Real Estate Finance

Sylvia, a real estate license holder, decides to prospect for new customers by handing out flyers which highlight her qualifications and also provide information about special loan programs. She works in a metropolitan area where the housing market continues to grow, and many new homes are being built in an area where zero-down USDA financing can be used. Victor, an RMLO, volunteers to pay for the flyers and take care of all of the printing and set up if the flyers can be co-branded in order to help them both generate new business at the same time. Sylvia had some ideas about what she wanted the flyers to say about loans, but Victor assures her that he can do an excellent job at writing the information for that section of the flyer. Which of the following should Sylvia and Victor avoid adding to their advertising flyers because it is considered a trigger by Truth-In-Lending? "No down payment." "Monthly payments $300" "Financing available." "Low down payment."

"Monthly payments $300"

What is the largest denomination Federal Reserve note ever issued for public circulation?

$10,000

Garth is representing Mr. and Mrs. Wu who have just decided to buy a home. Garth advised the couple to get prequalified before viewing any more homes. Mr. and Mrs. Wu trust Garth and want to do their own research and get Garth's advice before talking to a loan originator. They are disheartened by the realization that closing costs are typically more than they had thought, so they are considering pursuing an FHA loan, so that they can make a smaller down payment. However, they do not like the fact that the MIP makes the house payments higher. Mr. and Mrs. Wu have a combined gross monthly income of $9,000. For the home they want, the estimated monthly payment would be $2,700 on a 30-year loan. If the Wus buy the home that they want, their house payments would be approximately $2,700 per month. If they go with a conventional loan, the front ratio of their house payment (PITI) cannot exceed $ _______ or 28% of their gross monthly income.

$2,520

The FDIC insures deposits in banks and thrift institutions for up to:

$250,000

Agent Sidney is representing an investor buyer Alfonso who is looking at a single-family home to purchase. Alfonso wishes to lease the property after purchasing it and has asked Sidney to analyze the price of the property. Sidney believes, after careful analysis, that the property will lease for $1400 a month. Similar homes in the neighborhood have sold for $225,000 and typically lease for $1250 a month. Using the GRM, what price should the investor offer for the purchase of this property?

$252,000

In Texas, the minimum withdrawal on a HELOC is:

$4,000

Bob and Sarah decided to purchase their first home. They have decent credit and have some longevity in their respective jobs. The big issue for them is that they have not saved up enough for a substantial downpayment on a home. The home that they want to purchase is in the range of $150,000. Bob's parents have offered to loan them up to $6000 to help them with the downpayment. Sarah's parents have offered to give them, as a gift, up to $10,000. Neither Bob nor Sarah have any military experience, eliminating a VA loan as a possibility. Bob and Sarah are hoping to put a minimum downpayment on the home with the hope of buying a bit of furniture and landscaping after they move in. Given a $150,000 sales price and a minimum downpayment, what will their downpayment be on an FHA loan?

$5,250

Rita and Henry have been told that the monthly payment of PITI on the home that they have selected to purchase is $1,507. If area lenders are qualifying at 28%, what gross monthly income must they show to qualify?

$5382.14

Garth is representing Mr. and Mrs. Wu who have just decided to buy a home. Garth advised the couple to get prequalified before viewing any more homes. Mr. and Mrs. Wu trust Garth and want to do their own research and get Garth's advice before talking to a loan originator. They are disheartened by the realization that closing costs are typically more than they had thought, so they are considering pursuing an FHA loan, so that they can make a smaller down payment. However, they do not like the fact that the MIP makes the house payments higher. Mr. and Mrs. Wu have a combined gross monthly income of $9,000. For the home they want, the estimated monthly payment would be $2,700 on a 30-year loan. If the Wus decide to purchase a $250,000 home with an FHA loan, what is the minimum amount of money that they would be required to put down?

$8,750

Doug is interested in purchasing a new home. He is a veteran of the U. S. Army, and previously owned a home that he had financed using a VA loan. The loan was paid off when he sold the home five years ago. Doug has good credit and some available cash. Because he plans to do some remodeling after closing, he wants to minimize his downpayment, preserving his cash for future projects. The home he is looking at is in the $200,000 range. Given a $200,000 sales price and a minimum downpayment, what will his downpayment be under the proposed loan?

0%

RESPA regulates closing on _______________ with federally related financing.

1 to 4 family residential transactions

There are ____________ Federal Home Loan Banks.

12

Agent Sidney is representing an investor buyer Alfonso who is looking at a single-family home to purchase. Alfonso wishes to lease the property after purchasing it and has asked Sidney to analyze the price of the property. Sidney believes, after careful analysis, that the property will lease for $1400 a month. Similar homes in the neighborhood have sold for $225,000 and typically lease for $1250 a month. What is the GRM for similar homes in this neighborhood?

180

The FHLB was created by Congress in:

1932

The FDIC was created in:

1933

When was the FHA created?

1934

Fannie Mae began as an agency of the U.S. government in _______________.

1938

A notice of sale must be given at least _______________ before the date of a foreclosure sale in a non-judicial foreclosure.

21 days

On a 90% LTV, fixed rate mortgage, investors require _______________ MI coverage.

25%

A borrower must receive the Closing Disclosure from the lender no later than ______________ before closing.

3 business days

The Homeowners Protection Act (HPA) requires that borrower-paid PMI be cancelled once the borrower has paid down the loan to an LTV of _______________.

78%

Internal Revenue Service

A bureau of the Department of Treasury that collects taxes

Mortgage

A conditional transfer or a pledge of real estate as security for the payment of debt

Judicial Foreclosure

A court proceeding that begins when the lender files a complaint and records a notice in the public records announcing a claim on the property to potential buyers

Credit Report

A detailed breakdown of a person's credit history as reported by one of the three major credit bureaus

Verification Of Deposit

A document authorizing the lender to examine deposit records from a bank of the borrower to determine eligibility for a loan

Recession

A downturn in economic activity

Loan Estimate

A estimate of charges associated with a mortgage loan that must be given to a borrower no later than 3 business days after the borrower has made loan application

Home Equity Line Of Credit

A form of open-end account that may be debited from time to time, under which credit may be extended from time to time

Chunking

A get rich quick scheme using multiple loan applications submitted to various lenders without disclosing the intent to purchase other properties

Bob and Sarah decided to purchase their first home. They have decent credit and have some longevity in their respective jobs. The big issue for them is that they have not saved up enough for a substantial downpayment on a home. The home that they want to purchase is in the range of $150,000. Bob's parents have offered to loan them up to $6000 to help them with the downpayment. Sarah's parents have offered to give them, as a gift, up to $10,000. Neither Bob nor Sarah have any military experience, eliminating a VA loan as a possibility. Bob and Sarah are hoping to put a minimum downpayment on the home with the hope of buying a bit of furniture and landscaping after they move in. What will Bob and Sarah need from her parents to show that the money for downpayment is a gift?

A gift letter

Specially Adapted Housing Grants

A grant to servicemembers and veterans to certain permanent and total service-connected disabilities to help purchase or construct an adapted home or modify an existing home to accommodate a disability

Creditworthiness

A history of making on-time payments of loans

Which of the following must be a judicial foreclosure in Texas?

