Real Estate Finance Final

The maximum origination fee for both FHA and VA loans is:

1%

In processing a loan, a commitment for private mortgage insurance would be required if the down payment was less than:

20%

For an FHA loan on mixed-used use property, the allowable percentage of commercial use for a single-story building must not be more than:

25%

As per the TRID Rule, if a creditor provides a corrected Loan Estimate, how long of a new waiting period before consummation of the loan is required? 24 hours 48 hours 3 days 7 days

3 days

In a foreclosure under a Deed of Trust the Notice of Sale must be published in a newspaper for:

3 weeks

The statutory FHA down payment is:

3.5%

The FHA maximum debt ratios are:

31% and 43%

The maximum veteran entitlement for a VA loan guaranty is:

36,000

Under Truth in Lending, who is responsible for explaining and compliance with the act?

Error Question

A clause in a financial instrument that limits a borrower's right to transfer the property without the lender's permission is called a(n):

alienation clause.

Under the TRID Rule, the Loan Estimate must provide the: name and address of the creditor. address of the property (including the zip code) that will secure the financing. date the Loan Estimate is mailed or delivered to the consumer. all of the above.

all

In California the Real Estate Commissioner can:

all of the above.

Compound interest is:

interest paid on the principal and the accrued interest.

A conventional loan is a loan that:

is not insured or guaranteed by any government entity.

A loan that is repaid with periodic payments that include principal and interest so that the entire loan is paid by the end of the term is a(n):

amortized loan

Usury is: an interest payment in excess of the legally permitted rate. a medieval form of slavery. a person who has a financial trust. none of the above.

an interest payment in excess of the legally permitted rate.

Liquid assets include:

any assets that can readily be converted to cash.

Real estate loans would be noted on the loan application under:

assets and liabilities.

Those who participate in creative financing should: consult a real estate attorney. exercise caution. both a and b. none of the above.

both a and b

Mortgage bankers/mortgage companies: both originate and loan funds. act only as "go-betweens." are part of the secondary market only. none of the above.

both originate and loan funds.

An investment is said to be liquid when it: can be readily sold. is worthless. is guaranteed by the government. is difficult to sell.

can be readily sold.

A borrower seeking a conventional loan with a larger LTV than the traditional ratio is required to:

carry private mortgage insurance

The type of lending institutions that focus on short-term business investments and have mostly short-term funds are: S&Ls. commercial banks. life insurance companies. mortgage companies.

commercial banks.

A loan that meets the standards of the secondary market (Fannie Mae and Freddie Mac) is called a:

conforming loan

The minimum requirement in needed repairs for an FHA 203k loan is:

$5,000

"One point" is:

1% of the loan amount.

Based on FNMA and FHLMC guidelines, mortgage interest rates are generally limited by lenders to an annual increase of:

2%

Bankruptcies must be reported if they have occurred within the past:

7 years

In California, the minimum score required in order to pass the Salesperson Exam is:

70%

How many hours of continuing education must all MLOs complete annually? 45 20 12 8

8

Private mortgage insurance is required on loans that exceed what percentage of the value of a property? 20% 50% 80% None of the above

80

The standard loan-to-value ratio has traditionally been:

80%

A borrower who has a 90% loan at 7.5% interest with a 2% annual interest rate cap must qualify at:

9.5%

The payment of points to the lender at the time a loan is made to reduce the interest rate and lower the borrower's monthly payments is called:

a buydown

A clause in a finance instrument that allows a lender to demand immediate payment in the event of a default by the borrower is called a(n)

acceleration clause.

An escrow agent:

acts on the instructions of the parties to the loan.

A lease/option is used to:

all of the above

A wraparound mortgage can:

all of the above

In reconciling the Closing Statement with the Loan Estimate, "zero tolerance" charges include:

all of the above

Lenders offering adjustable-rate mortgages must:

all of the above

In addition to any individual state requirements, pre-requisites for licensing by NMLS include:

all of the above.

Regulation Z: allows the right of rescission. requires that a consumer be provided with the annual percentage rate. requires proper disclosure of all finance terms in advertising. all of the foregoing

all of the foregoing

In a loan with negative amortization, the balance owed:

increases over time.

The FHA:

insures loans only.

The Government National Mortgage Association (GNMA), or "Ginnie Mae": only deals with agricultural loans. is a wholly owned government corporation. is considered a lender of last resort. is part of the Department of Justice.

is a wholly owned government corporation.

A loan that exceeds the maximum amount that FNMA or FHLMC will lend is called a:

jumbo loan

A sale where the lender accepts less than the amount owed on the existing debt is:

known as a "short sale."

A Notice of Default and Election to Sell is prepared by trustee for the benefit of the: tenant. sheriff. borrower. lender

lender

Doing accounting necessary for a loan is known as: loan servicing. loan warehousing. arbitrage. marking to market.

loan servicing.

The primary market is made up of: first-time homebuyers. federal agencies. local lending institutions. none of the above.

local lending institutions.

An appraiser provides:

opinion of the value of the property.

A credit report is:

paid for at the time of application.

In a growth equity mortgage (GEM):

payments increase annually

Alternative financing programs are:

popular during times of high interest rates.

An estoppel letter is used to:

prevent a lender from exercising the due-on-sale clause.

Money market funds are: the same as mutual funds. private noninsured investment accounts. held in the lender's portfolio. none of the above.

private noninsured investment accounts.

A scheme in which a recently acquired property is resold for a considerable profit with an artificially inflated value, often as the result of collusion with an appraiser is known as: property flipping. leverage. ballooning.

property flipping.

