real estate finance

Question 51 Which of the following is regulated by the Federal Housing Finance Agency?

Fannie Mae $$

Which of these acts has special provisions for borrowers who are victims of over-charging?

Real Estate Settlement Procedures Act$

Question 58 Which of the following describes a Treasury bond?

A Treasury security with a maturity term of 30 years $$

Question 52 How does the FHA control the use of 203(k) money loaned for repairs to a home?

A cost estimate must be provided prior to loan approval, and repairs are approved by an FHA inspector when completed. $$

Question 60 In a deed of trust, who is the trustee?

A neutral third party $$

Question 56 Regional State Bank has made a lot of loans to consumers in the community and is running low on funds. It seeks a loan from the Federal Home Loan Bank. This loan is called a/an _______.

Advance $$

What is the three-property rule as it relates to tax-deferred exchanges?

An investor can identify up to three replacement properties and not encounter a restriction regarding fair market value as long as debt load requirement is met.$$

Question 68 Ava is borrowing money to buy some commercial property for her business. The loan agreement she signs includes a lock-in clause. What does that mean?

Ava will not be allowed to prepay the loan prior to the date specific in the loan agreement.$$

Question 55 Bill's loan is secured by a mortgage. Who holds legal title when this security instrument is used?

Bill $$

Question 45 Which of the following statements about liens is true?

Both mechanic's and materialman's liens are junior liens.$$

Question 54 Which of the following is an event that has a direct impact on property?

Builders required by the state to recycle aluminum during demolition $$

Question 34 Chuck needs to make a few repairs and upgrades to his home, but he needs some cash to do it. He decides to tap into the equity in his home, which he purchased using a VA home loan. What VA program can Chuck use to do this?

Cash-Out Refinance $$

Which real estate finance instrument includes the promise to repay and the security instrument within the same document?

Contract for deed $$

Question 94 Which banking-related entity shares similarities with the purpose and function of the NCUA?

FDIC $$ As an insurer of funds deposited, the NCUA acts similarly to the Federal Deposit Insurance Corporation (FDIC), with the full faith and credit of the U.S. as backing.

Question 25 Lydia put the minimum 3.5% down on her $210,000 home. She'll have to pay an MIP. What type of loan does Lydia have?

FHA $$

If Acme Bank, a primary lender, wants to sell its loans on the secondary market, it would be easier for it to do so if its loans meet ______.

Fannie Mae and Freddie Mac guideline $$

In 2008, as a response to the 2007 financial crisis, the Federal Housing Finance Agency began acting as conservator over which institutions?

Fannie Mae and Freddie Mac$

Question 79 The rate at which a bank can obtain an overnight loan from another bank without providing collateral is called ______.

Federal funds rate $$ When a member bank seeks a short-term loan from another bank, the federal funds rate applies. This is for short-term (overnight) loans without collateral.

Wendy is buying a house from Tom. Tom helps Wendy out by paying for a 2-1 buydown. The lender has given Wendy an interest rate of 5%. Which of the following describes what the buydown will do to Wendy's interest rate?

Her rate will be 3% for the first year, 4% the second year, and 5% after that.$

Question 92 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 $$ During the recovery phase, we've passed our low point and unemployment rates and foreclosures begin to level off before improving.

Question 42 In a mortgage, the property is used as collateral for the loan. This is referred to as ______.

Hypothecation $$

Question 28 Which of the following best describes the state of the market during the expansion phase of the real estate cycle?

Increases in hiring, employment, and public confidence, and lots of buyers in the market $$

Question 73 Commercial banks fall into which of the following category of lenders?

Institutional lenders $$ Commercial banks are part of a category of lenders known as institutional lenders.

Question 57 Your client has a VA loan and wants to refinance to a lower rate. Which of the following is likely the simplest option?

Interest rate reduction refinance $$

What's the purpose of a typical subordination agreement?

It allows a junior mortgage to move into first lien position.$ .

Question 31 David purchased a house three years ago for $300,000. Considering historical property value fluctuations, what is the likely value of the property today?

It's impossible to tell. Historically, property values fluctuate up and down in the short term.$$

Question 77 When an adjustable rate mortgage (ARM) makes its initial adjustment, it does so to its fully indexed rate. What makes up the fully indexed rate?

Margin plus index $$ The fully indexed rate is the margin plus the index.

Question 74 HUD's second goal in support of its mission is to ___

Meet the need for quality affordable rental homes $$ Part of HUD's strategic plan is to meet the need for quality affordable homes, which is defined as its second goal.

Question 40 Which act temporarily removed the requirement that taxpayers whose homes were sold as a result of a foreclosure had to include the loan write-off amount as taxable income?

Mortgage Forgiveness Debt Relief Act of 2007 $$

Which of the following is NOT a benefit government-sponsored enterprises receive?

