Finance Practice Tests

What's the acronym for the legislation that requires financial institutions to document and publicly disclose lending practices? 1. ECOA 2. HMDA 3. RESPA 4. TILA

2 - HMDA HMDA stands for Home Mortgage Disclosure Act.

Dana and Phil have evaluated their situation, and have decided to purchase a unit in a cooperative housing project. Which FHA loan program might work for them? 1. Title I 2. Title II, Section 203(n) 3. Title II, Section 234(c) 4. Title II, Section 251

Title II, Section 203(n) The FHA has a program specifically for the purchase of a unit in a cooperative housing project: Title II Section 203(n).

A seller buydown can ______. 1. Help a borrower meet lender qualification standards 2. Reduce the purchase price of a property 3. Reduce the transfer tax 4. Remove a lien

1 - Help a borrower meet lender qualification standards A seller buydown can be used to help a buyer qualify for a loan by making the loan payments more affordable.

Brittany is a real estate licensee with a mortgage loan originator endorsement. When she acts as an MLO, the California Real Property Loan Law requires her to give her clients a disclosure that ______. 1. Informs the prospective borrower about the terms of the loan being offered. 2. Makes the loan effective, without their signature 3. She is acting as both a real estate licensee and an MLO 4. The consumer has a right to approach a lender directly, without the aid of an ML

1 - Informs the prospective borrower about the terms of the loan being offered The Mortgage Loan Disclosure Statement informs the borrower about the terms of the loan being offered. The licensee must deliver this disclosure to the prospective borrower within three business days of receiving a loan application.

What is the purpose of a lifting clause? 1. It allows a borrower to refinance a first mortgage without affecting its lien position even when a junior mortgage is in place. 2. It allows a junior mortgage to move into first position when a borrower refinances. 3. It raises interest rates incrementally over time. 4. It removes a lien from a property when it's been repaid.

1 - It allows a borrower to refinance a first mortgage without affecting its lien position even when a junior mortgage is in place. A lifting clause allows senior liens to be refinanced without affecting the senior lien position in relation to the junior loan.

When a buyer uses an FHA loan, the down payment amount is calculated ____ 1. According to the FHA requirements for LTV at the time of origination 2. On the FHA median price for similar properties in the area 3. On the greater of the sales price or the appraised value of the property 4. On the lesser of the sales price or the appraised value of the property

4 - On the lesser of the sales price or the appraised value of the property The down payment for an FHA loan is calculated on the lesser of the sales price or the appraisal value of the property.

Which interest rate do banks use to offer consumer loans? 1. Adjustable rate 2. Discount rate 3. Federal funds rate 4. Prime rate

4 - Prime rate Prime rate is the rate given to consumers that's based off of the discount or federal funds rate plus a percentage.

Zack and April are purchasing a home. They apply to three different lenders and review the Loan Estimates they receive. Each form includes a field identifying the National Mortgage Licensing System ID number for the lender. What is the act that requires this licensing identification to be available to consumers? 1. Consumer Credit Protection Act 2. Mortgage Originator Licensing Act 3. NMLS Act 4. SAFE Act

4 - SAFE Act The Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) requires that mortgage loan originators obtain a license that consumers can identify and research.

What is the most likely effect when the Fed sells securities on the open market? 1. Banks will have more money to lend. 2. Interest rates will decrease. 3. The economy may grow due to an increased money supply. 4. The economy may slow down due to a decreased money supply.

4 - The economy may slow down due to a decreased money supply. When the Fed sells securities, it takes money out of the market. This decreases the supply of money in the market and potentially slows down the economy.

What is a potential cause for a decrease in local economy driven by the Fed? 1. Consumers are closing accounts at local banks. 2. Consumers are no longer using cash. 3. Consumers are using more cash. 4. The reserve percentage is increased by the Fed.

4 - The reserve percentage is increased by the Fed. The local economy can be negatively impacted when banks are required to hold greater reserves that can't be used for loans.

The Farm Credit System funds are acquired from ______. 1. Local lenders 2. Mortgage-backed securities 3. Private investors 4. The sale of debt securities and international money markets

4 - The sale of debt securities and international money markets The Farm Credit System money comes not from deposits, but from the sale of debt securities in the U. S. and in international money markets.