A home equity lien

Foreclosure

A legal procedure whereby property used as security for a debt is sold to satisfy the debt in the event of default in payment of the mortgage note or default of other terms in the mortgage document

Portfolio Lender

A lender that does not sell its mortgage loan into the secondary market

FHA Direct Endorsement Lender

A lender that is authorized to approve loans for FHA insurance without prior submission to FHA

Closed-End Loan

A loan or type of credit where the funds are dispersed in full when the loan closes and must be paid back

Conforming Loan

A loan that is originated to adhere to the standards of Fannie Mae and Freddie Mac

Subordinate Instruments

A loan that takes a lower lien position than another mortgage loan

Amortizing Loan

A loan where the monthly payment includes an amount that is applied first to the interest that is due, with the remainder of the loan payment applied to the outstanding loan balance

Secondary Mortgage Market

A market for the purchase and sale of existing mortgages, designed to provide greater liquidity for mortgages; also called the secondary money market

Package Mortgage

A method of financing in which the loan that finances the purchase of a home also finances the purchase of certain items of personal property such as specified appliances

Wraparound Mortgage

A method of financing that preserves the low, existing interest rate on the original loan with the wraparound as seller financing

Bonds

A method of raising funds used by corporation and government entities

Mortgage Broker

A middleman between the borrower and the lender, negotiating, selling, or arranging loans to be delivered to larger investors

Pre-Approval

A more involved process than pre-qualification requiring a loan application from the borrower.

Participation Loan

A mortgage in which the lender participates in the income of the mortgaged venture beyond a fixed return or receives a yield on the loan in addition to the straight interest rate

Budget Mortgage

A mortgage in which the monthly house payment includes principal, interest, taxes and insurance (PITI)

Reverse Annuity Mortgage

A mortgage loan for homeowners who are 62 or older borrowing against the equity in their property

Reverse Mortgage

A mortgage loan for homeowners who are 62 or older borrowing against the equity in their property

Shared Appreciation Mortgage

A mortgage loan in which the lender, in exchange for a loan with a favorable interest rate, participates in the profits (if any) the mortgagor receives when the property is eventually sold

Native American Direct Loan

A mortgage loan program that provides direct home loans from VA to eligible Native American Veterans to finance the purchase, construction, or improvement of homes on Federal Trust land

Blanket Mortgage

A mortgage loan that covers more than one parcel of real estate

Balloon Loan

A mortgage loan that has a final payment that is considerably larger than the required periodic payments because the loan amount was not fully amortized

Open-End Mortgage

A mortgage loan that permits additional borrowing on the same note and mortgage

Subprime Loan

A non-conforming risked-based loan with the interest based on the risk of the loan

VA Loan Guaranty

A partial guaranty on a loan protecting the lender against loss if the payments are not made

Employment Qualification

A process used by mortgage lenders to review the employment history of a borrower to determine the borrower's job stability and cross-reference income history

Verification Of Employment

A process used by mortgage lenders to review the employment history of a borrower to determine the borrower's job stability and cross-reference income history

Troubled Asset Relief Program

A program created in 2008 to restore the nation's financial stability and restart economic growth

Interest Rate Reduction Refinancing Loan

A refinance of a VA loan at a lesser interest rate without using additional entitlement

Title Commitment

A report outlining the current condition of the title - title report

Lien

A right given by law to certain creditors to have debts paid out of property of a defaulting debtor, usually by means of a court sale

Private Lenders

A small but important category for funding residential mortgage loans who have a relationship with one or more loan originators investing in mortgages that might not otherwise have a ready buyer in the secondary market

Federal Home Loan Bank System (FHLB)

A system of regional banks from which local lending institutions everywhere in America borrow funds to finance housing, economic development, infrastructure, and jobs

Federal Home Loan Banking System (FHLB)

A system of regional banks from which local lending institutions everywhere in America borrow funds to finance housing, economic development, infrastructure, and jobs

Credit Scoring

A systematic process that uses statistical models to assess an individual's creditworthiness based on their credit history and current credit accounts

Open-Market Operations

A tool of monetary policy for buying or selling government securities

Adjustable-Rate Mortgage

A type of mortgage loan in which the interest rate may increase or decrease at specified intervals over the life of the loan

Contract For Deed

A type of seller financing when the owner retains title to the property while the purchaser takes possession of the premises and pays on the principal

In the event of default, the entire amount of the principal becomes due and payable

Acceleration clause

According to the Taxpayer Bill of Rights, taxpayers have the right to: Be informed Pay no more than the correct amount of tax Privacy According to the Taxpayer Bill of Rights, taxpayers have all of these rights

According to the Taxpayer Bill of Rights, taxpayers have all of these rights

A(n) _______________ is a loan with an interest rate that fluctuates as the market changes.

Adjustable-rate mortgage

The appraiser sites any easements, encroachments, zoning problems, or other adverse or positive characteristics of the property being appraised in the section titled:

Adverse conditions

Buyers and sellers both sign a document called _______________ certifying that he or she is who they claim to be.

Affidavit of Identity

RESPA Section 8 requires the disclosure of:

Affiliated Business Arrangements

Which of the following is NOT a protected class under Federal Fair Housing? Sex Age Color Race

Age

Also known as the due on sale clause

Alienation clause

A contract for deed is risky for the buyer because:

All are risks for the buyer in a contract for deed

The Texas Veterans Land Board's Home Loan Program is for:

All honorably discharged veterans

Sellers may be interested in financing a property because: The secured note may be a good investment The property being sold may be a type that is difficult to finance through regular mortgage lenders. The buyer may have credit issues that prevent financing from regular mortgage sources but may still be a reasonable risk. All of these are reasons a seller may be interested in seller financing.

All of these are reasons a seller may be interested in seller financing.

Which of the following is one of the FHFA's strategic goals? Ensure safe and sound regulated entities Manage Fannie Mae and Freddie Mac's ongoing conservatorships Ensure liquidity, stability, and access in housing finance All of these are strategic goals of the FHFA

All of these are strategic goals of the FHFA

Bob and Sarah decided to purchase their first home. They have decent credit and have some longevity in their respective jobs. The big issue for them is that they have not saved up enough for a substantial downpayment on a home. The home that they want to purchase is in the range of $150,000. Bob's parents have offered to loan them up to $6000 to help them with the downpayment. Sarah's parents have offered to give them, as a gift, up to $10,000. Neither Bob nor Sarah have any military experience, eliminating a VA loan as a possibility. Bob and Sarah are hoping to put a minimum downpayment on the home with the hope of buying a bit of furniture and landscaping after they move in. What will the lender require Bob and Sarah to pay along with the monthly principal and interest on their loan? 1/12th of the Annual Mortgage Insurance 1/12th of the Annual Homeowner's Insurance 1/12th of the Annual Property Taxes All three of the above will be required

All three of the above will be required

Real Estate Mortgage Conduits (REMIC)

Allows for the indirect investment in mortgages through the sale of securities by purchasing pools of mortgages

Hard-Money Loan

Also known as a collateral dependent loan which is a specific type of asset-based financing in which a borrower receives funds secured by the value of a parcel of real estate

Deed In Lieu Of Foreclosure

An alternative to foreclosure wherein the lenders accept a deed rather than funds to settle the debt. Also called friendly foreclosure or voluntary deed

