Unit 15 Quiz
If the interest rate on an FHA-insured mortgage loan is 5 1/2 percent and the monthly payment is $1,012, the principal sum would be
$220,800
The amount of mutual mortgage insurance premium on a single-family FHA loan is:
1/2 of 1 percent of the annual loan balance.
A woman bought a home. The asking price for the home was $585,000; the woman offered $565,000 and the seller accepted. The appraised value of the home is $560,000. The woman plans to pay $94,600 in cash and take out a mortgage for the remainder. What is the LTV for this property?
84%
A builder is required to secure a loan with mortgages on three properties. This is an example of
A blanket mortgage loan.
If title to real property remains in the seller's name after it has been sold on a monthly payment plan, the buyer has purchased it under:
A land contract
A borrower obtained a $7,000 second mortgage loan for 5 years at 6 percent interest per annum. Monthly payments of principle and interest were were $50.00. The final payment included the remaining outstanding principal balance. What type of loan is this?
A partially amortized loan
Mrs. Robinson has owned her house for over 50 years. It has fallen into disrepair, but because she lives on a fixed income, she does not have the money to make the needed repairs. She has a considerable amount of equity in the house. What type of loan best suits her needs?
A reverse annuity mortgage
A buyer signs a five-year interest-only installment land contract to purchase a farm for $100,000 with a $5,000 down payment. After diligently meeting her monthly payment obligations for three years, the buyer loses her job and defaults. A court would likely permit all of the following remedies EXCEPT:
A suit for repossession and balance due under contract.
On which type of loan can the borrower prepay without penalty?
All of These: Loans sold to Fannie Mae and Freddie Mac, FHA Loans, VA Loans
The federal Equal Credit Opportunity Act allows lenders to discriminate against potential borrowers on the basis of
Amount of income
An FHA-insured mortgage loan would be obtained from which of the following?
Any FHA-approved lending institution
A buyer wants to take out an FHA loan. The broker should refer the buyer directly to:
Any approved lending institution such as a bank or savings and loan.
The amount a lender will loan is generally based on the:
Appraised value for loan purposes or the sale price, which ever is lower.
Funds for FHA-insured loans are usually provided by
Approved lenders
When the amortized payment of a mortgage remains constant over the period of the loan but leaves an outstanding balance to be paid at the end, this payment is called a/n:
Balloon payment.
A developer received a loan that covers five parcels of real estate and provides for the release of the mortgage lien on each parcel when certain payments are made on the loan. This type of loan arrangement is called a
Blanket Loan
Subdivider Jonathan had a mortgage loan on his entire housing subdivision. When he sold a lot to a buyer, he was able to deliver title to that lot free of the mortgage lien by obtaining a partial release. What type of loan did the developer have?
Blanket mortgage
A mortgage broker generally offers which of the following services?
Bringing the borrower and the lender together
Who would most probably pay the initial 1 percent origination fee allowed by VA on guaranteed loans?
Buyer
A vendee is one who:
Buys or offers to buy.
The document that sets forth the maximum loan guarantee to which a veteran is entitled is the
Certificate of Eligibility.
Which of the following is considered a conventional loan?
Commercial bank loan.
The Equal Credit Opportunity Act (ECOA) requires lenders to
Consider the income of a spouse in evaluating a family's creditworthiness.
A seller has owned a property for one year. The buyer is paying all cash. The sellers is MOST likely to pay a prepayment penalty with which type of loan?
Conventional
The type of loan that will most likely have the lowest loan-to-value ratio is a
Conventional loan
Which of the following is NOT a participant in the secondary mortgage market?
Credit union
One of the primary purposes for the secondary mortgage market is to
Cycle funds back to primary lenders so they can make more loans
The maximum permissible loan-to-value ratios are:
Determined by federal statute in the case of FHA loans.
The availability of funds for real estate mortgage loans is affected by the Federal Reserve System through which of the following?
Discount Rates
The law providing that a loan applicant who is rejected must be provided with a statement of the reasons for the rejection within 30 days is the
Fair Credit Reporting Act
A savings and loan would be likely to make all of the following types of loans EXCEPT:
Fannie Mae
The major players in the secondary mortgage market are
Fannie Mae, Freddie Mac, and Ginnie Mae
The conservatorship of Fannie Mae and Freddie Mac is the responsibility of the
Federal Housing Finance Agency
Which of the following is a source of primary mortgage funds?
Federal Savings and Loan Association.
The principal role of the Veteran's Administration in the mortgage lending market is to
Guarantee loans made by approved lenders.
A requirement of a borrower under an FHA-insured loan is that he or she
Have cash for a down payment and part of closing costs.
The acronym HELOC stands for
Home Equity Line of Credit
A homeowner borrows money from a lender and gives the lender a mortgage on the property as collateral for the loan. The homeowner retains title to the property. This is an example of
Hypothecation.
Members of which of the following pairs of terms are synonymous.
Interim financing and construction loan
A mortgage banker generally can do all of the following EXCEPT:
List for sale property financed by one of its clients.
The FHA serves to do all of the following EXCEPT:
Make direct loans in the primary mortgage market.