Jacqueline found a ready, willing, and able buyer for her client's condo, with a sales price of $20,000 more than the asking price. However, the appraisal came in just under the asking price. Which number will the lender use to calculate the loan-to-value ratio? 1. A middle point between the two numbers 2. A weighted average based on the sales price, appraisal amount, and recent sales 3. The larger number, as a buyer has already been found 4. The smaller number

4 - The smaller number Lenders use the lesser of the sales price and appraised value.

Sandra retired from a career in the Navy and is ready to buy her first home, a small bungalow in a quiet neighborhood, for $169,900. Her military service gives her the benefit of Veterans Affairs (VA) loan. What's her required down payment? 1. $0 2. $1,699 3. $2,548.50 4. $500

1 - $0 The VA loan program was part of the G.I. Bill of 1944, and it offers financing with no down payment.

Which of the following best describes annual percentage rate (APR)? 1. A standardized measure for interest rates and other loan costs 2. Fees charged by a lender, expressed as a percentage that's always rounded to the nearest whole percentage point 3. the amount a borrower pays in interest for a single year 4. The amount a lender is permitted by federal law to collect in interest from a borrower during a single year

1 - A standardized measure for interest rates and other loan costs Regulation Z requires lenders to use a standardized measure for interest rates, which is the APR.

What's the acronym for the legislation that established processes and procedures for how federal agencies propose and enforce regulations? 1. APA 2. ECOA 3. MDIA 4. TILA

1 - APA APA stands for the Administrative Procedure Act.

The ______ clause is also known as a due-on-sale clause. 1. Alienation 2. Defeasance 3. Power of sale 4. Separation

1 - Alienation The alienation clause allows the lender to make the loan due if the borrower sells or otherwise transfers the property.

To arrive at annual debt service cost, divide ______ by the debt coverage ratio. 1. Annual NOI 2. Loan factor 3. Maximum equity 4. Maximum loan

1 - Annual NOI Dividing annual NOI by debt coverage ratio gives you the annual debt service cost, which is important for determining the maximum loan.

A standardized measure for interest rates and other costs of the loan is called _______. 1. Annual percentage rate 2. Discount points 3. Federal funds rate 4. Prime information

1 - Annual percentage rate Regulation Z requires lenders to use a standardized measure for interest rates, which includes costs for obtaining the loan, which is the APR.

What's the acronym for the legislation that requires financial institutions to invest in the communities they serve? 1. CRA 2. ECOA 3. HERA 4. TILA

1 - CRA CRA stands for the Community Reinvestment Act.

Under which section of the Loan Estimate will you find any credits provided by the seller? 1. Calculated Cash to Close 2. Initial Escrow Payment 3. Origination Charges 4. Pre-Paids

1 - Calculated Cash to Close Calculated Cash to Close indicates any credits, including seller and lender credits.

Which document is used to establish the path and proof of ownership? 1. Chain of title 2. Deed 3. Survey 4. Title

1 - Chain of title The chain of title shows the history of ownership from one owner to the other. A broken link in the chain is a cause for concern, because it may signal a title defect.

Which of these individuals may benefit from USDA Rural Development program offerings? 1. Community-managed lenders 2. Low-income urban borrowers 3. Non-profit businesses 4. Start-up business borrowers

1 - Community-managed lenders The USDA Rural Development program supports loans to community-managed lenders.

A local company wants to build a new office building. What type of loan will it most likely be seeking from its commercial bank? 1. Construction loan 2. Conventional loan 3. Home equity line of credit 4. Home equity loan

1 - Construction loan For brand new construction, it'll mostly likely seek a construction loan, which is interim financing for new building construction.

You may see a ______ named as a land contract, real estate contract, contract for sale, agreement for deed, or as articles of agreement. 1. Contract for Deed 2. Mortgage 3. Deed of trust 4. Promissory note

1 - Contract for deed A contract for deed is a common form of seller financing involving the buyer/borrower and the seller /lender.

Interest-only loans are a form of ______ buyer financing. 1. Creative 2. Common 3. Conforming 4. Convertible

1 - Creative Interest-only loans are a form of creative buyer financing.

Which of the following is a form of commercial bank revenue related to mortgage financing? 1. Demand deposits 2. HELOCs 3. 401ks 4. IRAs

1 - Demand Deposits Commercial banks derive most of their funds for mortgage lending from demand deposits.

Lewis is reviewing his Loan Estimate and notices under "Other Costs" that there are items listed that don't include an amount. What does this mean? 1. Lewis should ask his lender about it. 2. The amount for that item is included in a total at the bottom of the page. 3. The item is likely a mistake, and Lewis should find a different lender. 4. The lender hasn't yet determined the amount to charge for that line item.

