Texas 30-Hour Real Estate Finance
industrial bonds
bonds issued by industrial corporations
Which parties must be identified on the promissory note?
buyer + lender
CFPB (Consumer Financial Protection Bureau)
education, enforcement, and research to promote fairness and transparency for consumer financial services.
In an installment sales contract arrangement, the seller retains legal title until the contract is paid in full. What type of title does the buyer retain during the contract fulfillment period?
equitable
Growing Equity Mortgage
fixed-rate mortgage with payments that increase over a specific period. Extra funds are applied to the principal so that the loan is paid off more quickly
Revenue Bonds
investments secured by the revenue generated by a state or municipal project
Sean hasn't paid his property tax. The tax collector places a lien on his property. How is this lien classified?
involuntary, specific
What is the impact to lenders when mortgage packages are sold?
it provides additional cash flow for new loans
other names for contract for deed
land contract, real estate contract, contract for sale, agreement for deed, or as articles of agreement
housing and economic recovery act
legislation aimed primarily at addressing the effects of the subprime mortgage crisis.
Arnold has gotten behind on his mortgage payments. His lender agrees to temporarily suspend payments to help Arnold catch up. What is this an example of?
moratorium (or forbearance)
The three types of finance instruments that can be used when financing a real estate purchase
mortgage, note with deed of trust, and contract for deed
Federal Open Market Committee (FOMC)
oversees open-market operations
Mortgage bankers are mostly what type of enterprise?
private
municipal bonds
tax-exempt bonds issued by state and local governments
Who or what entity directs the activities of credit unions?
the board of dirrectors
FHA offers a program for loan insurance on adjustable-rate mortgages under ______ of the National Housing Act.
title II
What's one reason a borrower may choose a piggyback (or split) loan?
to avoid paying the private mortgage insurance
treasury bill
treasury security with a maturity term between two and 10 years
Fannie Mae
was created as the Federal National Mortgage Association in 1938
What's the most common way that a seller can help a buyer come up with the funds to complete a real estate transaction?
with a contract for deed
Which section of the closing disclosure contains the seller's existing mortgage loan payoff amount that must be paid to complete the transaction?
"Due from Seller at Closing"
When appraiser Archie uses the sales comparison approach, at least how many comparables may be included in the URAR?
3
Which range of credit scores represents subprime borrowers?
580-669
Which of the following is Fannie Mae most likely to purchase?
A conventional fixed-rate mortgage issued by a commercial bank
Torrens System
A method of evidencing title by registration with the proper public authority, generally called the registrar, named for its founder, Sir Robert Torrens.
collateralized mortgage obligations
An MBS that takes the principal and interest payments from underlying mortgages and separates them into various classes of bonds that are referred to as tranches.
Junior Lien
An encumbrance, second in priority, to a previously recorded lien or to a lien to which the encumbrance has been subordinated.
In a deed of trust, who is the trustor?
BORROWER
Corporate Bonds
Bonds issued by corporations to fund operating expenses
involuntary, specific statutory liens
Both materialman's and mechanic's liens
How does the Federal Housing Administration fund its mortgage insurance program?
By charging borrowers a mortgage insurance premium
Rules and regulations that protect consumers of financial services are now the responsibility of ______, which was created by the Dodd-Frank Act.
CFPB
Cost Approach Appraisal
Considers the replacement value of the property. It is often used for new properties and analyzes what it would cost to build a substitute residence, plus the value of the land.
Which of the following entities has the authority to place an equitable lien on a property?
Court order by judge
When a promissory note is sold, how is ownership transferred?
Endorsement of the note
Federal Home Loan Bank is regulated by what agency?
Federal Housing Finance Agency
Randall needs some new equipment for his ranching operation, and he needs a loan to purchase the equipment. When he approaches his local bank and applies for a Farm Credit System loan, how is the loan funded?
From the sale of Farm Credit System debt securities
Which of these is actually an amendment to the Truth in Lending Act (TILA)?
Home Ownership and Equity Protection Act
Ginnie Mae only guarantees mortgage-backed securities that contain loans ______.
Insured or guaranteed by U.S. government agencies
lifting clause
It allows a borrower to refinance a first mortgage without affecting its lien position even when a junior mortgage is in place.
Normal wages are considered when a lender is evaluating an applicant's income. Which of the following must be true for overtime pay to be considered?
