

Home equity

Bindy received a loan based on the amount of equity she had in her house. She used this lump sum to fund her daughter's college education. What type of loan did she get?

Her down payment isn't at least 20% of the purchase price.

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?

One year

Chanel is buying a brand new home with a VA loan. She's obtained a certificate of reasonable value. For how long is that CRV valid?

Amortized

Esmerelda makes regular monthly payments on her loan. In addition to paying interest, she's slowly paying down the principal of the loan. With each payment she makes, more will go towards the principal and less to interest. What type of loan does she have?

Four goals

HUD's strategic plan outlines the ______ that support its mission.

Seller

If a cloud on a title is discovered, which party is generally responsible for clearing the cloud?

Potentially negative items

In which section of a credit report may a lender expect to find a loan that the consumer is delinquent on?

He will pay 1/12 of it monthly with his mortgage payment.

Jarod has obtained an FHA loan for which he pays an annual mortgage insurance premium. How will he likely make this payment?

Get a low 4.925% APR

Jerome is developing an ad for three properties he has listed in an upscale community. He wants to keep it short and simple. Which of these would NOT trigger full disclosure under TILA?

Participation

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?

Account statement

Larry is a lender processing a loan application. Which of the following might he request to verify the applicant's bank deposit information?

The right to foreclose if the borrower defaults

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?

Straw buyer

Samuel and Yoshi have worked at the same firm for a few months and get along well. Samuel mentions he has a credit score in the low 800s. Yoshi, who's just starting out, persuades Samuel to sign for a loan to help Yoshi buy a property, since his credit isn't good enough. Yoshi promises to make the mortgage payments, but two months after the deal closes, Yoshi moves across the country. Samuel's now stuck with a $400,000 mortgage. What type of scheme is this?

Reverse

Section 255 of the Title II FHA-insured loan program covers ______ mortgages for borrowers age 62 or older.

Maybe, but they'll have to petition their lender

The Bransons have a conventional loan for which they were required to obtain private mortgage insurance. Their local real estate market has been going like gangbusters, and their house is now appraised at twice their loan balance! Will their PMI be cancelled?

The introduction of the long-term amortized loan

The FHA has helped to significantly improve the mortgage market through ______.

First-time homeowners

The Homeownership Voucher Assistance program is available to ______ to help pay monthly homeownership expenses

Home Mortgage Disclosure Act

The Morgans are about to close on their home. They're meeting with the lender to complete all the necessary paperwork. They've requested that none of their demographic information be shared with anyone. Which act would they need to be made aware of?

$36,000

The VA loan program offers a basic entitlement amount of ______.

Funding fee

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.

Ensure funds are available to borrowers

The secondary mortgage market buys loans from the primary market. How does this aid the lending market?

Investors

To whom would a 1031 tax exchange usually appeal?

The rebate is not required for referral of business.

Under RESPA, a rebate of a licensee's commission may be offered to a transaction party, provided which of the following is true?

It allows investors to defer capital gains taxes when selling a property, provided they buy another property.

What advantage does the 1031 tax-deferred exchange offer?

National Credit Union Administration

What does NCUA stand for?

A deficiency judgment against the property owner for the outstanding balance to the lien holders is issued.

What happens after a lien foreclosure sale if not enough money were made from the auctioning of the property to pay off the lien holders?

A land contract

What is another name for an installment sale contract?

The combined fair market value of the property (or properties) being exchanged into cannot be more than 200% of the relinquished property.

What is the 200% rule as it relates to tax-deferred exchanges?

It provides the lender with an accurate opinion of the property's market value.

What is the purpose of the Uniform Residential Appraisal Report?

Rolling over funds from one IRA into another

What type of investment strategy is most similar to a 1031 tax-deferred exchange?

Assessed value

What type of value is of interest to taxing authorities?

Checking account

Which of these items is a demand deposit?

Four-unit residence being purchased with a conventional loan

Which of these transactions must comply with Appraiser Independence Requirements?

Underwriter

Which party to the loan approval process evaluates the loan application, the supporting documentation and data, and the property appraisal in order to make an approval recommendation?

Partnership among mortgagees

Which type of participation agreement involves more than one mortgagee as owner of the finance instrument in which each receives an equal share of the mortgage payment?

Mortgage REIT

Which type of real estate investment trust derives a portion of its income from interest dividends?

Determine the value of the loan that the VA will guarantee

With a VA loan, the certificate of reasonable value is used to ______.

Interest

With a straight mortgage, what type of payments are made up until the end of the loan term?

Shelby must still be under the VA's debt-to-income ratio

Your client, Shelby, a veteran using a VA loan to finance her purchase, just learned that the CRV came in lower than the sales price. But no problem: Shelby's brother is willing to loan her the difference. If the loan is approved, ______.

Equitable title and possession of the property

Your clients, the Nguyens, have signed a contract for deed to purchase a property. What rights do the Nguyens receive?

A qualified intermediary

What type of professional must an investor use to conduct a tax-deferred exchange?

The lender executes and records a satisfaction of mortgage and returns the note to the borrower.

When a borrower has paid off the loan, how is the release handled if the security instrument is a mortgage?

An assumption

When a buyer takes over the seller's original loan with the lender's permission, this is called ______.

On the lesser of the sales price or the appraised value of the property

When a buyer uses an FHA loan, the down payment amount is calculated ______.

When a borrower has missed payments but still has some financial security

When is a loan modification considered?

Chain of title

Which document is used to establish the path and proof of ownership?

Utility

Which factor that influences value considers the property's function?

Individual entrepreneurs

Which of the following are potential private loan resources that may be willing to finance a home?

Local credit union

Which of the following entities commonly acts in the primary market?

The Federal Reserve and secondary mortgage markets

Which of the following entities support lenders in having adequate cash flow available?

A conventional fixed-rate mortgage issued by a commercial bank

Which of the following is Fannie Mae most likely to purchase?

Population size

Which of the following is a piece of general data an appraiser may gather?

Meet the same eligibility criteria as for the VA-guaranteed loan program

Which of the following is a requirement for veterans who wish to use the Native American Direct Loan?

Vacant lot

Which of the following is considered an ineligible property type for which a loan to purchase or refinance wouldn't be purchased by Fannie Mae?

Homeowner and Equity Protection Act

Which of the following specifies a requirement of pre-loan counseling for consumers?

They're allowed only on fixed rate loans.

Which of the following statements is true about buydowns with a VA loan?

Be knowledgeable about the global market rates

Which of these appraiser requirements does AIR NOT specify?

Set construction standards for homes purchased with FHA loans

Which of these items did the Federal Housing Administration (FHA) implement to stabilize and improve the mortgage market?