1 - Lewis should ask his lender about it. Lewis should ask his lender about any items that aren't clear to him, such as line items without an associated amount.

Which of the following statements best describes a foreclosure by advertisement? 1. Notification of pending auction, public auction, notice of eviction 2. Notification of pending auction, repossession, notice of eviction 3. Petition for legal ownership, opportunity to redeem property, notice of eviction if property is not redeemed 4. Petition to enter, repossession, notice of eviction

1 - Notification of pending auction, public auction, notice of eviction 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.

Which of the following may cause the Loan Estimate to be revised? 1. The buyer decides to get a different kind of loan. 2. The home inspection report finds no major issues. 3. The home is appraised at more than the sales price. 4. The seller replaces the carpeting in the home.

1 - The buyer decides to get a different kind of loan. There are several reasons a Loan Estimate may need to be revised including interest rate change, switch to fixed-rate loan, down payment amount change, and a property appraisal reveals decrease in value.

The three types of finance instruments that can be used when financing a real estate purchase are the note with mortgage, note with deed of trust, and ______. 1. Contract for deed 2. Finance deed 3. Promissory note 4. Security deed

1 - contract for deed The contract for deed is used by a seller who extends credit to a buyer.

Financing for a real estate transaction can use a note with a ______ or a note with a deed of trust. 1. Mortgage 2. Negotiable instrument 3. Promise to repay 4. Title

1 - mortgage The mortgage is a security instrument that describes the security for the note.

A homeowner who's preparing to sell can't transfer the property until an encumbrance is removed. Which of the following is an encumbrance that would delay the property sale? 1. The existing mortgage 2. The landscaping bills 3. The large bush in the front yard that's encroached on the neighboring property 4. The leak in the basement

1 - the existing mortgage The mortgage is a financial encumbrance that must be removed before the title to the property can be transferred.

U.S. Treasure responsibilities

1. Advises the president on financial issues 2. Ensures our country's financial security

Your seller wants to net $100,000 after the 5% commission is paid. Assuming no closing costs, at what price does the home need to sell for the seller to net this amount? 1. $105,163.16 2. $105,263.16 3. $105,363.16 4. $105,463.16

2 - $105,263.16 The seller's percentage of a sale is 100% - 5% commission = 95% (or .95). Take the amount the seller wants to net and divide it by that amount ($100,000 ÷ .95 = $105,263.16). Conversely, for a sales price of $105,263.16: $105,263.16 × .95 = $100,000.

Which of the following is a likely effect when the discount window is closed? 1. Banks are restricted from making loans to consumers. 2. Banks don't have access to additional funds. 3. Banks have access to additional funds through their district reserve bank. 4. Interest rates plummet.

2 - Banks don't have access to additional funds. When the discount window is closed, banks cannot obtain additional funds from their reserve bank to make more loans to consumers.

Lucy is a mortgage banker. Her business is regulated by ______. 1. California Finance Lenders Law 2. California Mortgage Banker Regulation Act 3. California Residential Mortgage Lending Act 4. Real estate law

2 - California Residential Mortgage Lending Act Mortgage bankers are regulated by the California Residential Mortgage Lending Act.

Which of the following is NOT part of the Other Considerations section of the Loan Estimate? 1. Allowance for loan assumption to another person 2. Comparisons 3. Homeowner's insurance requirement 4. Late fee charges

2 - Comparisons The Comparisons section allows the borrower to make comparisons between loans with different interest rates and isn't related to the proposed loan estimate.

Which of the following describes amortized debt? 1. Debt that increases over time, but allows early payments to remain low 2. Debt that's paid off by making periodic payments 3. Debt with an amortized interest feature 4. Debt with an amortized principal feature

2 - Debt that's paid off by making periodic payments These periodic payments consist of both principal and interest.

The ______ clause protects the borrower's assets that aren't part of the voluntary lien from a deficiency judgment in case of foreclosure. 1. Cross-default 2. Exculpatory 3. Non-recourse 4. Subordination

2 - Exculpatory If a lender uses a judicial foreclosure, it may also ask for a deficiency judgment, unless the exculpatory clause is present in the security instrument. An exculpatory clause protects the borrower's other assets in case of foreclosure. In a judicial foreclosure, the lender can choose to ask for a deficiency judgment, which allows the lender to include a request for money over and above the proceeds from the foreclosure sale. The exculpatory clause protects the borrower from that possibility.

