chapter 11 part 2
If home seller Sandra and buyer Amy agree to owner financing in order to close the transaction, how does that impact you, the real estate agent? A.It won't, you still earn a commission. B.You don't earn a commission. C.You charge the buyer and seller twice the normal amount. D.You handle the transaction as a short sale.
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If you have a 30-year, 6.5% fixed interest rate on your $500,000 mortgage, what would be your interest rate on the final loan payment? A.6.5 percent. B.6 percent. C.6.75 percent. D.7 percent.
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Iris wants to find the record of her deed and title. Where does she go? A.The registrar of deeds or county recorder. B.The lender will have this information. C.The county court system manages all of this city-wide business. D.An attorney she hires to pay for the service.
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Iris wants to look for homes, but isn't pre-approved. Why is this a problem? A.Home sellers don't want to waste their time on unapproved borrowers. B.It's not a problem unless the loan falls through. C.Iris needs to make more money to buy a home. D.Iris hasn't yet told you how much she can spend on a home.
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Is Toby able to obtain a loan to cover some of the furnishings in his new home? A.Yes, in a package loan, the buyer can purchase real and personal property. B.No, it is only for the home itself. C.Furnishings are purchased using unsecured loans instead. D.Toby will need to negotiate a deal with his lender first.
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Jamie hasn't secured home insurance yet and closing is approaching. Is this a problem? A.It's likely to be a condition to closing the loan. B.No, he doesn't need this until after the loan goes through. C.Most often, loans don't require home insurance. D.It's not likely to be asked about by the lender.
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Janice completes her loan application. It's approved. Is she completely set? A.No, the lender will run the application again during closing and can change their mind. B.Yes, this means she can buy a home without being told no. C.Yes, the lender has completed all information and is confident it can lend to her. D.No, Janice still needs to meet credit qualifications at this point.
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Jessica's lender wants to pull another credit report during the underwriting. Is that normal? A.Yes, this is often done during the underwriting for verification. B.Yes, but only when there is a concern about information provided. C.No, Jessica should tell them not to do this. D.No, Jessica no will not need this unless she is getting an FHA loan.
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Julie lost her home in foreclosure. Who has priority over the value of the home? A.This is outlined in the priority of liens component of the mortgage and recording. B.The lender gets it all. C.Julie will get the home's sale price and will get to pay whoever she wants. D.The court takes it all to cover taxes.
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Kevin just bought a home from you and is moving in. He receives a notice in the mail that his loan servicers have changed. Does this mean Kevin now has a new mortgage? A.No, the loan was likely sold on the secondary mortgage market to a buyer. His terms remain the same. B.No, there has likely been a mistake in the closing paperwork. C.Yes, Kevin now has a new loan from a new lender because the first one didn't approve him. D.Yes, Kevin's mortgage is now starting all over again because the lender backed out of the loan.
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Lenders may ask about alimony payment in which of the following scenarios? A.Lender has provided notice that the applicant is not required to provide this information B.Lender knows the applicant is divorced C.Lender may ask all applicants D.If the applicant is a male
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Lenders may ask applicants about which of the following? A.dependent care costs B.number of children C.age of children D.how many more children the borrower plans to have
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Matt has a pre-qualification letter from a lender. Has he been approved? A.No, it means he's supplied information but that information is not yet verified. B.No, it means the lender is asking for more information. C.Yes, the lender has said the loan is available. D.Yes, it means the loan is heading into the closing process.
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Maxie has decided to buy a home. She visits you to see homes. What's your first question? A.Have you been pre-approved for a loan? B.Did you want to see homes in this area? C.What type of home do you want? D.How much can you spend?
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Otis sees a drop in income in the weeks before closing on a loan. Does this matter? A.Yes, the underwriting process will verify the borrower's ability to make payments. B.Yes, he has to resubmit all information before the loan closes anyway. C.No, at this point, it's all done and in place. D.No, the lender isn't interested as long as he makes payments.
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Roger is selling his home and has $50,000 worth of equity. What happens to this value? A.After the home loan is paid off, the remaining sale value is paid to Roger. B.The lender has first priority to all funds. C.Roger can cash out and walk away with that money even if the home sells. D.The trustee handles the negotiations here.
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Sally is worried. It's been three weeks and the lender hasn't completed the underwriting. What do you say? A.It's okay and normal for this process to take time. B.She should call her lender to speed up the process. C.She should be ready to get a new loan. D.Sally is facing the likelihood of denial.
