Real Estate Finance

A , also known as a real estate lien note, is the borrower's unconditional promise to repay, and is not typically recorded. a. Promissory note b. Mortgage c. Deed d. Title

a

A participation loan in which a lender collects principal and interest and shares in profits when a property is sold is called a . a. Shared appreciation mortgage b. Blanket mortgage c. Hard money loan d. Reverse annuity mortgage

a

A(n) transfers ownership of property from the government to an individual. a. Patent b. Title c. Abstract d. Promissory note

a

According to the Loan Estimate, services you cannot shop for include: (a) Credit Report Fee (b) Pest inspection fee (c) Title - closing protection letter fee (d) All of these choices are correct

a

The industry term for residential loan originators, as mandated by the SAFE Act.

RMLO

Lending institution asset classification for property obtained through a foreclosure

Real Estate Owned (REO)

Member-owned depository institutions

credit unions

The act of moving funds from one investment arena to another

Disintermediation

Commonly known as the GI Bill of Rights

Servicemen's Readjustment Act

The Real Estate Settlement Procedures Act is implemented by . a. Regulation Z b. Regulation X c. Consumer Protection Act d. Regulation C

b

The Serviceman's Readjustment Act, signed into law in , is more commonly known as the GI Bill of Rights. a. 1934 b. 1944 c. 1834 d. 1968

b

Prepayment penalties can be found in more than two-thirds of . a. Conventional loans b. FHA loans c. Contract for deeds d. Sub-prime mortgages

d

Breach or nonperformance of the terms of a note or covenants of a mortgage

Default

The unpaid balance of a foreclosed mortgage, payable by court order

Deficiency judgment

The reduction in value of property from deterioration or obsolescence

Depreciation

Insurance cost based on the loan-to-value ratio

Annual premium

The ratio of the borrower's total recurring monthly debts

Back ratio

Partially-amortized loan with a substantially larger final payment

Balloon loan

A loan which covers more than one piece of property

Blanket mortgage

Excessive selling/lending activity for the purpose of generating fees and commissions

Churning

Conventional loans that conform to FNMA/FHLMC standards

Conforming loans

Uses forms created and issued in an effort to standardize mortgage loan purchases

Conforming loans

Someone who processes, underwrites, closes and funds their own files in their name and then sells the loans to other mortgage lenders

Correspondent lender

A claim, lien, charge, or liability attached to and binding real property

Encumbrance

Insures deposits in banks and thrift institutions

Federal Deposit Insurance Corporation (FDIC)

Legal procedure by which secured property may be sold to satisfy an unpaid note

Foreclosure

Form which replaces the Good Faith Estimate

Loan Estimate

The most probable price a property should bring on the open market

Market value

Direct loans for construction or improvement on Federal Trust Land

Native American Direct Loan

Also known as a statutory foreclosure

Power of sale

Investment vehicle created by Congress in 1960

REIT

Holds mortgages in trust for the benefit of investors

REMIC

The re-amortizing of a mortgage

Recasting

Designed to enhance consumer protection and reduce fraud.

SAFE Act

Responsible for the chartering, regulation and supervision of Texas' thrift industry.

SML

Responsible for the regulation of the Texas manufactured housing industry.

TDHCA

Form lenders use to obtain borrower balance information

Verification of Deposit (VOD)

An FHA borrower can use gift funds from a(n) as funds for a downpayment. a. Parent b. Friend c. Roommate d. Cash-out refinance

a

At the treasury level, funds can be raised to pay for government spending by increasing borrowing and . a. Raising taxes b. Offering discounts on government securities c. Raising the cost of real estate d. Flooding the market with money

a

During closing, a seller must sign a deed which conveys the property, authorize the payoff of any existing liens, sign additional documents, and, if stipulated in the contract, . a. Provide title insurance b. Provide funds to assist with the downpayment c. Sign a promissory note payable to the lender d. Provide mortgage insurance

a

For a property to have value, it must four characteristics, including demand, scarcity, , and transferability. a. Utility b. Functional obsolescence c. Appraisal d. Depreciation