Nonprofit status $$

Which of the following statements best describes a foreclosure by advertisement?

Notification of pending auction, public auction, notice of eviction$

Question 84 Lenders who ______ can underwrite and approve FHA loans without requiring the FHA to review each borrower's qualifications.

Participate in the direct endorsement program $$ The FHA allows lenders to perform all of the steps for qualification and approval of FHA loans, following FHA guidelines, when they participate in the direct endorsement program.

Question 71 Jody is concerned about the ______ that doesn't allow her to start her gardening greenhouse because it sits next to a nature conservancy.

Physical encumbrance $$ A physical encumbrance limits what can be done on the property and can decrease the property value.

Question 24 Which clause is standard in a deed of trust and affects the foreclosure process that can be used if the borrower defaults?

Power of sale $$

Question 82 Which of the following lending regulations apply to mortgage loans and settlement services?

Real Estate Settlement Procedures Act $$ RESPA applies to mortgage loans and settlement services. This includes real estate licensees, appraisers, and title companies.

Question 89 ______ is the term that the VA uses to describe the amount of net income remaining after deduction of debts, obligations, such as utility and phone bills, and monthly shelter expenses.

Residual income$$ This is the definition of residual income.

Question 81 Your client, Shelby, a veteran using a VA loan to finance his purchase, just learned that the CRV came in lower than the sales price. But no problem: Shelby's brother is willing to loan him the difference. If the loan is approved

Shelby must still be under the VA's debt-to-income ratio $$ Any windfalls will be scrutinized by the VA. Gifts are no problem, but loans will be evaluated in terms of how they impact the borrower's debt-to-income ratio.

Question 91 What is one of the ways the U.S. Treasury promotes economic growth and stability?

Supervises national banks and financial institutions. $$ The U.S. Treasury supervision of banks and financial institutions allows them to take action when there is a deficit or surplus.

Question 66 Which act exempted homeowners from paying taxes on capital gains up to a specified value?

Taxpayer Relief Act of 1997 $$

Question 35 What is the purpose of the Federal Reserve System?

The Fed regulates the U.S. depository institutions.$$

Question 80 Kendra has applied for a loan from Acme Savings and Loan, but when she compares the Loan Estimate the loan officer gave her with the one from Best Bank, where she also applied for a loan, she decides she'd rather go with the loan from Best Bank. Which of the following is a true statement about this situation?

The Loan Estimate expires in 10 business days if Kendra doesn't tell Acme Savings and Loan that she wants to move forward with it. $$ The Loan Estimate expires in 10 business days if the consumer decides not to move forward with it.

Question 70 How is a loan assumption documented?

The buyer and seller both sign an assumption agreement. $$ If the lender agrees to let the buyer assume the loan, an assumption agreement between buyer and seller documents the change.

What is the most likely effect when the Fed sells securities on the open market?

The economy may slow down due to a decreased money supply.$$

The annual MIP is recalculated each year using ____

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

Question 78 Larry obtained a mortgage from State Bank. Larry owns the property, controls it, and has all the rights that come along with real property ownership. State Bank has an interest in the property and ______.

The right to foreclose if the borrower defaults $$ The lender has a lien on the property and the right to foreclose if the borrower were to default.

Question 59 Which statement most accurately describes the right of rescission?

The three-business-day period from the date of loan application or disclosure, during which the borrower can cancel the loan $$

Question 44 The funding fee on a VA loan is waived when __

The veteran has a 10% or higher VA disability $$

Question 30 What program allowed the U.S. Treasury to spend hundreds of billions of dollars to stabilize our financial system, boost credit markets, help families avoid foreclosure, and promote economic growth?

Troubled Asset Relief Program $$

Question 61 Brandon's home has been foreclosed on. He had an outstanding loan balance of $145,000, which he owed to his lender, XYZ Lending. 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?

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. $$

Question 90 Robbie's lender notified him of an impending foreclosure, and told Robbie that his property will be sold at public auction. After the auction occurred, he receives a notice of eviction for which the lender had to petition a court. What does this describe?

Foreclosure by advertisement $$ In foreclosure by advertisement, the borrower is notified of the default and pending public auction of the property. After the auction takes place, the winning bidder has to petition the court for a notice of eviction

Question 99 The interest rate on an FHA Section 251 adjustable rate mortgage will __

Go up or down, but can't change more than a maximum number of points allowed by the FHA over the life of the loan $$ The FHA sets a maximum number of percentage points that the interest rate on a Section 251 ARM may change over the life of the loan.

Question 97 Does the VA make direct loans?

Yes, for Native Americans on trust lands $$ The VA makes direct loans to Native Americans on trust land and to supplement a grant to get a specially adapted home for eligible veterans who have permanent and total service-connected disabilities.