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You're brokering a deal with a property owner and a large developer. What type of loan is available? A.A blanket mortgage B.An FHA loan C.A traditional conventional loan works D.A construction loan
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You've learned your buyer's underwriter is questioning the value of the home. What does that mean? A.The underwriter needs better verification of the home's worth as collateral. B.The underwriter doesn't want to lend. C.The home's value has fallen a great deal. D.The home's value may be too high.
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Your home seller, Leslie, is agreeable to a purchase money mortgage. What is that? A.The seller is willing to accept payments from a buyer over time to purchase the home. B.The seller will seek out financing for the loan for the buyer. C.The seller agrees to rent the home to the buyer. D.The home buyer doesn't have to have a down payment.
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Your new seller, Oscar, has a second mortgage on his home. How does this impact the sale? A.It doesn't as long as the sale price covers both mortgage values. B.The homeowner has to pay off the second mortgage before selling the home. C.The second loan will default after the sale. D.The home buyer has to take over paying the second mortgage to the lender.
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A graduated payment mortgage is a variation of what type of loan? A.Fixed interest rate mortgage. B.Adjustable rate mortgage. C.Growing equity mortgage. D.Buydown mortgage.
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A home buyer's purchase goes through, but he or she finds their loan was sold to another lender, and now they have another bank servicing their loan. Where was their loan sold? A.Secondary mortgage market B.Primary mortgage market C.Stock market D.Federal National Mortgage Association
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A lender can deny a credit application based all but the following? A.Applicant receives public assistance B.Applicant does not have income C.Applicant has bad credit D.Applicant has filed for bankruptcy
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A lender requires which of the following information from a borrower in order to prepare the loan estimate? A.All of the answer choices provided are correct B.Legal name C.Social security number D.Home address
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A mortgage that changes periodically based on a market index is called a(n): A.Adjustable rate mortgage. B.Fixed interest rate mortgage. C.Negative amortization mortgage. D.Buydown mortgage.
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A new home buyer requests help finding a loan and wants the lowest rate. They've heard that interest rates are increasing. Who sets the base or prime rate? A.Federal Reserve B.Fannie Mae C.Freddie Mac D.Individual bank lenders
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After a borrower submits a loan application, the lender has three days to provide which document to the borrower? A.Loan Estimate B.Settlement Statement C.Closing Disclosure D.Loan Approval
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Amanda's home equity lender is going through the subordinate process. What does that mean? A.This lender wants to take priority over other lenders in the event of a foreclosure. B.The lender wants to pressure Amanda to pay off the debt. C.The home equity lender doesn't believe the mortgage terms are correct. D.The subordinate process is always a part of the foreclosure process.
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If a commercial applicant generates more than $1 million in revenue, and asks about an adverse credit decision, the lender must provide a response within how many days? A.60 B.30 C.90 D.120
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If during the closing disclosure review, the loan changes from a fixed rate to a variable rate loan, what will happen? A.A new CD will have to be issued and a new 3 day review starts B.The buyer can waive the 3 day review and proceed to settlement C.A new CD is issued and the buyer can close D. A new CD is issued and a new 2 day review period begins
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Amy wants to purchase a home, but she feels the banks are not being fair. As she sits across from you at your desk, she talks about just how good she is about paying her debts on time and that she has a solid credit score. But, she can't get the lowest interest rate available. Amy has read that the Fed has reduced key lending rates to .25%, and she wants to know why lenders are charging her 4 to 5%. That's thousands of dollars more over the course of the loan. Why is Amy being charged more? A.The Fed sets a key lending rate shared only between banks, which sets the tone for, but is not the rate borrowers pay. B.Her credit score isn't good enough. C.She isn't talking to enough banks. After all, negotiating between several banks can help her. D.She doesn't qualify for the lowest rates possible because of a lack of credit history in owning a home.
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Angela wants to buy a home with an existing tax lien. What should she do? A.The tax lien must be settled first, and in some cases, the buyer will pay these off to clear the title. B.She can't buy the home as the city owns it. C.She has to pay the taxes and the home sale price. D.Angela needs to file a lawsuit in court to get rid of the tax lien.
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Are credit reports the only thing lenders use during the application process? A.No, all income and expenses are independently verified. B.Yes, credit reports provide all details needed. C.No, the lender needs to talk to each employer and source of income first. D.Yes, credit reports are thorough enough to include all income and debt information.
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As a real estate agent, should you help in a lease-option purchase? A.You can still charge a commission for connecting the seller and homeowner. B.No, there's no sale, so you cannot obtain a commission. C.No, there is too much risk and legal concern here. D.Yes, you can help, but you will only be able to charge a fee if a sale takes place.
