Real Estate Finance and Loan Brokering 8Th Edition

A loan can often be "seasoned" in: A. 6-12 months B. 12-18 months C. 2 years D. 5 years

A. 6-12 months

A scheme where the property and borrower and non-existent is referred to as a(n): A. Air loan fraud scheme B. Houdini loan scheme C. Ninja loan scheme D. Shell game loan scheme

A. Air loan fraud scheme

All licensed/registered MLOs: A. Are issued a unique identifier number B. Must be bonded C. Must carry liability insurance D. All of the above

A. Are issued a unique idenifier number

Discount points are paid: A. At the time of the loan origination B. At the closing C. During the loan interview process D. When escrow opens

A. At the time of the loan origination

An investment is said to be "liquid" when it: A. Can be instantly sold B. Has a high yield C. Is guaranteed by the government D. Is difficult to sell

A. Can be instantly sold

The Federal Open Market Committee: A. Carries out open market operations B. Computes the Consumer Price Index C. Determines all farms subsidies in the U.S. D. All of the above

A. Carries out open market operations

A subordination clause is most often used for: A. Construction loans B. Refinancing loans C. Loans for open land D. Loans for public buildings

A. Construction loans

When the government is forced to borrow money, making less money available for construction and home loans, it is called: A. Deficit spending B. Government spending C. Predatory loan practices D. Disintermediation

A. Deficit spending

The main purpose of the Home Mortgage Disclosure Act is to: A. Expose incidents of redlining B. Stabilize real estate loan interest rates C. Stabilize real estate prices D. Quantify construction trends

A. Expose incidents of redlining

The act that establishes uniform standards for credit reporting and strengthens consumer protection against identity theft is knows as the: A. Fair and Accurate Credit Transaction Act (FACTA) B. Home Mortgage Disclosure Act (HMDA) C. Consumer Credit Protection Act (CCPA) D. FTC red Flags Rule (FRFR

A. Fair and Accurate Credit Transaction Act (FACTA)

FAMC is also referred to as: a. Farmer Mac. b. Fannie Mac. c. Fannie Mae. d. FICO Mac.

A. Farmer Mac

Private mortgage insurance protects the: A. Lender B. Borrower C. Seller D. None of the above

A. Lender

A "due-on-sale" clause in a loan allows the: A. Lender to declare the entire loan balance due immediately upon transfer of title: B. Lender to declare foreclosure on a property C. Lender to negotiate new terms on a loan D. Lender to declare a trustee's sale

A. Lender to declare the entire loan balance due immediately upon transfer of title

Private, non insured investment accounts are called: A. Money market funds B. Certificates of deposit C. Mutual funds D. Money portfolios

A. Money market funds

In a foreclosure, a judge's order is called an: A. Order of execution B. Order of disposition C. Order of redemption D. None of the above

A. Order of execution

Mortgage bankers/mortgage companies: A. Originate, service, and sell loans B. Act only as "go-between" C. Are part of the secondary market only D. None of the above

A. Originate, service, and sell loans

A loss of savings deposits to higher yielding competitive investments is referred to as: A. Deficit savings B. Disintermediation C. Pass-through deposits D. Mediation investing

B. Disintermediation

Lending in the absence of discrimination based on race, sex, color, religion, national ancestry, marital status, or handicap is known as: A. Politically correct lending B. Fair lending C. Safe lending D. Equal rights lending

B. Fair lending

Negotiable instruments are promissory hotels that are: A. Non-negotiable B. Freely transferable C. Easily recordable D. Difficult to transfer

B. Feels transferable

The first step in obtaining a real estate loan is to: A. Find a real estate salesperson to represent you B. Fill out the loan application C. Have $10,000 in a saving account D. Obtain a credit report

B. Fill out the loan application

When prices begin to fall and production tapers off, the period is called a: A. Low economy B. Seller's market C. Buyer's market D. Balanced market

C. Buyer's market

A borrower's assets include all of the following, except: A. Automobiles B. Stocks C. Child support payments D. Savings accounts

C. Child support payments

Banks who supply capital for business ventures and construction activities on a short-term basis are called: A. Savings and loans B. Credit unions C. Commercial banks D. None of the above

C. Commercial banks

Alternative financing programs are popular: A. During times of low interest rates B. With younger buyers C. During times of high interest rates D. With older buyers

C. During times of high interest rates

The role of the Federal National Mortgage Association (FNMA-"Fannie Mae") was further expanded in 1970 with the passage of the: A. Federal National Mortgage Act B. Urban Development Act C. Emergency Home Finance Act D. Home Entitlement Act

