FInance

Danny and Wendy recently relocated to California. They are buying a three-bedroom home in an established neighborhood where they look forward to raising a family. Their real estate agent, Brunhilda, thinks that their income, which is on the low side, and the property could make them eligible for ______, which would offer reduced, fixed interest rates on a loan.

A CalHFA loan product

Limited buyer income, property location and price, and a home buying education course are all eligibility requirements for ______.

A CalHFA mortgage assistance program

The Farm Credit System is ______.

A government-sponsored enterprise

California's Seller Financing Disclosure Law requires the arranger of credit to provide both the buyer and seller with disclosures. What's the timing requirement for this disclosure?

As soon as possible before the execution of any note or security document

Which event led to the establishment of the FDIC?

Bank failures during the Great Depression

Which of the following is an event that has a direct impact on property?

Builders required by the state to recycle aluminum during demolition

Robert is a rancher. He was told about the USDA Farm Service Agency offerings. What can he use an approved loan for?

Building a new hay barn

Which agency is responsible for the production of paper currency?

Bureau of Engraving and Printing

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

Conrad has purchased a home in California and, as a veteran, he's been able to take advantage of the CalVet home loan program. How does this loan program work?

CalVet holds the legal title to the property until the loan is paid off.

Jan is a real estate licensee with a mortgage loan originator (MLO) endorsement. When she acts as an MLO, what law limits the amount of commission and fees she can earn for negotiating a loan on behalf of her client?

California Real Property Loan Law

Lucy is a mortgage banker. Her business is regulated by ______.

California Residential Mortgage Lending Act

Which of the following would the FDIC most likely insure?

Certificates of deposit

Althea is starting her own candle business. Her plan is to rent a space to sell her products for several years, with the hope of expanding. In this scenario, which item represents supply?

Commercial space for lease

Which of these individuals may benefit from USDA Rural Development program offerings?

Community-managed lenders

Which of the following items directly influences real estate supply?

Construction

The ______ uses education, enforcement, and research to promote fairness and transparency for consumer financial services.

Consumer Financial Protection Bureau

Which of the following statements best describes disintermediation?

Consumers are withdrawing more money from banks than they are depositing.

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

Which of the following actions did the Federal Reserve take in response to the 2007 financial crisis?

Decreased rates

The rate at which a bank can obtain a loan from its Federal Reserve bank when using commercial paper as collateral is called the ______ rate.

Discount Rate

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

ECOA

Which generation financed their homes due to also having other debt obligations?

Echo Boomers

Which of the following is part of the Consumer Financial Protection Bureau's mission of consumer protection?

Enforce consumer financial protection laws.

Which of these HUD programs is primarily responsible for providing mortgage insurance on home loans?

FHA

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

FHA financing

Licensees who stay current with ______ can better serve low- to moderate-income clients looking to purchase.

FHA financing requirements

Which of the following entities generally acts in the secondary market?

Fannie Mae

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

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

Farm Credit System

Farm and Country Bank provides credit to the farmers, ranchers, and other rural residents of its community. What government program helps the bank maintain enough capital to fund those loans?

Farmer Mac

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

Which of the following is an acceptable ad based on Regulation Z?

Get a low interest rate of 4.75% (4.925% APR) with as little as 10% down payment and a 30-year fixed rate with no points.

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

HMDA

Celia was obtaining a conventional loan, and she put $50,000 down as a down payment. Why might her lender also require her to obtain private mortgage insurance?

Her down payment of $50,000 isn't at least 20% of the purchase price.

Which of the following was created as part of the Homeowner Affordability and Stability Plan?

Home Affordable Modification Program (HAMP)

Lee manages a rental property for her client, and is accepting applications for tenants. Applicants Damian and Maria are young, newly married, and have a baby on the way. They can't afford a typical rent on a clean, well-maintained two-bedroom home such as the one that Lee has available; but they are recipients of the ______, which Lee knows the property would also qualify for. Lee is glad to accept them as tenants.

Housing Choice Voucher program

Lenny the lender is reviewing mortgage applications. Applicant Catherine has a good credit history, but the property she wants to buy is in an area of town where home prices have been headed down, and neighborhoods are starting to look grim. Lenny denies Catherine's loan application. What California legislation makes Lenny's decision illegal?

Housing Financial Discrimination Act (Holden Act)

In a mortgage, the property is used as collateral for the loan. What's the term for the process of pledging something as collateral?

Hypothecation

Which of the following is a possible result of a community growing too fast?

Inadequate resources to support the population

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

Increase

What is the impact to lenders when mortgage packages are sold?

It provides additional cash flow for new loans.

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.

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

Know Before You Owe

The ease with which an asset is converted to cash is called ______.

