Real Estate Finance 2

The VA loan program offers a basic entitlement amount of ______.

$36,000

A homeowner's monthly mortgage payment is $580.23. If the taxes are $83.33 and the insurance is $41.66, how much of the monthly payment is principal plus interest?

$455.24

Which percentage reflects the top debt-to-income ratio limit for qualified mortgages?

43%

For conventional loans in which the loan-to-value ratio is in excess of a certain percentage, lenders generally require private mortgage insurance. What's this percentage?

80%

By stabilizing and improving the mortgage market, the FHA helped to build ______.

A global market for mortgage-backed securities

Jose is an investor who found and closed on an investment property, then decided to sell a property other than the one originally marked for the exchange. What is this an example of?

A reverse tax-deferred exchange

Which property is Bertrand appraising if he's using the income approach?

A three-unit rental property

Suzy has lost her job and wasn't able to make last month's mortgage payment. How is her lender most likely to help Suzy stay in her home?

Agreeing to modify her loan

An example where a lender might place a property in default due to poor property management includes ______.

Allowing moisture intrusion

Which act, which was the first act passed to address the subprime mortgage crisis and was also known as "the stimulus package," sought to create new jobs and save existing ones, spur economic activity and invest in long-term growth, and foster new accountability and transparency in government spending?

American Recovery and Reinvestment Act of 2009 (ARRA)

Regional State Bank is a member bank of the Federal Home Loan Bank. In exchange for mortgage collateral, Regional State Bank received a loan from the FHLB so it can make additional loans to consumers. What is the loan called that Regional State Bank received?

An advance

In a deed of trust, who is the trustor?

Borrower

Robert is a rancher. He was told about the USDA Farm Service Agency offerings. What can he use an approved loan for?

Building a new hay barn

Which party pays for the appraisal in a financed real estate transaction?

Buyer

During which phase of the real estate cycle does a real estate professional have the most direct impact?

Buying/selling

How does Farmer Mac support agricultural producers?

By creating a secondary market for agricultural loans, making it possible for agricultural lenders to fund more loans

When borrowers started missing mortgage payments, how did this affect collateralized mortgage obligations?

CMOs weren't collecting the expected principal and interest payments.

The planned transfer of money from your business checking account to your personal checking account to your savings accounts is called ______.

Cash flow

Victor is a buyer reviewing the Closing Disclosure he received from his lender. On the last page of the form, he sees a signature line. By signing the form, Victor has ______.

Confirmed receipt of the Closing Disclosure

Commercial banks offer interim financing in the form of ______ loans.

Construction

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 ______.

Contract for deed

Which of the following actions did the Federal Reserve take in response to the 2007 financial crisis?

Decreased rates

Rather than be foreclosed on, Jarod turned his deed over to his bank. This is called a ______.

Deed in lieu

Which of the following best describes a seller's market?

Demand is greater than supply.

Which type of real estate investment trust is designed to deal exclusively in equities?

Equity REIT

Which banking-related entity shares similarities with the purpose and function of the NCUA?

FDIC

Ned doesn't want the lenders to have his personal information, so he's applying for a home loan under an assumed name. Which type of mortgage fraud scheme is this an example of?

False identity

The Homeownership Voucher Assistance program is available to ______ to help pay monthly homeownership expenses.

First-time homeowners

Which of these transactions must comply with Appraiser Independence Requirements?

Four-unit residence being purchased with a conventional loan

Boris is an appraiser working for the Smith family. They've hired him to perform an appraisal on their six-bedroom house. What two types of data will Boris gather?

General and specific

What two types of data does an appraiser gather?

General and specific

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

Have an attorney review the contract.

A loan made based on the amount of equity available in an person's home or property is called a ______.

Home equity loan

Historically, what do property values tend to do over short periods of time?

Increase and decrease

What is the general economic impact of mortgage loan payments?

