Real Estate Finance TX Final

An investor holds a second mortgage of $20,000 on a property going to foreclosure. There is a first mortgage of $110,000. If the property sells at auction for $110,000, the investor will receive:

$0

A couple has a gross monthly income of $5,000. Under Fannie Mae and Freddie Mac standard guidelines, how much will be allowed to cover total housing expenses plus all long-term debt?

$1,800

All depository accounts in commercial banks are insured by the Federal Deposit Insurance Corporation (FDIC) for up to what amount:

$250,000

Under the Texas Veterans Home Improvement Program, the Veterans Land Board will make a loan to eligible Texas veterans to make substantial repairs to an existing primary residence. If an eligible Texas veteran takes out a $9,000 loan under this program, what is the maximum term of this loan?

10 years

Under the Texas Veterans Home Improvement Program, the Veterans Land Board will make a loan to eligible Texas veterans to make substantial repairs to an existing primary residence. If an eligible Texas veteran takes out a $22,000 loan under this program, what is the maximum term of the loan?

20 years

The maximum amount guaranteed to a lender on a Department of Veterans Affairs (VA) loan is

25 percent of the current conforming loan limit

Bonuses and overtime income can be considered if it has been received for

3 years

The average life of a real estate loan is

7 to 8 years

Which of the following split loans would require private mortgage insurance?

85/10/5

When Fannie Mae was reorganized in 1954 to include financing by private investors, mortgage loans could be purchased at:

A discount

The assets listed on a loan application may include all of the following EXCEPT

A loan on a $50,000 life insurance policy

Money can be viewed as all of the following except:

A measure of creditworthiness

Loan participations normally are:

A speculative investment for lenders

A couple has been notified that they are in default on their mortgage payments and that the entire amount of the loan is now due. Their loan likely includes a(n):

Acceleration clause

A bridge loan is

All of these answers are correct

VA loans can be

All of these answers are correct (down payment loans For veterans or surviving spouses A valuable veterans benefit)

A loan under the Texas Veterans Housing Assistance Program must be originated in conjunction with what type of mortgage loan?

All of these are correct

Non-judicial foreclosures in Texas are:

Allowed by Deeds of Trust

Hypothecation is...

Being in possession of a property while it is the collateral for a loan

Old English law established an equitable redemption period that allowed for the:

Borrower has time to cure the default before foreclosure

The certificate or reasonable value (CRV) came in at $190,000 on a house that is under contract for $200,000. The buyer has the option to

Cancel the transaction

A veteran must have a __________ to secure a VA loan.

Certificate of Eligibility

Processing a mortgage loan includes all of the following procedures EXCEPT

Checking the Dun and Bradstreet listing for the lender

The primary mortgage market includes which of the following?

Commercial banks and savings associations

Interim financing includes:

Construction loans

A recorded deed, or recorded note and mortgage is considered to be

Constructive notice

A loan processor with a mortgage company who is preparing the loan package for a borrower's application will need to include all of the following EXCEPT

Copy of the deed to the borrower's current home

The largest percentage of a FICO credit score is based on the applicant's

Credit history

A power-of-sale clause will always be a part of a:

Deed of trust

A loan applicant provides data to Fannie Mae. The automatic underwriting system that is used to analyze the data is called

Desktop Underwriter®

The MOST common way of financing private mortgage insurance today is to

Divide the annual premium by 12 and add that amount to the monthly principal, interest, taxes and insurance (PITI) payment

To determine an estimate of value on an office building, the appraiser would

Divide the net income by the capitalization rate

The biggest change in the mortgage financing procedures has been the

Emphasis on the risk assessment of the purchaser

Foreclosed properties are sold at public auction in order to:

Establish the true market value of the property

A jumbo loan is a mortgage loan that:

Exceeds the FHFA maximum loan limit

The Federal Housing Finance Agency (FHFA) is responsible for regulating:

Fannie Mae and Freddie Mac

A package of agricultural loans would most likely be purchased by:

Farmer Mac

Each individual account on deposit with a thrift or savings association is insured by the:

Federal Deposit Insurance Corporation (FDIC)

As a result of the tightened required qualifying standards caused by the financial crisis, the primary lender for low-income mortgage loans became:

Federal Housing Administration (FHA)

Maximum conforming loan limits are set by

Federal Housing Finance Agency (FHFA)

The purchase and sale of government securities by the Federal Reserve on the open market is regulated by the:

Federal Open Market Committee

Banks often borrow from each other on a short-term basis without requiring collateral. The interest charged on these loans is called the:

Federal funds rate

Although many types of interests in real property must be used as security for a real estate loan, the MOST common is a:

Fee simple interest

During a financial crisis, a homeowner who is upside down on a mortgage might find relief using any of the following EXCEPT:

Foreclosure

Depending on the circumstances of the default, a lender may be willing to give delinquent homeowners any of the following options EXCEPT:

Forgive six months' worth of payments

An appraiser is appraising a five-story historic office building. The building was constructed in 1880 and is not compatible with installing central air conditioning. This is an example of

Functional obsolescence

Home equity loans:

Fund loans for home owners for many uses

The new lender disclosure form called the Loan Estimate replaces the

Good Faith Estimate and the early truth-in-lending disclosure

Rules and regulations for FHA appraisers require appraisers to do all of the following EXCEPT:

Guarantee that the property is free of any defects

The new lender disclosure form called the Closing Disclosure replaces the

HUD-1 Settlement Statement and the final Truth-in-Lending disclosure

A Deed of Trust in Texas:

Has a note with it to make it a mortgage

A man joins his local teacher's credit union. Membership in the credit union will be open to all of the following EXCEPT:

His wife's boss

Life insurance companies provide funds for all of the following EXCEPT:

Home mortgage loans

Many unwary homeowners have lost their homes due to predatory lending practices. All of the following are examples of predatory lending EXCEPT:

Home mortgage loans

A foreclosure sale in Texas is conducted:

In the vicinity of the county courthouse

An investor who is interested in purchasing a rental property could estimate the value by using the

Income approach

All of the following variables affect short-term real estate cycles except:

Increase in government borrowing

The Federal Deposit Insurance Corporation:

Insures bank customer deposits

Under the new appraiser independence requirements (AIR), lenders must choose an appraiser who

Is familiar with the local market where the property is located

The Federal Reserve regulates money and credit, whereas the U.S. Treasury:

Is the nation's fiscal manager

A bank is foreclosing on a property with an outstanding loan balance of $80,000. The loan carries private mortgage insurance. The mortgage insurance company would likely pay the bank the amount of the bid and take title to the property if:

It is confident of recovering the loss by reselling the property

A 15-year fixed rate mortgage provides all of the following benefits EXCEPT

It provides greater tax deduction

Private mortgage insurance (PMI) is issued for the protection of the

Lender

Which of the following statements BEST describes lien theory?

Lender has equitable rights; borrower has legal rights

Homeowners should only consider foreclosure if the house is worth:

Less than they owe and they cannot afford the payments

The CFPB developed which disclosure to meet Regulation Z requirements that borrowers must sign 3 days after a loan application?

Loan Estimate

The person responsible for ordering the title search and title insurance policy is the

Loan officer

The best example of negative amortization is

Loan payments do not cover accrued interest

Subprime lenders in the 1990s - 2000s:

Made loans that had significant risks

A bank's trust department would probably agree to provide any of the following services EXCEPT:

Manage a small individual retirement account (IRA)

Which of the following is NOT an example of a physical encumbrance?

Mortgage lien

A couple has a conventional mortgage loan with private mortgage insurance in Texas. This loan is secured by a deed of trust. They are now six months in default on the loan. In order to collect the monies due, the lender will initiate a:

Non-judicial foreclosure

A deed of trust is used to achieve a:

Non-judicial foreclosure

The MOST common cause on default of mortgage loan is:

Nonpayment of principal and interest

A form of financing that does not require a separate note since it is a complete financing and sales agreement can be called any of the following EXCEPT:

Note and deed of trust

A statutory period of redemption gives the borrower the opportunity to:

Pay the outstanding balance after the foreclosure sale

In order for a lender to verify information provided on the loan application, the borrower may be asked to sign all of the following EXCEPT

Permission to order an appraisal

When all attempts to resolve a delinquency on a mortgage have failed, the lender may only proceed to foreclosure after taking all of the following steps EXCEPT:

Physically examine the property

A borrower was surprised when he attempted to pay off his current loan and was told that he must pay 2% of the loan balance in addition to the balance due. His loan must have included:

Prepayment penalty clause

The MOST significant feature of a deed in lieu of foreclosure is that it:

Prevents the loss of time and cost of foreclosure

Market value is usually defined as the

Price if placed on the open market for a reasonable period with no undue pressure on either buyer or seller

Escrow or impound funds are collected to provide the lender with funds to pay for

Property taxes and homeowner insurance

The Federal Housing Administration (FHA) was organized in 1934 to do all of the following EXCEPT:

Provide direct funding for mortgage loans

The focus of lenders shifted in the 1990s to:

Refinancing existing mortgage loans

Life insurance and casualty insurance companies are regulated by:

State laws and regulations

A property owner has six months after his property is sold at public auction to redeem the property according to his state's:

Statutory redemption period

A veteran is willing to allow his VA loan to be assumed but wishes to regain his ability to obtain another VA loan. He must ask the borrower to provide him with a

Substitution of entitlement

A licensed appraiser may use any of the following approaches to derive an estimate of value for a piece of property EXCEPT

Tax assessment approach

The federal agencies empowered to control the supply and cost of money include all of the following except:

The Office of Thrift Supervision

Owner financing is used primarily when:

The owner has free & clear title

An FHA section 203(k) loan would provide a loan for:

The purchase and rehabilitation of a property

The acceleration clause in a mortgage loan is activated when:

There is a breach of one or more conditions of the agreement

The system whereby the lender holds title to a property and may dispossess the borrower without notice upon any default of the loan agreement is called:

Title theory

In lien and intermediate theory states, under a deed of trust title remains with the borrower with lien rights empowering foreclosure assigned to the:

Trustee

A couple will need to have 3.5 percent of the sales price to qualify for their FHA loan. They may not obtain the funds from which of the following sources?

Unsecured loans

What is the definition of leverage?

Using borrowed money to purchase property

A deed in lieu of foreclosure can be described as a:

Voluntary transfer of deed

Reserve requirements for lending institutions that keep customer deposits:

Were put in place to require banks to keep certain amounts of cash available to depositors

Fixed-rate loans may be designed in all of the following ways EXCEPT

With gradual increases in the interest rate