C. Emergency Home Finance Act

Discrimination in the loan process is prohibited by the: A. Lender Ethics Act B. Federal Consumer Lending Commission C. Equal Credit Opportunity Act (ECOA) D. All of the above

C. Equal Credit Opportunity Act (ECOA)

The FHFA refers to the: A. Federal Harvest and Farm Agency B. Federal Housing Freedom Act C. Federal Housing Finance Agency D. Farm Housing Financing Agency

C. Federal Housing Finance Agency

Another term used to describe private mortgage insurance is: A. Primary monthly installment B. Property maintenance insurance C. Mortgage insurance premium D. Private monthly installment

C. Mortgage insurance premium

How many days prior to consummation can a revised Loan Estimate generally be provided to the borrower? A. No later than 1 day prior to consummation B. No later than 3 days prior to consummation C. No later than 7 days prior to consummation D. No later than 1 day after consummation

C. No later than 7 days riot to consummation

Borrowers seeking conventional loans with a larger LTV than the traditional ratio are requires to: A. Be first time buyers only B. Get additional approval from FHA C. Obtain private mortgage insurance D. All of the above

C. Obtain private mortgage insurance

A loan held by a lender rather than sold into the secondary market is referred to as a : A. Seasoned loan B. Detainment loan C. Portfolio loan D. No liquid loan

C. Portfolio loan

FNMA and FHLMC are: A. Government agencies B. Primary lenders C. Funded by the U.S. Treasury D. Government-chartered private corporations

D. Government-charted private corporations

An order to cease and desist is known as a(n): A. Demurrer B. Novation C. Judgment D. Injunction

D. Injunction

Paying points to reduce the amount of interest on a loan is called: A. A buydown B. A loan origination fee C. A point index loan D. Interest redemption

D. Interest redemption

A declaration of default is prepared by a: A. Tenant B. Sheriff C. Borrower D. Lender

D. Lender

The process of tracking and comparing mortgage interest rates held in a pool to current market interest rebates is called: A. Forecasting the market B. Marking the system C. Coordinating the market D. Marking to market

D. Marking to market

The four phases of the business cycle are: A. Peak, expansion, bottom, recovery B. Peak depression, bottom, expansion C. Trough, recession, bottom, recovery D. Peak, recession, bottom, recovery

D. Peak, recession, bottom, recovery

In a seller's market: A. Supply exceeds demand B. Demand exceeds expectations C. Home prices decline D. Demand exceeds supply

D. Demand exceeds supply

Credit unions were first set up in: A. 1870 B. 1970 C. 1990 D. 2006

B. 1970

Participants who make up the secondary mortgage market: A. Raise the necessary funds to purchase the mortgages B. Borrow the necessary funds to purchase the mortgages C. Fund the purchase of mortgages with personal funds D. None of the above

A. Raise the necessary funds to purchase the mortgages

The act that requires lenders, mortgage brokers, or services of home loans to provide borrowers with the pertinent and timely disclosure of the nature and costs of the real estate settlement process is known as the: A. Real Estate Settlement Procedures Act (RESPA) B. Truth in Lending Act (TILA) C. Equal Credit Opportunity Act (ECOA) D. Fair and Accurate Credit Transactions Act (FACTA)

A. Real Estate Settlement Procedures Act (RESPA)

A fixed-rate loan that gives the borrower a limited opportunity to reduce the interest rate without paying refinancing costs is called a(n): A. Reduction option mortgage B. Lower-than-market mortgage C. Optional-rate mortgage D. Biweekly mortgage

A. Reduction option mortgage

A real estate cycle refers to the real estate market's reaction to the forces of: A. Supply and demand B. War and peace C. Give and take D. deposits and withdrawals

A. Supply and demand

How many Federal Reserve Districts are there across the nation? A. 3 B. 12 C. 6 D. 18

B. 12

The minimum number of hours of mandatory pre-license education for MLOs is: A. 10 B. 20 C. 8 D. 45

B. 20

Bankruptcies must be reported if they have occurred within the past: A. 3 years. B. 7 years. C. 10 years. D. 15 years.