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Aside from interest rate fees, how do lenders in the primary mortgage market profit from the home buying process? A.The loans they create are packaged and sold in bundles as securities. B.Banks make money on the key index lending rate by swapping money between lenders. C.They profit from just interest rate charges and fees charged to home buyers. D.They are profitable because the government pays for these loans.
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Barb's lender took her information over the phone and was able to get pre-qualified. Can she buy a home now? A.She can start looking, but pre-approval hasn't been provided yet. B.Yes, this means she's all set to buy. C.Yes, the lender has verified her personal information at this point. D.No, the lender hasn't approved the loan and she should wait.
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Can a buyer fill out a loan application online? A.Yes, this has become a common first step for homeowners. B.Yes, but only for some types of loans. C.No, it has to be done in person. D.No, it is a document that needs to be done with witnesses.
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Can wraparound loans help your buyer purchase a home? A.Yes, but this is a type of owner financing that the lender must approve. B.No, these are costly loans meant for only low-risk borrowers. C.Yes, but only if the individual has very good credit. D.No, they typically are only used in commercial transactions.
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Does the home buyer need to report stocks and bonds or other investments on home loan applications? A.Yes, this is a source of income or debt and needs to be considered. B.Yes, but only when applying for a conventional loan. C.No, this information doesn't apply. D.No, only if he wants to share this information.
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Does the lender care about home insurance and taxes? A.Yes, they ensure this is affordable to the borrower. B.Yes, but only when they are not paid on time. C.No, the lender is concerned only with the loan. D.No, not unless the foreclosure process takes place.
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For applicants who generate more than $1 million in revenue, creditors must keep the records for how many days? A.60 B.90 C.120 D.30
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For how many months must a lender keep the applicants records on file? A.25 B.12 C.24 D.36
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How can your client, Drew, obtain a loan to build a home? A.He can obtain a construction loan through a traditional mortgage lender. B.He has to work with the developer for financing. C.Drew will need to have a sizable down payment to pay for the cost to buy the land first. D.Construction loans are only available to low-risk borrowers through VA loans.
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How many different types of loans are covered by TILA? A.5 B.4 C.7 D.10
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How many times a year does a lender need to make loans in order to be subject to TILA? A.25 B.30 C.20 D.100
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How much does Jessie need to have for a down payment on a VA loan? A.Nothing. These loans are available at 100 percent financing. B.VA loans require 3.5 percent down. C.VA loans require 20 percent down. D.It depends on what the Veterans Affairs office says.
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If Christine is moving and has someone who can take over her VA loan, will the VA allow it? A.VA loans are assumable, but the lender must approve it. B.Yes, as long as Christine approves of the lender. C.No, it is not possible to change the loan documents like this. D.VA loans are not assumable.
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If Jeff wants to obtain a VA loan, where does he apply for it? A.After getting a Certificate of Eligibility from the VA, he can work through any VA approved lender. B.The VA issues these loans. C.The VA will point him in the right direction. D.Jeff can work with any lender in his local area.
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If Jim doesn't want to tell the lender about his second job, does he have to? A.He should, since it will help him get a loan and shows honesty. B.He only needs to share information about his debts. C.No, he doesn't have to do so because they only want to know about full-time work. D.Yes, he is legally required to do so.
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If Jimmy serves in the Army, but you don't know any details, who should he see about getting a VA loan? A.The local Veterans Affairs office for approval. B.A local mortgage lender. C.The FHA loan approval board. D.The local credit union.
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If a commercial applicant generates less than $1 million in revenue, and asks about an adverse credit decision, the lender must provide a response within how many days? A.30 B.60 C.90 D.120
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Sam heard that buying a home was least expensive if he bought through Fannie Mae. Sam wants to invest in a loan that's least expensive to him, and this government-backed program seems to be a good option. Can Sam borrow from Fannie Mae? A.No, Fannie Mae is a publicly traded organization. It does not lend directly. B.No, Fannie Mae only loans money to investors. C.Yes, these loans are available to home buyers. The home buyer can contact the organization directly. D.Yes, the organization offers loans, which the borrower can obtain through their local bank.
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TILA was enacted in what year? A.1968 B.2001 C.1933 D.1961
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The Equal Credit Opportunity Act became law in which year? A.1974 B.1989 C.1991 D.2001
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The TILA-RESPA Integrated Disclosure Rule was enacted in which year? A.2015 B.2016 C.1988 D.1974
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The Truth-In-Lending Act is also referred to as? A.Regulation Z B.Regulation X C.Title IV D.Title Z
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The organization in charge of enforcing TILA is...? A.Consumer Financial Protection Bureau B.HUD C.Federal Trade Commission D.Federal Financing Board
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Tim can no longer make payments on the home he's purchasing in an installment land sales contract. Will he lose his equity? A.Yes, if a forfeiture clause is present in the contract. B.Yes, but only if it is a small amount. C.No, he has the right to sell the property to recoup his losses. D.No, the seller has to pay him back those funds.