It must have been received regularly over the last two years.
Loan Modification Agreement
It permanently changes one or more terms on a home mortgage loan which can provide a way for a borrower to avoid foreclosure on the mortgage.
In a deed of trust, who is the beneficiary?
LENDER
Who's the mortgagee in a mortgage?
LENDER
Freddie Mac and Fannie Mae qualifying guidelines
Loan amount, down payment requirement, loan-to-value ratio, and housing debt-to-income ratio
An ARM usually offers an initial interest rate that's ______ a fixed rate mortgage for a period of time.
Lower than
In a deed of trust, who is the trustee?
NEUTRAL 3rd PARTY
A refinance is always a
NEW LOAN
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.
Partnership among mortgagees
Participation agreement that involves more than one mortgagee as owner of the finance instrument in which each receives an equal share of the mortgage payment
Which of the following is a piece of general data an appraiser may gather?
Population size
Which of the following lending regulations apply to mortgage loans and settlement services?
RESPA
What factors directly affect an adjustable rate mortgage?
Rate, index, and margin
What is one of the ways the U.S. Treasury promotes economic growth and stability?
Supervises national banks and financial institutions.
Some countries have banks that issue loans for U.S. real estate purchases. What are the main countries that participate?
Taiwan, the U.K., and Canada
200% rule as it relates to tax-deferred exchanges
The combined fair market value of the property (or properties) being exchanged into cannot be more than 200% of the relinquished property.
How does a 3-2-1 buydown work?
The interest rate starts low but increases by 1% each year for three years until it reaches the rate stated in the note.
Which of the following statements best describes the judicial foreclosure and sale process?
The lender must seek the court's permission to foreclose on the property used as collateral for the loan.
How are creditors or lien holders paid during a foreclosure process?
The property is sold at auction and lien holders are paid from the proceeds of the sale.
right of rescission
The three-business-day period from the date a transaction is consummated or disclosures are delivered to the borrower, whichever is later, during which the borrower can cancel the loan
What's the purpose of the fixed/adjustable rate note?
To convert the interest rate from fixed to adjustable
fixed/adjustable rate note
To convert the interest rate from fixed to adjustable
Which government program assists rural Americans by offering loans, grants, and loan guarantees for housing?
USDA Rural Development
Equity Skimming
When an investor receives title to a property— often by using a straw buyer—doesn't make the mortgage payments, and usually rents out the home until foreclosure occurs.
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
power of sale clause
a clause authorizing a private foreclosure sale that does not require court action
general property data
about the location of the property and not the property itself
typical subordination agreement
allows the loan to move up in the docket for being paid off
The FHA Section 203(h) program
assists victims of a presidentially declared disaster with an insured mortgage.
Which of the following is a likely effect when the discount window is closed?
banks do not have access to additional funds
seller buydown
helps the buyer qualify for a loan
encumbrance
A defect on a title that can be monetary or physical
Reverse Exchange
An investor finds and closes on an investment property and then decides to immediately sell another investment property.
When a promissory note is sold, what is recorded in county land records?
Assignment of the security instrument the note is attached to
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
HECMs
Federal Housing Administration-insured, neither the borrower nor the estate must make up the difference should the loan become "upside down."
Which institution guarantees mortgage-backed securities with the full faith and credit of the United States?
Ginnie Mae
Federal Housing Administration's loan program
Insures lenders against loss from borrower default
Why should licensees maintain a business account separately from any personal accounts?
It makes it easier to recognize when the business is profitable.
FHA county loan limits are based on ______.
Median income for the area and interest rates
How much of a mutual savings bank's assets come from savings accounts?
More than 70%
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.
Alienation Clause (Due on Sale Clause)
Says you must repay your mortgage if you sell your home to a new owner (loan is not assumable)
What is the most common structure for a CMO?
Sequential pay
Which of the following types of residential dwellings do life insurance companies purchase from the secondary mortgage market?
Single-family on one lot
Which agency sets the guidelines for qualified mortgages?
The Consumer Financial Protection Bureau
straw buyers
The borrower's identity is concealed behind someone else's name and credit history.
open market operations
The buying and selling of government securities as a way to influence the money supply and balance economic growth
State Bank has an interest in the property and one other right. What is that?
The right to foreclose if the borrower defaults
The 95% rule
The total value of the property (or properties) being exchanged is at least 95% of the value of the property being sold.