Fixed-Rate Mortgage

An amortizing loan with an interest rate that stays the same for the entire term of the loan

Reserve Requirements

An amount of deposits that must be set aside a member of the Federal Reserve System as either cash on hand or as a reserve account balance at a Reserve Bank

Mortgage Banker

An entity that provides its own funds for mortgage financing

Mortgage Banker

An entity that provides its own funds to for mortgage financing

Commercial Banks

An entity that uses depositors funds for mortgage financing

Monetary Inflation

An excess of money supply in the market

Farm Credit Administration (FCA)

An independent federal agency that regulated, examines, and oversees entities like Farmer Mac

Deed Of Trust

An instrument used to create a mortgage lien by which the mortgagor (trustor) conveys his or her title to a trustee

Real Estate Investment Trust

An investment vehicle created by Congress to make it possible for small investors to invest in larger commercial properties

Real Estate Mortgage Trust

An investment vehicle created by Congress to make it possible for small investors to invest in mortgages or mortgage-backed securities

Promissory Note

An unconditional written promise of one person to pay a certain sum of money to another at a future, specified time

Predatory Lending

An unscrupulous lender taking advantage of a consumer's lack of knowledge regarding lending practices

Insurance cost based on the loan-to-value ratio

Annual premium

Encumbrance

Any lien that may diminish the value of a property; a cloud against clear, free title to property limiting the rights of the property owner

The appraiser describes and evaluates the condition of the kitchen equipment in this section of the appraisal.

Appliances

The United States Treasury is responsible for all of the following except: Raising funds to finance operations of the government. Implementing economic sanctions against foreign threats Applying monetary policy to manage the growth of the economy Advising the president on economic and financial issues

Applying monetary policy to manage the growth of the economy

Money

Assets which have immediate purchasing power

Allows a new borrower to take over the payments on an existing loan

Assumption clause

Equity Of Redemption

At any time up to the moment of the foreclosure, the borrower has the right to step in and pay what is owed and reclaim property forfeited due to mortgage default

To save time, the loan officer can gather information over the phone and run the loan through an _______________, reducing the documentation the borrower has to gather before the initial meeting.

Automated Underwriting System

The ratio of the borrower's total recurring monthly debts

Back ratio

The Request for Verification of Deposit is used by the lender to verify _______________ information of the borrower's accounts.

Balance

A _______________ may be beneficial to a borrower who is planning to move prior to the last payment of the loan.

Balloon loan

Partially-amortized loan with a substantially larger final payment

Balloon loan

A loan with a _______________ has a final payment that is much greater than the amount of the other monthly payments.

Balloon payment

A loan which covers more than one piece of property

Blanket mortgage

A _______________ is a debt instrument used to lend money to a firm of government entity.

Bond

A corporation is obligated to repay the _______________.

Bondholders

An instrument of corporate or governmental debt

Bonds

The Fannie Mae 1003 Application is used to collect pertinent information of the _______________ so the loan may be properly underwritten.

Borrower

The promissory note is the _______________ unconditional promise to repay.

Borrower's

Default of the terms of the loan may cause damage to the _______________ and could lead to loss of the property through foreclosure.

Borrower's credit score

A contract for deed is also known as a(n) ____________.

Both a land contract and an installment contract

Default

Breach or nonperformance of the terms of a note or covenants of a mortgage

Through which avenue does the U.S. Treasury promote economic growth and job opportunities?

By promoting conditions to enable economic growth and stability at home and abroad

The Interstate Land Sales Full Disclosure Act requires developers to file a property report with:

CFPB

Which of the following is NOT a function of the Department of the Treasury? Campaign finance reform Currency and coinage Enforcing federal finance and tax laws Supervising national banks and thrift institutions

Campaign finance reform

A _______________ is a form of a purchase-money loan from the seller.

Carryback loan

In a _______________ refinance the borrower pays off an existing loan with the proceeds of the new mortgage on the same property but draws equity out of the property.

Cash-out

The Four Cs of Good Lending include:

Character, Capacity, Collateral, Capital

Office Of The Comptroller Of The Currency

Charters, regulates, and supervises all national banks and federal savings associations as well as federal branches and agencies of foreign banks

_______________ occurs when a fraudster promises to show investors how to get rich by buying investment properties.

Chunking

Excessive selling/lending activities to generate fees and commissions is called _______________.

Churning

Excessive selling/lending activity for the purpose of generating fees and commissions

Churning

Ratio of total recurring monthly debts to GMI

Closing

The consummation of a contractual real estate transaction in which all appropriate documents are signed and the proceeds of the mortgage loan are then disbursed by the lender

Closing

The RESPA - TILA Integrated Disclosure Rule mandates the use of two disclosures: the Loan Estimate and the _______________.

Closing Disclosure

In addition to Freddie Mac and Fannie Mae, Wall Street is a source of funds in the secondary market through the sale of:

Collateralized Mortgage Obligations

Any seller _______________ which exceeds 4% of the established reasonable value of the property is considered excessive and unacceptable for VA-guaranteed loans.

Concession

The three approaches to appraisal are all of the following, except: Condition approach Income approach Cost approach Sales comparison approach

Condition approach

A loan that is originated adhering to Fannie Mae or Freddie Mac's standards so it may be sold in the secondary market is called a(n):

Conforming Loan

Adheres to Fannie Mae and Freddie Mac requirements for purchase of a mortgage

Conforming loan

Conventional loans that conform to FNMA/ FHLMC standards

Conforming loan

Advantages of ARM loans include all of the following, except:

Confusion

All of the following are HUD's major programs except: Community Development Block Grants Consumer Financial Protection Bureau Federal Housing Administration Section 8 Housing

Consumer Financial Protection Bureau

The finalization or closing of the real estate transaction is called:

Consummation

A sales contract in which the buyer agrees to make regular payments to the seller for equitable title

Contract for deed

In a contract for deed, the seller promises to _______________ to the buyer when all payments have been made.

Convey legal title

A _______________ is an entity or person that processes, underwrites, closes, and funds its own mortgage loans through a warehouse line of credit, selling the loans to another lender once the loan is closed.

Correspondent Lender

Someone who processes, underwrites, closes and funds their own files in their name and then sells the loans to other mortgage lenders

Correspondent Lender

The systematic process that uses statistical models to assess an individual's creditworthiness based on their credit history and current credit accounts is called _______________.

Credit Scoring

_______________ are not-for-profit organizations that exist to serve its members.

Credit Unions

Member-owned depository institutions

Credit union

An essential component of the underwriting process is determining the _______________ of the borrower.

Creditworthiness

Money laundering through the purchase of real estate is an example of:

Criminal purposes beyond fraud

The _______________ states that in the event of default on the primary instrument, the secondary instrument automatically defaults.

Cross-default clause

In a _______________ the borrower voluntarily deeds the property to the lender.

Deed in lieu of foreclosure

Breach or nonperformance of the terms of a note or covenants of a mortgage

Default

When the price at auction on a foreclosed property is insufficient to cover the unpaid balance of the loan, the lender may sue for a _______________.