a

Like banks and credit unions, pension funds are fed by . a. Client deposits b. Bonds c. Stock dividends d. REIT dividends

a

Loans which have no federal government guarantees or insurance and come from traditional sources are known as . a. Conventional loans b. FHA loans c. Contracts for deed d. Conforming loans

a

Periodic payment amounts such as principal & interest, estimated escrow, estimated monthly payment, and must be disclosed in the Projected Payments section of the Loan Estimate form. a. Mortgage insurance b. Homeowner's insurance c. Property value d. Estimated inspection cost

a

The Agricultural Credit Act, which established Farmer Mac to facilitate the creation of a secondary market for agricultural mortgage products, was passed in by Congress. a. 1987 b. 1997 c. 1980 d. 1932

a

The _______________ is responsible for raising money to support the spending decisions of the congress. (a) U.S. Treasury (b) Federal Reserve (c) Tax authority (d) U.S. Mint

a

The money that mortgage companies use to make loans comes from the sale of . a. Bonds b. Savings accounts c. Tax dollars d. Real estate

a

The secondary mortgage market was designed to provide greater liquidity to the residential real estate market, primarily by . a. The sale of mortgage loans as investments b. Loaning money to primary market lenders c. Charging additional interest to borrowers d. Funding savings institutions in areas experiencing regional shortages

a

The value applied to a property for ad valorem tax purposes is the ___________. (a) Assessed value (b) Appraised value (c) Market value (d) Exchange value

a

Under the , the use of certain terms in an advertisement trigger the need for full disclosure of lending terms. a. Truth in Lending Act b. Consumer Protection Act c. Fair Credit Reporting Act d. Equal Credit Opportunity Act

a

are subject to a limitation on seller concessions; 4% of the reasonable value of the property. a. VA-guaranteed loans b. FHA-guaranteed loans c. Conventional loans d. Cash-out refinances

a

is defined as the sum of currency held by the public and transaction deposits at depository institutions. a. M1 b. M2 c. M3 d. MI5

a

A cash-out refinancing loan is a loan guaranteed by the which refinances any type of lien against a secured property. a. FHA b. VA c. USDA d. NADL

b

A deed of trust mortgage which is in default does not require a , in most cases. a. Non-judicial foreclosure b. Judicial foreclosure c. Power of sale d. Trustee

b

A loan application includes the following six pieces of information, property address, estimated value, name of the borrower, social security number __________________ and loan amount. (a) Initial rate (b) Income (c) Age (d) Gender

b

A strict foreclosure is one in which the files suit on the homeowner in default. a. Seller b. Lender c. State government d. Federal government

b

A(n) is a partially-amortized loan with a final payment that is substantially larger than the previous payments. a. Blanket mortgage b. Balloon note c. Collateral-dependent loan d. Participation loan

b

A(n) is a right given by law to creditors to have debts paid out of the property of a defaulting debtor. a. Interest b. Lien c. Settlement d. Foreclosure

b

According to the Closing Disclosure, prepaids are items to be paid by the consumer in advance of the first scheduled payment of the loan, and include homeowner's insurance premiums, mortgage insurance premiums, prepaid interest, property taxes, and a maximum of additional items. a. 13 b. 3 c. 7 d. 9

b

An arrangement that borrowers make with lenders to repay a delinquent loan and avoid foreclosure is commonly called . a. Default fee b. Forbearance c. Power of sale d. Auction

b

Because it is a gift, the lender and/or the agent can provide gift funds to the borrower to be used as a down payment on an FHA loan. (a) True (b) False

b

Both the HUD-1 and the Good Faith Estimate (GFE) forms have been replaced, the HUD-1 by the new Closing Disclosure Form, and the GFE by the new . a. Truth in Lending Disclosure b. Loan Estimate c. Appraisal form d. Market data analysis

b

Established in 1968, operates a mortgage-backed securities program designed to facilitate the flow of capital into the housing industry. a. Freddie Mac b. Ginnie Mae c. Fannie Mae d. Farmer Mac

b

FHA requires a minimum down payment of: (a) 0% (b) 3.50% (c) 5% (d) 5.50%

b

In 2008, Fannie Mae and Freddie Mac were placed into by the Federal Housing Finance Agency. a. Oversight b. Conservatorship c. Default d. Compliance