Liquidity

During which phase of the real estate cycle do residents engage with local amenities and services?

Living

Kendra is purchasing a home and is ready to find a lender who will give her terms that she can afford. What lender-issued document can she use to compare loans and find the one that will best meet her needs?

Loan Estimate

Which of the following statements is true about usury laws in California?

Loans secured by real property and arranged for by a real estate broker are exempt from state usury laws.

Licensing by the California Residential Mortgage Lending Act allows a mortgage banker to ______.

Make and service any federally related mortgage 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

What does it mean if the Fed increases reserve requirements?

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

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 of these names is also known as the California Real Property Loan Law?

Mortgage Loan Broker Law

What information is included on the Loan Estimate form so that the consumer can confirm the reputation of lending institution and individual?

Nationwide Mortgage Licensing System IDs

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 is one of the benefits of the USDA loan program?

No down payment is required.

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

Betty is purchasing a home and has received Loan Estimates from three lenders. As she compares the terms of the loans being offered, where can she find the section that allows her to make comparisons between loans with different interest rates?

Page three

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

Properties selling for more than their appraised value, many buyers in the market, and lots of new construction

The two most common methods used when a bank fails are the payout method and the ______ method.

Purchase and assumption

HUD's second goal in support of its mission is to meet the need for ______ homes.

Quality affordable rental

Natalie is a licensee who assists buyers in the purchase of HUD ______ when they're listed for sale.

Repossessed homes

The intent of the Consumer Credit Protection Act, which includes the Truth in Lending Act, is to safeguard the consumer by ______.

Requiring full disclosure of the terms and conditions in any offers of credit

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

Set rules and regulations that member banks must follow

John is looking for a home to purchase. If he represents demand, which of the following represents the supply that best fits his needs?

Single-family house for sale

What did the Troubled Asset Relief Program allow the U.S. Treasury to do in response to the 2007 financial crisis?

Spend billions

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.

What term is used to describe loans that were approved for borrowers with lower incomes and poor credit histories?

Subprime

What does the Unruh Civil Rights Act require of real estate licensees?

That they treat all customers and clients fairly and equally, without discrimination

Which of the following was created as a result of the Housing and Economic Recovery Act?

The Federal Housing Finance Agency

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

In response to the increase in foreclosures and losses on their balance sheets, not to mention a reduced market for subprime loans, many lenders slowed their lending activities. What was the impact of this on the overall economy?

The economy headed into a recession.

What is the most likely effect when the Fed sells securities on the open market?

The economy may slow down due to a decreased money supply.

Which of the following describes the prime rate?

The rate at which a bank or lender may loan money to its most creditworthy borrowers

When a lender has a lien on a property via a mortgage, what rights does the lender hold?

The right to foreclose

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

Which statement most accurately describes the 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 program allowed the U.S. Treasury to spend hundreds of billions of dollars to stabilize our financial system, boost credit markets, help families avoid foreclosure, and promote economic growth?

Troubled Asset Relief Program

Regulation Z codifies the rules of the ______.

Truth in Lending Act

To be eligible for a ______, an applicant must have participated in farm or ranch management for at least three years.

USDA loan through the Farm Service Agency

Store of value, medium of exchange, and what other factor define money?

Unit of value

Adam is a real estate licensee. He gets a call from Brad, who tells him that he's getting married soon, and that he and his partner, Zeke, will need to buy a home that is between their places of work. The area where Adam has active listings is right where Brad and Zeke need to be. Adam doesn't agree that gay marriage should be legal, so he tells Brad that he doesn't have time to help but that he can refer Brad and Zeke to another agent. What California legislation makes Adam's action illegal?

Unruh Civil Rights Act

When HUD pursues actions that are designed to end homelessness and promote the health and housing stability of vulnerable populations, which of its goals is it supporting?

Use housing as a platform for improving quality of life.

The Mortgage Disclosure Improvement Act gives applicants a three-day ______ to review and approve the Loan Estimate and Closing Disclosure form.

Waiting period

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

When the government's bills exceed income collected

A mortgage banker licensed under the ______ may make, sell, and service residential mortgage loans.

California Residential Mortgage Lending Act

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

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.

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

Stock certificates

Unit of account, medium of exchange, and what other factor define money?

Store of value

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

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

Farmer Mac

Which entity provides disclosures and public information about the financial condition of FCS?

Federal Farm Credit Banks Funding Corporation

The rate at which a bank can obtain an overnight loan from another bank without providing collateral is called the ______ rate.

Federal Funds

Sylvia is a single mother living in a small town surrounded by ranch and farm land. She would like to buy a house there, but her income level and her status as an independent contractor makes it hard for her to qualify for a conventional loan. What government program might provide her with a direct loan to purchase a home?