Institutions in the Farm Credit System are regulated and examined by: FNMA. the Farm Credit Administration. FHLMC. all of the above.

the Farm Credit Administration.

Private mortgage insurance reduces:

the lender's risk of loss in the event of borrower default.

Market value is:

the most probable price that a property should bring in an open and competitive market.

All of the following are true regarding a Notice of Sale, except:

the notice must be court-ordered.

The purchaser of an option is called:

the optionee.

According to the Mortgage Reform and Anti-Predatory Lending Act a mortgage loan originator may only receive compensation that is based on:

the principal amount of a residential mortgage loan.

In a civil lawsuit brought by a party who has been discriminated against, punitive damages are awarded:

to punish the wrongdoer.

Collateralized mortgage securities are separated into different classes called: shelters. trenches. tranches. none of the above.

tranches

A borrower must provide employment status for the past:

two years

The seller in a real estate land contract is known as the: pawn. vendor. vendee. none of the above.

vendor

A proration is used to:

divide expenses fairly between buyer and seller.

Information provided for government monitoring purposes is:

entirely voluntary on the part of the borrower.

Loans that are made based on an owner's equity in real property are known as: investment quality loans. qualified loans. equity loans. unqualified loans.

equity loans.

The first step in the loan process is:

filling out the loan application.

A mortgage that remains at the same rate for the life of the loan is called:

fixed rate

The first step in the VA loan process is:

for the veteran to obtain a Certificate of Eligibility.

While ethics is what is right: it has nothing to do with values. government laws set minimum standards of behavior. it does not apply in real estate. ethics is illegal in California.

government laws set minimum standards of behavior.

FNMA and FHLMC are: government agencies. primary lenders. funded by the U.S. Treasury. government-chartered private lenders.

government-chartered private lenders.

Credit unions: are not allowed to make real estate loans. have a relatively small overall share of the mortgage lending market. are never allowed to merge with other credit unions. all of the above.

have a relatively small overall share of the mortgage lending market.

What agency exists solely to provide a secondary market for farm mortgages? "Farmer Mac" "Freddie Mac" "Sally Mae" "Fannie Mae"

"Farmer Mac"

A foreclosure that does not have to be taken to court is called: nonjudicial. nonrecurring. nonamortized. all of the above.

nonjudicial

An FHA appraiser must:

note major health and safety deficiencies on the URAR.

Mortgage-related securities: are easily bought and sold. are issued by participants in the secondary market. have real estate mortgages as their collateral. all of the above.

All of the above

Predatory loan practices include: fraud. usury. deception. all of the above.

All of the above

Prior to getting licensed by the NMLS all applicants must: complete 20 hours of pre-licensing education approved by NMLS. pass a 125 question national Uniform state test (UST). provide fingerprints for a FBI criminal background check. all of the above.

All of the above

All state licensed MLOs must meet the following standards: be at least 21 years old. have a minimum of two years of experience in residential real estate lending. C. never have had a felony conviction in the past seven years. D. have never had a bankruptcy.

C

Under the TRID Rule, the Loan Estimate combines the: Good Faith Estimate and the initial Truth-in-Lending Disclosure. Good Faith Estimate and the final Truth-in-Lending Disclosure. Good Faith Estimate and the HUD-1. HUD-1 and the final Truth in Lending Disclosure.

Good Faith Estimate and the initial Truth-in-Lending Disclosure.

What age must a reverse mortgage borrower be?

Over 62

Who is responsible for supervising the Truth-in-Lending Law? The Federal Bureau of Investigation (FBI) The Consumer Financial Protection Bureau (CFPB) The United States Treasury The United States Attorney General

The Consumer Financial Protection Bureau (CFPB)

Which federal Act gives consumers rights as to who has access to their credit files as well as to know what is in their files and the right to correct inaccurate credit information?

The Fair Credit Reporting Act (FCRA)

Which Act forbids kickbacks?

The Home Mortgage Disclosure Act (HMDA)

A scheme where the down payment is actually borrowed or carried as a second mortgage by the seller but never documented in the purchase agreement, escrow instructions, or recorded is known as: an air loan. leverage. a silent second. a disappearing second.

a silent second.

All licensed/registered MLOs are issued: a unique identifier number. a tax identification number. a picture ID card. all of the above.

a unique identifier number.

In a seller's market: supply exceeds demand. demand exceeds supply. home prices decline. none of the above.

demand exceeds supply.

The prime rate is the: rate of interest charged by the Fed to the banks. interest rate at which banks lend balances at the Fed to each other. lowest interest rate a bank charges its best customers. the interest rate the Fed charges the U.S. Treasury.

lowest interest rate a bank charges its best customers.

In a promissory note, the borrower is called the: payee. maker. beneficiary. none of the above.

maker

The intentional misrepresentation or omission of material facts by applicants or others to improperly influence a mortgage loan lender is known as: an air loan. mortgage fraud. property flipping. consumerism

mortgage fraud.

An unincorporated association of real estate investors managed by a trustee is a:

real estate investment trust.

Redlining is: refusal to lend in certain neighborhoods. not lending to bad credit customers. not lending on insufficient collateral. all of the above.

refusal to lend in certain neighborhoods.

The Fair Credit Reporting Act:

requires credit reporting agencies to remove all adverse information over 7 years old except for bankruptcies and foreclosures.

FHLMC (Freddie Mac) is an example of a: secondary market participant. primary market only participant. federal agency lender open only to veterans. none of the above.

secondary market participant.

The availability of funds in the primary market depends on the existence of the: secondary market. stock market. commodities market. foreign exchange market.

secondary market.

The greatest risk of default is caused by:

small or no down payments.