The CE shop - finance

The VA loan program offers a basic entitlement amount of ______.

$36,000

Millie and Jerry are purchasing a home using their VA loan benefit. The sales price is $320,000, with 100% financing. Assuming that Jerry has a typical level of entitlement, how much of their loan does the VA guarantee?

$80,000 -The VA guarantees up to a quarter of the total loan amount, up to $104,250, so Millie and Jerry's loan is guaranteed for one-fourth of $320,000, which is $80,000.

HUD Mission and Strategic Plan

-Strengthen the housing market to bolster the economy and protect consumers.-Meet the need for quality, affordable rental homes.-Use housing as a platform to improve quality of life-Build strong, resilient, and inclusive communities.

A buyer with which of the following debt-to-income ratios can obtain a qualified mortgage?

38% -Remember, the 43% debt-to-income ratio is unwavering. In this case, the only choice below the 43% ratio is 38%.

John wants to do a 1031 tax exchange with a property he just sold. How many days does he have to identify a new property for the exchange?

45

Which range of credit scores represents subprime borrowers?

580-669

Which project would a life insurance company be most likely to finance?

A shopping mall

Which of these appraiser requirements does AIR NOT specify?

Be knowledgeable about the global market rates -AIR specifies that appraisers be knowledgeable about the local market, not global market rates.

As part of a deficiency judgment sought by a lender, a ______ may be placed on any current and future property the borrower owns until the lender recovers all losses.

Blanket lien

When borrowers started missing mortgage payments, how did this affect collateralized mortgage obligations?

CMOs weren't collecting the expected principal and interest payments.

Which of the following is NOT part of the assumptions section of the Loan Estimate?

Comparisons -The comparisons section allows the borrower to make comparisons between loans with different interest rates and isn't related to the proposed loan estimate.

You may see a ______ named as a land contract, real estate contract, contract for sale, agreement for deed, or as articles of agreement.

Contract for deed

Freddie Mac targets which type of loans to purchase?

Conventional

Which of the following items directly increases the supply of real estate properties on the market?

Conversion of properties -The number of total properties on the market is directly influenced by the conversion of existing commercial properties to residential properties.

The ______ was enacted in 2010 to create stricter regulation of the financial services industry to reduce costs for consumers from (for instance), undisclosed kickbacks.

Dodd-Frank Wall Street Reform and Consumer Protection Act

Community Banks is being sued for intentionally violating the Truth In Lending Act. What fines and imprisonment possibilities can the company face?

Fines up to $5,000 and up to a year of imprisonment

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 -Ginnie Mae was created as the Government National Mortgage Corporation in 1968 under the Department of Housing and Urban Development (HUD).

What is the general economic impact of mortgage loan payments?

Increase in economic growth

Construction loans are a type of ______ financing.

Interim

Kevin is having an appraisal performed on a piece of property he's interested in buying. He's especially interested in hearing about the estimated rate of return the property could pull. What type of value is he interested in?

Investment value

What is the purpose of the request for verification of employment?

It allows the lender to verify the employment listed on the applicant's loan application.

When consumers make a small down payment, borrow the remaining amount of the purchase price from a lender, and reap the rewards off of hte full investment value, they are demonstrating what concept?

Leveraging -To leverage is to put up a small amount of money to obtain a loan of a larger amount. Return To Course Home View Exam Results

In the early 2000s, before the 2007 financial crisis, how would you characterize the real estate market?

Low interest rates and high property values

When an adjustable rate mortgage (ARM) makes its initial adjustment, it does so to its fully indexed rate. What makes up the fully indexed rate?

Margin plus index

Life insurance companies sometimes like to insure their investment in commercial projects by insisting on an equity position. This is known as ______ financing.

Participation -Participation financing means the lender becomes a participant in the deal in exchange for some equity. This offers added security for the investment.

Landon will pay interest over the life of his 30-year loan. What other responsibility does he have to lender Marco when he finances his loan?

Pay loan-related closing costs

How can a foreclosure be stopped or prevented?

Paying all outstanding liens against the property

Mortgage bankers are mostly what type of enterprise?

Private

Which of the following is a piece of specific data an appraiser may gather?

Property lot size

A property has just been foreclosed on. Which of the following describes the rules regarding lien priority?

Property tax liens take priority, with all others following a "first in time" rule. -Property tax liens take priority; all others are paid depending on the date they were filed—first in, first paid, regardless of amount owed.

Which of the following characteristics would the appraiser find in the Neighborhood section of the URAR?

Property value trends

What does REIT stand for?

Real Estate Investment Trust

______ is the term that the VA uses to describe the amount of net income remaining after deduction of debts, obligations, such as utility and phone bills, and monthly shelter expenses.

Residual income

A lender qualifies a borrower for a VA loan based on ______.

Residual income and debt-to-income

What kind of communities does Farmer Mac serve?

Rural communities

Cassie is helping her buyer client, Gus, prepare for closing. What should she encourage him to verify as soon as he receives the form?