b

In a _____________ state, the borrower retains title to the property. (a) Title theory (b) Lien theory (c) Intermediate theory (d) All of these choices are correct

b

In the Loan Estimate, the Comparisons Table: (a) Displays offers from multiple lenders (b) Provides information to the borrower used to compare loan offers from different lenders (c) Assists the borrower in comparing different loan offers from the same lender (d) Is not used until the borrower has committed to a particular lender

b

Income eligibility for the is capped at 115% of the median income of the area in which the property is located. a. VA loan guaranty b. USDA Rural Housing Program c. FHA 203k Purchase and Rehabilitation Program d. FHA 203b Fixed Rate Program

b

Many depository institutions participate in the primary mortgage market, including commercial banks, insurance companies and . a. Mortgage bankers b. Credit unions c. Correspondent lenders d. Real estate investment trusts

b

Net basis rates are sometimes identified as the , and do not include servicing fees. a. Standard rate b. Wholesale rate c. Federal rate d. Exchange rate

b

Prior to 1980, savings accounts held by lenders accounted for over of residential lending in America. a. 80% b. 75% c. 40% d. 60%

b

Seller contributions to buyer closing costs for FHA loans are limited to of the sales price. a. 8% b. 6% c. 10% d. 2%

b

The Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law in 2010, established the . a. Office of Consumer Credit Commissioner b. Consumer Financial Protection Bureau c. Community Development Block Program d. Department of Housing and Urban Development

b

The borrower is asked to provide their full name, , social security number, and present address in Part III of the Uniform Residential Loan Application. a. Gender b. Marital status c. Credit history d. Employment status

b

The charters, regulates and supervises all national banks and federal savings associations. a. OPP b. OCC c. TARP d. IRS

b

The is where borrowers and mortgage lenders come together to create and negotiate the terms of a mortgage transaction. a. Money market b. Primary market c. Secondary market d. Credit market

b

The maximum loan to value ratio on an FHA loan is 90%. (a) True (b) False

b

The monetary policies of the affect interest rates and the availability of funds. a. Local economy b. Federal Reserve c. U.S. Congress d. Securities Exchange Commission

b

The ratio of a borrower's total recurring monthly debts to gross monthly income is called the . a. Front ratio b. Back ratio c. Income ratio d. Loan-to-value ratio

b

The sales comparison approach focuses on , or recent sales of similar properties, to determine value. a. Physical deteriorations b. Comparables c. Reconciliations d. Inspections

b

There are Federal Home Loan Banks in the United States. a. Five b. Twelve c. Sixteen d. Fifty

b

Which of the following is true regarding FHA loans? (a) An FHA loan requires a CRV (b) Ratios may be exceeded with compensating factors (c) FHA loans require a minimum 5% down payment (d) FHA loans are for low income borrowers only

b

An instrument of corporate or governmental debt

bonds

A lender is one who funds mortgage loans from deposits on hand, retaining the loans long term. a. Primary b. Secondary c. Portfolio d. Private

c

A property which is being appraised is commonly referred to as the . a. Sale property b. Property in question c. Subject property d. Seller's property

c

A(n) is a breach or nonperformance of the terms of a note or the covenants of a mortgage. a. Foreclosure b. Termination c. Default d. Penalty

c

A(n) is a person, corporation or firm not otherwise in banking that provides its own funds for mortgage financing purposes. a. Mortgage broker b. Savings and loan association c. Mortgage banker d. Commercial banker

c

All foreclosures require notice regarding the foreclosure proceedings. a. Private b. Email c. Public d. Verbal

c

Credit reports are ordered from all three major national credit reporting agencies: Experian, Equifax and . a. TransAtlantic b. Union Pacific c. TransUnion d. Transtar

c

Deed restrictions, easements, and CC&Rs are examples of on real property. a. Statutory liens b. Covenants c. Encumbrances d. Improvements

