Ch 1, 2, 3, 5, 6, 7, 15 Quiz and Mid-Term for Real Estate Mortgage Lending

The act that requires lenders, mortgage brokers, or servicers of home loans to provide borrowers with the pertinent and timely disclosure of the nature and costs of the real estate settlement process is known as the: *Real Estate Settlement Procedures Act (RESPA).* Truth in Lending Act (TILA). Equal Credit Opportunity Act (ECOA). Fair and Accurate Credit Transactions Act (FACTA).

Real Estate Settlement Procedures Act (RESPA).

A clause in a finance instrument that limits a borrower's right to transfer the property without the lender's permission is called a(n): acceleration clause. *alienation clause.* prepayment clause. none of the above.

alienation clause.

Predatory loan practices include: *all of the above.* deception. usury. fraud.

all of the above.

Indirect lenders include: mortgage brokers. pension funds. life insurance companies *both pension funds & life insurance companies*

both pension funds & life insurance companies

In the title insurance industry, the word encumbrance means more than loans against the property. It includes: liens such as taxes, trust deeds, and involuntary liens. covenants, conditions, and restrictions (CC&Rs). easements. *all of these.*

all of these

Prior to getting licensed by the NMLS, all applicants must: pass a 125 question Uniform State Test (UST). provide authorization for NMLS to obtain a credit report. provide fingerprints for a FBI criminal background check. *all of these*

all of these

All licensed/registered MLOs: *are issued a unique identifier number.* all of these must be bonded. must carry liability insurance.

are issued a unique identifier number.

Finance charges include: *both a and b.* neither a nor b. interest charges and discount points. mortgage insurance fees.

both a and b.

The Closing Disclosure Form integrates and replaces the: HUD-1 form. Final TILA Disclosure Form. *both a and b.* neither a nor b.

both a and b.

Indirect lenders include: *both pension funds & life insurance companies* mortgage brokers. pension funds. life insurance companies

both pension funds & life insurance companies

The SAFE Act defines a Mortgage Loan Originator (MLO) as an individual who: takes a residential mortgage loan application. *both statements* offers or negotiates terms of residential mortgage loans for compensation or gain. none of these

both statements

An investment is said to be "liquid" when it: *can be instantly sold.* is guaranteed by the government. has a high yield. is difficult to sell.

can be instantly sold

The Federal Open Market Committee: determines all farm subsidies in the U.S. computes the Consumer Price Index. all of these. *carries out open market operations.*

carries out open market operations.

Banks who supply capital for business ventures and construction activities on a short-term basis are: credit unions. savings and loans. *commercial banks.* none of these

commercial banks.

A subordination clause is most often used for: *construction loans.* refinancing loans. loans for open land. loans for public buildings.

construction loans.

A loan where the lender assumes a percentage of ownership is called: an unseasoned loan. *a quasi-ownership loan* a participation loan. a percentage loan.

*a quasi-ownership loan*

The minimum number of hours of mandatory pre-license education for MLOs is: 45. 10. 8. *20.*

20

A buyer is purchasing a home for $525,000. The down payment is $75,000. What is the approximate LTV? 80% 90% 70% *86%* $525,000 - 75,000 = $450,000 $450,000 divide by $525,000 = 85.7%... 86%

86%

A California Finance Lender (CFL) can only broker loans to *a lender licensed under the CFL Lenders law* thrift and loan associations banks savings banks

a lender licensed under the CFL Lenders law

A California Finance Lender (CFL) can only broker loans to *a lender licensed under the CFL Lenders law* thrift and loan associations savings banks banks

a lender licensed under the CFL Lenders law

*CHAPTER 3* A loan where the lender assumes a percentage of ownership is called: an unseasoned loan. a quasi-ownership loan *a participation loan.* a percentage loan.

a participation loan.

In the event of a default, a creditor or seller may declare the entire outstanding balance immediately due and payable with a(n): quiet title. prepayment clause. due-on-sale clause. *acceleration clause.*

acceleration clause

A scheme where the property and borrower are non-existent is referred to as a(n): Houdini loan scheme. shell game loan scheme. *air loan fraud scheme.* ninja loan scheme.

air loan fraud scheme.

The TRID rule does not apply to: Home Equity Lines of Credit (HELOCs). reverse mortgages. loans secured by a mobile home. *all of the above.*

all of the above

*CHAPTER 6* The Loan Estimate form must provide: the name and address of the creditor. the title "Loan Estimate." a statement of "Save this Loan Estimate to compare with your Closing Disclosure." *all of the above.*

all of the above.

On the Loan Estimate form, the items shown in the section "Services You Cannot Shop For" must be in alphabetical order and may include: appraisals. credit reports. government funding fees. *all of the above.*

all of the above.