That the borrower and seller names, the property address, and the sales price are accurate and spelled correctly

Kendra has applied for a loan from Acme Savings and Loan, but when she compares the Loan Estimate the loan officer gave her with the one from Best Bank, where she also applied for a loan, she decides she'd rather go with the loan from Best Bank. Which of the following is a true statement about this situation?

The Loan Estimate expires in 10 business days if Kendra doesn't tell Acme Savings and Loan that she wants to move forward with it.

The upfront MIP on an FHA loan is calculated on ______.

The base loan amount

Select the choice that best translates this clause into plain English. "Any partial prepayment shall be applied against the principal amount outstanding and shall not postpone the due date of any subsequent monthly installments or change the amount of such installments, unless the Note holder shall otherwise agree in writing."

The borrower is allowed to prepay the loan without penalty.

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 describes the discount rate?

The rate at which a bank can obtain a loan from its Federal Reserve bank when using commercial paper as collateral

Margot reviewed page three of her Closing Disclosure to see the amounts she'll pay and receive, and the total cash amount. She located this information under the "Summaries of Transaction" in the "Seller's Transaction" table, which is completed by ______.

The settlement agent

The Housing and Economic Recovery Act and the American Recovery and Reinvestment Act were enacted in response to ______.

The subprime mortgage crisis and economic meltdown of 2007-2008

Patty is buying a three-bedroom mountain home. After applying for a loan, she received the Loan Estimate at least _______ business days before closing.

Three

How long does a homeowner have to pay off outstanding liens against his property?

Until the foreclosure sale is held

Sgt. Johnson is an active member of the Marines. He's been serving for 10 years. He wants to buy a home with no money down. What loan option seems like the best fit?

VA -While the sergeant could consider any loan, the only loan option with a zero down payment is a VA loan.

A mortgage lien is a(n) ______ lien.

Voluntary and specific

A Treasury note is a Treasury security ______.

With a maturity term between two and 10 years -Treasury notes are issued in terms of two, three, five, seven, and 10 years.

Which appraisal approach is likely the best choice for appraising a movie theater?

Cost

Which government entity oversees open-market operations?

Federal Open Market Committee

The _______ section contains the seller's existing mortgage loan payoff amount that must be paid to complete the transaction.

"Due from Seller at Closing"

Ken and Sue are purchasing a home but are short on the down payment required by their lender. Sue's mother offered to give them cash to help with the down payment. How much can Sue's mother give under current tax laws?

$30,000 -Sue's mother can give $15,000 to Ken and another $15,000 to Sue. This is a tax-free gift from Sue's mother. Sue's mother and father could each gift $15,000 to both Ken and Sue, for a total of $60,000.

What is the formula for calculating the total housing ratio?

(Monthly housing expenses ÷ gross monthly income) × 100

Pattie is the widow of Oscar, a member of the Army who was killed in action. When she uses the VA loan to buy her first home, what percentage of her loan amount will be charged as a funding fee?

0%

It's possible for the adjustment period on an adjustable rate mortgage (ARM) to have ranges, such as three or ______ years apart.

10

Bob just closed on his investment property. He's already identified a replacement property that he'll be exchanging into by using a 1031 tax-deferred exchange. How many days does he have to close on his replacement property?

180

The Davidsons' lender is trying to approve them for a conventional loan. What is the minimum percentage of total debt ratio they must have to be eligible a conventional loan?

36% -The total debt ratio for a conventional loan is 36%.

Interest rates that are more than ______ over the current market rate are considered predatory lending.

5%

In the residential mortgage market, charging borrowers more than ______ over market rate for interest is considered a predatory lending practice.

5% -Subprime loans can have interest rates 1% to 5% over the current market rate. Anything over 5% is an indication of predatory lending.Which of the following best describes

Consumers in the _______ range have an above-average credit score. They tend to qualify for better interest rates than those in the "acceptable" category.

740-799 -The higher the credit score, the more creditworthy the borrower. A credit score of 740-799 is an above-average score, which would allow borrowers to qualify for a better interest rate.

Recently retired Admiral Bongo and his wife, Lucy, contact you. They want you to help them purchase their dream house now that he's retired, but one that has the necessary accommodations for the admiral's disability. They also confide in you that they don't have a lot of money saved up for a down payment. Which type of financing may work best for them?

A VA loan, which requires no down payment.

Cathy is hoping to purchase a home using a VA loan. A VA-assigned real estate appraiser is required to provide ______ for the property.

A certificate of reasonable value

Suppose you live and work in the north-central U.S. Which of the following factors would have a direct impact on property at the local level?

A change in zoning ordinances

Which of the following describes an encumbrance?

A lien on the property due to an unpaid tax bill

What's a participation certificate?

A mortgage-backed security issued by Freddie Mac

Which of these statements about a buydown is true?

A permanent buydown will cost more than a temporary buydown.

What type of property is Aileen appraising if she's using the income approach?

A short-term lake rental

What type of property is Valerie appraising if she's using the sales comparison approach?