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Under TILA, all of the following are considered business days, except? A.Sundays B.Saturday C.Monday D.Friday
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What Is Ginnie Mae? A.An organization that's government-owned and managed through HUD offering mortgage security guarantees B.A type of loan offer from financial institutions with low interest rates C.A loan program for people who want to buy investment property D.An organization that handles high-risk borrowers
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What are mortgage insurance premiums? A.A fee paid by the home buyer upfront and worth 1.75 percent of the loan amount. B.A fee paid to the Federal Housing Administration for providing the loan. C.A cost the buyer must pay with cash at the time of buying a home. D.A fee paid to cover the closing costs on the loan.
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What are the key benefits of VA loans? A.They are less expensive and easier to obtain for qualified buyers. B.They are the only option available to Veterans. C.They tend to be ideal for only those who are in upper ranks of the military. D.They save the borrower time by cutting out the middleman in the transaction.
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What can cause a holdup with a loan application for Julio? A.A lack of identification of personal information, debts, income, or other qualifying factors. B.He has to meet with the lender in person. C.A backup with the lender. D.He doesn't qualify if he isn't told right away that he's been approved.
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What does the underwriter do? A.Verifies all information on the loan application and ensures the level of risk is acceptable to the lender's needs. B.The underwriter writes up the loan information. C.The underwriter calls the buyer and seller to close the deal. D.The underwriter works with the agent to close the deal.
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What happens during the property closing? A.All parties sign the documents and close the loan. It transfers hands. B.The buyer has to agree to new terms on the loan. C.The buyer officially gets the keys. D.The loan's terms are reviewed again to make changes.
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What happens when your home buyer purchases a home where a blanket mortgage is in place? A.The person buying the home obtains a new loan that pays off the blanket mortgage on just their property. B.The developer has to pay off the loan in full before this can happen. C.The blanket mortgage remains in place until all of the homes are sold. D.The lender will not agree to these terms until the loan is paid off.
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What has Amy's lender done to send a pre-approval letter? A.Verified all of her income and debts, considered a credit report, and verified all details. B.She's completed an application, but that's the only amount done on the process. C.The lender agreed to the terms. D.The borrower needs to supply more information.
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What is a federally backed loan program? A.Programs like FHA and VA loans, which help borrowers avoid default and help them get into low-interest loans. B.Fannie Mae and Freddie Mac lenders C.Loans given by any bank to a home borrower including conventional loans D.A loan given to those with very good credit with very low interest rates
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What is a loan commitment? A.The lender says they are approving the loan after the homebuyer finds a home. B.The lender starts the loan process. C.The borrower submitted his documents. D.The loan has been pre-qualified.
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What is a pre-qualification letter? A.It says the lender has done basic levels of determining if a home buyer is qualified to buy. B.It says the lender has committed to lending to the borrower. C.It outlines the concerns the lender has with the buyer. D.It's an approval letter for a loan.
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What is a second mortgage? A.Another loan taken out on a home after a mortgage is already in place. B.The second time a person purchases a home, the loan is a second mortgage. C.It is a line of credit available to the homeowner. D.A loan that replaces the first mortgage on a loan.
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What is an example of a buydown? A.To cut interest, the home buyer purchases points. B.To lower the interest rate, a builder makes a payment to the lender on behalf of the buyer. C.A buydown is a reduction in the sale price of the home. D.A buydown is a type of discount given on the sale of the property by the developer.
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What is negative amortization? A.When the payment amount does not cover the amount of interest accrued each month, increasing the loan balance. B.A discount interest rate on the mortgage. C.Fees paid at the closing of the loan. D.The rate of return on a real estate investment.
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What is recorded by the county in a real estate transaction? A.Mortgages and title transfers are documented, but promissory notes are not. B.Home loans and the terms of the contract. C.Just the title showing who owns the home. D.The real estate agent's name.
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What is the benefit of mortgage-backed securities to a home buyer? A.With mortgage-backed securities, lenders sell loans in packages across the country, making it possible for borrowers in low-income areas to qualify for loans. B.Nothing, it's just a way for banks to make money. It's all about profit. C.These securities make the bank money, but also provide the government with profits. D.The home buyer benefits from low interest rates and better terms because of these investment opportunities.
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What is the collateral in a blanket mortgage? A.The land itself. B.The property built on the land. C.There is no collateral in this case. D.Whatever asset the buyer uses to obtain the loan, such as another home's equity.