Deficiency Judgment

The unpaid balance of a foreclosed mortgage, payable by court order

Deficiency judgment

HUD's Community Development Block Grant Program funds are used to meet all of the following goals except: Aiding low and moderate-income persons Developing shopping centers and other commercial areas Preventing or eliminate slum or blight conditions Meeting an urgent need that threatens health or safety

Developing shopping centers and other commercial areas

The yield on a loan is determined by the rate of interest charged on the loan and the _____________ charged by the lender at closing.

Discount Points

Set by the board of directors of the Federal Reserve Banks, subject to approval by the Board of Governors

Discount rate

The act of moving funds from one investment arena to another

Disintermediation

The process of moving savings funds from one arena to another is called:

Disintermediation

Stockholders anticipate receiving a _______________, which is profit that is distributed to the stockholders.

Dividend

A veteran's entitlement to VA home loan benefits, based on military service

Eligibility

_______________ is the veteran's entitlement to a VA home loan benefits under the law, based on military service.

Eligibility

The FDIC examines banks for compliance with all of the following consumer protection law, except: Fair Credit Reporting Act Truth In Lending Act Emergency Economic Stabilization Act Community Reinvestment Act

Emergency Economic Stabilization Act

___________ was a federal law enacted in 2008 to promote the stability and liquidity of the financial system through the authorization of TARP.

Emergency Economic Stabilization Act

The VOE is completed by the borrower's _______________.

Employer

What is the number one determinant for demand?

Employment

A claim, lien, charge, or liability attached to and binding real property

Encumbrance

Under FHA's Direct _______________ program, approved lenders may underwrite and close mortgage loans without FHA's prior review or approval.

Endorsement

Mortgage Companies

Entities that provide financing for real estate purchases usually through a

The _______________ the borrower has built up over time may be used to obtain a subordinate finance instrument, using the property as collateral.

Equity

At any time prior to the foreclosure, the borrower has the right to step in and pay what is owed. This is called _______________.

Equity of redemption

Allows the lender to raise the existing interest rate

Escalation clause

The servicer of a loan must submit an annual statement for each _______________ within 30 days of the completion of the computation year.

Escrow Account

Churning

Excessive selling/lending activity to generate fees and commissions

Limits the borrower's personal liability in the event of a default on a loan, protecting other property from becoming collateral

Exculpatory clause

A(n) _______________ loan is exempt from a deficiency judgment.

FHA

Bob and Sarah decided to purchase their first home. They have decent credit and have some longevity in their respective jobs. The big issue for them is that they have not saved up enough for a substantial downpayment on a home. The home that they want to purchase is in the range of $150,000. Bob's parents have offered to loan them up to $6000 to help them with the downpayment. Sarah's parents have offered to give them, as a gift, up to $10,000. Neither Bob nor Sarah have any military experience, eliminating a VA loan as a possibility. Bob and Sarah are hoping to put a minimum downpayment on the home with the hope of buying a bit of furniture and landscaping after they move in. What is the best type of loan for Bob and Sarah?

FHA loan

Government Loans

FHA, VA, or USDA loans that are insured or guaranteed by the federal government

Common occurrences that can result in foreclosure in all of the following except:

Failure to follow a deed restriction

A Section 205 loan is an USDA Rural Development Guaranteed Housing Loan Program.

False

A married couple has a capital gain exemption if the property has been their primary residence for more than 1 year.

False

A participation loan is when two or more builders share in the construction of a large commercial building.

False

An individual may have a tax-free capital gain on the sale of real property up to $250,000 if the property were his or her principal residence for at least two of the last five years.

False

Section X of the Fannie Mae 1003 is used to qualify the borrower for the loan.

False

Signing the Loan Estimate locks the borrower into the loan described in the LE form.

False

The Farm Service Agency is an agency of the FHA.

False

The Section 502 loan is for loans up to 90% loan to value.

False

The USDA Rural Development Guaranteed Housing Loan program, Section 502 loan is for a farm or ranch.

False

The gain or loss on the sale of real estate is a simple calculation of the sales price minus the original purchase price.

False

The owner of a single-family home can depreciate the property for tax purposes.

False

The Federal National Mortgage Association is also known as:

Fannie Mae

The two largest issuers of REMICS are Freddie Mac and _______________.

Fannie Mae

_______________ is a government-sponsored enterprise with the mission of providing a secondary market for agricultural real estate mortgage loans.

Farmer Mac

Due to the financial crash of 2007, the _______________ placed Freddie Mac and Fannie Mae into conservatorship.

Federal Housing Finance Agency

__________ is currency that is not backed by any precious metals at all.

Fiat money

The trustee in a deed of trust has a _______________ with the lender.

Fiduciary relationship

Under the Texas Constitution, before lenders commence foreclosure, they must give the borrower time to do one of the following, except:

File suit against the lender in court

The potential negative impact of mortgage fraud is on _______________.

Financial institutions

All of the following are primary monetary policy tools the Fed uses to influence the cost and availability of credit except: The discount rate Reserve requirements Open market operations Fiscal policy

Fiscal policy

Relates to federal government spending

Fiscal policy

_____________ relates to government spending.

Fiscal policy

A _______________ is a loan that has an interest rate that remains the same throughout the term of the loan.

Fixed-rate mortgage

In a _______________ plan, the borrower pays part of the delinquency each month along with the borrower's regular monthly installment.

Forbearance

Legal procedure by which secured property may be sold to satisfy an unpaid note

Foreclosure

The legal procedure whereby the secured property may be sold to satisfy the unpaid promissory note

Foreclosure

The legal process whereby the property is sold to satisfy the unpaid promissory note is called _______________.

Foreclosure

Garth is representing Mr. and Mrs. Wu who have just decided to buy a home. Garth advised the couple to get prequalified before viewing any more homes. Mr. and Mrs. Wu trust Garth and want to do their own research and get Garth's advice before talking to a loan originator. They are disheartened by the realization that closing costs are typically more than they had thought, so they are considering pursuing an FHA loan, so that they can make a smaller down payment. However, they do not like the fact that the MIP makes the house payments higher. Mr. and Mrs. Wu have a combined gross monthly income of $9,000. For the home they want, the estimated monthly payment would be $2,700 on a 30-year loan. If Mr. and Mrs. Wu are pre-approved for a mortgage, what form will they receive?

Form B Conditional Approval Letter

The Interstate Land Sales Full Disclosure Act was passed in 1968 to protect consumers from ______________ in the sale or lease of land.

Fraud

_______________ is a misrepresentation and/or concealment made by a borrower or other party in order to qualify for a mortgage loan.

Fraud for housing

_______________ is a federally chartered corporation established as the Federal Home Loan Mortgage Corporation in 1970.

Freddie Mac

Life Insurance Companies

Funded by premiums paid by the insured to create savings by reinvesting to produce capital

The process of transferring funds to a title or escrow company for disbursement

Funding

With few exceptions, the law requires that the VA be paid a(n) _______________ on guaranteed loans.

Funding fee

Gift Funds

Funds from relatives as a source of down payment on a loan

Pensions/Retirement Account

Funds held with the anticipation of distribution when the client reaches retirement age

Debt instrument which attaches to all the property of the debtor not exempt from forced sale

General lien

______________ funds are acceptable and may be used for the entire down payment on an FHA loan.

Gift

All of the following are acceptable sources of the borrower's downpayment, except: Gift from seller Gift from relative Stocks Earnest money deposit

Gift from seller

_______________ is a wholly-owned government association that operates the mortgage-backed securities program designed to facilitate the flow of capital into the housing industry.

