Real Estate Finance Exam
Life insurance companies participate in real estate in the ______ arena.
Mortgage blocks from secondary mortgage market
A local town has been growing and needs a new elementary school. What kind of bond instrument will the town use to finance this project?
Municipal bond
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.
Neighborhood Stabilization
Who must provide the buyer and seller with a copy of the closing disclosure?
The buyer's lender
The FHA has helped to significantly improve the mortgage market through ______.
The introduction of the long-term amortized loan
The final page of the Closing Disclosure provides loan calculations that tell the consumer how much ______.
The loan costs, including total payments, finance charge, and TIP
If Mitch uses a financial system that allocates a percentage of income to his expenses and financial goals, how much will his retirement fund receive from a commission check of $8,000?
The percentage of $8,000 that Mitch has allocated to his retirement goal
How is title usually conveyed to the buyer during a foreclosure process?
Through a referee's deed
What is the purpose of the loan transfer disclosure?
To notify the borrower that the loan is being resold on the secondary market, and how and where to make future payments
What's the purpose of the ECOA?
To prevent discrimination in lending
Store of value, medium of exchange, and what other factor define money?
Unit of value
A debenture is also known as a ______ bond.
Unsecured
A lapse in property insurance coverage can result in borrower default because it leaves the lender ______ should something happen to damage the property.
Vulnerable
A lender requires a title search to finance a transaction. Who pays for this search?
Buyer
Under which section of the Loan Estimate will you find any credits provided by the seller?
Calculated Cash to Close
Which of the following is included in HMDA data?
Census tract information
Payment history, age of accounts, inquiries, and types of accounts are factors considered in calculating a credit score. What's another item that's considered?
Credit usage
Which of the following describes amortized debt?
Debt that's paid off by making periodic payments
Jean is a high school English teacher. With the Good Neighbor Next Door program, she's able to buy a foreclosed FHA-insured property ______, though she does have to agree to live on the property for three years.
For a 50% discount off list price and a down payment of only $100
How and when does a contractor performing work associated with a 203(k) loan receive funds from the lender?
Half is received up front and the other half after the work is completed and approved
Bindy received a loan based on the amount of equity she had in her house. She used this lump sum to fund her daughter's college education. What type of loan did she get?
Home equity
Which of the following specifies a requirement of pre-loan counseling for consumers?
Homeowner and Equity Protection Act
Sandra is a single woman fresh out of college. She hopes to qualify for an FHA loan. Her lender calculates her housing ratio as 31% and her total debt obligation as 43%. Her credit score is 480. Does she qualify under FHA underwriting guidelines?
No, she doesn't meet the credit score requirement.
Which of these items is an asset to list on a residential loan application?
Real estate
The FHA is part of ______.
The Department of Housing and Urban Development
Which of the following describes the prime rate?
The rate at which a bank or lender may loan money to its most creditworthy borrowers
The loan amount plus the down payment should equal ______.
The sales price of the home
What is the purpose behind Appraiser Independence Requirements?
To protect appraisers' ability to assess an accurate value for a property by avoiding outside pressure or influence
Nadia uses a VA loan to buy a house for $125,000. She wants to buy the neighboring property, an empty lot, so she can improve the house using the extra land. The lot is for sale for $135,000. Can she use a VA loan for this purchase?
Yes, she should have partial entitlement left.
_______ are part of the loan-approval process and are responsible for completing a loan application and supplying supporting documentation.
Buyers
In an amortized loan, the interest portion of the mortgage payment generally ______ over the life of the loan.
Decreases
Norma, a real estate licensee, is working with the buyers in a transaction. She suspects mortgage fraud. What should she do?
Discuss the situation with her broker.
How does the Community Development Block Grant program assist in supporting HUD's mission?
Distributes grant funding to help meet community needs as determined by state and local governments
Which of the following is an aspect of government loans?
Either insured or guaranteed by the government
When a promissory note is sold, how is ownership transferred?