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What is the most commonly used mortgage application? A.The 1003 mortgage application or Uniform Loan Application. B.The Freddie Mac and Fannie Mae Application. C.FHA loan lending forms. D.The Loan Application form selected by a bank.
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When asked why the Fed is raising rates, what is your answer? A.The Federal Reserve increases rates to grow profits, but also to control inflation and build the economy. B.The Federal Reserve increases rates so homebuyers spend more to buy a home. C.The organization wants to limit home buying. D.The Federal Reserve increases interest rates as a way to encourage home sales.
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When the Federal Reserve reduces interest rates, it impacts the real estate market. How so? A.Homebuyers may qualify for lower rates, impacting the number of people who want to buy and the amount they can afford to spend to buy a home. B.It means it will be harder for lenders to offer loans, limiting the number of home buyers you have. C.A drop in the interest rate means home buyers will pay more to buy a home locally. D.It has no impact on the actual market, but only on the larger banks themselves.
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Which is the following is not considered an adverse credit action? A.increasing the fee for cash advances of all accounts B.denying a credit increase request C.closing an existing account D.denial of credit to an applicant
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Which of the following can be used as a factor in making a credit decision? A.None B.Race C.Religion D.Sex
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Which of the following cannot be used as a factor for making a credit decision? A.All of the answer choices provided are correct B.Race C.National Origin D.Religion
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Which of the following changes to a Closing Disclosure would trigger a new three day review period? A.A prepayment penalty is added B.A seller credit is added C.The address is corrected D.The settlement date is changed
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Which of the following is not a prohibited act under the ECOA? A.None of the answer choices provided are correct B.Using a person's race to make credit decisions C.Charging a higher interest rate because the house is in a Catholic neighborhood D.Asking a woman if she is divorced or widowed
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Which of the following is not considered a trigger phrase under the TILA guidelines? A.no down payment B.20% down C.Low $200 monthly payments D.Own the home in as little as 12 payments
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Which of the following would not be considered an adverse credit decision under the ECOA? A.approving a line of credit B.denial of credit C.approving a credit application in a lesser amount than what was requested D.closing an existing credit account
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Which type of loan allows a borrower to pay only the interest due over the life of the loan? A.Term loan. B.Graduated payment loan. C.Growing equity mortgage. D.Buydown mortgage.
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Who benefits from owner financing? A.Both the buyer and seller - since the buyer may not qualify for traditional loans and the seller can collect interest. B.The bank behind the transaction benefits the most. C.The buyer because he or she cannot obtain an FHA loan. D.The seller because he can kick the buyer out at any time.
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Who establishes the criteria for owner financing? A.The buyer and seller work out terms. B.The loan must follow state guidelines. C.The terms are outlined as a conventional loan. D.These loans always are interest-only loans.
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Who has more protection in a land sales contract? A.The seller - who has the ability to take possession of the home again quickly. B.The buyer - who has the right to sell the property quickly. C.Both parties share the same amount of risk. D.The lender involved in financing the agreement.
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Who is responsible for recording the mortgage process? A.A title agency will likely handle it, but the responsibility is the lenders. B.A trustee involved in the process. C.The home seller. D.The homebuyer has to handle it along with a real estate agent.
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Who owns a home in an installment land sales contract? A.The seller maintains the legal title until the terms of the contract are met. B.The buyer automatically gets the title. C.A title company holds the ownership. D.A third party escrow company handles it.
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Who qualifies for a VA loan? A.Active duty and retired veterans of the United States Armed Forces. B.Anyone that works for the federal government. C.Those who apply for a loan through Veterans Affairs. D.Anyone that plans to serve in the government.
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Why does Martha's lender need to know about her recent expense on her savings account? A.They want to ensure there's no hidden concern or drop in creditworthiness. B.The lender wants to know you're spending only on your home. C.It's not any concern to the lender. D.Martha can tell the lender it's nothing to worry about.
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Why doesn't Alex's lender send a pre-approval? A.Most often, information is missing or not completed. B.It doesn't want to lend to her. C.She doesn't have a good credit score. D.She hasn't asked for it.
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Why is the Uniform Loan Application important? A.It provides information that backers of loans, such as Fannie Mae and Freddie Mac require. B.It gives some information about the buyer's history. C.It is necessary for you to begin using the MLS. D.The loan application is an easy to use form.
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Will a borrower need to pay closing costs on his VA loan? A.Maybe, but these are often paid by the seller and are typically lower. B.Yes, all loans require closing costs. C.No, only the seller pays these. D.No, the lender does not charge closing fees for VA loans.
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