*CHAPTER 1* A preliminary title report contains details about a piece of real estate, including: ownership. liens and encumbrances. easements. *all of these*

all of these

*CHAPTER 4* A borrower's credit report score can effect: type of loan available interest rate offered to them approval of the loan *all of these*

all of these

All state-licensed MLOs must have NEVER: had a felony involving fraud, dishonesty, breach of trust, or money laundering. had a felony in the past seven years. *all of these* had a mortgage loan originator license revoked.

all of these

FIRREA: applies to all federally related transactions sets procedures for loans in federally related transactions. *all of these* protects the federal deposit insurance funds.

all of these

A "due-on-sale" clause in a loan allows the: *lender to declare the entire loan balance due* *immediately upon transfer of title.* lender to declare foreclosure on a property. lender to negotiate new terms on a loan. lender to declare a trustee's sale.

lender to declare the entire loan balance due immediately upon transfer of title.

In California, real estate licensees who wish to engage in residential real estate loan origination must: *obtain an endorsement from NMLS.* have a minimum net worth of $100,000. all of these. post a $250,000 bond.

obtain an endorsement from NMLS.

In a foreclosure, a judge's order is called an: *order of execution.* order of disposition. order of redemption. none of the above.

order of execution.

The four phases of the business cycle are: peak, expansion, bottom, recovery. trough, recession, bottom, recovery. peak, depression, bottom, expansion. *peak, recession, bottom, recovery.*

peak, recession, bottom, recovery.

The purpose of licensing is to: stabilize property values. *protect the public.* raise money for the state. provide jobs.

protect the public.

A real estate cycle refers to the real estate market's reaction to the forces of: war and peace. give and take. deposits and withdrawals. *supply and demand*.

supply and demand

The different classes of securities are called: fiat classes. *tranches.* mortgage levels. caste systems.

tranches

An out-of-court sale or auction initiated at the direction of a beneficiary is called a: notice of sale. *trustee's sale.* sheriff's sale. nonjudicial sale.

trustee's sale.

A loss of savings deposits to higher yielding competitive investments is referred to as: *disintermediation.* pass-through deposits. deficit savings. mediation investing.

disintermediation.

Preventing sudden changes such as an unexpected large loan payment totally outside escrow can be accomplished by: hiding the loan. *freezing the loan.* paralyzing the loan. all of the above.

freezing the loan.

A buyer wants to put down 10% on the home he is purchasing for $560,000. He also wants to borrow another 10% as secondary financing. What is the loan amount for the first mortgage? 420,000 *$448,000* 504,000 $510,000 $560,000 - 10% down payment. $56,000 -10% secondary financing $56,000 = $448,000 1st Loan

$448,000

A buyer wants to put down 10% on the home he is purchasing for $560,000. He also wants to borrow another 10% as secondary financing. What is the loan amount for the first mortgage? 504,000 420,000 $510,000 *$448,000* $560,000 - 10% down payment. $56,000 -10% secondary financing $56,000 = $448,000 1st Loan

$448,000

The maximum amount the Real Estate Recovery Fund in California is liable for in any single action is: $25,000. $100,000. *$50,000.* $250,000.

$50,000.

The rate of interest charged by the Fed to member banks is called the: Federal Funds rate. Usury rate. Prime rate. *Discount rate.*

Discount rate.

A lender evaluates a borrower's "Character" by in person interview with the loan officer a background & finger print check *Verifying employment history and credit score* obtaining education transcripts

Verifying employment history and credit score

An order to cease and desist is known as a(n): demurer. novation. judgment. *injunction.*

injunction.

A declaration of default is prepared by a: tenant. sheriff. borrower. *lender.*

lender.

Private, non-insured investment accounts are called money portfolios. mutual funds. certificates of deposit. *money market funds.*

money market funds.

The act that establishes uniform standards for credit reporting and strengthens consumer protection against identity theft is known as the: Home Mortgage Disclosure Act (HMDA). *Fair and Accurate Credit Transaction Act (FACTA).* FTC Red Flags Rule (FRFR). Consumer Credit Protection Act (CCPA).

Fair and Accurate Credit Transaction Act (FACTA).

The minimum age to obtain a real estate salesperson's license in California is: *18*. 21. 16. no minimum age requirement.