Endorsement of the note
HUD's ______ assists very low-income families, the elderly, and disabled individuals in affording decent, safe, and sanitary housing in the private market.
Housing Choice Voucher Program
Which of the following characteristics applies to a partnership between mortgagors?
It involves more than one mortgagor as owner, sharing responsibility for payment of a single mortgage.
What is the name for a loan that creates a lien against property that already has been pledged as collateral?
Junior loan
Which of these business structures offers personal liability protection in the event of a lawsuit against the licensee's business?
LLC
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?
One year
Which of the following may a lender request to verify an applicant's work history and earning information?
Pay stub
Which of the following is the best investment for a licensee?
Paying down outstanding credit card debt
Leslie has applied for a loan modification. As part of the process, her lender will likely ______.
Perform a title search
Which of the following best describes foreclosure by entry and possession?
Petition to enter, repossession, notice of eviction
Assuming a CMO uses the sequential pay structure, how is principal passed through from borrowers paid to investors?
Principal payments are only made to the first tranche until it retires, then to the second tranche, and so on.
What qualifying ratios are used in a VA home loan?
Residual income and debt-to-income
When interest rates increase, what is the impact on mortgage-backed security investors?
Returns on investments increase.
A RAM is a type of equity financing. What does RAM stand for?
Reverse annuity mortgage
A loan that's offered based on a homeowner's equity in which funds are drawn over time and the bank gains corresponding property ownership is called a ______.
Reverse annuity mortgage
Greg is selling his home to a veteran who's using a VA loan. When the transaction starts to stall, Greg tries to motivate the buyer by including his giant flat screen TV, valued at $1,200, as a gift. Is Greg allowed to do this?
Yes, this is considered an allowable seller concession
A home equity line of credit (HELOC) is based on the homeowner's available ______.
Equity
Glen is assisting a buyer who makes an offer on a condo in a high-end area of town. The seller refuses the offer, and Glen's client believes this is discriminatory behavior. How should Glen advise his client in this situation?
Glen can recommend filing a complaint with HUD about the alleged discrimination.
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?
Late charge
The Community Reinvestment Act (CRA) requires lenders to post their policies on what?
Lending
The Federal Housing Finance Agency established percentage targets and ______ for loans made to low- to moderate-income borrowers.
Limits for conforming loans
The lender, the depository institution, and the _______ all complete parts of the request for verification of deposit form.
Loan applicant
Which of the following is a requirement for veterans who wish to use the Native American Direct Loan?
Meet the same eligibility criteria as for the VA-guaranteed loan program
What does it mean if the Fed decreases reserve requirements?
Member banks can keep fewer assets on deposit at the reserve bank.
Jasmine wants to buy a duplex where the mortgage is $300,000. Her income only qualifies her for a $200,000 loan, and she doesn't have enough saved to make up the difference. What factor might allow her to obtain financing anyway?
Rental income
What type of investment strategy is most similar to a 1031 tax-deferred exchange?
Rolling over funds from one IRA into another
The Addams family has an FHA-insured loan. The family's mortgage payment has a fixed interest rate, but after the first five years, the rate will adjust annually. Which FHA loan insurance program are they using?
Section 251
The ______ table discloses the amounts associated with the transaction that the seller will pay and receive, usually resulting in a total cash to seller.
Seller's Transaction
Your client, Shelby, a veteran using a VA loan to finance her purchase, just learned that the CRV came in lower than the sales price. But no problem: Shelby's brother is willing to loan her the difference. If the loan is approved, ______.
Shelby must still be under the VA's debt-to-income ratio
Ray is in a bit of a predicament. He owes more on his mortgage than his property is worth, but can no longer afford the payments. He receives permission from his lender to sell the property for less than what he owes. What is this an example of?
Short sale
Remy's mortgage payment is $1,256.28. His annual property taxes are $809, and his annual insurance premium is $712. How much of his payment goes toward the principal and interest?