c

Each consumer has three different credit scores from the three major credit reporting agencies because:(a) Some consumers use only one or two of the reporting agencies (b) Some consumers have locked their credit files (c) Not all creditors report to all of the agencies (d) Some of the credit reporting agencies are slow to update their records

c

The Community Reinvestment Act, enacted in , ensures that banks serve the needs of the community in which they were chartered. a. 1995 b. 2010 c. 1977 d. 1974

c

The FDIC insurance limit for deposits is: a. $100,000 b. $200,000 c. $250,000 d. $1,000,000

c

The Farm Service Agency, a subagency of the , makes various loans available to those unable to obtain mortgage credit from other, more conventional sources. a. Federal Housing Administration b. Federal Trade Commission c. U.S. Department of Agriculture d. Consumer Financial Protection Bureau

c

The Fed uses three primary monetary policy tools to influence the cost and availability of credit, open-market operations, the discount rate and . a. Statutory authority b. Taxation c. Reserve requirements d. None of the above

c

The Mortgage Debt Relief Act of 2007 allows taxpayers to exclude up to of debt on their principal residence. a. $500,000.00 b. $1,500,000.00 c. $2,000,000.00 d. $20,000,000.00

c

The Services You Can Shop For section of the Loan Estimate form includes items such as . a. Appraisal fees b. Attorney fees c. Survey fee d. Upfront mortgage insurance fee

c

The lender may also be referred to as the in some deed of trust forms. a. Mortgagor b. Grantor c. Mortgagee d. Trustee

c

The promissory note form identifies the lender, the place of repayment, and the . a. Seller b. Broker c. Borrower d. Title company

c

The rate charged on an adjustable rate mortgage until the first adjustment date is known as the . a. Prime rate b. Index rate c. Initial rate d. Cap rate

c

USDA loans are available for: (a) Farm and ranch finance only (b) Crop loans (c) Primary residences only (d) Cash-out refinance

c

Under a(n) , when the final payment is made to the seller, title automatically transfers to the buyer. a. Residential contract b. Tax lien c. Contract for deed d. Special warranty deed

c

Which of the following transactions is exempt from RESPA? a. Loans intended for sale in the secondary market b. Loans for manufactured homes c. Temporary loans d. Loans made in connection with a HUD program

c

are usually small lenders who have the necessary funds to extend loans at their own risk. a. Mortgage brokers b. Underwriters c. Correspondent lenders d. Correspondence bankers

c

is one in which the interest rate remains the same for the entire term. a. Adjustable rate mortgage b. Contract for deed c. Fixed-rate mortgage d. Promissory note

c

A sales contract in which the buyer agrees to make regular payments to the seller for equitable title

contract for deed

A chronological list of owners in the title history of a property is known as a(n): a. Abstract of title b. Patent c. Cloud on the title d. Chain of title

d

A mortgage modification in which the borrower voluntarily deeds their collateral property in exchange for release from all mortgage obligations is known as . a. Short sale b. Forbearance c. Default d. Deed in lieu

d

All residential mortgage loan originators must now be registered with: (a) TREC (b) Department of Corrections (c) CFPB (d) NMLS

d

Bonds may be categorized by . a. Method of repayment b. Method of redemption c. Intended use of funds d. All of these choices are correct

d

Congress created the Federal Housing Administration in . a. 1949 b. 1939 c. 1984 d. 1934

d

Default can lead to a number of negative consequences for the defaulting party, including . a. Damage to credit score b. Default-related fees c. Foreclosure d. All of these are correct

d

Disadvantages of adjustable rate mortgages include possibly increased monthly payments, , borrower confusion, and higher long-term costs. a. Lower overall interest rates b. Higher loan amounts c. Falling interest rates during the loan term d. The inability to refinance early

d

Downpayment sources may include . a. Gift funds b. Stocks c. Bonds d. Any of these

d

FHA loans are available for: (a) Single-family homes (b) Multifamily properties (c) Manufactured homes (d) All of these choices are correct

d

Major loan reforms spearheaded by the FHA have included . a. Partially amortized loans b. High interest rates c. No limits on borrower qualification d. None of these are correct