A single-family residence built six years ago

Which of the following best describes annual percentage rate (APR)?

A standardized measure for interest rates and other loan costs

What is the Torrens system?

A title search method that goes back as far as the previous title search

Paulina is buying her first house. Which of these costs will she NOT be expected to pay?

Agent's commission -Origination, application, and underwriting fees are all fees that a borrower may need to pay. In addition to these fees, the buyer may be responsible for other costs associated with the transaction.

Albert wants to sell his house to his cousin, who's willing to assume his FHA loan. What clause in Albert's mortgage requires him to obtain the lender's permission to do this?

Alienation clause

An example where a lender might place a property in default due to poor property management includes ______.

Allowing moisture intrusion

What feature do most adjustable rate mortgages have?

Allows borrowers to convert to a fixed-rate during a specific period of the mortgage

Which of the following best describes a recourse mortgage?

Allows the lender to sue the borrower for damages if foreclosure occurs

The energy efficient mortgage program insured by the FHA requires an energy consultant to provide the lender with a report listing recommended modifications for energy efficiency, an estimate of the cost for each recommendation, and ______.

An estimate of the energy savings that would result

What is a reverse exchange?

An investor finds and closes on an investment property and then decides to immediately sell another investment property.

A lender requires a title search to finance a transaction. Who pays for this search?

Buyer

Who is responsible for paying the loan-related closing costs in a financed real estate transaction?

Buyer

_______ are part of the loan-approval process and are responsible for completing a loan application and supplying supporting documentation.

Buyers -Prospective buyers complete a loan application and submit it to the lender, along with additional documentation, if they need to obtain financing to purchase a property.

During which phase of the real estate cycle does a real estate professional have the most direct impact?

Buying/selling

The Federal Housing Administration funds its mortgage insurance program ______.

By charging borrowers a mortgage insurance premium

Victor is a buyer reviewing the Closing Disclosure he received from his lender. On the last page of the form, he sees a signature line. By signing the form, Victor has ______.

Confirmed receipt of the Closing Disclosure

Commercial banks offer interim financing in the form of ______ loans.

Construction

Which of the following is designed to make consumer financial products and services fair and transparent?

Consumer Financial Protection Bureau

Cassie is helping her buyer client, Gus. As they discuss preparations for closing, she cautions Gus, "Make sure you review the Closing Disclosure as soon as you receive it and ______."

Contact your lender immediately if you find errors or have any questions

The Baxters are looking at a $425,000 home. They have $90,000 in savings to use as a down payment. What loan type(s) would likely be the best option for them?

Conventional

Farmer Mac is an entity that ______ for agricultural property loans, rural utility loans, and certain loans guaranteed by the U. S. Department of Agriculture.

Creates a secondary market

Interest-only loans are a form of ______ buyer financing.

Creative

Private mortgage insurance protects the lender in case the borrower takes which of the following actions?

Defaults on the loan

The U.S. ______ is the federal agency with the mission to create strong, sustainable, inclusive communities and quality affordable homes for all.

Department of Housing and Urban Development

Juaquin is an appraiser. What purpose do Juaquin and other appraisers serve?

Determine a property's value

John sells his single-family home and purchases a new home for his family to reside in. Marcus owns a single-family home, but rents it out to a co-worker while he is on an extended two-year military tour overseas. Donald sells an apartment complex and purchases a new complex in a different part of the city. Which of these consumers is most likely to take advantage of a 1031 tax-deferred exchange?

Donald - Remember, the property must be held for investment or business purposes. Single-family homes don't qualify.

Which of the following could an investor who sells an apartment house buy using a 1031 exchange?

Duplex, office building, or warehouse

Percy is buying a home with an FHA loan. He uses the ______ to borrow enough money to cover the cost of replacing most of the windows in the home, which will improve its energy usage by 15%.

Energy Efficient Mortgage

The ______ clause protects the borrower's assets that aren't part of the voluntary lien from a deficiency judgment in case of foreclosure.

Exculpatory

In which phase of the real estate market would you expect to see an increase in hiring and employment, increased public confidence, and an increase in buyers in the market?

Expansion -Expansion is where activity starts to really pick up. Companies are hiring, so unemployment decreases. Higher employment means more buyers in the market and more overall public confidence.

When George is working with buyers who can't afford a large down payment, he recommends that they look into ______.

FHA financing -FHA financing is one of HUD's most popular programs, and many residential buyers can take advantage of this option.

Conventional loans from large commercial banks are the primary target for which secondary market player?

Fannie Mae

The ______ is a government-sponsored enterprise that works through a cooperative system to provide agricultural and rural loans.

Farm Credit System

______ creates a secondary market for agricultural loans by buying the loans, pooling them, and selling them as securities.

Farmer Mac

After purchasing a property, what can Jeremiah do to clear a possible future claim on the property's title?

File a suit to quiet title.

Which of these HUD programs allows mortgage lenders to obtain a better price for their mortgage loans in the secondary mortgage market?