Page four of the Closing Disclosure includes consumer education about ______.
The use of an escrow account
Chrissy and Jack are purchasing a new condo. When they sign their new mortgage document, to whom are they conveying title to the property until their loan is paid off?
Their lender
what type of lien is a mortgage lien?
Voluntary and specific
What is one disadvantage of a will over a trust?
Wills are made public; trusts are not.
farm credit system
a government-sponsored enterprise that works through a cooperative system to provide agricultural and rural loans
housing ratio requirement for FHA
31%
debt obligation requirement for FHA
43%
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%
APR
A standardized measure for interest rates and other loan costs
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.
In which phase of the real estate market cycle would you expect to see properties sit vacant and prices drop?
Recession
how is MIP calculated?
The end-of-year loan balance, plus the balance after the next 11 payments
silent second
accepting a second mortgage without notifying the original lender
Fannie Mae's multi-state note includes a due-on-sale clause, also known as a(n) ______ clause.
alienation
what does Appraiser Independence Requirements apply to?
conventional loans used to purchase a single-family dwelling of one to four units. Federally insured or guaranteed loans (such as FHA or VA or commercial loans) are exempt
How can a foreclosure process be temporarily stalled?
declare bankruptcy
The two most common methods used when a bank fails
payout method and the Purchase and assumption method.
Appraiser Independence Requirements
protect appraisers' ability to assess an accurate value for a property by avoiding outside pressure or influence
Who must provide the buyer and seller with a copy of the closing disclosure?
the buyers lender
The appraiser of Garran's property used the Torrens system to perform a title search. Now a claim has been filed. Who or which entity will be the title guarantor?
the state
reverse annuity mortgage
where the lender makes payments to the homeowner for a specified period of time and gains collateral ownership. The home is used as collateral and the borrower receives the loan funds.
In the residential mortgage market, charging borrowers more than ______ over market rate for interest is considered a predatory lending practice.
5%
Interest rates that are more than ______ over the current market rate are considered predatory lending.
5%
participation certificate
A mortgage-backed security issued by Freddie Mac and backed by pool of conventional mortgages
Mortgage REITs
focuses on lending money for mortgages and investing in mortgage-backed securities
Conforming loan limits vary based on two factors
location and number of units being purchased
On the Loan Estimate under "Loan Costs," the points, application fee, and underwriting fee are considered ______.
origination charges
In which phase of the real estate market would you expect to see properties selling for more than they're worth, many buyers in the market, and lots of new construction?
over supply
Section 255 of the Title II FHA-insured loan program covers ______ mortgages for borrowers age 62 or older.
reverse
FHFA (Federal Housing Finance Agency)
sets conforming loan limits for mortgages
The "Projected Payments" section
shows the amounts that will make up each monthly payment, including amounts that will be placed in an escrow account
Which of the following would be the most common form of business structure for a new licensee?
sole proprietor
Disintermediation
the cutting out of marketing channel intermediaries by product or service producers or the displacement of traditional resellers by radical new types of intermediaries
Partnership between mortgagees and mortgagors
the lender is a partner as well as the financier
demand deposit
the money in checking accounts
federal funds rate
the rate at which a bank can obtain an overnight loan from another bank without providing collateral
regulation b
the set of regulations used to enforce the Equal Credit Opportunity Act
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.
Housing Choice Voucher Program
A program to help very low-income families, the elderly, and disabled individuals to afford decent, safe, and sanitary housing in the private market
credit score requirement for FHA
580 for 3.5%, 500 for 10%
The ______ account is an essential part of a financial plan for independent contractors, who should expect to disburse from this account on a quarterly basis.
Income tax
Natalie is a licensee who assists buyers in the purchase of HUD ______ when they're listed for sale.
Repossessed homes
CMO (Collateralized Mortgage Obligation)
a type of mortgage-backed security that contains a pool of mortgages bundled together and sold as an investment
Interim Financing
bridge or swing loan for short-term financing before a sale
What happens after a lien foreclosure sale if not enough money were made from the auctioning of the property to pay off the lien holders?
A deficiency judgment against the property owner for the outstanding balance to the lien holders is issued.
mutual savings banks have limitations that are set by their ______.
charter
According to RESPA, what must the lender give to the borrower in the days immediately prior to settlement?
closing disclosure
One alternative to foreclosure is a voluntary conveyance of ______.
deed