Which banking-related entity shares similarities with the purpose and function of the NCUA? 1. Department of Treasury 2. FDIC 3. Federal Reserve 4. IRS

2 - 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.

Which of these HUD programs is primarily responsible for providing mortgage insurance on home loans? 1. Community Development Block Grant 2. FHA 3. Ginnie Mae 4. Office of Fair Housing and Equal Opportunity

2 - FHA The FHA provides mortgage insurance for home loans.

Farmer Mac is supervised by which entity? 1. Agri-Industry Credit Market 2. Farm Credit Services Administration 3. Federal Agricultural Credit Capital Program 4. Federal Farm Credit Banks Funding Corporation

2 - Farm Credit Services Administration The Farm Credit Services Administration supervises Farmer Mac.

The ______ is a government-sponsored enterprise that works through a cooperative system to provide agricultural and rural loans. 1. Agricultural Financial Cooperative System 2. Farm Credit System 3. Federal Agricultural Mortgage Corporation 4. U.S. Department of Agriculture Rural Development Program

2 - Farm Credit System The Farm Credit System makes loans available to farmers and rural residents through a system of financial cooperatives.

HUD's strategic plan outlines the ______ that support its mission. 1. 12 departments 2. Four goals 3. Six regional citizen-led initiatives 4. Three data collection systems

2 - Four Goals HUD's strategic plan outlines four goals that it uses to support its mission.

Jessica hasn't paid the roofing company that replaced the roof on her home. The contractor placed a mechanic's lien on her property, which is a(n) ______ lien. 1. Involuntary and general 2. Involuntary and specific 3. Voluntary and general 4. Voluntary and specific

2 - Involuntary and specific A mechanic's lien is involuntary, because Jessica did not agree to it, and specific, because it is attached to one property rather than everything that Jessica owns.

In California, how has state law modified the way the deed of trust works? 1. If the lender forecloses, the buyer is given a statutory right of redemption, regardless of the foreclosure process chosen. 2. It creates a lien on the property, and the borrower, not the trustee, holds legal title. 3. Legal title to the property stays with the seller until the borrower has 50% equity in the property. 4. The deed of trust may not include a power of sale clause.

2 - It creates a lien on the property, and the borrower, not the trustee, holds legal title. California is a lien theory state, and state law has made the mortgage and the deed of trust functional equivalents.

Both the Housing and Economic Recovery Act and the American Recovery and Reinvestment Act funded a program called the ______ program, which provided emergency assistance grants to states to purchase and redevelop foreclosed and abandoned homes and residential properties. 1. Community Reinvestment 2. Neighborhood Stabilization 3. Rebuild Our Homes 4. SAFE Neighborhood

2 - Neighborhood Stabilization The Neighborhood Stabilization Program was funded through recovery legislation.

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.

Chanel is buying a brand new home with a VA loan. She's obtained a certificate of reasonable value. For how long is that CRV valid? 1. One month 2. One year 3. Six months 4. Three months

2 - One year A CRV has a shelf life of six months for resale properties and 12 months for new construction.

On the Loan Estimate under "Loan Costs," the points, application fee, and underwriting fee are considered ______. 1. Closing 2. Origination charges 3. Service charges 4. Transaction charges

2 - Origination charges The origination charge is the fee the lender charges for making the loan and includes points, the application fee, and the underwriting fee.

Rules and regulations that protect consumers of financial services are now the responsibility of ______, which was created by the Dodd-Frank Act. 1. HUD 2. The CFPB 3. The ECOA 4. The U.S. Department of Commerce

2 - The CFPB The Dodd-Frank Act created the CFPB to consolidate regulatory responsibility for consumer financial protection.

Which statement correctly describes a contract for deed? 1. Contract for deed is another name for a deed of trust. 2. The contract for deed is usually used in a seller-financed transaction. 3. The contract for deed is usually used when a commercial lender is securing a mortgage loan. 4. The parties to a contract for deed are the beneficiary and the vendee.

2 - The contract for deed is usually used in a seller-financed transaction. The contract for deed includes the promise to pay and is usually used in a seller-financed transaction.

With an interest-only loan, what happens after the specific period of time that interest-only payments are made is over? 1. The debt is paid. 2. The full principal of the loan is due. 3. The loan is converted. 4. The loan is sold to another lender.

