RE Finance

executory contracts

Chapter 5 of the Texas Property Code set requirements and penalties for

securities

Long- and short-term debt instruments are called

mortgage backed securities

Mortgages that are pooled together and sold to investors on the secondary mortgage market

Open-market operations

The buying and selling of government securities as a way to influence the money supply and balance economic growth describes ______.

Are somewhat less stringent than standards for conventional loans

Which of the following is true about the Federal Housing Administration's qualifying standards for a mortgage loan?

FHLB

reports on the liquidity and financial strength of banks throughout its districts

property tax takes priority over other liens

A foreclosure occurs January 1, 2016. Of the following, which lien takes priority?

subprime loans

A loan offered at a rate above prime to individuals who don't qualify for prime rate loans

lifetime cap

A maximum interest rate above a given index that may be charged on an adjustable rate mortgage

Pledged Account Mortgage (PAM)

A mortgage in which a savings account is set up initially by the borrower. This fund, plus earned interest, is used to supplement principal and interest payments, which are kept lower initially

Construction Loan

A new apartment building is going up downtown. The owner secured interim financing for the job. Which of these loan types is interim financing?

Alienation Clause

A provision in a mortgage that requires the loan to be paid in full by the mortgagor if a transfer of ownership takes place

municipal

An industrial development bond is a variety of ______ bond.

A global market for mortgage-backed securities

By stabilizing and improving the mortgage market, the FHA helped to build ___

30,000

Ken and Sue are purchasing a home but are short on the down payment required by their lender. Sue's mother offered to give them cash to help with the down payment. How much can Sue's mother give under current tax laws?

If Morris is foreclosed on, the home equity line of credit won't be paid until Morris's first loan is paid off

Morris still owes his lender for the financing obtained in purchasing his home. Several years later, Morris took out a home equity line of credit. This means that

shared equity mortgage

Most often used in commercial transactions, shared equity allows the lender to participate in ownership of the building.

repossessed

Natalie is a licensee who assists buyers in the purchase of HUD ______ when they're listed for sale.

Victims of a presidentially declared disaster

The FHA Section 203(h) program assists ______ with an insured mortgage.

Department of Housing and Urban Development

The U.S. ______ is the federal agency with the mission to create strong, sustainable, inclusive communities and quality affordable homes for all.

USDA Farm Service Agency (FSA)

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

Calculated Cash to Close

Under which section of the Loan Estimate will you find any credits provided by the seller?

Loan Availability

Which of the following items directly influences real estate demand?

Fed Reserve Board

consists of seven members, all appointed by the President and confirmed by the Senate. These members serve one 14-year term

Mortgage Insurance Premium (MIP)

due from borrowers who make a down payment of less than 20% on a home mortgage loan. It's paid by the borrower to protect the lender from losses due to potential default.

Carry back loan

A seller-financed loan; option a buyer may use when there's insufficient cash for a down or to finance the full purchase

Private Mortgage Insurance (PMI)

An insurance requirement that protects the lender when it approves a loan with more than 75% to 80% of the purchase being financed

junior mortgages/lien

Any loan on a property that is below first payment priority

robo-signing

Banks were facing so many defaults that they started cutting corners and pushed many properties through the foreclosure process without closely reviewing the documentation, an act known as

Collateralized mortgage obligation

Dorinda is an investor. She recently purchased shares in a tranche that holds mortgages and mortgage-backed securities. In what did she invest?

The funds are used to buy, build, or improve the home that secures the loan

For tax years 2018 to 2025, a borrower can write off the interest on a home equity loan only if

The buyer and seller both sign an assumption agreement.

How is a loan assumption documented?

more than 70%

How much of a mutual savings bank's assets come from savings accounts?

SAFE Act

Hugh works as a loan officer at a bank. Because of the ______, he must be registered with the Nationwide Mortgage Licensing System.

lender

In a deed of trust, who is the beneficiary?

neutral third party

In a deed of trust, who is the trustee?

decreases

In an amortized loan, the interest portion of the mortgage payment generally ______ over the life of the loan

expansion

In which phase of the real estate market would you expect to see an increase in hiring and employment, increased public confidence, and an increase in buyers in the market?

Maggie will take over Jim's loan payments without telling his lender she's doing so.

Maggie will take over Jim's loan payments without telling his lender she's doing so.Maggie has a neighbor, Jim, who is facing foreclosure. She likes Jim and wants to help him out, so they agree to do a "subject to" purchase. What does this mean?

any individuals such as family

Pat and Danielle are buying their first home. They don't have quite enough money saved for the down payment and closing costs. Who could give them a tax-free gift to help with the purchase?

Lenders don't like contract for deed arrangements.

Ralph and Mort are neighbors. Ralph is selling, Mort is buying, and Ralph is offering a second loan to help Mort with his down payment, using a contract for deed. When Mort presents this idea to his lender, his lender balks. Why might that be?

Taiwan, the U.K., and Canada

Some countries have banks that issue loans for U.S. real estate purchases. What are the main countries that participate?

Government Sponsored Enterprises (GSEs)

The Farm Credit System is ______

first time homebuyers

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

USDA Loans

The program requires no minimum loan amount and offers loans of up to $300,000

Buyer's Market

The supply of properties available in the market is greater than the number of buyers. What type of market does this describe?

