Real Estate Finance
The Real Estate Investment Trust must have at least ______ shareholders.
100
In order to qualify for a tax-deferred exchange, a seller must complete the acquisition of another property within how many days of closing the first transaction?
180 days
The Federal Deposit Insurance Corporation (FDIC) insures deposits in Savings and Loans for up to _______________.
250,000
The maximum amount of flood insurance available for each property is:
250,000
About ________ of monthly consumer spending can be attributed to housing.
40 percent
A Mortgage Backed Security (MBS) is _____________.
A financial instrument backed by the value of real estate securing mortgage loans
A Real Estate Investment Trust (REIT) is ____________.
A stock company set up to purchase real estate for income or investment
Interest collected on a loan is the __________for a real estate lender. 1. Profit 2. Interest 3. Return on Investment 4. All of the above
All of the above
Owner Financing _________. 1. Is often used in periods of tight money 2. Can benefit the buyer by allowing a lower rate than the current market rate 3. Can benefit the seller by allowing a higher return than putting the equity in a saving account 4. All of the above
All of the above
Penalties for RESPA violations can include which of the following ____________. 1. Fines up to $10,000 2. Up to 1 year in prisonYOUR ANSWER 3. Payment of three times the settlement service charge, plus legal fees, to the borrower 4. All of the above
All of the above
RESPA 1. is legislation that regulates closing costs and settlement procedures in real estate transactions. 2. prohibits the payment or receipt of any kickbacks or referral that increase the costs related to settlement services 3. provides consumer protection 4. all of the above
All of the above
The Discount Rate 1. Is the most common tool the FED uses to control the economy 2. Is the interest rate that is charged to member banks to borrow money from the FED. 3. Is for short- term borrowing only, and can change daily 4. All of the above
All of the above
Which of the following would be a variable that can impact the real estate economy in any given market? 1. Population and job growth 2. Social influences 3. Housing inventory 4. All of the Above
All of the above
A(n) loan provides your client with loan payments that do not change regardless of fluctuation in market interest rates, your client's income, or the "ups and downs" of the local real estate market.
Amortized
Interest rates offered on Mortgage- Backed Securities ___________.
Are based on the credit quality of the loans included in the pool
A market area (such as a neighborhood) goes through its own four cycles, which include all of the following EXCEPT:
Blockbusting: a period of economic segregation based on current banking trends
Principal balance is ____________. 1. the initial loan amount 2. the remaining loan amount 3. a constant amount 4. both 1 and 2
Both 1 and 2
FHA's purpose is to 1. protect the lender 2. insure mortgage loans against default 3. protect the borrower in case he/she cannot pay 4. Both 1 and 2 are correct
Both 1 and 2 are correct
Mortgage Backed Securities ___________. 1. Are only sold by government agencies 2. Are sold by commercial banks, brokerage houses, and large mortgage companies 3. Are sold in the secondary market to various investors 4. Both 2 and 3 are correct
Both 2 and 3 are correct
The Servicing Release Premium (SRP) is all of the following except ______.
Changes the terms of the loan to the borrower
The Act designed to encourage financial institutions to invest in their communities by making credit available to low and moderate income neighborhoods is known as
Community Reinvestment Act
The following statement about the Patriot Act is false________.
Companies must have a warrant before providing information
The Real Estate Settlement Procedures Act (RESPA) is administered and enforced by the _____.
Consumer Financial Protection Bureau
The majority of loans made by Credit Unions are ____________.
Consumer loans for items such as cars, furniture, and appliances
The ___________________ is specifically available to residents who are currently purchasing residential property within 150 miles of the Texas-Mexico border.
Contract for Deed Conversion Initiative
The following statement about a promissory note is False. The promissory note:
Does not need to be signed to be valid
Who needs to understand RESPA?
Everyone involved in a real estate transaction
A 1031 real estate exchange allows the proceeds from the exchange to be used for improvements of land already owned by the taxpayer.
False
An inverted Yield Curve predicts an improving economy with more jobs and higher interest rates.