2 - The full principal of the loan is due With an interest-only payment, the periodic payments of interest only last for a few years. When the loan term is over, the borrower has to repay the entire principal. This is known as a lump sum payment. This lump sum payment is usually accomplished through refinancing the loan.

Which of the following describes the discount rate? 1. The rate at which a bank can obtain a loan from another bank 2. The rate at which a bank can obtain a loan from its Federal Reserve bank when using commercial paper as collateral 3. The rate at which a bank or lender may loan money to its most creditworthy borrowers 4. The rate at which borrowers can refinance their mortgages

2 - The rate at which a bank can obtain a loan from its Federal Reserve bank when using commercial paper as collateral When banks obtain a loan from their district reserve bank, they can do so at the discount rate if they use commercial paper as collateral for the loan.

Who's the mortgagee in a mortgage? 1. The borrower 2. The lender 3. The trustee 4. The beneficiary

2 - the lender The lender is the mortgagee, and the borrower is the mortgagor. This is because the borrower establishes the mortgage as a security instrument on the lender's behalf.

Glenn is purchasing a home for $400,000. The property appraised at $415,000 and Glenn is financing $300,000. What's the loan-to-value ratio? 1. 72% 2. 75% 3. 82% 4. 96%

2 -75% Lenders use the lesser of the sales price or appraised value. This results in an LTV ratio of 75% ($300,000 ÷ $400,000).

Which of these is actually an amendment to the Truth in Lending Act (TILA)? 1. Consumer Mortgage Protection Act 2. Home Ownership and Equity Protection Act 3. Honest Lending Education Act 4. Real Estate Settlement Procedures Act

2- Home Ownership and Equity Protection Act The Home Ownership and Equity Protection Act (HOEPA) was updated in early 2014 and is an amendment to TILA.

Farm and Country Bank provides credit to the farmers, ranchers, and other rural residents of its community. What government program helps the bank maintain enough capital to fund those loans? 1. Agri-Industry Credit Market 2. Farm Credit System 3. Farmer Mac 4. Federal Agricultural Credit Capital Program

3 - Farmer Mac Farmer Mac makes more capital available to financial institutions that make agricultural loans by creating a secondary market for ag loans.

Which of these HUD programs allows mortgage lenders to obtain a better price for their mortgage loans in the secondary mortgage market? 1. Community Development Block Grant 2. FHA 3. Ginnie Mae 4. Housing Choice Vouchers

3 - Ginnie Mae A Ginnie Mae guarantee makes it easier for mortgage lenders to obtain a better price for their mortgage loans in the secondary mortgage market.

Sam has a mortgage that has a static interest rate, but monthly payments that increase over time according to a set schedule. What type of mortgage does Sam have? 1. Adjustable rate 2. Amortized 3. Growing equity 4. Straight

3 - Growing equity Sam has a growing equity mortgage. His interest remains the same, but his monthly payments increase over time according to a set schedule.

Lee manages a rental property for her client, and is accepting applications for tenants. Applicants Damian and Maria are young, newly married, and have a baby on the way. They can't afford a typical rent on a clean, well-maintained two-bedroom home such as the one that Lee has available; but they are recipients of the ______, which Lee knows the property would also qualify for. Lee is glad to accept them as tenants. 1. Family Self-Sufficiency program 2. Good Neighbor Next Door program 3. Housing Choice Voucher program 4. Project-Based Voucher program

3 - Housing Choice Voucher Program HUD's Housing Choice Voucher program helps low-income tenants with rental assistance that is paid directly to the landlord.

Lenny the lender is reviewing mortgage applications. Applicant Catherine has a good credit history, but the property she wants to buy is in an area of town where home prices have been headed down, and neighborhoods are starting to look grim. Lenny denies Catherine's loan application. What California legislation makes Lenny's decision illegal? 1. Credit Services Fair Practices Act 2. Financial Fairness Act 3. Housing Financial Discrimination Act (Holden Act) 4. Unruh Civil Rights Act

3 - Housing Financial Discrimination Act (Holden Act) The Holden Act of 1977 prohibits redlining, which makes Lenny's decision to deny credit based on the location of the property illegal.

The ______ Act was legislation aimed primarily at addressing the effects of the subprime mortgage crisis. 1. Home Financing Recovery 2. Homeownership Prosperity and Economic Recovery 3. Housing and Economic Recovery 4. Housing Stabilization

3 - Housing and Economic Recovery The Housing and Economic Recovery Act of 2008 was enacted as a response to the subprime mortgage crisis.