18

In California, persons wishing to become licensed or endorsed as an MLO by NMLS must satisfactorily complete how many hours of approved pre-license education? 12 *20* 45 8

20

A loan can often be "seasoned" in: 2 years. 12-18 months. 5 years. *6-12 months.*

6-12 months

A homeowner is refinancing their home. The value is $650,000. The loan amount will be $500,000. What is the approximate LTV? 84% 69% *77%* 70% $500,000 divided by $650,000 = 76.9%...77%

77%

A buyer wants to put down 10% on the home he is purchasing for $560,000. He also wants to borrow another 10% as secondary financing. What is the CLTV? 85% 90% *80%* 70% $560,000 - 10% down payment. $56,000 -10% secondary financing $56,000 = $448,000 1st Loan $448,000 divide by $560,000 = 80%

80%

Private mortgage insurance is required on all loans that exceed what percentage of the value of a property? 60% 90% *80%* 70%

80%

As to loans made by a CFL lender, which of the following is a true statement The licensee can use lending criteria established by an institutional lender. *All of these*. The licensee must use his or her own funds to make the loan. The licensee must be the beneficiary on the promissory note.

All of these

The "C's" of lending criteria: *All of these* Capital or Assets Capacity Character & Credit

All of these

In California, the state program that provides financing for veterans is known as: CHAMPUS. *CalVet.* CalHFA. WIC.

CalVet.

On the Loan Estimate form, the items shown in the section "Services You Cannot Shop For" must be in alphabetical order and may include: credit reports. appraisals. government funding fees. *any of these.*

any of these.

The TRID rule does not apply to: *any of these.* reverse mortgages. Home Equity Lines of Credit (HELOCs). loans secured by a mobile home.

any of these.

The main purpose of the Home Mortgage Disclosure Act is to: quantify construction trends. stabilize real estate loan interest rates. stabilize real estate prices. *expose incidents of redlining.*

expose incidents of redlining.

Lending in the absence of discrimination based on race, sex, color, religion, national ancestry, marital status, or handicap is known as: *fair lending.* safe lending. equal rights lending. politically correct lending.

fair lending.

Negotiable instruments are promissory notes that are: non-negotiable. *freely transferable.* easily recordable. difficult to transfer.

freely transferable

Preventing sudden changes such as an unexpected large loan payment totally outside escrow can be accomplished by: paralyzing the loan. hiding the loan. *freezing the loan.* all of the above.

freezing the loan.

In order to obtain a Real Estate Broker's license in California, proof of legal presence in the United States: *is not required.* is always required. can be waived by the payment of a $100,000 waiver fee. can be waived by obtaining special permission from the Governor.

is not required.

*CHAPTER 7* In a promissory note, the borrower is called the: lender. *maker.* benefactor. seller.

maker.

In California, real estate licensees who wish to engage in residential real estate loan origination must: post a $250,000 bond. all of these. *obtain an endorsement from NMLS.* have a minimum net worth of $100,000.

obtain an endorsement from NMLS.

Mortgage bankers/mortgage companies are part of the secondary market only. *originate, service, and sell loans.* act only as "go-betweens." none of these

originate, service, and sell loans.

Any person who receives or represents to the public that he or she will for compensation assist an applicant in obtaining a residential mortgage loan is defined as a: residential mortgage loan expeditor. *residential mortgage loan originator.* residential mortgage loan processor. residential mortgage loan finder.

residential mortgage loan originator.

The effective yield on a loan is referred to as: the nominal rate. *the annual percentage rate (APR).* the discount rate. the total finance charge.

the annual percentage rate (APR).

The effective yield on a loan is referred to as: the total finance charge. the discount rate. the nominal rate. *the annual percentage rate (APR).*

the annual percentage rate (APR).

Ethics differs from law in that ethics is: usually illegal. *always a written code.* the minimum standard of behavior. what is right.

the minimum standard of behavior.

Regarding borrower qualifications, lenders always consider "A T R" which stands for: Access To Refinance *Ability To Repay* According To Record Assets Tendered Revolving

Ability To Repay

The "C's" of lending criteria: Capital or Assets Capacity *All of these* Character & Credit

All of these

The lending term "A M L" stands for: Agreed Money Liquidation *Anti Money Laundering* Allowable Mortgage Loan Alternative Mortgage Lender

Anti Money Laundering

PITI + all long-term debt ------------------------------- = Gross Monthly Income What does this formula calculate? *Back End Ratio.* Loan to Value Ratio Capital Ratio Front End Ratio Also known as DTI, Debt To Income ratio

Back End Ratio

Which of the following is true concerning escrow fees? Escrow holders set their fees in accordance with local practice. The fee is usually a small percentage of the property's selling price, plus a set figure. *Both statements are correct* Neither statement is correct

Both statements are correct

A transaction management program for all real estate licensees and unlicensed transaction coordinators who want to build and establish a successful transaction coordinator business is the: Certified Transaction Expert. none of these *Certified Transaction Coordinator.* Certified Transaction Specialist.

Certified Transaction Coordinator.

The Truth in Lending Law is supervised by the: *Consumer Financial Protection Bureau (CFPB).* Department of Justice. Federal Deposit Insurance Corporation. United States Treasury.

Consumer Financial Protection Bureau (CFPB).

