Financial Test 2

The Davidsons' lender is trying to approve them for a conventional loan. What is the minimum percentage of total debt ratio they must have to be eligible a conventional loan? 36% 37% 38% 39%

36%

Homeowners over the age of ______ are eligible for the HECM program. 55 62 71 80

62

What is the HECM program? A direct loan from the FHA A form of reverse mortgage insured by the FHA A grant from the FHA made to senior citizens A home construction loan insured by the FHA

A home construction loan insured by the FHA

What is another name for an installment sale contract? A land contract An equitable lien A pro-rated sales plan A traditional mortgage

A land contract

Albert wants to sell his house to his cousin, who's willing to assume his FHA loan. What clause in Albert's mortgage requires him to obtain the lender's permission to do this? Acceleration clause Alienation clause Non-recourse clause Transfer clause

Alienation clause

FHA may adjust loan limits for each county ______. Annually Every five years Every three years Monthly

Annually

The rate at which a bank can obtain an overnight loan from another bank without providing collateral is called the ______ rate. Adjustable Discount Federal funds Prime

Federal funds

An ARM usually offers an initial interest rate that's ______ a fixed rate mortgage for a period of time. Different in nature from Equal to Higher than Lower than

Lower than

When a lender has a lien on a property via a mortgage, what rights does the lender hold? Air rights Possession rights The entire bundle of rights The right to foreclose

The right to foreclose

Select the choice that best translates this clause into plain English. "Upon payment of all sums secured by this Mortgage, Mortgagee shall discharge this Mortgage without cost to Mortgagor. Mortgagor shall pay all costs of recordation, if any." The borrower must pay all recording fees if the property is transferred to another owner. The borrower will be charged a fee when the loan has been paid off to ensure that the satisfaction of the note is recorded. When the borrower has fully paid off the loan, the lender will record that the note is satisfied. When the borrower has fully paid off the loan, the lender will retain the note that is satisfied.

When the borrower has fully paid off the loan, the lender will record that the note is satisfied.

What is one disadvantage of a will over a trust? Wills are made public; trusts are not. Wills are more expensive to create than trusts are. Wills don't allow you to appoint an executor. Wills don't allow you to name assets and beneficiaries.

Wills are made public; trusts are not.

What's the most common way that a seller can help a buyer come up with the funds to complete a real estate transaction? Co-ownership Equity financing Remaining in the home and renting from the new buyer With a contract for deed

With a contract for deed

A Treasury bill is a Treasury security ______. With a maturity term between two and 10 years With a maturity term of 30 years With a maturity term of one year or less Without a specified maturity term

With a maturity term of one year or less

Brandon's home has been foreclosed on. He had an outstanding loan balance of $145,000, which he owed to his lender, XYZ Lending for a loan taken out in 2009. There's also a lien against the property recorded in 2014 for an unpaid student loan of $25,000, and a HELOC established in 2012 of $30,000, of which he'd used $10,000. If his foreclosure nets $150,000, how much will each creditor be paid? The student loan will be paid off, then XYZ Lending will receive $125,000 of what it's owed, and his HELOC will receive nothing. The student loan will be repaid, then XYZ Lending and the HELOC lender will split the remaining proceeds. XYZ Lending and the HELOC will each get half of what they're owed, and the lien holder for the student loan will not be repaid. XYZ Lending will receive $145,000, the HELOC lender will receive $5,000, and the lien holder for his student loan will not be repaid.

XYZ Lending will receive $145,000, the HELOC lender will receive $5,000, and the lien holder for his student loan will not be repaid.

How does Farmer Mac support agricultural producers? By creating a secondary market for agricultural loans, making it possible for agricultural lenders to fund more loans By funding and servicing loans directly to the farmers and ranchers who need them By providing economic education to farmers and ranchers seeking credit By providing oversight to the Farm Credit System

By creating a secondary market for agricultural loans, making it possible for agricultural lenders to fund more loans

Which of the following VA programs requires a credit check, new appraisal, and income verification? Cash Out Refinance IRRC Negative amortization conversion Senior disability refinance

Cash Out Refinance

Which of the following is included in HMDA data? Borrower names Borrower Social Security numbers Census tract information Specific property addresses

Census tract information

With a VA loan, the certificate of reasonable value is used to ______. Determine the amount of entitlement the veteran borrower has available Determine the value of the loan that the VA will guarantee Negotiate with sellers when the buyer wants a lower sale price Restore entitlement for a veteran who has used the VA loan before

Determine the value of the loan that the VA will guarantee

Andy is selling his home to Erika and Doug, who are using an FHA loan for the purchase. To facilitate the purchase, Andy can agree to pay ______. Discount points to buy down Erika and Doug's interest rate No more than 2% of the sales price toward Erika and Doug's closing costs The first three months of PITI for Erika and Doug Up to 6% of the sales price as Erika and Doug's down payment

Discount points to buy down Erika and Doug's interest rate

How is Regulation B related to the Equal Credit Opportunity Act? Enforcement Fortification Negation Restriction

