Final Test Finance

Cathy is hoping to purchase a home using a VA loan. A VA-assigned real estate appraiser is required to provide ______ for the property. 1. A certificate of reasonable value 2. A certificate of resale value 3. A home inspection 4. An appraisal report

1 - A certificate of reasonable value The certificate of reasonable value must be provided by a VA-assigned real estate appraiser.

The ______ was enacted in 2010 to create stricter regulation of the financial services industry to reduce costs for consumers from (for instance), undisclosed kickbacks. 1. Dodd-Frank Wall Street Reform and Consumer Protection Act 2. Equal Credit Opportunity Act 3. Real Estate Settlement Procedures Act 4. Truth in Lending Act

1 - Dodd-Frank Wall Street Reform and Consumer Protection Act The aim of the Dodd-Frank Wall Street Reform and Consumer Protection Act was to regulate the financial services industry more effectively.

Victor is selling his property to Sheila. He's acting as the lender, and the property is unencumbered. Which of the following options describes the type or types of financial instruments Victor may use for the loan agreement? 1. Mortgage or promissory deed 2. Note with a contract for deed, mortgage, or a note with a deed of trust 3. Note with assumption agreement 4. Note with carryback agreement

2 - Note with a contract for deed, mortgage, or a note with a deed of trust Any of these three basic financial instruments can be used in real estate transactions.

Kaycie is a new employee at a mutual savings bank. During orientation, she learned that mutual savings banks have limitations that are set by their ______. 1. Articles of incorporation 2. Board of directors 3. Board of branch managers 4. Charter

4 - Charter Limitations are set by the bank's charter and vary from state to state.

Beth needs help with the down payment to buy Mark's property. Mark is going to supplement Beth's bank loan with a second loan, allowing her to meet her lender's down payment requirements. What finance instruments may be used for this agreement? 1. A contract for deed or deed of trust 2. A contract for deed or market 3. A contract for deed or mortgage 4. Mortgage or deed of trust

4 - Mortgage or deed of trust A lender would not approve a contract for deed because the seller holds legal title in a contract for deed, making foreclosure difficult.

The final page of the Closing Disclosure provides loan calculations that tell the consumer how much ______. 1. Cash must be brought to closing 2. Could have been saved by paying discount points 3. The borrower and the seller each pay or receive at closing 4. The loan costs, including total payments, finance charge, and TIP

4 - The loan costs, including total payments, finance charge, and TIP The last page of the Closing Disclosure helps the consumer understand how much the loan costs after all payments are made.

Which of the following is part of the Other Disclosures section? 1. Confirm Receipt 2. Liability After Foreclosure 3. Questions 4. Total Interest Percentage

2 - Liability After Foreclosure

Which of the following is part of the Consumer Financial Protection Bureau's mission of consumer protection? 1. Enforce consumer financial protection laws. 2. Level discrimination penalties and fines. 3. Provide loan programs for first-time homebuyers. 4. Provide low fee loans to consumers.

1 - Enforce consumer financial protection laws. The CFPB enforces federal consumer financial protection laws.

The FHA Energy Efficient Mortgage allows modifications such as solar panels as long as 1. The cost of the modification is within limits based on the value of the home 2. The installation is done by an FHA-approved contractor 3. The product is made in America 4. The utility company that services the property allows the consumer to sell back energy

1 - The cost of the modification is within limits based on the value of the home All improvements covered under an energy-efficient mortgage must be within certain limits based on the value of the home.

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(n) ______. 1. Advance 2. Collateralized mortgage obligation 3. IOU 4. Mortgage-backed security

1 - advance FHLB lends money, called advances, to member banks in exchange for collateral.

Which of the following best describes an equity real estate investment trust? 1. Gets its income from property rent or sale as well as mortgage interest, fees, and profits earned from buying and selling mortgages 2. Invests in equity by owning income-producing property, such as malls, apartments, or office parks 3. Makes mortgage loans and invests in mortgage-backed securities 4. Owned exclusively by banks and insurance companies

2 - Invests in equity by owning income-producing property, such as malls, apartments, or office parks Equity REITs invest in equity. These REITS own income-producing property, such as malls, apartments, or office parks.

In a judicial foreclosure, how long does the borrower's redemption period last if a deficiency judgment isn't being sought? 1. 30 days 2. One year 3. There is no redemption period 4. Three months

3 - There is no redemption period There is no redemption period if the lender is not pursuing a deficiency judgment.