Increase in economic growth

Which of the following could be different from the amount on the initial Loan Estimate and can impact the monthly payment?

Interest rate

Which of the following best describes the function of a deficiency judgment in the case of a foreclosure?

It allows the lender to recover losses incurred in the foreclosure process.

Which of these is an advantage to maintaining business and personal accounts separately?

It allows you to track business expenses for tax purposes.

Which professionals are most utilized by the buyer prior to closing?

Lenders, title companies, appraisers, and home inspectors

Which document provides an estimate of the costs a buyer is likely to pay at settlement before the closing?

Loan Estimate

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 _______.

Loan estimate and final amounts side-by-side

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?

Mortgage insurance

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?

Mortgage or deed of trust

What piece of information would an appraiser NOT find in the Subject and Contract sections of the report?

Neighborhood characteristics

The construction of what type of structures is one of the largest indicators on the country's economy?

New homes

A mortgage with a clause that prohibits the lender from suing the borrower for unpaid amounts if foreclosure occurs is called a ______ mortgage.

Non-recourse

Where does a veteran have to live to qualify for the Native American Direct Loan?

On federal trust land

When a buyer uses an FHA loan, the down payment amount is calculated ______.

On the lesser of the sales price or the appraised value of the property

When does PMI end?

Once the loan-to-value ratio reaches 78% of the original value.

What's the definition of a qualified mortgage?

One that meets stringent CFPB guidelines

______ lending was a contributing factor to the housing collapse in the mid-2000s.

Predatory

The document that describes the loan amount and the terms for repaying and is attached to a security instrument is called the ______.

Promissory note

A property has just been foreclosed on. Which of the following describes the rules regarding lien priority?

Property tax liens take priority, with all others following a "first in time" rule.

What factors directly affect an adjustable rate mortgage?

Rate, index, and margin

When an investment property is sold, three taxes that apply are transfer tax, capital gains and ______.

Recaptured depreciation

When using a financial system, what activities should you complete on a weekly basis?

Record purchases and file receipts

The Community Reinvestment Act requires lenders to invest in development and ______ efforts that will enable low- and moderate-income individuals and families to afford a home.

Rehabilitation

Which of the following is a significant drawback to an FHA loan as compared to conventional financing?

Required mortgage insurance must remain in place for the life of the loan

Contributions for this type of IRA aren't tax-deferred.

Roth

Elijah has identified his personal values, estimated his income, and analyzed his current expenses. With this information, he's ready to ______.

Set his financial goals

In addition to lending money to member banks, FHLBanks also do which of the following?

Set rules and regulations that member banks must follow

When a homeowner has repairs made to a home using an FHA 203(k) loan, HUD requires ______.

That the work meet FHA's basic energy efficiency and structural standards

Lender Ron is running Sally's credit report. In which section of the credit report might Ron expect to find information regarding her loan that was paid off on time?

The Accounts in Good Standing section

Margot is hoping to buy the Bransons' farm. However, lender Susan informs her that a cloud has been discovered on the Bransons' title. Who is usually responsible for clearing the cloud?

The Bransons

Which agency sets the guidelines for qualified mortgages?

The Consumer Financial Protection Bureau

For tax years 2018 to 2025, a borrower can write off the interest on a home equity loan only if ______.

The funds are used to buy, build, or improve the home that secures the loan

Carla and Sven have a previous foreclosure, but now they are a few years away from that. They make good money with their jobs, and have about $30,000 available to use for a down payment and closing costs. Why might they consider an FHA 203(b) loan, even if they have sufficient down payment for a conventional loan?

The lender can consider compensating factors, even if their credit history isn't great.

What do sellers who agree to carry part of a loan for a buyer need to understand?

The risks involved

Margot reviewed page three of her Closing Disclosure to see the amounts she'll pay and receive, and the total cash amount. She located this information under the "Summaries of Transaction" in the "Seller's Transaction" table, which is completed by ______.