d

Maximum ratios for FHA loans are . a. 30% front ratio/41% back ratio b. 10% front ratio/20% back ratio c. 43% front ratio/31% back ratio d. 31% front ratio/43% back ratio

d

Mortgage brokers, at one time, originated up to of all mortgage loans. a. 60% b. 95% c. 100% d. 80%

d

Real estate transactions regulated by the Office of Consumer Credit Commissioner include which of the following? a. Home equity loans b. Home improvement loans c. Secondary mortgages d. All of the above

d

Specially Adapted Housing Grants are provided to veterans and service members with disabilities for the purpose of . a. Constructing specially adapted homes b. Remodeling an existing home suitable for adaptation c. Applying funds to unpaid principal of previously purchased existing adapted homes d. Any of the above

d

The FHA borrower can pay the downpayment with gift funds provided by any of the following except his or her: (a) Parents (b) Brother (c) Fiancé (d) Real estate agent

d

The Housing and Economic Recovery Act was enacted in , and created the Federal Housing Finance Agency (FHFA). a. 1938 b. 1968 c. 1992 d. 2008

d

The Texas Veterans Land Board Land Loan Program requires a minimum down payment of: a. 10% b. 20% c. 1% d. 5%

d

The is the central banking system of the United States. a. Federal Deposit Insurance Corporation b. The U.S. Treasury c. The U.S. Mint d. The Federal Reserve

d

The practice of occurs when unscrupulous lenders take advantage of a consumer's lack of knowledge regarding lending practices. a. Chunking b. Churning c. Property flipping d. Predatory lending

d

The promulgates forms for the preparation of pre-qualification and pre-approval of financing. a. Fannie Mae b. Lender c. Freddie Mac d. Texas Department of Savings and Mortgage Lending

d

The recasting, or re-amortization, of a loan, can , thus making resolving a default situation more manageable for the borrower. a. Lower insurance premiums b. Lower servicing fees c. Raise the interest rate d. Lower monthly payments

d

The two major purchasers of mortgages in the secondary market are . a. Freddie Mac and Ginnie Mae b. Ginnie Mae and Fannie Mae c. FHFA and HECM d. Fannie Mae and Freddie Mac

d

The was created by Congress in 1792 and became part of the Department of the Treasury in 1873. a. Office of the Comptroller of the Currency b. Internal Revenue Service c. Federal Reserve System d. United States Mint

d

Typical sources of income for Real Estate Mortgage Trusts (REMTs) are . a. Origination fees b. Interest c. Profits from sale/purchase of mortgages d. All of these choices are correct

d

Which of the following housing objectives does Fannie Mae address? a. Regional imbalances of available mortgage credit b. The origination of mortgages for sale c. The standardization of mortgage loans d. All of the above

d

____________ bonds are sold by government entities to fund major capital investments. (a) Equipment (b) Mortgage revenue (c) Mortgage-backed (d) Municipal

d

Set by the board of directors of the Federal Reserve Banks, subject to approval by the Board of Governors

discount rate

The size of loan a veteran may receive, determined by term of service

entitlement

Relates to federal government spending

fiscal policy

The legal procedure whereby the secured property may be sold to satisfy the unpaid promissory note

foreclosure

Ratio of proposed loan payment to GMI

front ratio

The process of transferring funds to a title or escrow company for disbursement.

funding

Debt instrument which attaches to all the property of the debtor not exempt from forced sale

general lien

The process of collecting information about a borrower in order to build a loan file that will be used to make an underwriting decisions.

loan processing

Policy that deals with interest rates and the supply of money in the US economy.

monetary policy

Typically specialize as middlemen between borrowers and lenders

mortgage brokers

Buying or selling government securities by the Federal Reserve.

open-market operations

The process of creating a new mortgage loan.

origination

Percentages based on the amount of the loan

points

The practice of refusing to provide financing in a particular area because of location.

redlining

Encompasses the purchase and sale of existing mortgages to investors

secondary mortgage market

Sending monthly payment statements and collecting monthly payments, maintaining payment records and following up on delinquencies.

servicing

The process of evaluating a borrower's loan application to determine the risk involved for the lender.

underwriting

Return on an investment

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