Roger is a veteran with a service-connected disability that requires him to use a wheelchair. He is eligible for the VA's Specially Adapted Housing grant. What can he use this grant for? 1. To make repairs to a home that has been adapted to accommodate his disability 2. To purchase a home and adapt it to accommodate his disability 3. To remodel a home he owns to accommodate his disability 4. To remodel a home he rents to accommodate his disability

3 - To remodel a home he owns to accommodate his disability The SAH grant allows the eligible veteran to make adaptations to a home owned by the veteran.

Which statement is true regarding most government loans? 1. Borrowers must put at least 20% down. 2. Private mortgage insurance (PMI) is required. 3. The government provides the funds. 4. They're insured or guaranteed by the government.

4 - They're insured or guaranteed by the government.

In a judicial foreclosure, if the sheriff's sale wasn't enough to pay off the borrower's debt plus foreclosure costs, how long does the borrower's redemption period last? 1. 30 days 2. One Year 3. There is no redemption period 4. Three months

2 - One year The redemption period lasts one year following the sheriff's sale if the sale didn't pay off the entire debt (and foreclosure costs).

When a buyer takes over the seller's original loan with the lender's permission, this is called ______. 1. A buyout 2. An assumption 3. A substitution 4. Subject-to financing

2 - an assumption Buyers can assume an existing loan with the lender's permission.

How might a borrower avoid paying the mortgage insurance premium required by an FHA loan? 1. Buy down the interest rates 2. Get conventional financing 3. Have a credit score above 720 4. Put down a larger down payment

2 - get conventional financing Borrowers may avoid mortgage insurance payments by financing with a conventional loan.

The Covered Loan Law limits total fees and points paid by the borrower prior to closing to what amount? 1. 4% 2. 5% 3. 6% 7. 7%

3 - 6% Under the Covered Loan Law, the total fees and points that the borrower must pay before closing can't exceed 6% of the total loan amount.

Cindy is buying an older home. It's in reasonably good shape, but she figures she can reduce her energy bills by replacing some of the windows. If she applies for the FHA Energy Efficient Mortgage, what step must she take to receive approval? 1. Develop a proposal for the lender, describing the use of the EEM money she is asking for. 2. Enroll in a HUD-sponsored Sustainable Energy for Homeowners course. 3. Give her lender a report of the cost estimate and energy savings from an energy consultant 4. Provide the lender with estimates from at least three contractors for the cost of the window replacement.

3 - Give her lender a report of the cost estimate and energy savings from an energy consultant Lenders will require an energy consultant's report of needed energy-efficient modifications, their estimated cost, and estimated savings in order to approve an EEM.

Zara is reviewing the "Calculating Cash to Close" table on page three of the Closing Disclosure to see what has changed from her Loan Estimate. She found this extremely helpful and easy to understand because the table explicitly lists _______. 1. All fees related to obtaining the loan 2. All itemized amounts that contribute to the total closing costs 3. Loan estimate and final amounts side-by-side 4. Who must pay and who receives payment

3 - Loan estimate and final amounts side-by-side The "Calculating Cash to Close" table lists amounts from the Loan Estimate side by side with final amounts, and where to find any amounts that don't match.

Which of the following is an example of an involuntary, specific, statutory lien? 1. Estate tax lien 2. Judgment lien 3. Materialman's lien 4. Mortgage lien

3 - Materialman's lien Both materialman's and mechanic's liens are involuntary, specific statutory liens. A specific lien is a lien against a single property. An involuntary lien occurs when a creditor places a claim without the owner's consent.

In which type of participation agreement would a financier lower the interest on the mortgage in exchange for partial ownership of the project? 1. Limited liability partnership 2. Partnership between mortgagees 3. Partnership between mortgagees and mortgagors 4. Partnership between mortgagors

3 - Partnership between mortgagees and mortgagors In a partnership between mortgagees and mortgagors, a lender may be willing to accept a higher LTV ratio or make other adjustments, such as a lower interest rate, in exchange for partial ownership of the project.

Which of the following statements is true regarding closing costs on a VA loan? 1. All closing costs are considered part of the funding fee. 2. No closing costs may be charged to the veteran. 3. Payment of closing costs may be negotiated. 4. The loan origination fee is limited to no more than 2%.

3 - Payment of closing costs may be negotiated. Closing costs that are charged to the borrower may be negotiated in VA loan.

Lisa, a seller, is providing Darwin, a buyer, with a seller second on the purchase of her property. Darwin's conventional lender uses a note with deed of trust to secure the first loan. What instrument is Lisa most likely to use for her second loan with Darwin? 1. Assumption agreement 2. Contract for deed 3. Mortgage 4. Note with deed of trust

4 - Note with deed of trust Lisa won't be able to use a contract for deed, and although the mortgage (with note) is an option, if Darwin's lender uses a deed of trust that means it is typical for the state, and would be Lisa's most likely choice.