Ginnie Mae

Fred is an agricultural lender who helps the ranchers and farmers in his community by providing credit for purchasing land, making repairs to their buildings, and improving their agricultural property. He's able to do this in part because of the ______ offered by the USDA Farm Service Agency.

Guaranteed loans

What's the acronym for the legislation that requires financial institutions to document and publicly disclose lending practices?

HMDA

Scott has plenty of money saved and is ready to make a down payment on his $14 million dream home. One problem: Scott doesn't want to end up with a jumbo loan because he goes over the conforming loan limit. What option does Scott have?

He can take out a piggyback loan.

Appraiser Jamie is looking past how a property is being used to determine a higher value. What is Jamie determining?

Highest and best use

Appraiser Jerry is looking past how a property is being used to determine a more optimal function. What is he determining?

Highest and best use

Identifying the purpose of the appraisal leads the appraiser to do what next?

Identify data needed

Which of the following approaches to value uses a capitalization rate?

Income approach

As interest rates fall, what is the number of buyers in the market likely to do?

Increase

Which of the following is classified as the least liquid on the scale?

Institutional money market funds

Mortgage, homeowners, and flood ______ may be included the mortgage payment.

Insurance -The insurance portion of the mortgage payment may include mortgage, homeowners, and flood insurance.

With a straight mortgage, what type of payments are made up until the end of the loan term?

Interest

Mary Ann is looking for the potential rate of return. What sort of value is she interested in?

Investment value

Sean hasn't paid his property tax. The tax collector places a lien on his property. How is this lien classified?

Involuntary, specific

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.

What's the purpose of the Community Reinvestment Act?

It requires that lenders invest in development and rehabilitation efforts that enable low- and moderate-income individuals and families to afford a home.

Which of the following statements is true about the annual MIP on an FHA mortgage?

It will decrease each year as the loan is paid down.

Which of the following entities commonly acts in the primary market?

Local credit union -The primary mortgage market typically consists of local banks, credit unions, and insurance companies. Generally, these are lenders that work directly with borrowers who are obtaining a loan.

What are securities?

Long- and short-term debt instruments

The Tierney family obtained their four-bedroom home with an FHA loan 10 years ago. In another 20 years, they will have paid it off. Which FHA benefit applies here?

Long-term amortized loan

Natalie and Sam are reviewing the Loan Estimate form to ensure the date, their names, the property address, and sales price is listed accurately. Additionally, the information provided about their loan term, purpose, product, type, and rate lock should ______.

Match what the lender discussed with both of them

The Morris family home went into foreclosure December 15, 2016, and sold January 1, 2017. Their contractor had begun work on May 15, 2015, and was not paid, and finally filed a mechanic's lien on October 1, 2016. What date will be used for lien priority for the mechanic's lien?

May 15, 2015

Babs is buying Kirk's property. Babs needs help with the down payment, and Kirk offers to supplement Babs' bank loan with a second loan, allowing her to meet her lender's down payment requirements. Which finance instrument(s) may be used for the agreement between Babs and Kirk?

Mortgage or deed of trust

The acronym PITI is a reference to what real estate-related concept?

Mortgage payment

Which of the following is the price a lender believes the property will bring at a foreclosure sale?

Mortgage value -Lenders won't lend on what they can't recoup. Therefore, the loan amount will be based on what a lender would hope to recoup, should a foreclosure sale be necessary.

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

Your buyer, Chet, is a veteran trying to buy a house, but the certificate of reasonable value came in $10,000 lower than the agreed-upon sales price. What can Chet do?

Negotiate with the seller

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

Which of the following is NOT a benefit government-sponsored enterprises receive?

Non-profit status

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

What's the definition of a qualified mortgage?

One that meets stringent CFPB guidelines -A qualified mortgage must meet stringent CFPB guidelines that are designed to curb lending practices that led to the late-2000s financial crisis.

The buying and selling of government securities as a way to influence the money supply and balance economic growth describes ______.

Open-market operations

Which of the following statements is true regarding closing costs on a VA loan?

Payment of closing costs may be negotiated.

The section on the Loan Estimate called "Services You Cannot Shop For" includes fees for services ______.

Performed by a third party that the lender selects

Jody is concerned about the ______ encumbrance that doesn't allow her to start her gardening greenhouse because it sits next to a nature conservancy.

Physical

Which of the following can a lender do if a borrower fails to keep homeowner's insurance on the collateral property?

Place lender-acquired insurance on the property and bill the borrower

Which of the following is an example of an inquiry initiated by a creditor (without the consumer's permission) that may appear on a credit report?

Pre-approved credit

______ lending was a contributing factor to the housing collapse in the mid-2000s.

Predatory

Roger has a sufficient income, has never missed a loan or credit payment, and has an adequate credit history. His credit score makes him a very creditworthy consumer. When obtaining a loan, which rate will he most likely get?

Prime rate

What does the lump sum payment at the end of an interest-only mortgage loan consist of?