B. 7 years

A clause in a finance instrument that limits a borrower's right to transfer the property without the lender's permission is called a(n): A. Acceleration clause B. Alienation clause C. Prepayment clause D. Difficult to transfer

B. Alienation clause

The Truth in Lending Law is supervised by the: A. Department of Justice B. Consumer Financial Protection Bureau (CFPB) C. Federal Deposit Insurance Corporation D. United States Treasury

B. Consumer Financial Protection Bureau (CFPB)

The study and description of the population of an area is called: A. Regentrification B. Demographics C. Psychographics D. Demonstrative study

B. Demographics

The requirement that all pertinent information about a property or a loan be poor idea to enable a consumer to make informed choices is referred to as: A. Disintermediation B. Disclosure C. Pre approval D. Underwriting

B. Disclosure

The rate of interest charged by the Fed to member banks is called the: A. Federal Funds rate B. Discount rate C. Prime rate D. Usury rate

B. Discount rate

Which of the following is False regarding the purchase agreement? A. It contains the sale terms B. It is completed only by the home purchaser C. It contains the date the parties expect the transaction to close D. All of the above are false

B. It is completed only by the home purchaser

In a promissory note, the borrower is called the: A. Lender B. Maker C. Benefactor D. Seller

B. Maker

The intentional misrepresentation or omission of material facts by applicants to improperly influence a mortgage loan lender is referred to as: A. Fictitious underwriting B. Mortgage fraud C. Negative posturing D. Risk management

B. Mortgage fraud

When minimum monthly payments result in unpaid interest that is added to the loan balance, it is called: A. Positive amortization B. Negative amortization C. Inflationary amortization D. None of the above

B. Negative amortization

When an investor has an "undivided interest in the mortgages pool, it is commonly referred to as a: A. Liquid investment B. Pass-through security C. Subordinate pass-through D. Mortgage-backed security

B. Pass-through security

A fixed-rate mortgage: A. Accrues or decreases depending on the current prime interest rate: B. Remains at the same rate of interest for the life of the loan C. Is favored by lending institutions D. Keeps pace with the rate of inflation

B. Remains at the same rate of interest for the life of the loan

Who has the power of currency issue? A. Congress B. The President of the United States C. The Federal Reserve D. The United States Treasury

B. The President of the United States

The effective yield on a loan is referred to as: A.the nominal rebate B. The annual percentage rate (APR) C. The discount rate D. The total finance charge

B. The annual percentage rate (APR)

An out-of-court sale or auction initiated at the direction of a beneficiary is called a: A. Notice of sale B. Trustee's sale C. Sheriff's sale D. Nonjudicial sale

B. Trustee's sale

In alternative financing, "one point" is equal to: A. $10,000 B. 1% of the sales price C. 1% of the loan amount D. $1,000

C. 1% of the sale price

FICO scores generally range from: A. 90-900 B. 200-500 C. 300-850 D. None of the above

C. 300-850

ARM mortgage payment caps are usually limited by lenders to an annual increase of: A. 2% B. 5% C. 7.5% D. None of the above

C. 7.5%

Private mortgage insurance is required on all loans that exceed what percentage of the value of a property? A. 60% B. 70% C. 80% D. 90%

C. 80%

A 5-year Call Provision mean: A. The borrower can wait 5 years before paying interest B. PMI insurance is only needed for the first 5 years C. A large balloon payment is due in 5 years D. A borrower has the option to borrow more money in 5 years

C. A large balloon payment is due in 5 years

A loan where the lender assumes a percentage of ownership is called: A. A percentage loan B. A quasi-ownership loan C. A participation loan D. An unseasoned loan

C. A participation loan

A third-party opinion of the value of a property is called a(n): A. Credit report. B. Guesstimate. C. Appraisal. D. Preliminary title report.

C. Appraisal

A fixed-rate mortgage loan that is set up in a fashion similar to a standard 30-year conventional loan is a: A. Standard loan B. Reduction option C. Biweekly loan D. Reverse mortgage loan

C. Biweekly loan

A borrower must provide which kind of information when applying for a loan? A. Financial B. Personal C. Both A and B D. Neither A nor B

C. Both A and B

Finance charges include: A. Interest charges and discount points B. Mortgage insurance fees C. Both A and B D. Neither A nor B

C. Both A and B

If a buyer does not have enough money for a 20% down payment for a conventional loan, some options include a: A. Down payment of 10% with a conventional loan up to 80% and the seller carrying a second mortgage B. 90% conventional loan with a 10% down payment C. Both A and B D. Neither A nor B

C. Both A and B

The Closing Disclosure Form integrates and replaces the: A. HUD-1 form B. Final TILA Disclosure Form C. Both A and B D. Neither A nor B

C. Both A and B

The SAFE Act defines a Mortgage Loan Originator (MLO) as an individual who: A. Takes a residential mortgage loan application B. Offers or negotiates terms of residential mortgage loans for compensation or gain C. Both A&B D. None of the above

C. Both A&B

A loan origination fee is normally paid by the: A. Lender B. Seller and buyer, splitting the cost C. Buyer D. None of the above

