REAL ESTATE PRACTICE

Approximately how many states have predatory lending laws?

36

The Farm Credit System is?

A government-sponsored enterprise

What is another name for an installment sale contact?

A land contract

Bankruptcy?

A legal action that liquidates our restructures debt. It can have a long-lasting negative impact on borrower's ability to obtain financing

Restoration of Entitlement VA Loan?

A one-time that benefit allows a veteran to apply for restoration of entitlement and used the VA loan to buy a second home after the prior loan is paid in full, even while retaining ownership of the first home

Prepayment clause?

Allows the borrower to prepay principal on the loan at anytime without penalty

A standardize measure for interest rates and other costs of the loan is called?

Annual Percentage Rate. Regulation Z requires lenders to use standardized measure for interest rates.

General lien

Attached to more than just one specific

The Neighborhood Stabilization Program funded by?

Both the Housing and Economic Recovery Act and the American Recovery and Reinvestment Act funded a program. Funded through recovery legislation

Biff is completing a residential loan application. Which of the following would he include in the liabilities section?

Car loan Liabilities are obligations or debts the borrower owes. This may include loans, credit card balances, and alimony

CMO?

Collateralized mortgage obligation holds mortgages and mortgage-backed securities. These are organized in tranches from which investors can purchase shares

CFPB?

Consumer Financial Protection Bureau are rules and regulations that protect consumers of financial services. Was created by the Dodd-Frank Act

Equity skimming?

Equity skimming occurs when an investor receives title to a property, usually rents out the home but doesn't make the mortgage payments. When types of equity skimming fraud like this occurs, housing usually end up in foreclosure

Another term for a valuation(Appraising)?

Formal Appraisal

Bridge Loan?

Gives a homeowner the ability to pay for two homes at the same time

Which of the following is the cost of replacing a building in the case of total loss?

Insured value

Government loans?

Insured! by Federal Housing Administration(FHA) and can be guaranteed! by the U.S. Department of Veterans Affairs

Growing equity?

Interest remains the same, but his monthly payments increase over time according to a set schedule

To find a factor on an amortization chart, you need to know the interest rate and the _______

Length of the loan

Which of these items should you expect to include when calculating your start-up costs as a licensee?

License fee

Charter?

Limitations are set by the bank's charter and vary state to state

Conforming loan limits?

Limits vary based on location and the number of units being purchased

The lender, the employer, and the _______ all complete parts of the request for verification of employment form?

Loan applicant

How do mortgage lenders acquire income?

Loan interest and mortgage packages sold on the secondary market

What are advances?

Loans the Federal Home Loan Bank makes to member banks

The _____ defines individuals who perform certain foreclosure-related activities for compensation for borrowers?

Mortgage Foreclosure Consultant law

Which of the following is the price a lender believes the property would bring at a foreclosure sale?

Mortgage value

When using an amortization chart, you use the interest rate and the loan term to arrive at a number, such as 5.17808. Now what do you do?

Multiply the number of thousands in the loan by the number

This HUD program is responsible for developing and enforcing federal fair housing policies and laws?

Office of Fair Housing and Equal Opportunity

Convertible feature?

On most adjustable rate mortgages, it allows borrowers to convert to a fixed-rate during a specific period of the mortgage

Amortized mortgages

Paid off in periodic regular payments of interest and principal. Over time, the portion of the payment made toward principal increases as the portion used to pay interest decreases

How common are interest-only loans today?

Rare They were more common before the housing crisis, but because an large number of borrowers defaulted on interest-only loans, they've fallen out of use, and have only recently become available again on a very limited basis. When they're used the borrower pays only the interest for a specific period of time, usually five to seven years

In which phase of the real estate market cycle would you expect to see property under valued and a large supply of homes on the market?

Recovery Phase

The Funnel?

Requires some average or estimated numbers to make the calculation complete

What is the name of the federal act that sets requirements for mortgage loan originators (MLOs)?