Principal only

Although the Closing Disclosure lists all amounts as accurately as possible, some costs must be estimated. Why?

Property taxes and insurance may change over the life of the loan, resulting in changes to the required escrow amounts.

What's the purpose of PMI?

Protect the lender in case of borrower default when the borrower has put down less than 20%

Which of these describes the Texas Mortgage Credit Certificate program?

Provides eligible homeowners the opportunity to reduce their federal tax liability -The Texas Mortgage Credit program seeks to improve affordability by offering qualified homeowners the opportunity to receive a dollar-for-dollar reduction in their federal taxes owed for the amount they pay in mortgage interest.

In which phase of the real estate market would you expect to see unemployment and foreclosures remain high but begin to stabilize?

Recovery

The three-business-day period following the latter of either the date that the transaction is consummated or the date the disclosure is made, during which a borrower can cancel their loan, is called the ______.

Right of rescission

Because of the funding fee required for a VA loan, a borrower with no down payment funds saved should ______.

Roll the funding fee into the loan

When completing a loan application, the applicant must list their assets. Which of these is considered an asset?

Savings account

Where can a party reviewing a title commitment find basic details about the transaction?

Schedule A

In addition to lending money to member banks, FHLBanks also do which of the following?

Set rules and regulations that member banks must follow

Melanie is a buyer who has agreed to purchase Stan's property using a contract for deed. Who holds legal title to the property during the term of the loan?

Stan

Which of the following would the FDIC most likely not insure?

Stock certificates

When HUD pursues actions that are designed to restore the financial health of the Federal Housing Administration, which of its goals is it supporting?

Strengthen the housing market to bolster the economy and protect consumers.

Jeremiah is preparing to begin the homebuying process. Which of these is an action he should take?

Take a homeownership education course.

Which agency regulates FHLBanks?

The Federal Housing Finance Authority

Which act establishes general requirements that state agencies must follow when adopting rules or conducting contested cases?

The Texas Administrative Procedures Act

The federal SAFE Act required states to enact licensing and registration requirements related to loan originators, and created the Nationwide Mortgage Licensing System and Registry. Which act was Texas' response to the federal act?

The Texas SAFE Act

Bart is selling his home and has accepted an offer from a buyer, who's obtaining a VA loan. The sale price is agreed upon and is in the purchase contract. Then Bart receives a call from his agent, explaining that the buyer is hoping that Bart will lower the sale price because ______, and there is a risk the buyer will not be able to get the VA loan as a result.

The VA appraiser completed the CRV and it is less than the sale price

A "homes for sale" magazine contains the following ad: "One-bedroom condo. Corner unit with beautiful ocean views. Financing available, 5.25% APR." Which of these statements is true?

The ad is in compliance with TILA because providing the APR doesn't trigger the required disclosure of all credit terms.

What is reconciliation?

The final estimate of value based on results of the appraiser's approaches to value

For tax years 2018 to 2025, a borrower can write off the interest on a home equity loan only if ______.

The funds are used to buy, build, or improve the home that secures the loan

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.

What does it mean when a life insurance company uses participation financing?

The life insurance company participates by taking partial ownership of the project in exchange for funding the 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

Real estate professionals handle many documents related to real estate transactions. Which one of the items listed below is one of the most important in detecting mortgage fraud?

The original sales agreement and any addenda

Sophia and Antonio are expecting twins. They want to sell their old house and buy a larger home using a conventional loan. In order to be sure they'll get the PMI waived, what will they need to have?

They should have a loan-to-value ratio of 80% or less. -Primary mortgage insurance may kick in when the loan-to-value ratio exceeds 80%; that is, the borrower is borrowing more than 80% of the property's value. To be sure they can avoid paying PMI, Sophia and Antonio need to put at least 20% down.

When appraiser Archie uses the sales comparison approach, at least how many comparables may be included in the URAR?

Three

How does the VA qualify a property for a VA-guaranteed loan?

Through a VA-approved appraiser

Beverly has applied for a loan to purchase a Craftsman-style home for herself and her teenage son. Her mortgage broker helps her find an FHA loan program that accommodates her low down payment. Which program will serve Beverly's needs?

Title II, Section 203(b) -The Title II, Section 203(b) loan program is for the purchase of one- to four-unit residences.

Which of the following factors carries the least weight when calculating a credit score?

Type of accounts

How long does the borrower have to pay private mortgage insurance?

Until the borrower reaches a 22% equity position

There are a lot more sellers than buyers in the current market. How does this demand influence value?

Value is pushed downward.

What must a prudent lender do with the information received on a loan application?

Verify it. -The data provided as part of the loan application process must be verified. This process may be manual or automated.

Which veteran loan program in Texas offers qualified veterans help with the purchase of their primary home?

Veterans Housing Assistance Program

How's interest defined as it's related to a mortgage loan payment?

A fee paid to lenders for the use of their money

Lender Sonya wants to make sure the legal description of the Jacobsons' property is accurate. She feels it's essential to determine whether any lot size changes have been made. What might Sonya request to determine this?