All of these are roles of the Federal Reserve System EXCEPT
Make direct loans to buyers
A source of capital for real estate loans might come from all of the following EXCEPT
Mortgage brokers
In 1967, a man served for six months on active duty in Vietnam. In 1998, he was killed in a skiing accident. His widow wishes to use the man's life insurance money to make a down payment on a condominium and believes she is entitled to a VA-guaranteed loan. Is she correct?
No, the man's death was not service-related.
The penalty for complete prepayment of an FHA-insured loan during the first ten years is:
Nothing.
Fannie Mae performs which of the following functions?
Operates in the secondary mortgage market.
A prospective home purchaser can do which of the following?
Pay more than the appraisal, provided payment is in cash.
The definition of an institutional lender includes all of the following EXCEPT:
Pension funds.
A lender's interest in a mortgage loan is protected by obtaining additional security from
Private Mortgage Insurance
Most of the junior loans that are available today are secured through:
Private investors.
What helps lenders reduce the risk on a conventional mortgage loan with a high LTV?
Private mortgage insurance.
An extension of credit from a seller to a buyer to allow the buyer to complete the transaction is called a
Purchase Money Mortgage
The money used for FHA loans is supplied by which one of the following?
Qualified lending institutions.
A package loan includes
Real and Personal Property.
A buyer is purchasing a home by way of a VA loan. The closing statement reveals a payment of $1,200 in discount points. How would this payment appear on the closing statement?
Reduction in the proceeds due seller.
A buyer purchases a fee simple property for $70,000 by way of assuming a first mortgage of $50,000, paying $10,000 in cash and having the seller take back a purchase-money second mortgage for the balance. There is an existing $5,000 second mortgage on the property to be paid off. At settlement (close of escrow), what is the correct order in which to record documents?
Release of second mortgage, deed, purchase-money second mortgage.
As used in real estate financing, the term impounds MOST nearly means:
Reserves
An owner is selling her house in a flood-prone area. Adequate flood insurance would be required in which case?
Sale by way of FHA-insured loan.
The lender that specializes in real estate home loans, allows a high loan-to-value ratio, deals in non government loans, services its own loans and makes many medium-term to long-term loans is a/n:
Savings and loan.
All of the following transfers can result in the lender's exercising its rights under the due-on-sale clause, based on the rules of Freddie Mac, EXCEPT a/n:
Second mortgage
A promissory note providing for interest only to be paid during its term is BEST described as a/n:
Straight note.
A lender's commitment to lend funds to a borrower in order to retire another outstanding loan is called a
Take-out loan commitment
When a borrower defaults on an FHA-insured loan, any losses sustained by foreclosure are made up through:
The Mutual Mortgage Insurance Plan.
A veteran of the Vietnam War applies for a VA loan. Which of the following statements about VA financing is CORRECT?
The VA will guarantee the lender against loss up to certain amounts
The limit on the amount of a VA loan is:
The amount of the CRV.
Which of the following best expresses the mechanics of a mortgage loan transaction?
The borrower receives a note in exchange for a mortgage from the lender.
When a property is sold under an agreement of sale (land contract):
The buyer has equitable title until satisfaction.
An eligible veteran made a purchase offer of $180,000 on a home he wants to finance with a VA-guaranteed loan. Four weeks after the offer was accepted, a certificate of reasonable value (CRV) for $177,000 was issued for the property. In this situation, the veteran could do all of the following EXCEPT
The correct answer is: Insist that the lender loan up the allowable maximum of the certificate of eligibility.
What element is peculiar to the sale-leaseback transaction?
The property is sold on condition that the new owner lease it back to the seller at the time title passes.
One feature of a wraparound mortgage loan is that
The wraparound lender can profit from a difference in interest rates.
Which of the following statements about conventional mortgages is true?
They require a higher down payment than FHA or VA
A lender lends money to a homeowner and takes legal title to the property as collateral during the payoff period. They are in a
Title-theory state.
Which statement is true regarding FHA loans?
To be insured, the loan must involve an FHA-approved mortgagee.
Which laws or regulations require mortgage lenders to disclose financing costs and annual percentage rate to a borrower before funding a loan?
Truth-in-Lending laws.
A lender who charges a rate of interest in excess of legal limits is guilty of
Usury
A certificate of eligibility is a prerequisite for which type of loan?
VA
For which type of loan must the applicant be an owner-occupant?
VA loan
A VA loan may be granted for the purchase of a one- to four-family dwelling if the:
Veteran agrees to live there.
The VA can give direct loans:
When the property is located in an area where conventional loans are not easily available.
When compared with a 30-year payment period, taking out a loan with a 20-year payment period would result in
higher monthly payments.
A type of long-term financing which has become popular because initial payments are lower due to no principal being paid, is called a/n
interest-only loan
All of these are lenders in the primary mortgage market EXCEPT
mortgage brokers.
Programs to help families purchase or operate family farms are provided by
the Farm Service Agency.
The real estate financing market is comprised of
the primary and secondary mortgage markets, plus government influences such as the Federal Reserve system.
A wraparound loan enables a borrower
with an existing mortgage loan to obtain additional financing from a second lender without paying off the first loan