C. Buyer

A credit is given the right to have the security property sold to satisfy the debt if the debtor fails to pay the debt according to the terms of the agreement. This is done with a: A. Deed of reconveyance B. Power of sale C. Security instrument D. Title of theory

C. Security instrument

The different classes of securities are called: A. Caste systems B. Mortgage levels C. Tranches D. Fiat classes

C. Trances

Ethics differs from law in that ethics is: A. The minimum standard of behavior B. Always a written code C. What is right D. Usually illegal

C. What is right

A private mortgage insurer usually requires how many months mortgage payments in reserve? A. 18 B. 12 C. 6 D. 2

D. 2

A borrower who has a 90% LTV ARM loan at 3.5% initial interest with a 2% annual interest rate cap and a 5% lifetime cap must quality at: A. 3.5% B. 8.5% C. 11% D. 5.5%

D. 5.5%

In the event of a default, a creditor or seller may declare the entire outstanding balance immediately due and payable with a(n): A. Quiet title B. Prepayment clause C. Due-on-sale clause D. Acceleration clause

D. Acceleration clause

According to Reg. Z, Triggers include: A. Down payment account B. Interest rate C. Number and dollar amount of payments D. All of the above

D. All of the above

All state-licensed MLOs must have NEVER: A. Had a mortgage loan originator license revoked B. Had a felony in the past seven years C. Had a felony involving fraud, dishonesty, breath of trust or money laundering D. All of the above

D. All of the above

FIREA: A. Protects the federal deposit insurance funds: B. Applies to all federally related transactions C. Sets procedures for lans in federally related transactions D. All of the above

D. All of the above

Good ethics leads to: A. Happy clients B. Referrals C. More income for you D. All of the above

D. All of the above

If established as a REMIC, collateralized mortgage obligations may be issued by: A. A trust B. A corporation C. A partnership D. All of the above

D. All of the above

In the loan application process, the borrower pays up front for a: A. Preliminary title report B. Credit report C. Property appraisal D. All of the above

D. All of the above

On the Loan Estimate form, the items shown in the section "Services You Cannot Shop For" must be in alphabetical order and may include" A. Appraisals B. Credit reports C. Government funding fees D. All of the above

D. All of the above

Predatory loan practices include: A. Fraud B. Usury C. Deception D. All of the above

D. All of the above

Prior to getting licensed by the NMLS, all applicants must: A. Provide fingerprints for a FBI criminal background check B. Provide authorization for NMLS to obtain a credit report C. Pass a 125 question Uniform State Test (UST) D. All of the above

D. All of the above

The "degree of rust" in a real estate loan: A. Can be controlled by qualifying a buyer and a property before a loan is made B. Refers to the likelihood of defaults by the borrower C. Refers to the ability of the lender to recover loan proceeds through foreclosure D. All of the above

D. All of the above

The Loan Estimate form must provide: A. The name and address of the creditor B. The title "Loan Estimate" C. A statement of "Save this Loan estimate to compare with your Closing Disclosure" D. All of the above

D. All of the above

The TRID rule does not apply to: A. Home Equity Lines of Credit (HELOCs) B. Reverse mortgages C. Loans secured by a mobile home D. All of the above

D. All of the above

The primary market (direct lenders) consists of: A. Mortgage companies B. Savings banks C. Local banks D. All of the above

D. All of the above

Which of the following is an advantage of having a 15-year mortgage? A. Saving thousands of dollars because of lower payments B. Home ownership in half the time C. Lower fixed interest rates D. All of the above

D. All of the above

A loan that provides for repayment with an agreed period by means of regular level payments is called a(n): A. Straight note loan B. Unconventional loan C. Annualized loan D. Amortized loan

D. Amortized loan

Indirect lenders include: A. Pension funds B. Mortgage brokers C. Life insurance companies D. Both A and C are correct

D. Both A and C are correct

The interest rate states in the promissory note is called the: A. Prime rate B. Coupon rate C. Nominal rate D. Both B and C

D. Both B and C

Any person who receives or represents to the public that he or she will for compensation assist an applicant in obtaining a residential mortgage loan is defines as a: A. Residential mortgage loan expeditor B. Residential mortgage loan finder C. Residential mortgage loan processor D. Residential mortgage loan originator

D. Residential mortgage loan originator

All of the following are factors that comprise a credit score, except: A. New credit B. Amounts owed C. Payment history D. Savings accounts

D. Savings accounts

A core area containing a substantial population nucleus of 50,000 A. Standard census tract B. Standard urban neighborhood C. Standard map grid section D. Standard metropolitan statistical area

D. Standard metropolitan statistical area