Ginnie Mae

The Fed uses open market operations for buying or selling of ___________.

Government Securities

A(n) _______________ sells municipal bonds to fund major capital investments.

Government entity

The _______________ program is designed for borrowers who cannot afford their current mortgage and need to transition to more inexpensive housing.

HAFA

The _______________ allows the Treasury to work with loan providers to refinance existing loans to achieve a 31% front-end ratio.

HAMP

The interest rate on a subordinate instrument is typically _______________ the market rates for primary instruments due to increased risk on the part of the lender.

Higher than

The appraiser should indicate in the section titled _______________ the best use for the property.

Highest and best use for the property

Loans that are collateralized by a non-purchase money mortgage or deed of trust on the borrower's principal residence

Home equity loan

A _______________ occurs when a contractor targets owners of homes in need of repair referring the homeowner to lenders encouraging the homeowner to refinance to cover the repair costs.

Home improvement scam

The Texas Reverse Mortgage is for older homeowners who are described as ____________.

House-rich and cash-poor

The _______________ was enacted in July of 2008 creating the Federal Housing Finance Agency.

Housing and Economic Recovery Act

In Section III of the Fannie Mae 1003, the borrower will provide information regarding all of the following, except:

Income

All of the following affect the borrower's credit score except: Income ratios Payment history Length of credit history Current level of indebtedness

Income ratios

A Real Estate Mortgage Investment Conduit allows for the _______________ investment in mortgages through the sale of securities.

Indirect

Private Mortgage Insurance

Insurance that indemnifies a lender against a borrower default on a conventional residential mortgage loan

According to the site, which of the following is an FHFA value?

Integrity

In a REMIC, the repayment of principal and interest is channeled through to the _______________.

Investors

Foreign Lenders

Investors in the secondary market from outside of the U.S.

Calculating Cash to Close _________________.

Is a summation of sections A, B, C, E, F, G, and H

Fannie Mae works to accomplish all of the following housing objectives except:

It funds loans for credit poor areas

In a _______________, the lender files suit with the judicial system and the borrower receives a note in the mail demanding payment.

Judicial foreclosure

Payments in excess of the reasonable value of goods provided or services rendered

Kickback

Serviceman's Readjustment Act

Known as the GI Bill of Rights, Serviceman's Readjustment Act is a law that provides servicemen and women with medical benefits, educational benefits, and low-interest loans to help the veteran assimilate back into civilian life

Foreclosure

Legal procedure by which secured property may be sold to satisfy an unpaid note

VA loans are made by a _______________, such as a mortgage company, savings and loan, or a bank.

Lender

Predatory lending typically affects all of the following groups of people except: Low-income Challenged credit borrowers Senior citizens Lenders

Lenders

Savings And Loans

Lending institutions that were organized by groups of people who lacked the sufficient savings to purchase their own home

The loan-to-value ratio is the percentage of the _______________ of the appraised value or sales price that the lender will lend.

Lesser

The Texas Department of Savings and Mortgage Lending

Licenses or registers RMLOs in the state of Texas

_______________ are funded by premiums paid by those insured.

Life Insurance Companies

The secondary market is designed to provide greater _______________ to the residential real estate mortgage market by providing for a steady supply of funds from investors.

Liquidity

Private lenders can create novel and unique _______________ products.

Loan

The borrower receives a credit on the disclosure for which of the following:

Loan Amount

A mortgage loan originator who receives an application for a federally related mortgage loan is required to provide the borrower this document within three business days of the loan application:

Loan Estimate

The loan amount will be found in the _______________ section of the Loan Estimate.

Loan Terms

_______________ is a practice in which a lender encourages repeated refinancing by existing customers tacking thousands of dollars in additional fees or other charges to the loan each time.

Loan flipping

The process of collecting information about a borrower in order to build a loan file that will be used to make an underwriting decision

Loan processing

Conventional Loans

Loans made with real estate as security and not involving government participation in the form of insuring of guaranteeing the loan

Conventional Loans

Loans made with real estate as security and not involving government participation in the form of insuring or guaranteeing the loan

To be sold into Fannie Mae or Freddie Mac in the secondary market, loans adhere to all of the following standards, except:

Loans must be held in portfolio first

Home Equity Loans

Loans that are collateralized by a non-purchase money mortgage or deed of trust on the borrower's principal residence

Prohibits prepayment of the loan prior to a certain date

Lock-in clause

All of the following are disadvantages of ARM loans, except: Unpredictable mortgage payments Confusion Lower than market initial interest rate Need for early refinancing

Lower than market initial interest rate

The sum of currency held by the public and transaction deposits at depository institutions is referred to as:

M1

M1 plus savings deposits, small-denominations time deposits, and retail money market mutual fund shares is __________.

M2

The FHA provides mortgage insurance on single-family, multifamily, and _______________ homes throughout the United States and its territories.

Manufactured

The most probable price a property should bring on the open market

Market value

An excess in money supply causes __________.

Monetary inflation

When there is an excess of money supply in the market

Monetary inflation

Policy that deals with interest rates and the supply of money in the US economy.

Monetary policy

The maintenance of a stable money supply that provides growth in the economy while keeping inflation in check is ______________.

Monetary policy

The _______________ pledges the property as security for a debt.

Mortgage

_______________ is a person, corporation, or firm not otherwise in banking that provides its own funds for mortgage financing.

Mortgage Bankers

A _______________ is a middleman between a borrower and a lender.

Mortgage Broker

A _______________ specializes as the middleman between the borrower and the lender.

Mortgage Broker

Typically specialize as middlemen between borrowers and lenders

Mortgage Brokers

The _______________ allows taxpayers to exclude income from the discharge of debt on their principal residence.

Mortgage Debt Relief Act of 2007

If a borrower is in default, the _______________ may start the foreclosure process.

Mortgage Servicer

Up-Front Mortgage Insurance Premium

Mortgage insurance charged to the borrower at closing on an FHA loan, determined as a percentage of the base loan amount

The _______________ is the person or entity that receives the pledge as security for a debt.

Mortgagee

An Equity Estate REIT purchases all of the following except:

Mortgages

The _______________ is the person who pledges the property as security for a debt.

Mortgagor

Direct loans for construction or improvement on Federal Trust Land

Native American Direct Loan

_______________ occurs when the borrower's payment does not cover all of the interest due each month.

Negative Amortization

The _______________ of the appraisal report is a narrative entry that includes a general discussion of the type of homes in a neighborhood.

Neighborhood Description

The appraisal report has a section that describes the neighborhood's geographical boundaries, called:

Neighborhood boundaries

Bob and Sarah decided to purchase their first home. They have decent credit and have some longevity in their respective jobs. The big issue for them is that they have not saved up enough for a substantial downpayment on a home. The home that they want to purchase is in the range of $150,000. Bob's parents have offered to loan them up to $6000 to help them with the downpayment. Sarah's parents have offered to give them, as a gift, up to $10,000. Neither Bob nor Sarah have any military experience, eliminating a VA loan as a possibility. Bob and Sarah are hoping to put a minimum downpayment on the home with the hope of buying a bit of furniture and landscaping after they move in. When will the Annual Mortgage Insurance be removed from the loan?

