Real Estate Finance
In the residential mortgage market, charging borrowers more than ______ over market rate for interest is considered a predatory lending practice.
5%
What's a participation certificate?
A mortgage-backed security issued by Freddie Mac
The ______ clause is also known as a due-on-sale clause.
Alienation
What type of property is Gerald appraising if he's using the cost approach?
An industrial warehouse
Which consumer inquiry has Zachary initiated that may appear on a credit report?
Application for a loan
When a promissory note is sold, what is recorded in county land records?
Assignment of the security instrument the note is attached to
Kendra and her real estate agent are preparing to close on the property she's purchasing on Thursday. Kendra will sign the paperwork with her lender to close on the loan at the same time. When does the lender need to provide Kendra with the Closing Disclosure form?
At least three days prior to closing on the loan
Which of the following statements about liens is true?
Both mechanic's and materialman's liens are junior liens.
Carla is a licensee who uses a personal financial system that recommends that all of her commission checks be deposited into her ______ account.
Business Checking
Shelly's real estate investment strategy is to look for smaller multi-family properties, fix them up, and rent them out. Her investment strategy most closely matches which of the following?
Buy and hold
Which of the following tells the lender how much entitlement the veteran has available under the VA loan program?
Certificate of Eligibility
Which of the following entities has the authority to place an equitable lien on a property?
Court order by the judge
The FHA is part of ______.
Department of Housing and Urban Development
Norma, a real estate licensee, is working with the buyers in a transaction. She suspects mortgage fraud. What should she do?
Discuss the situation with her broker.
Which of the following led to the 2007 financial crisis and negatively impacted investors that purchased properties in the early 2000s?
Falling home prices
Which of these transactions must comply with Appraiser Independence Requirements?
Four-unit residence being purchased with a conventional loan
The Government National Mortgage Corporation was created in 1968 under the Department of Housing and Urban Development (HUD) and is more commonly known as ______.
Ginnie Mae
HUD's ______ assists very low-income families, the elderly, and disabled individuals in affording decent, safe, and sanitary housing in the private market.
Housing Choice Voucher Program
Lee manages a rental property for her client, and is accepting applications for tenants. Applicants Damian and Maria are young, newly married, and have a baby on the way. They can't afford a typical rent on a clean, well-maintained two-bedroom home such as the one that Lee has available; but they are recipients of the ______, which Lee knows the property would also qualify for. Lee is glad to accept them as tenants.
Housing Choice Voucher Program
Which of the following are potential private loan resources that may be willing to finance a home?
Individual entrepreneurs
You don't qualify for financing, but are able to invest in real estate because your role as a licensee is helpful in this type of investment strategy.
Joint venture
Fairwell Lending must seek the court's permission to foreclose on a property used as collateral for a loan that is in default. What type of foreclosure process is likely being used?
Judicial Foreclosure
What does the concept "first in time" refer to when discussing lien priority?
Liens are paid based on date of filing.
What information is listed on the promissory note?
Loan amount and schedule of repayment
Which term describes a lender temporarily agreeing to suspend payments to help the borrower get caught up?
Moratorium (or forbearance)
Which type of real estate investment trust involves both residential and commercial properties?
Mortgage REIT
The ______ is where the borrower finds details about how, when, and by how much the interest rate will change in an adjustable rate mortgage (ARM).
Mortgage and the note
Which type of federally related lending transaction is covered under RESPA?
Mortgages and home equity credit lines
What would likely happen to the real estate market if there were no lenders?
New construction and home purchases would greatly decrease.
Jackie is 10 days late on her loan payment. Will her lender likely place her loan in default?
No, she needs to be 30 days late to be in default.
Which of the following is NOT a benefit government-sponsored enterprises receive?
Non-profit status
To qualify for the FHA Streamline Refinance program, a homeowner must ______.
Not be delinquent on mortgage payments
Jacob is selling his unencumbered property to Shem and is acting as lender in the transaction. Which type(s) of finance instrument can Jacob use for the loan agreement?
Note with mortgage, note with deed of trust, or contract for deed
What type of partnership is a cooperative?
Partnership between mortgagors
Rhoda is a first-time homebuyer. She has applied for a VA loan to buy a house from Phyllis. When the CRV values the home at less than the sale price, Phyllis refuses to come down on the sales price, so Rhoda must either ______ or find a different home to buy.
Pay the difference between the CRV and sales price in cash
Don uses one hour each week to perform certain tasks, including ______, as part of his personal financial system.
Paying any bills that are due
Leslie has applied for a loan modification. As part of the process, her lender will likely ______.
Perform a title search
Two areas of vulnerability for the lender occur when homeowners insurance is allowed to lapse. What are they?
Property damage and judgment liens
A mortgage that allows the lender to sue the borrower for damages if foreclosure occurs is called a ______ mortgage.
Recourse
What's the name of a discriminatory lending practice whereby lenders limit the scope of their loans to exclude neighborhoods with certain ethnic or economic characteristics?
Redlining
The CFPB promotes consumer protection in the credit market through a number of strategies, including ______.
Responding to and investigating consumer complaints regarding financial services
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, ______.
Shelby must still be under the VA's debt-to-income ratio
Which agency regulates FHLBanks?