A survey

In which of the following situations is a lender prohibited from enforcing an alienation clause?

A transfer between parent and child -The federal Garn-St. Germain Depository Institutions Act of 1982 prohibits the enforcement of the alienation clause when a property is transferred between parent and child.

To which of the following borrowers might a lender be most likely to recommend an FHA loan?

A young couple with only a few thousand dollars saved for a down payment and relatively low credit scores

What type of clause is this? "If any monthly installment under this Note is not paid when due and remains unpaid after a date specified by a notice to Mortgagor, the entire principal amount outstanding and accrued interest thereon shall at once become due and payable at the option of the Note holder."

Acceleration clause

Regional State Bank has made a lot of loans to consumers in the community and is running low on funds. It seeks a loan from the Federal Home Loan Bank. This loan is called a(n) ______.

Advance

For borrowers who already have an FHA loan, the Streamline Refinance program offers the benefit of ______.

An unlimited loan-to-value ratio

Which of the following is an example of an inquiry a consumer initiated that may appear on a credit report?

Application for a loan

Which generation are children of the Silent Generation and products of the U.S. population explosion after World War II?

Baby Boomers -Baby Boomers are the children of the Silent Generation, and were born between 1946 and 1964.

Which of the following sources can provide real estate professionals with important market data?

Banking, bond, and investment analysts

______ is a legal action that liquidates or restructures debt. It can have a long-lasting negative impact on the borrower's ability to obtain financing.

Bankruptcy

In a deed of trust, who is the trustor?

Borrower

Who is responsible for paying the underwriting fee in a financed real estate transaction?

Borrower

How does the consumer provide economic support to a community in the living phase of the real estate cycle?

By purchasing and consuming local goods and services

Chuck needs to make a few repairs and upgrades to his home, but he needs some cash to do it. He decides to tap into the equity in his home, which he purchased using a VA home loan. What VA program can Chuck use to do this?

Cash-Out Refinance

Who typically performs an appraisal?

Certified appraiser -Only certified appraisers do appraisals. It's extremely important that real estate licensees don't refer to a CMA or BPO as an appraisal.

What's the term for an extended period of time during which banks experience more withdrawals than deposits?

Disintermediation

Natalie is a single mother of twins and receives government assistance to help make ends meet. She's been living with her mother for the last few years but really wants to buy her own home to gain some independence. She's got a little in savings and has good credit, but when a lender turns her away because she receives public assistance she worries that she'll never be able to get a loan. What act prevents automatic discriminatory practices by lenders and protects individuals like Natalie?

Equal Credit Opportunity Act

What type of lien is placed on a property as a result of a court order?

Equitable

Johnston was thrilled that he could cash in on the ______ in his home by refinancing, and using it to purchase a camper he had his eyes on for months.

Equity

With what type of loan do the principal and interest payments remain the same for the life of the loan?

Fixed-rate

HUD's strategic plan outlines the ______ that support its mission.

Four goals

______ is regulated by the Federal Housing Finance Agency.

Freddie Mac

What do loans create for banks and other financiers?

Future cash income

Boris is an appraiser working for the Smith family. They've hired him to perform an appraisal on their six-bedroom house. What two types of data will Boris gather?

General and specific

How might a borrower avoid paying the mortgage insurance premium required by an FHA loan?

Get conventional financing

Appraiser John is determining how a property is being used to determine a more optimal function. What is he determining?

Highest and best use

Which of the following programs broke the normal 80/20 ratio rule usually required as a loan-to-value and offered favorable interest rates?

Home Affordable Refinance Program (HARP) -HARP assisted property owners who took out loans after 2009 at a higher interest rate by offering an option to refinance provided they kept up with their payments.

The Morgans are about to close on their home. They're meeting with the lender to complete all the necessary paperwork. They've requested that none of their demographic information be shared with anyone. Which act would they need to be made aware of?

Home Mortgage Disclosure Act

Which of these is actually an amendment to the Truth in Lending Act (TILA)?

Home Ownership and Equity Protection Act -The Home Ownership and Equity Protection Act (HOEPA) was updated in early 2014 and is an amendment to TILA.

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

Fred and Wilma are listing their home for sale with Carl, a licensee. They tell Carl that they're not interested in selling to people who won't "fit in with the neighborhood." Carl advises them about ______ that are developed and enforced within HUD.

Housing discrimination laws -Licensees should be aware of and follow federal laws to prevent discrimination in housing that are developed and enforced through HUD's Office of Fair Housing and Equal Opportunity.

Which of the following describes a mechanic's lien?

It's a specific involuntary lien.

Joseph's got B-rated credit, and his commercial bank suggested he check with the specialty mortgage company down the street because they deal in subprime loans. What's NOT true about Joseph's situation?

Joseph should avoid taking the commercial bank's advice, since a subprime loan is most likely made by a predatory lender.

The CFPB uses education to accomplish its mission, such as the ______ publications.