What type of provision is standard with either the mortgage or the deed of trust, but is included in the promissory note rather than the security instrument? 1. Acceleration 2. Alienation 3. Late charge 4. Power of sale

3 - Late Charge Late charges that will apply if the borrower doesn't pay on time are a standard part of the promissory note.

Because of the Secure and Fair Enforcement for Mortgage Licensing Act, borrowers can determine if mortgage loan originator is ______. 1. Affiliated with other lenders 2. Federally funded 3. Licensed and registered 4. Locally owned and operated

3 - Licensed and registered SAFE provides unbiased information about MLOs to allow borrowers to make informed decisions about lending professionals.

Under the "Projected Payments" section of the Loan Estimate, the consumer can view what is included in the monthly payment. Which of the following may be part of the total payment other than the principal and interest? 1. Closing costs 2. Loan term 3. Mortgage insurance 4. Prepayment penalties

3 - Mortgage Insurance The "Projected Payments" section shows the amounts that will comprise each monthly payment, including mortgage insurance and amounts that will be placed in an escrow account.

When using an amortization chart, you use the interest rate and the loan term to arrive at a factor, such as 5.17808. Now what do you do? 1. Divide the loan amount by the factor. 2. Divide the sales price by the factor. 3. Multiply the number of thousands in the loan by the factor. 4. Multiply the number of thousands in the sales price.

3 - Multiply the number of thousands in the loan by the factor. The factor found where the term and interest rate intersect is multiplied by the number of thousands in the loan.

Which is one of the benefits of the USDA loan program? 1. Farmers don't pay interest rates. 2. It provides rural home financing for low-income borrowers. 3. No down payment is required. 4. There's no limit to the loan amount.

3 - No down payment is required. The USDA loan program doesn't require a down payment for the loan.

The buying and selling of government securities as a way to influence the money supply and balance economic growth describes ______. 1. Discount window 2. Federal funds rate 3. Open-market operations 4. Reserve requirements

3 - Open-market operations Open-market operations involve the trading of government securities.

Information about how the lender will handle assumptions and late payments is included on ______ of the Loan Estimate. 1. Page four 2. Page one 3. Page three 4. Page two

3 - Page Three Page three of the Loan Estimate includes the "Other Considerations" section, where consumers will find information about assumptions and late payments.

What's the name of the clause included in a finance instrument that requires the lender to release a portion of the property from the lien when a part of the debt has been paid? 1. Exculpatory 2. Non-recourse 3. Partial release 4. Subordination

3 - Partial release This is a partial release clause that is typically used by developers who need to sell lots in a new subdivision.

One of these actions is considered an MLO activity. Which one? 1. Explaining the steps the consumer needs to take to obtain a loan offer 2. Informing a consumer of the loan rates that are publicly available 3. Presenting a revised loan offer to the consumer after they requested a lower rate 4. Scheduling the loan closing

3 - Presenting a revised loan offer to the consumer after they requested a lower rate Presenting a loan offer, whether the initial offer or a revised offer, is an MLO activity.

Assuming a CMO uses the sequential pay structure, how is principal passed through from borrowers paid to investors? 1. All tranches receive principal payments. 2. Principal is first paid to investors holding the greatest number of shares. 3. Principal payments are only made to the first tranche until it retires, then to the second tranche, and so on. 4. Principal payments are only made to the last tranche until it retires, then to the second-to-last tranche, and so on.

3 - Principal payments are only made to the first tranche until it retires, then to the second tranche, and so on. Principal payments from the underlying collateral are paid to the first tranche only, until it retires. After the first tranche retires, principal payments are paid to the second tranche until it retires, and so on.

When HUD pursues actions that are designed to restore the financial health of the Federal Housing Administration, which of its goals is it supporting? 1. Build strong, resilient, and inclusive communities. 2. Meet the need for quality affordable rental homes. 3. Strengthen the housing market to bolster the economy and protect consumers. 4. Use housing as a platform for improving quality of life.

3 - Strengthen the housing market to bolster the economy and protect consumers. These are actions designed to support HUD's goal of strengthening the housing market in order to bolster the economy.