The Federal Housing Finance Authority
The upfront MIP on an FHA loan is calculated on _____
The base loan amount
Which of the following features is shared by the mortgage and the deed of trust?
The borrower is required to maintain the property and pay property taxes and insurance.
How is a loan assumption documented?
The buyer and seller both sign an assumption agreement.
Who must provide the buyer and seller with a copy of the closing disclosure?
The buyer's lender
Jasmine has a mortgage on her property, but allows her homeowner's insurance to lapse. Which of these is a possible consequence of this action?
The lender can put Jasmine's loan in default.
What may happen to a transaction if a cloud on the title is discovered?
The transaction comes to a standstill until the cloud is cleared.
Chrissy and Jack are purchasing a new condo. When they sign their new mortgage document, to whom are they conveying title to the property until their loan is paid off?
Their lender
Jim is self-employed. He and his wife want to obtain a home loan. Which of the following statements is true?
They'll need to provide additional proof of income.
Which statement is true regarding most government loans?
They're insured or guaranteed by the government.
The ______ can offer direct loans to farmers and ranchers. The loans are funded by congressional appropriation.
USDA Farm Service Agency
Which veteran loan program in Texas offers qualified veterans help with the purchase of their primary home?
Veterans Housing Assistance Program
What's the most common way that a seller can help a buyer come up with the funds to complete a real estate transaction?
With a contract for deed
Molly's father has a service-related disability. He lives with Molly and her family in a home that she owns. Can funds from a VA-specific housing grant be used to modify Molly's home to accommodate her father's disability?
Yes, the smaller Special Housing Adaptation grant may be used to adapt a home owned by a family member where the eligible veteran lives.
The signature lines on the multi-state Fannie Mae promissory note are set up for ______ to sign.
borrower
Which of the following would be the best place to keep monies intended for long-term savings?
certificate of deposit
Synergy National Bank issued a conventional loan that is eligible for purchase by Fannie Mae. When Fannie Mae purchases the loan, what will Synergy National Bank receive in return?
collection fee
Joe's applying for a mortgage that meets all of the Fannie Mae/Freddie Mac criteria. Based on this, how would we classify this loan?
conforming
Conventional loans from large commercial banks are the primary target for which secondary market player?
Fannie Mae
From a secondary market player, Regional State Bank received an advance in exchange for collateral in the form or mortgages. Which entity likely issued this advance?
Federal Home Loan Bank
Federal Home Loan Bank is regulated by what agency?
Federal Housing Finance Agency
After purchasing a property, what can Jeremiah do to clear a possible future claim on the property's title?
File a suit to quiet title.
What information does the appraiser complete for the section used for the income approach?
Gross rent multiplier
Jarod has obtained an FHA loan for which he pays an annual mortgage insurance premium. How will he likely make this payment?
He will pay 1/12 of it monthly with his mortgage payment.
Wendy is buying a house from Tom. Tom helps Wendy out by paying for a 2-1 buydown. The lender has given Wendy an interest rate of 5%. Which of the following describes what the buydown will do to Wendy's interest rate?
Her rate will be 3% for the first year, 4% the second year, and 5% after that.
Which of the following best describes the non-judicial foreclosure process?
It may be used if the deed of trust includes a power-of-sale clause.
Which of the following statements is true about the annual MIP on an FHA mortgage?
It will decrease each year as the loan is paid down.
A local company wants to build a new office building. What type of loan will it most likely be seeking from its commercial bank?
construction loan
In an amortized loan, the interest portion of the mortgage payment generally ______ over the life of the loan.
decreases
The rate at which a bank can obtain an overnight loan from another bank without providing collateral is called the ______ rate.
federal funds
Which of these would most likely be found in the "potentially negative items" section of a credit report?
lien
Which of the following is a passive type of real estate investment?
limited partnership
The buying and selling of government securities as a way to influence the money supply and balance economic growth describes ______.
open market operations
The two most common insolvency methods put in place when a bank fails are the purchase and assumption method and the ______ method.
payout
Which mortgage-related document is the equivalent of the deed of reconveyance used with a deed of trust?
satisfaction of mortgage
A buyer has agreed to purchase a property using a contract for deed. Who holds the legal title to the property during the term of the loan?
seller
Shania is having work done on the house she just purchased using an FHA 203(k) loan. How much time does the contractor have to complete the work?
six months
Which of the following is an option that might allow a licensee without much work history or very many assets to finance a real estate investment?
seller financing
Babs is buying Kirk's property. Babs needs help with the down payment, and Kirk offers to supplement Babs' bank loan with a second loan, allowing her to meet her lender's down payment requirements. Which finance instrument(s) may be used for the agreement between Babs and Kirk?
Mortgage or deed of trust
Why is it a good idea for real estate licensees to carry auto insurance?
Most states require it and it's recommended for all real estate licensees.
Which of the following lending regulations apply to mortgage loans and settlement services?
Real Estate Settlement Procedures Act
What type of property is Aileen appraising if she's using the income approach?
Short-term lake rental
Naomi is completing a residential loan application. On the application, she lists her assets and liabilities so that her net worth can be determined. What's net worth?
The difference between a borrower's items of value and obligations
The ______ Act was legislation aimed primarily at addressing the effects of the subprime mortgage crisis
Housing and Economic Recovery