In California, persons not licensed by CalBRE can still engage in residential real estate lending by operating under the NMLS and the: Housing Finance Agency. *Department of Business Oversight.* Bureau of Housing. Department of Insurance.

Department of Business Oversight.

The role of the Federal National Mortgage Association (FNMA - "Fannie Mae") was further expanded in 1970 with the passage of the: *Emergency Home Finance Act.* Home Entitlement Act. Federal National Mortgage Act. Urban Development Act.

Emergency Home Finance Act.

The law that prohibits a lender or mortgage broker from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status or age: Credit Fairness Doctring Fair Finance Law *Equal Credit Opportunity Act* Loan Equality Act

Equal Credit Opportunity Act

*CHAPTER 5* The law that gives consumers rights as to who has access to their credit files is: Credit Score Fairness Act Credit Fairness Doctrine Credit Access & Discovery Law *Fair Credit Reporting Act*

Fair Credit Reporting Act

*Mid-Term* The act that establishes uniform standards for credit reporting and strengthens consumer protection against identity theft is known as the: FTC Red Flags Rule (FRFR). *Fair and Accurate Credit Transaction Act (FACTA).* Home Mortgage Disclosure Act (HMDA). Consumer Credit Protection Act (CCPA).

Fair and Accurate Credit Transaction Act (FACTA).

How many days prior to consummation can a revised Loan Estimate generally be provided to the borrower? No later than 7 days prior to consummation. No later than 1 day after consummation. No later than 1 day prior to consummation. *No later than 3 days prior to consummation.*

No later than 3 days prior to consummation

The principal officer of the California Bureau of Real Estate (CalBRE) is the: *Real Estate Commissioner.* California Attorney General. Real Estate Bureau Chief. Housing Commissioner.

Real Estate Commissioner.

In California, who can deny, suspend, or revoke any license issued by the Bureau of Real Estate? *The Real Estate Commissioner* The Housing Commissioner The Real Estate Bureau Chief The California Attorney General

The Real Estate Commissioner

Educational requirements for employees of a CRMLS licensee who will be conducting brokerage activities include: a four year degree in finance *a three-hour course in ethics, professional conduct* *and legal aspects as well as a three-hour course in* *agency relationships and duties* any four year degree the identical educational requirements a for a real estate broker

a three-hour course in ethics, professional conduct and legal aspects as well as a three-hour course in agency relationships and duties

When the government is forced to borrow money, making less money available for construction and home loans, it is called: predatory loan practices. *deficit spending.* disintermediation. government spending.

deficit spending

*CHAPTER 2* The study and description of the population of an area is called: regentrification. psychographics. demonstrative study. *demographics*.

demographics

The intentional misrepresentation or omission of material facts by applicants to improperly influence a mortgage loan lender is referred to as: fictitious underwriting. risk management. negative posturing. *mortgage fraud.*

mortgage fraud.

The intentional misrepresentation or omission of material facts by applicants to improperly influence a mortgage loan lender is referred to as: risk management. *mortgage fraud.* fictitious underwriting. negative posturing.

mortgage fraud.

Persons working for a CRMLA licensees in arranging loans must be employees of the CRMLA licensee *must be separately licensed* can be either independent contractors or employees can be independent contractors

must be separately licensed

Participants who make up the secondary mortgage market: *raise the necessary funds to purchase the* *mortgages*. none of these fund the purchase of mortgages with personal funds. borrow the necessary funds to purchase the mortgages.

raise the necessary funds to purchase the mortgages

Participants who make up the secondary mortgage market: *raise the necessary funds to purchase the* *mortgages.* none of these fund the purchase of mortgages with personal funds. borrow the necessary funds to purchase the mortgages.

raise the necessary funds to purchase the mortgages

Any person who receives or represents to the public that he or she will for compensation assist an applicant in obtaining a residential mortgage loan is defined as a: *residential mortgage loan originator.* residential mortgage loan finder. residential mortgage loan processor. residential mortgage loan expeditor.

residential mortgage loan originator.

A creditor is given the right to have the security property sold to satisfy the debt if the debtor fails to pay the debt according to the terms of the agreement. This is done with a: deed of reconveyance. power of sale. *security instrument.* title of theory.

security instrument.

In the final settlement sheet, if the credits column is less than the debits total you face the possibility of closing escrow: *short of funds.* with excessive funds. with balanced funds. none of these

short of funds.

In the final settlement sheet, if the credits column is less than the debits total you face the possibility of closing escrow: with excessive funds. none of these with balanced funds. *short of funds.*

short of funds.

A core area containing a substantial population nucleus of 50,000 or more inhabitants is known as a: standard urban neighborhood. *standard metropolitan statistical area.* standard census tract. standard map grid section.

standard metropolitan statistical area.