$1,129.53
Your client, Ray, wants to purchase a home listed for $200,000. The home is in a revitalization area, and Ray can purchase it under the Good Neighbor Program. How much will he have to pay for the home?
$200,000, less 50%, plus $100
Which of the following is the credit score range?
300 and 850
A buyer with which of the following debt-to-income ratios can obtain a qualified mortgage?
38%
You do a listing presentation to a potential client over lunch at a nice restaurant. How much of your meal cost is considered tax deductible?
50%
Consumers in the _______ range are well above the average credit score and generally have an easy time getting approved for new credit.
800+
Which of the following is true about a home equity line of credit?
A borrower can use the funds as needed, repay them, and borrow them again.
In a deed of trust, who is the trustee?
A neutral third party
What type of professional must an investor use to conduct a tax-deferred exchange?
A qualified intermediary
In which of the following sections of a credit report might a lender expect to find a loan that has been paid off on time?
Accounts in good standing
How are account numbers displayed in a credit report?
Accounts numbers are truncated for security purposes.
Which act made some mortgage insurance premium deductions available to certain taxpayers?
American Taxpayer Relief Act of 2012
Laura is a newly licensed real estate professional. Which of these combinations of insurance does the law and her career choice make it essential that she carry?
Auto and errors and omissions
Which of the following describes mutual savings bank loans?
Banks focus lending offerings on local businesses and residents.
Carla is a licensee who uses a personal financial system that recommends that all of her commission checks be deposited into her ______ account.
Business checking
If your client's attorney contacts you, saying you were negligent in providing your client with service, which insurance coverage do you desperately hope you have?
Errors and omissions
This could happen if a factory were put in next door that changed and impacted property value.
External obsolescence
Licensees who stay current with ______ can better serve low- to moderate-income clients looking to purchase.
FHA financing requirements
The Farm Credit System is overseen by the ______, an agency of the federal government.
Farm Credit Administration
Farmer Mac is supervised by which entity?
Farm Credit Services Administration
______ works with lenders to make long-term credit available to homeowners and businesses in agricultural and rural communities, including farmers and ranchers.
Farmer Mac
Which of the following might involve old wiring or plumbing?
Functional obsolescence
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 program, what step must she take to receive approval?
Give her lender a report of the cost estimate and energy savings from an energy consultant.
A seller buydown can ______.
Help a borrower meet lender qualification standards
Jerry is appraising a five-bedroom home in the suburbs. After identifying the purpose of the appraisal, what does he need to do next?
Identify the data that is needed.
Which of the following approaches to value uses a capitalization rate?
Income approach
The Equal Credit Opportunity Act specifies that credit applicants must be judged using only what criteria?
Income, net worth, job stability, and credit rating
Which of the following are potential private loan resources that may be willing to finance a home?
Individual entrepreneurs
Commercial banks fall into which of the following category of lenders?
Institutional lenders
Construction loans are a type of ______ financing.
Interim
What does the right of redemption allow?
It allows a property owner to pay back any debts or liens against their property until a foreclosure sale is held.
Why might self-employed individuals who want to obtain financing for a home purchase, choose not to write off valid expenses on their tax statements?
It increases demonstrated income.
A major component of the Housing and Economic Recovery Act was the HOPE for Homeowners program, which aimed to ______ by helping subprime borrowers refinance into more affordable fixed-rate mortgages.
Stabilize the housing market
A lender wants to ensure that the legal description of a property is accurate, and determine whether any improvements, encroachments, or lot size changes have been made. What may the lender request to determine this?
Survey
How does the FHA control the use of 203(k) money loaned for repairs to a home?
A cost estimate must be provided prior to loan approval, and repairs are approved by an FHA inspector when completed.
From a secondary market player, Regional State Bank received an advance in exchange for collateral in the form or mortgages. Which entity likely issued this advance?
Federal Home Loan Bank