Which term describes the legal regulation of a property to the detriment of the owner, and must include reimbursement for the property owner? 1. Condemnation 2. Eminent domain 3. Taking 4. Reliction

3 - Taking Taking is when an action by the government, such as down zoning, harms property value, resulting in some form of compensation to the property owner.

Which of the following features is shared by the mortgage and the deed of trust? 1. In the case of foreclosure, the borrower has a statutory right of redemption. 2. Non-judicial foreclosure is standard. 3. The borrower is required to maintain the property and pay property taxes and insurance. 4. There are three parties involved: a lender, a borrower, and a party who holds title to the property.

3 - The borrower is required to maintain the property and pay property taxes and insurance. Regardless of the security instrument used, it's the borrower's responsibility to maintain the property during the term of the loan.

What is the most likely effect when the Fed buys securities on the open market? 1. Banks will have less money to lend. 2. Interest rates will increase. 3. The economy may grow due to an increased money supply. 4. The economy may slow down due to a smaller money supply.

3 - The economy may grow due to an increased money supply. When the Fed buys securities, it's putting money into the market, which increases the supply of money in the market and potentially causes the economy to grow.

When a borrower has paid off the loan, how is the release handled if the security instrument is a deed of trust? 1. The lender executes and records a satisfaction of mortgage and returns the note to the borrower. 2. The lender returns the note and deed of trust documents to the borrower. 3. The trustee executes and records a deed of reconveyance and the lender returns the note to the borrower. 4. The trustee files for a release of lien and the lender returns the note to the borrower.

3 - The trustee executes and records a deed of reconveyance and the lender returns the note to the borrower. When a borrower has paid the loan in full, it is the trustee's responsibility to execute and record a deed of reconveyance.

Direct farm ownership loans from the ______ may be used to buy farmland, construct and repair buildings, and make farm improvements. 1. American Agricultural Lending Service 2. Farm Bureau Credit System 3. USDA Farm Service Agency 4. USDA Rural Development Program

3 - USDA Farm Service Agency The USDA Farm Service Agency offers direct farm ownership loans and guaranteed loans.

The ______ can offer direct loans to farmers and ranchers. The loans are funded by congressional appropriation. 1. American Agricultural Lending Service 2. Farm Credit System 3. USDA Farm Service Agency 4. USDA Rural Development Program

3 -USDA Farm Service Agency Direct loans are available to farmers and ranchers through the USDA Farm Service Agency, funded by congressional appropriation.

The Farm Credit System is ______. 1. A federal agency 2. A federal bank 3. A government-sponsored enterprise 4. Supported by federal funds

3- A government-sponsored enterprise The Farm Credit System is a government-sponsored enterprise.

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.

Three months ago, Jamie started performing MLO activities, but she has yet to obtain an MLO endorsement. How much will she be penalized? 1. $10,000 2. $100 per day for each day so far 3. $50 per day for each day so far 4. $50 per day for the first 30 days of the violation, $100 per day starting on the 31st day

4 - $50 per day for the first 30 days of the violation, $100 per day starting on the 31st day Penalties for violations are $50 per day for the first 30 days, after which it increases to $100 per day, up to a maximum total penalty of $10,000.

Your clients, the Nguyens, have signed a contract for deed to purchase a property. What rights do the Nguyens receive? 1. Equitable and justifiable title 2. Equitable and legal title 3. Equitable and legal title and right of possession 4. Equitable title and possession of the property

4 - Equitable title and possession of the property When a contract for the sale of land is executed, equitable title passes to the buyer. When the conditions on the sale contract have been met, legal title passes to the buyer with the deed.

Which entity provides disclosures and public information about the financial condition of FCS? 1. Farm Credit Administration 2. Farm Credit Services of America 3. Farm Credit System Insurance Corporation 4. Federal Farm Credit Banks Funding Corporation

4 - Federal Farm Credit Banks Funding Corporation Federal Farm Credit Banks Funding Corporation provides public information and disclosures for FCS.

Natalie and Sam are reviewing the Loan Estimate form to ensure the date, their names, the property address, and sales price is listed accurately. Additionally, the information provided about their loan term, purpose, product, type, and rate lock should ______. 1. Be blank 2. Include a checkbox for Natalie and Sam to indicate acceptance of the loan terms 3. Include options for Natalie and Sam to select from 4. Match what the lender discussed with both of them

4 - Match what the lender discussed with both of them The information in the header of page one of the Loan Estimate should match what the lender discussed with the consumer.

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.

