Real Estate Finance - Practice Exam
What is the formula for calculating the total debt ratio?
(Monthly debt payments ÷ gross monthly income) × 100
What is the minimum amount of time a Notice of Sale must be posted on a property before the foreclosure sale can take place?
20 days
Which of these statements about a buydown is true?
A permanent buydown will cost more than a temporary buydown.
In 2001, California legislators enacted the ______ to combat predatory lending practices.
Covered Loan Law
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
The Government National Mortgage Corporation was created in 1968 under the Department of Housing and Urban Development (HUD) and is more commonly known as ______.
Ginnie Mae
What are the effects on a property if it includes an encumbrance?
It restricts the owner's use or decreases the value.
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
Ralph and Mort are neighbors. Ralph is selling, Mort is buying, and Ralph is offering a second loan to help Mort with his down payment, using a contract for deed. When Mort presents this idea to his lender, his lender balks. Why might that be?
Lenders don't like contract for deed arrangements.
Which of the following loan types can be packaged into a mortgage-backed security eligible for guarantee by Ginnie Mae?
Loans insured or guaranteed by U.S. government agencies
What are securities?
Long- and short-term debt instruments
The ______ defines individuals who perform certain foreclosure-related activities for compensation for borrowers.
Mortgage Foreclosure Consultant Law
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?
Multiply the number of thousands in the loan by the factor.
Special mortgage loan programs for ______ include the FHA248 and HUD 184 programs.
Native Americans living on tribal land
Bo's real estate ad states: "Custom homes for sale with scenic mountain views. Easy financing and low down payments." What else must be included in the ad in order for it to comply with TILA?
Nothing. Under TILA, ads that mention general financing terms, such as "low down payment" or "easy financing," do not require additional disclosure. If Bo had gotten more specific (e.g., "10-year loan with 0% down") he would need to include more information.
Which of the following is a piece of general data an appraiser may gather?
Population size. General data is related to the area where the property is located, not the property itself.
Which of the following resources are extremely helpful when working with investors?
REIT analysts and bond rating agencies
What factors directly affect an adjustable rate mortgage?
Rate, index, and margin
Which of these items did the Federal Housing Administration (FHA) implement to stabilize and improve the mortgage market?
Set construction standards for homes purchased with FHA loans
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
What is the most likely effect when the Fed buys securities on the open market?
The economy may grow due to an increased money supply.
Which of the following describes the federal funds rate?
The rate at which a bank can obtain a loan from another bank
The Farm Credit System funds are acquired from ______.
The sale of debt securities and international money markets
When does the mortgage insurance requirement end for a borrower with a VA loan?
There is no mortgage insurance requirement for a VA loan.
What's one purpose of a BPO?
To assist lenders in determining the marketability and potential sales price for distressed properties
The purpose of the Seller Financing Disclosure Law is ______.
To ensure that all parties are educated about loan terms and about who will be compensated for arranging credit
Which governmental legislation established the Consumer Financial Protection Bureau?
Wall Street Reform and Consumer Protection Act (Dodd-Frank Act)