Never

Doug is interested in purchasing a new home. He is a veteran of the U. S. Army, and previously owned a home that he had financed using a VA loan. The loan was paid off when he sold the home five years ago. Doug has good credit and some available cash. Because he plans to do some remodeling after closing, he wants to minimize his downpayment, preserving his cash for future projects. The home he is looking at is in the $200,000 range. Will this loan require any on-going mortgage insurance premiums?

No

Bob and Sarah decided to purchase their first home. They have decent credit and have some longevity in their respective jobs. The big issue for them is that they have not saved up enough for a substantial downpayment on a home. The home that they want to purchase is in the range of $150,000. Bob's parents have offered to loan them up to $6000 to help them with the downpayment. Sarah's parents have offered to give them, as a gift, up to $10,000. Neither Bob nor Sarah have any military experience, eliminating a VA loan as a possibility. Bob and Sarah are hoping to put a minimum downpayment on the home with the hope of buying a bit of furniture and landscaping after they move in. Can Bob and Sarah borrow the downpayment from Bob's parents?

No, it must be a gift.

Credit Unions

Non-profit organizations that exist to serve its members by accepting deposits and lending money returning surplus income to its members in the form of dividends

In commercial lending, it provides that the borrower is not personally liable for repayment of a loan

Nonrecourse clause

The TVLB Land Loan Program is for land ____________.

Of at least an acre

The _______________ charters, regulates, and supervises all national banks, federal savings associations, federal branches, and agencies of foreign banks.

Office of the Comptroller of the Currency

Settlement

Often referred to as closing, which is the consummation of a contractual real estate transaction in which all appropriate documents are signed and the proceeds of the mortgage loan are disbursed by the lender

All of the following will hurt a credit score except: Excessive shopping for credit On-time monthly payments Credit cards at capacity Moving balances from one revolving credit card to another

On-time monthly payments

Points

One percent of the loan amount paid as an origination fee to the lender or prepaid interest

Buying or selling government securities by the Federal Reserve.

Open-market operations

The Department of Treasury is organized into two main components: the departmental office and ____________.

Operating bureaus

The process of creating a new mortgage loan

Origination

A(n) _______________ includes both real and personal property in the same loan.

Package mortgage

The seller is debited at closing for:

Pay-off of the First Mortgage

Which of the following is not a benefit of homeownership?

Paying a mortgage

The most common cause of mortgage foreclosure is:

Payment delinquency

Kickbacks

Payments in excess of the reasonable value of goods provided or services rendered

A refinance is the _______________ of an existing loan with the proceeds of a new loan to the same borrower.

Payoff

_______________ are fed by client investment funds.

Pension and Retirement Programs

The promissory note includes all of the following except:

Pledge of the property

Percentages based on the amount of the loan

Points

Loans that are not sold to investors in the secondary market are called:

Portfolio loans

A typical deed of trust contains a _______________ allowing for a non-judicial foreclosure.

Power of Sale clause

Also known as a statutory foreclosure

Power of sale

In a _______________, the mortgage contains a power of sale clause.

Power of sale

A non-judicial foreclosure may occur when a _______________ exists in a mortgage.

Power of sale clause

Taking advantage of a consumer's lack of knowledge regarding lending practices is called _______________.

Predatory lending

The FDIC receives its funding from

Premiums that banks and thrift institutions pay

More than two-thirds of subprime loans have _______________.

Prepayment penalties

The lender charges the borrower if he/she pays the loan off early

Prepayment penalty

On the appraisal report, an estimate of how the neighborhood's parcels are currently improved and developed is called:

Present Land Use %

Federal Deposit Insurance Corporation

Preserves and promotes public confidence in the U.S. financial system by insuring deposits in banks and thrift institutions for up to $250,000

U. S. Treasury

Primarily responsible for raising funds to finance the operations of the United States Government

Commercial banks, credit unions, mortgage companies, and savings and loans are all part of the _______________.

Primary Market

According to the site, who provides VA home loans?

Private Lenders

Which of the following is a document that the buyer would sign at closing?

Promissory note

_______________ is a scam where unsuspecting buyers are sold homes in extreme states of disrepair for prices far above what the houses are actually worth.

Property Flipping

All of the following are examples of liens except: Tax Liens Property Liens Mechanics and Materialman's Liens Mortgages and Trusts Deeds

Property Liens

The primary goal of the Federal Home Loan Bank System is to:

Provide credit and other services to fund housing and other loans in the community

The Office of Consumer Credit Commissioner regulates all of the following real estate transactions except: Secondary Mortgage Purchase Mortgages Home Equity Loans Property Tax Lien Lenders

Purchase Mortgages

Default-related services include all of the following, except: Property inspections Foreclosure costs Purchase costs Property preservation

Purchase costs

A non-judicial foreclosure is a _______________ foreclosure than a judicial foreclosure.

Quicker

Holds mortgages in trust for the benefit of investors

REMIC

A _______________ is an investment vehicle created to allow small investors to invest in larger commercial properties.

Real Estate Investment Trust

Investment vehicle created by Congress in 1960

Real Estate Investment Trust

A _______________ invests in mortgages or mortgage-backed securities.

Real Estate Mortgage Trust

The _______________ should join the buyer or the seller at the closing table to be available to answer questions.

Real estate agent

The re-amortizing of a mortgage

Recasting

_______________ is the process of re-amortizing a mortgage.

Recasting

The practice of refusing to provide financing in a particular area because of location

Redlining

Raising the reserve requirements _______________ the availability of funds for lending.

Reduces

In a _______________ refinance the borrower pays off an existing loan with the proceeds of the new mortgage on the same property.

Regular

Fiscal Policy

Relating to government spending

Allows for a portion of the loan to be paid in exchange for the lender releasing part of the property from the mortgage

Release clause

Sources of income for a Real Estate Mortgage Trust include all of the following, except: Gain from buying and selling mortgages Origination Fees Rent Interest

Rent

The industry term for residential loan originators, as mandated by the SAFE Act

Residential Mortgage Loan Originator

The TDHCA is responsible for all of the following except: Residential Mortgage Loan Originators The manufactured home industry Housing-related community service programs Affordable housing

Residential Mortgage Loan Originators

_______________ income is the amount of money left over each month after all of the borrower's major expenses are paid - including housing, taxes, and debt payments.

Residual

A homeowner who is at least 62 years old may want to use a(n) _______________ to borrow against the equity in their property.

Reverse mortgage

A loan underwritten based upon the home's appraised value and the loan term of the owner

Reverse mortgage

A bond is rated according to its _______________.

Risk

The _______________ offers delinquent borrowers the opportunity to prevent foreclosure by working with lenders to refinance their existing loan.

SMP

A lender may seek a deficiency judgment when the _______________ at the foreclosure auction is less than what is owed on the property.

Sales Price

The down payment is the difference between the _______________ and the LTV.

Sales price

Which of the following is not a role of the agent in regards to the buyer's financing?

Scheduling the appraisal

A(n) _______________ is an instrument subordinate to the primary mortgage.