Babs is buying Kirk's property. Babs needs help with the down payment, and Kirk offers to supplement Babs' bank loan with a second loan, allowing her to meet her lender's down payment requirements. Which finance instrument(s) may be used for the agreement between Babs and Kirk? 1. Contract for deed 2. Contract for deed or deed of trust 3. 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.

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.

Which HUD program is responsible for protecting individuals against discrimination in housing based membership in a protected class? 1. Community Development Block Grant 2. FHA 3. Housing Anti-Discrimination Department 4. Office of Fair Housing and Equal Opportunity

4 - Office of Fair Housing and Equal Opportunity The mission of HUD's Office of Fair Housing and Equal Opportunity is to eliminate housing discrimination, promote economic opportunity, and achieve diverse, inclusive communities.

HUD's ______ has a goal of increasing the availability of safe and affordable housing to Native American families. 1. Housing for Native Americans Program 2. Native American Housing Choice Program 3. Native American Housing Program 4. Office of Native American Programs

4 - Office of Native American Programs The Office of Native American Programs administers housing and community development programs that benefit American Indian and Alaska Native tribal governments, tribal members, the Department of Hawaiian Home Lands, Native Hawaiians, and other Native American organizations

One difference between a judicial foreclosure and a non-judicial foreclosure is that with a non- judicial foreclosure, ______. 1. If there are proceeds remaining after the sale, they go to the state 2. There is no equitable right of redemption 3. There is no foreclosure sale 4. There is no statutory right of redemption

4 - There is no statutory right of redemption A statutory right of redemption is one that occurs after the sale. This occurs only in judicial foreclosures, and isn't allowed in every state.

How soon after the Notice of Default is filed can a trustee's sale occur? 1. One month 2. One month and 20 days 3. Three months 4. Three months and 20 days

4 - Three months and 20 days The sale may take place three months and 20 days following the recording of the Notice of Default.

The ______ requires specific disclosures and was enacted in 1968 as part of the Consumer Credit Protection Act. 1. American Recovery and Reinvestment Act 2. Federal Equal Credit Opportunity Act 3. Real Estate Settlement Procedures Act 4. Truth in Lending Act

4 - Truth in Lending Act The Truth in Lending Act (TILA) was enacted in 1968 and requires lenders to disclose financing terms to consumers in a manner that's not misleading or deceitful.

Which government program assists rural Americans by offering loans, grants, and loan guarantees for housing? 1. Farm Credit Administration 2. Farm Credit System 3. Farmer Mac 4. USDA Rural Development

4 - USDA Rural Development The USDA Rural Development Program assists rural Americans by offering loans, grants, and loan guarantees for housing (as well as economic development, health care, first responder services and equipment, and water, electric, and communications infrastructure).

When HUD pursues actions that are designed to end homelessness and promote the health and housing stability of vulnerable populations, which of its goals is it supporting? 1. Build strong, resilient, and inclusive communities. 2. Meet the need for quality affordable rental homes. 3. Strengthen the housing market to bolster the economy and protect consumers. 4. Use housing as a platform for improving quality of life.

4 - Use housing as a platform for improving quality of life. These are actions designed to support HUD's goal to use housing as a platform for improving quality of life.

The Mortgage Disclosure Improvement Act gives applicants a three-day ______ to review and approve the Loan Estimate and Closing Disclosure form. 1. Reapplication period without penalty 2. Right of cancellation 3. Right of first refusal 4. Waiting period

4 - Waiting period MDIA allows borrowers the time to approve the terms provided by the lender. The loan can't be closed or signed off before the waiting period is complete.

The American Recovery and Reinvestment Act provided mortgage assistance to ______. 1. Homeless persons 2. Low-income and rural neighborhoods 3. Subprime borrowers 4. Wounded servicemen and servicewomen

4 - Wounded servicemen and servicewomen Mortgage assistance for wounded servicemen and servicewomen was part of the ARRA.

Is a homeowner with an FHA loan allowed to obtain a second mortgage? 1. No, this is not allowed 2. Yes, but only if both mortgages are FHA insured 3. Yes, if the loan limits for FHA-insured loans have increased since the first mortgage was originated 4. Yes, if the total of the first and second mortgages is within the maximum loan to value ratio

4 - Yes, if the total of the first and second mortgages is within the maximum loan to value ratio Second mortgages are allowed under certain conditions, one of which is that the total of the first and second mortgages is within the maximum LTV.