Growing Equity Mortgage

This is a fixed-rate mortgage where the monthly payments increase over time according to a set schedule

Homeowner Affordability and Stability Plan

This plan used cost sharing and incentives to encourage lenders to reduce homeowner's monthly payments to 31% of their gross monthly income, with the lender responsible for getting the mortgage payments to under 38%, and the government sharing the cost to meet the 31% goal

Hardest Hit Fund

This provided $7.6 billion to the hardest hit states and the District of Columbia to develop locally tailored programs to assist struggling homeowners in their communities

life insurance company

Vantagestar Ltd. would like to construct a high-end condominium complex. Where will they likely go for financing this project?

Federal Open Market Committee (FOMC)

Which government entity oversees open-market operations?

Wall Street Reform and Consumer Protection Act (Dodd-Frank Act)

Which governmental legislation established the Consumer Financial Protection Bureau?

Home Equity Conversion Mortgage (HECM)

Which loan program is only available to homeowners who are 62 or older?

decreased rates

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

A standardized measure for interest rates and other loan costs

Which of the following best describes annual percentage rate (APR)?

Interest on the first $750,000 of mortgage debt is deductible for married couples filing jointly or $375,000 for married couples filing separately

Which of the following is a true statement about deducting interest on mortgages taken out in tax years between 2018 and 2025?

It was available in the states with the most underwater homeowners.

Which of the following is a true statement about the Hardest Hit Fund?

Either insured or guaranteed by the government

Which of the following is an aspect of government loans?

Institutional money market funds

Which of the following is classified as the least liquid on the scale?

Consumer Financial Protection Bureau (CFPB)

Which of the following is designed to make consumer financial products and services fair and transparent?

A borrower can use the funds as needed, repay them, and borrow them again.

Which of the following is true about a home equity line of credit?

conversion of properties

Which of the following items directly increases the supply of real estate properties on the market?

Single-family on one lot

Which of the following types of residential dwellings do life insurance companies purchase from the secondary mortgage market?

Stock certificates

Which of the following would the FDIC most likely NOT insure?

checking account deposits

Which of the following would the FDIC most likely insure?

FHA

Which of these HUD programs is primarily responsible for providing mortgage insurance on home loans?

Percentage targets for loans made to low- to moderate-income borrowers

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

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?

Hope for Homeowners Act of 2008

aimed to stabilize the housing market by preventing foreclosures and helping subprime borrowers refinance into more affordable fixed-rate mortgages

Homeowners Protection Act of 1998

allows borrowers with loans created after 1998 to have their PMI cancelled when their equity reaches 22% of the original value of the property

construction mortgages

are not paid out in one lump sum, but disbursed at intervals as phases of construction are completed

American Recovery and Reinvestment Act

called for tax cuts and benefits for working families and businesses, funding for entitlement programs (e.g., unemployment benefits), and funding for federal contracts, grants, and loans

guaranteed loans

offered by the USDA Farm Service Agency

loan modification

Borrowers work with lender to restructure or modify the terms of their mortgage so they can continue to make payments

shadow inventory

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

lender

Who's the mortgagee in a mortgage?

Credit Report

Because of the Mortgage Disclosure Improvement Act, the only advance fee that a creditor can charge to a consumer before providing required loan disclosures is a(n) ______ fee.

The subprime mortgage crisis and economic meltdown of 2007-2008

The Housing and Economic Recovery Act and the American Recovery and Reinvestment Act were enacted in response to ______.

Truth in Lending Act

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

Mortgage applications, loan amount, type of loan, and loan purpose

What HMDA data is available about loans?

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?

The cost of public services as a percentage of the property value

What do property taxes in a mortgage payment pay for?

It causes the entire outstanding loan amount to become due if the property is being sold.

What does an alienation clause in a promissory note do?

Sequential Pay CMO

What is the most common structure for a CMO?

An investor can identify up to three replacement properties and not encounter a restriction regarding fair market value as long as debt load requirement is met.

What is the three-property rule as it relates to tax-deferred exchanges?

A mortgage-backed security issued by Freddie Mac

What's a participation certificate?

To avoid going over the conforming loan limit

What's one reason a borrower would choose a split—or piggyback—loan option?

With a contract for deed

What's the most common way that a seller can help a buyer come up with the funds to complete a real estate transaction?

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

When is a loan modification considered?

RESPA

Which act prohibits the payment of kickbacks between settlement service providers?

Texas SAFE Act

Which act requires that individuals making more than five "owner-financed" loans per year, obtain a residential mortgage loan origination license?

Federal Farm Credit Banks Funding Corporation

Which entity provides disclosures and public information about the financial condition of FCS?

adjustable rate mortgage

A nontraditional mortgage product with a rate that changes, usually annually, based on the behavior of the economic index with which it is associated

Lifting clause

A provision that allows the lien(s) ahead of the junior mortgage to be refinanced without changing their priority in lien positions

medium of exchange

Store of value, unit of account, and what other factor define money?

Government

Which type of loan is insured by the Federal Housing Administration?

bridge

type of loan is temporary in nature, usually 90 days, and provides funds in addition to an existing loan until permanent financing can be obtained

Confirmed receipt of the Closing Disclosure

Victor is a buyer reviewing the Closing Disclosure he received from his lender. On the last page of the form, he sees a signature line. By signing the form, Victor has ______.