Second mortgage

Fannie Mae operates exclusively in the _______________ and provides support to mortgage lending institutions in the primary market.

Secondary Market

The _______________ exists for the purchase and sale of existing mortgages to investors.

Secondary Market

Encompasses the purchase and sale of existing mortgages to investors

Secondary mortgage market

This section of RESPA places limits on the amounts that a lender may require a borrower to put into an escrow account for the purpose of paying taxes and hazard insurance.

Section 10

The Single Family Housing Direct Home Loan is also known as:

Section 502 Direct Loan Program

This section of RESPA prohibits kickbacks and unearned fees.

Section 8

This section of RESPA prohibits the seller from directly or indirectly requiring the buyer to purchase title insurance from a specific title company.

Section 9

To raise money for the purchase of loans, Freddie Mac sells its own _______________.

Securities

A deed of trust is a three-party instrument whose parties include all of the following except: Trustee Borrower Seller Lender

Seller

Sometimes the _______________ is willing to finance the buyer.

Seller

Seller financing may be referred to as a _______________.

Seller carryback

All of the following are part of the section called Due From Borrower at Closing on page 3 of the Closing Disclosure except: Seller's Loan Payoff Closing Costs Paid at Closing Sales Price of the Property Sales Price of any Personal Property

Seller's Loan Payoff

Commonly known as the GI Bill of Rights

Servicemen's Readjustment Act

The ______________ collects the monthly payment, maintains records of payments and balances, collects and pays taxes, remits funds to the note holder, and follows up on delinquencies.

Servicer

The _______________ section has costs associated with the loan that the buyer may not choose the provider of the services.

Services You Cannot Shop For

Sending monthly payment statements and collecting monthly payments, maintaining payment records and following up on delinquencies

Servicing

Sylvia, a real estate license holder, decides to prospect for new customers by handing out flyers which highlight her qualifications and also provide information about special loan programs. She works in a metropolitan area where the housing market continues to grow, and many new homes are being built in an area where zero-down USDA financing can be used. Victor, an RMLO, volunteers to pay for the flyers and take care of all of the printing and set up if the flyers can be co-branded in order to help them both generate new business at the same time. Sylvia had some ideas about what she wanted the flyers to say about loans, but Victor assures her that he can do an excellent job at writing the information for that section of the flyer. How can Sylvia ensure that Victor is properly licensed as an RMLO?

She can look him up in the NMLSR

Conforming Loans

Standardized conventional loans written on uniform documents that meet the purchase requirements of Fannie Mae and Freddie Mac - both loan amount and borrower characteristics must meet the guidelines

A power of sale is a _______________.

Statutory foreclosure

A _______________ owns a share of the corporation.

Stockholder

A _______________ is a person used to buy a property to conceal the actual buyer.

Straw buyer

In a _______________, the lender files a lawsuit of the homeowner that is in default.

Strict foreclosure

Second and third mortgages

Subordinate instruments

The junior mortgage will continue in its position and will not become a first mortgage

Subordination clause

_______________ loans are risk-based financing.

Subprime

What is the primary determinant of real estate value?

Supply and demand

An application for a loan includes all of the following, except: Loan Amount Property Address Survey Estimated Value

Survey

The possession date for the buyer is stipulated in the _____________.

TREC promulgated contract

Retirees, Mark, 75 years of age, and Cindy, 72, have a tight monthly budget, leaving little left over at the end of each month for recreation or travel. They have amassed over $25,000 in credit card debt over the last year due to taxes and medical bills, and even though they are paying $1,000 per month to pay down their cards, the interest rates are high, and it seems to be taking forever to bring down the balances. Marl and Cindy owe $50,000 on their mortgage. Their property has appreciated since they bought it 10 years before, and is currently worth $300,000. Since they are both retired, their monthly income comes from their Social Security at $3,000 per month and from an IRA at $700 per month before taxes. The couple is interested in a reverse mortgage to pay off their mortgage so that they can have more money each month and not rely on credit cards. If Mark and Cindy want equal payments for as long as at least one of them is alive and stays in the house, occupying it as his/her principal residence, which payment plan would be best for them?

Tenure

HECMs have five payment plans, tenure, term, line of credit, modified tenure, and modified _______________.

Term

The Real Estate Settlement Procedures Act is administered by

The CFPB

Who funds the FHA?

The FHA itself

Farmer Mac

The Federal Agricultural Mortgage Corporation is a government-sponsored enterprise with the mission of providing a secondary market for agricultural real estate mortgage loans

Freddie Mac

The Federal Home Loan Mortgage Corporation created in 1970 to purchase mortgages in the secondary market

Fannie Mae

The Federal National Mortgage Association created in 1938 as an agency of the federal government to bring stability to the U.S. housing market

Ginnie Mae

The Government National Mortgage Association is a wholly-owned government association that operates a mortgage-backed securities program designed to facilitate the flow of capital into the housing industry

___________ was created in September 2008 to restore the nation's financial stability and restart economic growth.

The Troubled Asset Relief Program

Liquidity

The ability to sell an asset and convert it into cash at a price close to its true value in a short period of time

Conservatorship

The appointment of a guardian to manage the financial affairs of a person or entity

Pre-qualification

The borrowers provide basic information to the lender including income, debt, and credit history

Federal Reserve

The central banking system of the United States

Servicing

The collecting monthly payments, maintaining records of payments and balances, collecting and paying taxes and insurance (and managing escrow and impound funds), remitting funds to the note holder, and following up on delinquencies

Closing

The consummation of a contractual real estate transaction in which all appropriate documents are signed and the proceeds of the mortgage loan are disbursed by the lender

Appraisal Report

The document used by appraisers to communicate the appraiser's opinion of value for a property

Economic Cycle

The fluctuation of the economy between periods of growth and contraction

Discount Rate

The interest a Reserve Bank charges eligible financial institutions to borrow funds on a short-term basis

According to the website below, what is the prime rate?

The interest rate that is determined by individual banks

Strict Foreclosure

The lender files a lawsuit on the homeowner that has defaulted

Monetary Policy

The maintenance of a stable money supply that provides for growth in the economy while keeping inflation in check

Primary Mortgage Market

The market where borrowers and lenders come together to create and negotiate the terms of a mortgage transaction

At the national level, the value of residential real estate is affected by what factor?

The monetary policies of the Federal Reserve

Annual Premium

The mortgage insurance on an FHA loan that is paid annually divided into 12 monthly payments, determined as a percentage of the balance of the loan

Forbearance

The most common way of resolving a loan default through a plan to suspend payments for a limited time until the borrower is able to begin a repayment schedule

Loan-To-Value

The percent of the price or the appraised value whichever is lower that the buyer is borrowing

Loan Processing

The phase of the loan process where the borrower's file is built

Power Of Sale

The power of sale clause is a clause in the deed of trust where the borrower gives the lender the authority to foreclose in the event of default.