Enforcement

Chapter 5 of the Texas Property Code set requirements and penalties for ______. Addenda Executory contracts Foreclosure proceedings Listing agreements

Executory contracts

This could happen if a factory were put in next door that changed and impacted property value. Depreciation External obsolescence Functional obsolescence Physical depreciation

External obsolescence

Which of the following entities buys loans primarily through thrifts? Fannie Mae FHLB Freddie Mac Ginnie Mae

Freddie Mac

Which institution guarantees mortgage-backed securities with the full faith and credit of the United States? Fannie Mae Farmer Mac Freddie Mac Ginnie Mae

Ginnie Mae

Which of the following best describes the state of the market during the recovery phase of the real estate cycle? High but stabilized unemployment and a high number of foreclosures Increases in hiring, employment, and public confidence, and lots of buyers in the market Properties selling for more than they're worth, many buyers in the market, and lots of new construction Unemployment increasing, prices falling, and foreclosures on the rise

High but stabilized unemployment and a high number of foreclosures

The ______ Act was legislation aimed primarily at addressing the effects of the subprime mortgage crisis. Home Financing Recovery Homeownership Prosperity and Economic Recovery Housing and Economic Recovery Housing Stabilization

Housing and Economic Recovery

Joseph is self-employed and wants to buy his first home. What additional document may he need to provide to the lender when trying to obtain a loan? Bank statements IRS Form 4506-T Receipts Tax donations

IRS Form 4506-T

Which of the following is a true statement about FHLBanks? It offers low-cost funding to consumers. Member banks can borrow for up to one year without collateral. The Fed regulates FHLBanks operations. The U.S. Treasury manages the operations of FHLBanks.

Member banks can borrow for up to one year without collateral.

Why is it a good idea for real estate licensees to carry auto insurance? All states require it. It's helpful to have in the event a client sues for negligence. It's required by federal law. Most states require it and it's recommended for all real estate licensees.

Most states require it and it's recommended for all real estate licensees.

Which organization manages and charters credit unions? Department of Treasury FDIC IRS NCUA

NCUA

Which HUD program is responsible for protecting individuals against discrimination in housing based membership in a protected class? Community Development Block Grant FHA Housing Anti-Discrimination Department Office of Fair Housing and Equal Opportunity

Office of Fair Housing and Equal Opportunity

Which of the following is a true statement about retirement accounts? Only self-employed individuals can use SEP IRAs Roth IRAs are more liquid than traditional IRAs There is no limit to the amount a person may contribute to an IRA each year Traditional IRAs are more liquid than Roth IRAs

Only self-employed individuals can use SEP IRAs

Which clause is standard in a deed of trust and affects the foreclosure process that can be used if the borrower defaults? Acceleration Alienation Power of sale Reconveyance

Power of sale

Assuming a CMO uses the sequential pay structure, how is principal passed through from borrowers paid to investors? All tranches receive principal payments. Principal is first paid to investors holding the greatest number of shares. Principal payments are only made to the first tranche until it retires, then to the second tranche, and so on. Principal payments are only made to the last tranche until it retires, then to the second-to-last tranche, and so on.

Principal payments are only made to the first tranche until it retires, then to the second tranche, and so on.

What does REIT stand for? Real Estate International Trust Real Estate Internet Tax Real Estate Investment Tax Real Estate Investment Trust

Real Estate Investment Trust

Which of the following lending regulations apply to mortgage loans and settlement services? Consumer Mortgage Protection Act Homeowner and Equity Protection Act Honest Lending Education Act Real Estate Settlement Procedures Act

Real Estate Settlement Procedures Act

A lender qualifies a borrower for a VA loan based on ______. Credit score and debt-to-income Gross income and credit score Housing ratio and debt-to-income Residual income and debt-to-income

Residual income and debt-to-income

What type of investment strategy is most similar to a 1031 tax-deferred exchange? Buy and hold Fix and flip Rolling over funds from one IRA into another Wholesaling

Rolling over funds from one IRA into another

When the Treasury collects fewer funds than what is needed to pay the government's bills, what action might it take? Buy securities Lower interest rates Raise interest rates Sell securities

Sell securities

What is the most common structure for a CMO? First come, first served First in, first out Last in, first out Sequential pay

Sequential pay

Which of the following requirements must a person meet to qualify as a Texas veteran? Be a resident of Mexico Be dishonorably discharged Serve at least 181 days of wartime active duty Serve at least 90 active duty days

Serve at least 90 active duty days

Marissa is obtaining a VA loan, and she's decided to place 20% down. What's her responsibility for paying the VA loan funding fee? She can either pay it separately or roll it into the cost of the loan. She's required to pay it unless she's disabled. She will need to place the funding fee in escrow for the first year. If she doesn't default in that time, it will be refunded to her. She won't be required to pay it since she made a large down payment.

She won't be required to pay it since she made a large down payment.