Know Before You Owe

What's the name of the clause in a promissory note where this language appears: "If the Note Holder has not received the full amount of any monthly payment by the end of ______ calendar days after the date it is due, I will pay a late charge to the Note Holder"?

Late charge provision

Tonia is buying a new home. She has a down payment of $30,000 and will obtain a $250,000 mortgage from a local bank to make up the remainder of the purchase price. What is this an example of?

Leveraging

Because of the Secure and Fair Enforcement for Mortgage Licensing Act, borrowers can determine if mortgage loan originator is ______.

Licensed and registered

Private loan companies may place a ______ on the property for which the loan is being taken.

Lien

The Federal Housing Finance Agency established percentage targets and ______ for loans made to low- to moderate-income borrowers.

Limits for conforming loans

Kate is looking over the document that provides the approximate loan-related costs, along with the loan's terms. What is Kate reviewing?

Loan Estimate

The Barbers are looking to purchase a new home for their family of four, but they'll need to be approved for a loan. What document will they need to complete to initiate their loan process?

Loan application

Denzel's loan payments have been reduced because his lender agreed to extend the amortization schedule stated on his note. This is the result of a ______.

Loan modification agreement

The Bransons have a conventional loan for which they were required to obtain private mortgage insurance. Their local real estate market has been going like gangbusters, and their house is now appraised at twice their loan balance! Will their PMI be cancelled?

Maybe, but they'll have to petition their lender -Cancellation of PMI happens once the borrower reaches a 22% equity position. This is determined by loan-to-value ratio at the time of the purchase. Unless loan-to-value ratio is now 78% or lower, the Bransons would have to petition to get PMI cancelled.

FHA county loan limits are based on ______.

Median price for the area and property type

Two examples of loan adjustments or modifications are recasting and ______.

Moratorium (or forbearance)

Which term describes a lender temporarily agreeing to suspend payments to help the borrower get caught up?

Moratorium (or forbearance)

Which act temporarily removed the requirement that taxpayers whose homes were sold as a result of a foreclosure had to include the loan write-off amount as taxable income?

Mortgage Forgiveness Debt Relief Act of 2007

Which type of real estate investment trust derives a portion of its income from interest dividends?

Mortgage REIT

Under the "Projected Payments" section of the Loan Estimate, the consumer can view what is included in the monthly payment. Which of the following may be part of the total payment other than the principal and interest?

Mortgage insurance

Maria is a borrower reviewing her Closing Disclosure. She notices a section under "Other Costs" with a number of fees that were not shown on her Loan Estimate, such as the commissions to the real estate brokers and the home inspection fee. Should Maria contact her lender about this issue?

No, these are costs that are part of the total cost to close but aren't part of obtaining the loan, so they weren't required to be on the Loan Estimate.

One common predatory lending practice is to charge fees for unnecessary or ______ loan products or services.

Non-existent -Charging fees for unnecessary or non-existent loan products or services is a common predatory lending practice. Another is to charge interest rates greater than 5% over the current market rate.

Lendright Home Loans asked a trustee to begin foreclosure proceedings as permitted by the power-of-sale clause in the security instrument. This action does not need to involve the courts. What type of foreclosure process is being used?

Non-judicial foreclosure

What percentage of closing costs can be included in a VA loan?

None -Closing costs may not be included in the loan, but the borrower may negotiate with the seller to pay these.

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

Conforming loan limits vary based on location and ______.

Number of units being purchased with the property

Which clause is standard in a deed of trust and affects the foreclosure process that can be used if the borrower defaults?

Power of sale -The power of sale clause is standard in a deed of trust and allows the non-judicial foreclosure process to be used in case of default.

Which alternative to foreclosure is being utilized when a lender creates a schedule for the borrower to catch up on delinquent mortgage payments?

Repayment plan

What information does Schedule B-1 of a title commitment provide?

Requirements that must met before a title policy will be issued

The amount of money a member bank must keep on deposit at its reserve district bank describes ______.

Reserve requirements

How do falling interest rates impact investors in mortgage-backed securities?

Returns on investments decrease. -Investors may be negatively impacted by falling interest rates. Lower rates mean smaller interest payments that eventually pass through to investors.

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

When a buyer takes over payments on a loan without telling the lender, this is called a purchase ______.

Subject to existing financing

______ make homeownership available for many who otherwise could not qualify for a mortgage loan.

Subprime lenders

What is one of the ways the U.S. Treasury promotes economic growth and stability?

Supervises national banks and financial institutions.

Which of the following is a potential concern of a buyer who's entering into a contract for deed with a seller?

The buyer could lose the property after missing only one mortgage payment.

Who must provide the buyer and seller with a copy of the closing disclosure?

The buyer's lender -The lender must provide the closing disclosure to the borrower at least three days prior to closing. The settlement agent will provide a closing statement to both buyer and seller.

A multibillion dollar online retail distributor has decided to set up operations in Ashland. The population of Ashland is 22,000. What is the potential impact to the area?