Secure and Fair Enforcement for Mortgage Licensing Act

Construction loans type?

Short-term financing aka interim financing

What type of lien is a mechanics lien?

Specific involuntary lien. A specific lien is against a single property. An involuntary lien occurs when a creditor places a claim on real or personal property through legal means without the owner's consent in order to collect a debt

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

Supervises national banks and financial institutions

Which of the following features is shared by the mortgage and the deed of trust?

The borrower is required to maintain the property and pay property taxes and insurance

A buyer with a 15-year, $250,000 loan at a 5.5% interest rate has a monthly principal and interest payment totaling $2,042.71. How many payments will the borrower make over the course of the loan?

The borrower will have 180 payments (assuming the loan isn't paid off early). This is 12 monthly payments per year for 15 years: 12 x 15 = 180

Housing ratio?

The borrower's monthly housing obligation as a percentage of monthly gross income

The FHA Energy Efficient Mortgage allows modifications such as solar panels as long as?

The cost of the modification is within limits based on the value of the home

What's true about the draw period on a home equity line of credit?

The draw period for HELOCs varies and is established at the loan's outset

Loan Amount equation?

The loan amount plus the down payment should equal the sales price of the home

Recaptured depreciation?

Three taxes take effect when an investment property is sold. The transfer tax is assessed at the time of the sale. Capital gains tax and recaptured depreciation will apply on the investor's income tax return

How is title usually conveyed to the buyer during a foreclosure process?

Through a referee's deed

What's the purpose of the fixed/adjustable rate note?

To convert the interest rate from fixed to adjustable

Which of the following acts created regulations for advertising credit services?

Truth in Lending Act (TILA)

USDA Rural Development?

USDA's Single Family Housing Program will make direct (as well as loan guarantees) to help low- and moderate-income rural Americans buy safe, affordable housing in rural areas

The funnel?

Uses a few different percentages to help you estimate the activity you need to create a certain income, and one of those is the percentage of clients who turn into closed transactions

Which factor that influences value considers the property's function?

Utility

With this alternative to foreclosure, a borrower hands over the property to the lender rather than face foreclosure proceedings

Voluntary conveyance of deed

A lapse in property insurance coverage can result in borrower default because it leaves the lender _____ should something happen to damage the property.

Vulnerable

Online banks?

Will typically have the best interest rates, along with low- or no-fee savings accounts

What is one disadvantage of a will over a trust?

Wills are made public; trusts are not

Treasure BILL?

A short maturity term of one year or less

To qualify for mortgage loan endorsement?

Applicants must meet education, examination, fingerprint, and credit report requirements to qualify for an MLO endorsement

Which of the following sources can provide real estate professionals with important market data?

Banking, bond, and investment analysts

"Hardest hit fund"?

Benefits states in that were deemed to have suffered the most from the 2007 financial crises. It provides funding to help homeowners stay off foreclosure. Available in states with the most underwater homeowners.

Calvin purchased a house for $220,000, financing $200,000 using a 30-year conventional mortgage at 4% interest. His monthly payment is $955, including both principal and interest. The annual property taxes are $1,400 and the combined annual insurance premium is $900. What's Calvin's PITI payment each month?

Combine annual property taxes and annual insurance premiums($1,400 + $900) then divide by 12($2,300 \ 12 = $191.67). Add the monthly property taxes and insurance to the monthly principal and interest: $191.67 + $955 = $1,146.67.

In a 1031 tax-deferred exchange, what role does the qualified intermediary serve?

Coordinates the exchange

HUD's strategic plan outlines the _____ that support its missions?

Four goals

When a real estate transaction is financed using a contract for a deed, what advice should real estate agents give their clients?

Have an attorney review the contract

Why should licenses maintain a business account separately from any personal account?

It makes it easier to recognize when the business is profitable

What qualifying ratios are used in a VA home loan?

Residual income and debt-to-income. The FHA uses the housing ratio and total debt obligation