Which of the following types of residential dwellings do life insurance companies purchase from the secondary mortgage market? Blocks of condo units Commercial properties Single-family on one lot Undeveloped land

Single-family on one lot

When a buyer takes over payments on a loan without telling the lender, this is called a purchase ______. According to existing agreements On behalf of lender Subject to existing financing Upon assumption

Subject to existing financing

A like-kind exchange, or 1031 exchange, is also referred to as a ______. Incentive exchange One-to-one exchange Property swap Tax-deferred exchange

Tax-deferred exchange

Which agency sets the guidelines for qualified mortgages? The Consumer Financial Protection Bureau The Federal Home Loan Bank The Federal Housing Finance Agency The U.S. Congress

The Consumer Financial Protection Bureau

What is one of the main differences between the U.S. Mint and the Bureau of Engraving and Printing? The Bureau of Engraving and Printing produces engraved commemorative coins and paper notes, and the U.S Mint produces money-related coins. The U.S. Mint only produces commemorative coins, and non-monetary paper documentation. The U.S. Mint produces all money-related coins and paper notes, and the Bureau of Engraving and Printing produces other official documentation, as well as commemorative coins and medals. The U.S. Mint produces coins, and the Bureau of Engraving and Printing produces paper notes.

The U.S. Mint produces coins, and the Bureau of Engraving and Printing produces paper notes.

Page four of the Closing Disclosure lists specific disclosures about the loan, such as the penalty for late payments, whether a demand feature applies, whether the loan can be assumed, and ______. An amortization table Refinancing options The total interest percentage amount The use of an escrow account

The use of an escrow account

Which of the following statements is true about national lending intuitions? Mortgage-backed securities are offered by credit unions. They control the flow of the local money supply. They fund loans to borrowers. They sell packaged loans to investors.

They sell packaged loans to investors.

Which statement is true regarding most government loans? Borrowers must put at least 20% down. Private mortgage insurance (PMI) is required. The government provides the funds. They're insured or guaranteed by the government.

They're insured or guaranteed by the government.

How does the VA fund the mortgage guarantee program so that lenders can be reimbursed for any losses from borrower default? Through a funding fee charged to most borrowers Through homeowners insurance Through mortgage insurance premiums charged to most borrowers Through property taxes

Through a funding fee charged to most borrowers

What standards do appraisers follow? Appraisal bylaws License law NAR Rules of Ethics Uniform Standards of Professional Appraisal Practice

Uniform Standards of Professional Appraisal Practice

You attend a business-related conference that includes an overnight stay away from home. Can you deduct the cost of your meals during the conference? No, meals are not deductible Yes, you can deduct 100% of the cost of your meals Yes, you can deduct 25% of the cost of your meals Yes, you can deduct 50% of the cost of your meals

Yes, you can deduct 50% of the cost of your meals

How does the Community Development Block Grant program assist in supporting HUD's mission? Develops block housing in areas where affordable rental property is not meeting the community's needs Distributes grant funding to help meet community needs as determined by state and local governments Provides grant money to support communities in creating non-discrimination policies Provides home financing grants to low-income home buyers

Distributes grant funding to help meet community needs as determined by state and local governments

The annual MIP is recalculated each year using ______. The borrower's housing ratio and the current loan value The borrower's total debt obligation ratio The end-of-year loan balance, plus the balance after the next 11 payments The lesser of the home's original or current appraised value

The end-of-year loan balance, plus the balance after the next 11 payments

How does a 3-2-1 buydown work? The interest rate increases by 3% the first year, 2% the second year, and 1% the third year until it reaches the original rate stated in the note. The interest rate starts at 3% for the first year, changes to 2% the second year, changes to 1% the third year, and is then set at the rate stated in the note for the rest of the loan term. The interest rate starts low but increases by 1% each year for three years until it reaches the rate stated in the note. The rate is reduced by 1% for the first three years, by 2% for the next two years, and by 1% for one more year, and is then set at the rate stated in the note for the rest of the loan term.

The interest rate starts low but increases by 1% each year for three years until it reaches the rate stated in the note.

Joe decided to borrow funds from his retirement account to fund the down payment on his new house. It's now two years later and he lost his job. What is true about his pension plan? He has until retirement to pay back the pension plan money he borrowed. He must refinance his home to pay back the balance. His home is at risk of being repossessed. The loan must be repaid immediately.

The loan must be repaid immediately.

Carla and Sven have a previous foreclosure, but now they are a few years away from that. They make good money with their jobs, and have about $30,000 available to use for a down payment and closing costs. Why might they consider an FHA 203(b) loan, even if they have sufficient down payment for a conventional loan? An FHA loan puts them in a better negotiating position with the seller. Past foreclosures are not considered when qualifying borrowers for a 203(b) loan. The FHA will pay their mortgage insurance for the life of the loan. The lender can consider compensating factors, even if their credit history isn't great.

The lender can consider compensating factors, even if their credit history isn't great.