The community is potentially put at risk.

In a residential real estate sale involving a federally related loan, what entity is required to provide Real Estate Settlement Procedures Act disclosures to the consumer?

The consumer's lender -The lender must provide the borrower with a written disclosure of the estimated and final settlement costs.

Joe decided to borrow funds from his retirement account to fund the down payment on his new house. It's now two years later and he lost his job. What is true about his pension plan?

The loan must be repaid immediately. -When the loan is from an employee-sponsored pension plan, the loan must be repaid immediately or be subject to income taxes and penalties if the former employee has not reached retirement age.

Larry obtained a mortgage from State Bank. Larry owns the property, controls it, and has all the rights that come along with real property ownership. State Bank has an interest in the property and one other right. What is that?

The right to foreclose if the borrower defaults

Anna is selling her home and met a nice young couple she really wanted to sell to, but they couldn't get financing. If Anna agrees to carry part of the loan for the buyers, what does she need to understand?

The risks involved

When the Torrens system is used to perform a title search, who acts as title guarantor in case a claim is filed?

The state

The funding fee on a VA loan is waived when ______.

The veteran has a 10% or higher VA disability

One of HUD's goals reflects a response to financial issues experienced in the housing market during the 2007 economic crisis. The goal is ______ to bolster the economy and protect consumers.

To strengthen the housing market

The ______ can offer direct loans to farmers and ranchers. The loans are funded by congressional appropriation.

USDA Farm Service Agency

Which party to the loan approval process evaluates the loan application, the supporting documentation and data, and the property appraisal in order to make an approval recommendation?

Underwriter -Underwriters evaluate the application packet and property appraisal. If the appraisal aligns with the loan amount and the documentation indicates the borrower can repay the loan, they'll probably recommend approval.

Which of the following best describes the state of the market during the recession phase of the real estate cycle?

Unemployment increasing, prices falling, and foreclosures on the rise

Which veteran loan program in Texas offers qualified veterans help with repairs on their current home?

Veterans Home Improvement Program -The VHIP helps qualifying veterans complete repairs or home improvements on their current home. Remember that the "I" represents "improvements."

Rich wants to add a room to his house, so he takes out a home equity loan. This creates a(n) ______ lien.

Voluntary and specific

Rather than face foreclosure, Tony decides to cut his losses. He voluntarily conveys his property to his lender. What type of foreclosure alternative is this?

Voluntary conveyance of deed

When is a loan modification considered?

When a borrower has missed payments but still has some financial security

In what situation would the U.S. Treasury be most willing to sell securities?

When the government's bills exceed income collected

Kaycie is a new employee at a mutual savings bank. During orientation, she learned that mutual savings banks have limitations that are set by their ______.

Charter -Limitations are set by the bank's charter and vary from state to state.

Which of these items is a liability on a residential loan application?

Child support -Child support, when payable, is considered a liability. If the borrower receives child support payments, this is noted under the income section of the application (not as an asset).

On an FHA 203(k) loan, the combined cost of home value and rehab must ______.

Fall within the FHA mortgage limit for the area where the property is located.

What's the acronym for the legislation that prohibits lenders from denying credit to applicants on the basis of their protected class status?

ECOA

What does it mean if the Fed increases reserve requirements?

Member banks must keep more assets on deposit at the reserve bank.

The FHA Energy Efficient Mortgage allows modifications such as solar panels as long as ______.

The cost of the modification is within limits based on the value of the home

What is the trustee's role when a deed of trust is used to secure property for a loan?

To hold legal title to the property on behalf of the beneficiary until the loan is repaid

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

A refinance is always a ______.

New loan -Refinancing pays off the prior loan with a new loan.

What are the main benefits to veterans of the VA-guaranteed loan program?

No down payment, no mortgage insurance, and no prepayment penalty

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

______ is when the outstanding loan balance is reconfigured. It is a form of loan modification.

Recasting

FHA-insured loan programs cover all of the following EXCEPT ______.

Recreational vehicles

Which of the following is a true statement about FHA financing?

An FHA loan is usually more attractive to borrowers who have lower credit scores and down payments.

How do mortgage lenders acquire income?

Loan interest and mortgage packages sold on the secondary market

Veterans who wish to use the Native American Direct Loan must ______ and their tribe must have a valid agreement with the VA to offer the program.

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.

Which is the most important factor used to determine a credit score?

Payment history

The ______ clause in a deed of trust allows the lender to foreclose non-judicially.

Power of sale -The power-of-sale clause can be understood as the borrower granting to the lender a right to sell the property in case of default, making this a non-judicial foreclosure.

What's the term for a loan modification in which the outstanding loan balance is reconfigured?

Recasting

What's one reason a borrower may choose a piggyback (or split) loan?

To avoid paying private mortgage insurance

Fannie Mae, Freddie Mac, and the Federal Home Loan Bank are regulated by the ______.

Federal Housing Finance Agency -GSEs are regulated by the Federal Housing Finance Agency, or the FHFA.