Redlining

The practice of refusing to provide financing in a particular area because of the location

Origination

The process of creating a new mortgage loan

Underwriting

The process of making a lending decision through the evaluation of the borrower's loan application

Disintermediation

The process of withdrawing funds from one arena of investment and moved to another

Income Qualification

The proof of income of a borrower using W-2s and/or tax returns

Federal Funds Rate

The rate the Federal Reserve charges banks for unsecured loans, most of which are for a very short term (sometimes for overnight)

Recasting

The re-amortizing of a mortgage

Yield

The return that a lender receives representing the money earned on an investment

Closing Disclosure

The settlement statement that shows a division of debits and credits for a buyer and seller of a real estate transaction and must be given to the borrower/buyer no later than 3 business days prior to closing

Federal tax policy that affects demand for real estate includes all of the following except:

The supply of money

Residential Mortgage Loan Originator

The term mandated by the SAFE Act for the person who originates a mortgage loan

Funding

The transfer of funds to a title or escrow company for disbursement

Eligibility

The veteran's entitlement to VA home loan benefits under the law, based on military service

Deficiency Judgment

Through a motion filed in court, the lender seeks to receive an unpaid balance or deficiency on the original mortgage

The Federal Housing Administration provides mortgage insurance on all of the following purchases except: Single-family homes Timeshares Multi-family homes Manufactured Homes

Timeshares

The contract for deed is a type of seller financing that allows for _______________ by the seller.

Title retention

A common appraisal issue on an agricultural property could include that the property served only by a volunteer fire department.

True

A homeowner can deduct property taxes and interest on a mortgage from their income for federal tax purposes.

True

A shared appreciation mortgage allows the lenders to share in the profitability of the property when it is sold.

True

Agricultural lending is different from residential lending because buyers may be seeking financing on unimproved properties that lack utilities.

True

An installment sale is a sale of property in which the seller receives at least one payment after the tax year of the sale.

True

FSA loans include farm ownership loans, operating loans, and emergency loans.

True

Land is never depreciated.

True

The Declarations section of the Fannie Mae 1003 must be completed with the borrower answering every question in the section.

True

To qualify for a Section 502 loan a borrower may only have up to 115% of the median income of the area where the property is located.

True

The Verification of Employment will be sent to current employers and any previous employers within the last _______________ years.

Two

The appraiser will list the improvements that are normal for similar properties in the section of the appraisal titled:

Typical improvements

Bob and Sarah decided to purchase their first home. They have decent credit and have some longevity in their respective jobs. The big issue for them is that they have not saved up enough for a substantial downpayment on a home. The home that they want to purchase is in the range of $150,000. Bob's parents have offered to loan them up to $6000 to help them with the downpayment. Sarah's parents have offered to give them, as a gift, up to $10,000. Neither Bob nor Sarah have any military experience, eliminating a VA loan as a possibility. Bob and Sarah are hoping to put a minimum downpayment on the home with the hope of buying a bit of furniture and landscaping after they move in. What type of mortgage insurance will be paid at closing by Bob and Sarah?

UFMIP

The _______________ offers rural homeowners to lower their monthly mortgage payment to no more than 31% of their verified monthly gross income.

USDA's special loan servicing

The process of evaluating a borrower's loan application to determine the risk involved for the lender

Underwriting

The seller receives a credit at closing for all of the following except:

Unpaid property taxes

All of the following are mortgage fraud red flags, except: Employer's address is a post office box Lack of accumulation of assets compared to income Down payment in some form other than cash Upgrading to a larger home

Upgrading to a larger home

Back Ratio

Used to qualify a borrower for a loan as a ratio of the borrower's total recurring monthly debts and the borrower's gross monthly income

Front Ratio

Used to qualify a borrower for a loan based upon the proposed house payment and his or her gross monthly income

Correspondent Lender

Usually in smaller scale than mortgage bankers or brokers that extend loans with their funds at their own risk

An example of a lien that would be considered a desirable encumbrance is:

Utility easement

Doug is interested in purchasing a new home. He is a veteran of the U. S. Army, and previously owned a home that he had financed using a VA loan. The loan was paid off when he sold the home five years ago. Doug has good credit and some available cash. Because he plans to do some remodeling after closing, he wants to minimize his downpayment, preserving his cash for future projects. The home he is looking at is in the $200,000 range. What is likely the best type of loan for Doug?

VA

The Request for Verification of Deposit is commonly called _______________.

VOD

Once a mortgage has been approved and the borrower has signed the mortgage documents, a _______________ verification of employment is conducted with all current employers.

Verbal

Form lenders use to obtain borrower balance information

Verification of Deposit

Ratio of proposed loan payment to GMI

Verification of Deposit

Which is acceptable proof of income in section V Monthly Income and Combined Housing Expense Information?

W-2

Doug is interested in purchasing a new home. He is a veteran of the U. S. Army, and previously owned a home that he had financed using a VA loan. The loan was paid off when he sold the home five years ago. Doug has good credit and some available cash. Because he plans to do some remodeling after closing, he wants to minimize his downpayment, preserving his cash for future projects. The home he is looking at is in the $200,000 range. Will the lender require taxes, insurance, and other assessments be paid into an escrow (impound) account?

Yes

Retirees, Mark, 75 years of age, and Cindy, 72, have a tight monthly budget, leaving little left over at the end of each month for recreation or travel. They have amassed over $25,000 in credit card debt over the last year due to taxes and medical bills, and even though they are paying $1,000 per month to pay down their cards, the interest rates are high, and it seems to be taking forever to bring down the balances. Marl and Cindy owe $50,000 on their mortgage. Their property has appreciated since they bought it 10 years before, and is currently worth $300,000. Since they are both retired, their monthly income comes from their Social Security at $3,000 per month and from an IRA at $700 per month before taxes. The couple is interested in a reverse mortgage to pay off their mortgage so that they can have more money each month and not rely on credit cards. Do the couple meet the borrower age requirements?

Yes

Retirees, Mark, 75 years of age, and Cindy, 72, have a tight monthly budget, leaving little left over at the end of each month for recreation or travel. They have amassed over $25,000 in credit card debt over the last year due to taxes and medical bills, and even though they are paying $1,000 per month to pay down their cards, the interest rates are high, and it seems to be taking forever to bring down the balances. Marl and Cindy owe $50,000 on their mortgage. Their property has appreciated since they bought it 10 years before, and is currently worth $300,000. Since they are both retired, their monthly income comes from their Social Security at $3,000 per month and from an IRA at $700 per month before taxes. The couple is interested in a reverse mortgage to pay off their mortgage so that they can have more money each month and not rely on credit cards. Mark and Cindy would like to change their plan, will they be allowed to do so?

Yes. Mark and Cindy can change their payment plan option for a fee.

Sylvia, a real estate license holder, decides to prospect for new customers by handing out flyers which highlight her qualifications and also provide information about special loan programs. She works in a metropolitan area where the housing market continues to grow, and many new homes are being built in an area where zero-down USDA financing can be used. Victor, an RMLO, volunteers to pay for the flyers and take care of all of the printing and set up if the flyers can be co-branded in order to help them both generate new business at the same time. Sylvia had some ideas about what she wanted the flyers to say about loans, but Victor assures her that he can do an excellent job at writing the information for that section of the flyer. Can Sylvia work with Victor, giving his name to her buyers?

Yes. Sylvia can distribute flyers with Victor, but she should provide her buyers with the names of at least three RMLOs to consider.

Return on an investment

Yield

The return on an investment is called the _______________.

Yield

Seller financing is the _______________ common form of mortgage financing.

least