The settlement agent

Which of the following is a likely result if Federal Home Loan Banks did not exist?

There'd be fewer funds available for lending in the community.

Mutual savings banks prefer to keep their lending activities in their immediate geographic area. Why?

They prefer to personally monitor the loans they issue.

When appraiser Archie uses the sales comparison approach, at least how many comparables may be included in the URAR?

Three

Kendra has applied for a mortgage from Best Bank. When is Best Bank required to provide Kendra with a Loan Estimate?

Three business days

Which of the following best describes collateral?

Using a house as security on a mortgage

The FHA Section 203(h) program assists ______ with an insured mortgage.

Victims of a presidentially declared disaster

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

Voluntary conveyance of deed

In what situation would the U.S. Treasury be most willing to sell securities?

When the government's bills exceed income collected

Page four of the Closing Disclosure lists specific disclosures about the loan, such as the penalty for late payments, whether a demand feature applies, whether the loan can be assumed, and ______.

Whether partial payments are accepted

A Treasury bond is a Treasury security ______.

With a maturity term of 30 years

A Treasury bill is a Treasury security ______.

With a maturity term of one year or less

Sissy is a veteran who used her full entitlement to purchase a home. The loan has since been paid off, and Sissy still owns the home. Now, she'd like to buy a second home using another VA loan. Is Sissy allowed to do this?

Yes, Sissy can apply to have her entitlement restored and can buy a second house using a VA loan.

The minimum down payment for an FHA 203(b) loan is ______.

3.5%

Who needs to obtain a mortgage loan originator endorsement and register with the Nationwide Mortgage Licensing System and Registry?

Anyone who acts as a mortgage loan originator

Which of the following actions toward an appraiser would be considered improper?

Asking an appraiser to remove information about adverse property conditions from an appraisal report

Which of the following statements is true about buydowns with a VA loan?

They're allowed only on fixed rate loans.

Buyer Sally is hoping to buy the Sandersons' condo. During a title search, a cloud on the title is discovered. What might happen to the transaction?

It will come to a halt until the cloud is cleared.

Fairwell Lending must seek the court's permission to foreclose on a property used as collateral for a loan that is in default. What type of foreclosure process is likely being used?

Judicial foreclosure

In which type of partnership does each mortgagee receive a share of the mortgage payment?

Partnership among mortgagees

In which type of partnership do participants have shared responsibility for a single mortgage?

Partnership between mortgagors

What type of partnership is a cooperative?

Partnership between mortgagors

______ taxation means that the business income passes through to the business owner's individual tax return rather than being taxed as a separate entity.

Pass-through

The two most common insolvency methods put in place when a bank fails are the purchase and assumption method and the ______ method.

Payout

Which of the following best describes a blanket lien?

It gives lenders the ability to recover losses due to a foreclosure sale from any current or future property the borrower owns.

Which of the following is a true statement about an IRA?

Contributions to a SEP IRA are pre-tax contributions.

Andrea's lender has notified her of its intent to foreclose. Her loan is secured with a deed of trust. What rights does she have to redeem her property?

Andrea can cure the default and reinstate the loan.

You may see a ______ named as a land contract, real estate contract, contract for sale, agreement for deed, or as articles of agreement.

Contract for deed

When a buyer obtains an FHA loan, the seller may ______.

Contribute up to 6% of the sales price (or appraisal, if that's lower) to the buyer's closing costs

What makes the HECM program safer for borrowers than a traditional reverse mortgage?

If more equity is paid out than remains, the homeowner doesn't have to make up the difference.

______ is the term that the VA uses to describe the amount of net income remaining after deduction of debts, obligations, such as utility and phone bills, and monthly shelter expenses.

Residual income

The house payment Tim and Vickie are considering would give them a housing ratio of 34% and a total debt obligation of 40%. Their credit score is 640. What do they need to change to meet the underwriting requirements for an FHA loan?

They should look for a home in a lower price range.