False
Commercial loans and loans made to corporations and partnerships must comply with all the Truth-in-Lending Laws and Regulation Z.
False
FNMA will make loans directly to home buyers only through an on-line application
False
If a lender requires the endorsement for Mineral Protection, the homeowner will be protected against all damage to his property from mining or oil drilling operations.
False
It is not necessary to explain escrow accounts to consumers.
False
The Government National Mortgage Association (GNMA) will only purchase loans backed by the Federal Government.
False
The most common transfer document for selling real estate is a quit claim deed.
False
To lock-in a loan means to get a pre-approval letter from the lender.
False
The following statement regarding Fannie Mae is FALSE __________.
Fannie Mae is a non-profit organization
____________is the process of selling a property that has been used as security for a debt to satisfy that debt in the case of a default by the borrower.
Foreclosure
A budget payment plan whereby the borrower would make equal payments for a period of time, which would pay off the borrowed money and the interest is called
Fully Amortized loan
The most common transfer document for selling real estate is a ____________ deed.
General Warranty
The most common transfer document for selling real estate is a ____________ deed.Study Hint: The most common transfer document for selling real estate is a general warranty deed.
General Warranty
The type of deed where the grantor (seller) guarantees that he or she holds clear title to a piece of real estate and has the right to sell it to you is known as
General Warranty Deed
Which of the following will not impact a credit score?
Income
Dave wants to purchase Joe's home (which is outside the city limits on 3 acres) but can't qualify for a loan with suitable terms and conditions. He is able to make a small down payment. The seller and buyer may both benefit from a(n)
Installment Land Contract
In Texas the manufactured housing industry
Is regulated by TDHCA
"The right of survivorship" applies to
Joint tenancy
FNMA does not_______________.
Make loans directly to home buyers only through an on-line application
The TDHCA is responsible for the regulation of the state's ___________ industry.
Manufactured housing
The__________ program channels low interest rate mortgage money through participating Texas lending institutions to eligible families who are purchasing their first home, or to those who have not owned a home in the past three years.
My First Texas Home
The __________________ provides funds to eligible entities for the acquisition and redevelopment of foreclosed, abandoned or vacant housing to create affordable housing; demolition of severely substandard housing and redevelop demolished or vacant properties.
Neighborhood Stabilization Program
The best way to improve a credit score is to
Pay off debts
A secured loan requires ______________.
Pledging of an asset to assure repayment
The Texas Department of Housing and Community Affairs (TDHCA) role does not include
Providing loans to those who a bank might consider too risky to lend to in a traditional manner
A "Loan Estimate" must be given to a borrower on a federally-related loan as required by .
RESPA
Within 3 days of loan application, a lender must provide a borrower an estimate of closing costs as required by .
RESPA (Federal)
The following statement about RESPA is incorrect
RESPA allows the payment or receipt of any kickbacks or referral that increase the costs related to settlement services.
What is not one of the purposes of RESPA?
Realtor protection
Increasing points paid for a loan in the absence of any economic change will have what effect on the loan.
Reduce the interest rate
_____________ will result in higher loan payments, making it more difficult to afford homes.
Rising Interest Rates
Lending money has three types of risk. These are
Risk, Reward, and Time Value
.A _____ loan must be repaid in full at the end of the term.
Term
__________ prohibits discrimination of any type in the granting of a real estate loan.Study Hint: The Equal Credit Opportunity Act (ECOA) prohibits discrimination of any type in the granting of a real estate loan.
The Equal Credit Opportunity Act (ECOA)
___________is the largest purchaser of real estate loans in the country.
The Federal National Mortgage Association (FNMA)
Interest collected on a loan is the __________for a real estate lender.
The borrowers rate won't change between now and closing
To lock-in a loan means _____________.
The borrowers rate won't change between now and closing
Regarding electronic signatures _______________.
The parties must agree to sign electronically
Alternative credit can be used
To allow an underwriter to approve a loan without a credit score
According to RESPA (Real Estate Settlement Procedures Act), which of the following information would lenders have to give to the buyer?
Total closing costs
Direct Lenders, such as Banks and Savings and Loans, use their depositors' money to provide financing for real estate.
True
Interest rates offered on Mortgage- Backed Securities are based on the credit quality of the loans included in the pool.
True
Private investors can purchase stock in Fannie Mae.
True
Regulation Z, the Truth-in-Lending Law, regulates all types of advertising, and places limits on what terms lenders can advertise.
True
Return of Investment refers to repayment of the original investment.
True
The Federal National Mortgage Association (FNMA) is the largest purchaser of real estate loans in the country.
True
The majority of loans made by Credit Unions are consumer loans for items such as cars, furniture, and appliances.
True
Transferring title to a property with a Special Warranty Deed only provides warrants or guarantees for the time that the seller has owned the property.
True
Regulation Z addresses all of the following issues EXCEPT .
Usury
Payments of an amortized loan are all of the following EXCEPT
Variable, depending on the COFI
The Gramm-Leach-Bliley Act ________________.
Was designed to protect an individual's privacy by limiting how and what information can be shared or sold between businesses or corporations
A _________ shows the relationship of how interest rates change based on the time allowed for paying off the loan.
Yield curve
Lending money is the same thing as investing in that
You expect to make some income on the investment
An example of an unsecured loan is
a credit card loan
A "wraparound" mortgage is
a type of secondary mortgage.
The reason a lender can call a note due if a property is assigned to another party without paying off the loan is because the security document has a (an)
an alienation clause
The following statement regarding sub-prime loans is incorrect
are illegal
If interest rates are higher when a seller needs to sell, 1. the monthly ownership cost may make selling the home more difficult 2. the seller may be forced to lower the price to keep the payment affordable for a prospective buyer 3. the seller should raise the price of the home to match the high interest rate 4. Both 1 and 2
both 1 and 2
The secondary market 1. buys and sells mortgages created in the primary mortgage market 2. insures there are funds available in markets that have low savings rates and high demand for housing 3. consists of lenders who deal directly with customers seeking a mortgage loan 4. both 1 and 2 are correct
both 1 and 2 are correct
Discount point(s) 1. allow the buyer to purchase a lower interest rate 2. is a percentage that is multiplied times the loan amount 3. is a percentage given to the purchaser for closing on time 4. both (1) and (2) are true
both 1 and 2 are true
FANNIE MAE, GINNIE MAE & FREDDIE MAC are important because 1. they create a method in which to channel mortgage money all across the United States 2. they are the major secondary market for mortgage money 3. they are the largest savings and loan companies in the United States. 4. both (1) and (2) are true.
both 1 and 2 are true
The money required to pay off a loan is always higher than the existing principal balance because 1. mortgage loan interest is most often calculated in arrears 2. the interest rate may go up 3. it does not take into consideration the interest on the loan in the month of the sale 4. both 1 and 3 are correct
both 1 and 3 are correct
Prior to the 1980's, most real estate financing was done by: 1. Wall Street 2. Local Banks 3. Savings & Loans 4. Both 2 and 3
both 2 and 3
A homeowner owes $70,000 on a home worth $100,000. The $30,000 difference is known as the homeowner's
equity
P.I.T.I. payment means the
principal, interest, taxes, insurance
Securities, backed by mortgages
provide funds for mortgages that may not meet the underwriting guidelines imposed by Fannie Mae and Freddie Mac
Regulation Z requires disclosure for _______________
residential real estate only
It is the _______ of all members that are loaned to borrowers, and the interest paid by the borrowers is defined as earnings for the members of that institution.
savings
Because of its regulatory nature, _______ has its own board and executive director.
the Manufactured Housing Division of the TDHCA
The TDHCA is NOT responsible for
the chartering, regulation and supervision of the state's thrift industry
In a nonjudicial foreclosure
the lender can foreclose on the property without going to court
The Real Estate Settlement Procedures Act was created
to make sure that buyers understand all the settlement costs that they are charged