USDA Rural Development Single Family Housing Program

Brittany is a real estate licensee with a mortgage loan originator endorsement. When she acts as an MLO, the California Real Property Loan Law requires her to give her clients a disclosure that ______.

Informs the prospective borrower about the terms of the loan being offered

Disclosures under the ______ are required when the seller is extending credit to the buyer or anyone other than the buyer or seller is paid in any way to arrange financing.

Seller Financing Disclosure Law

Which of the following is Fannie Mae most likely to purchase?

A conventional fixed-rate mortgage issued by a commercial bank

What's depreciation?

A decrease in property value

Which statement describes a conforming loan?

A loan that meets certain criteria that are accepted by Fannie Mae and Freddie Mac

Which of the following best describes a non-recourse mortgage?

A mortgage with a clause that prohibits the lender from suing the borrower for unpaid amounts if foreclosure occurs

Horace recently purchased 1,000 shares of a security that's made up of hundreds of mortgages. The principal and interest that borrowers of these underlying mortgages pay are eventually passed through to Horace and the other investors. What did Horace purchase?

A mortgage-backed security

What is a government-sponsored enterprise?

A private company the U.S. Congress created to make certain borrowing easier and cheaper

What is a carryback loan?

A second loan financed by the seller

How are account numbers displayed in a credit report?

Accounts numbers are truncated for security purposes.

What does ARM stand for?

Adjustable rate mortgage

The ______ clause is also known as a due-on-sale clause.

Alienation

A goal written according to the SMART criteria is ______.

Aligned with your personal values

Which of the following best describes a recourse mortgage?

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

Curtis is completing a residential loan application. Which of the following would he include in the assets section?

Amount on deposit at his bank

Under the "Summaries of Transaction" section on page three of the Closing Disclosure, amounts listed for the borrower's transaction are calculated to result in ______.

An amount due from the borrower, which will match the cash to close amount

What is the three-property rule as it relates to tax-deferred exchanges?

An investor can identify up to three replacement properties and not encounter a restriction regarding fair market value as long as debt load requirement is met.

Who needs to obtain a mortgage loan originator endorsement and register with the Nationwide Mortgage Licensing System and Registry?

Anyone who acts as a mortgage loan originator

Everyone can benefit from following a personal financial plan. Why is this especially important for the independent contractor?

Because income is not as reliable as it is for a regular employee

Bill's loan is secured by a mortgage. Who holds legal title when this security instrument is used?

Bill

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

Chapo's property was foreclosed on and he is facing a deficiency judgment so the lender can recover losses incurred from the foreclosure process. What type of lien may the lender levy against Chapo until the losses are paid?

Blanket lien

In a deed of trust, who is the trustor?

Borrower

In which U.S. market(s) do foreign lenders participate?

Both the primary and secondary mortgage markets

Secured corporate bonds use ______ as collateral.

Corporate assets

What is it called when the borrower and lender work together to restructure the terms of a home loan?

Loan modification

Which of the following REITs focuses on lending money for mortgages and investing in mortgage-backed securities?

Mortgage REIT

Taylor Bank and Trust is a Federal Reserve Member bank. It has several employees who act as mortgage loan originators. With which entity do these employees need to register?

Nationwide Mortgage Licensing System and Registry

What does REIT stand for?

Real Estate Investment Trust

Who's the mortgagee in a mortgage?

The lender

Who distributes the trust assets of a person who died?

The successor trustee

Which factor that influences value considers the property's function?

Utility

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

"Due from Seller at Closing"

Approximately how many states have predatory lending laws?

36

Which consumer inquiry has Zachary initiated that may appear on a credit report?

Application for a loan

Izzy wants to know how much of her income to allocate to her income tax savings account. What should Izzy do?

Ask her tax professional

Which of the following net worth examples may a lender view most favorably?

Assets exceed liabilities

Which of these is an essential rule for a licensee's finances?

Business and personal accounts should be maintained separately.

With a VA loan, the certificate of reasonable value is used to ______.

Determine the value of the loan that the VA will guarantee

For which of these properties would gross rent multiplier be calculated?

Duplex used as a rental property

Of the institutions listed, which of these is viewed only as a secondary mortgage market player?

Fannie Mae

Another term for a valuation is ______.

Formal appraisal

A loan made based on the amount of equity available in an person's home or property is called a ______.

Home equity loan

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

Insurance

What does the concept "first in time" refer to when discussing lien priority?

Liens are paid based on date of filing.

Life insurance companies are more concerned with long-term stability of investments than they are ___________.

Liquidity

A requirement of the Native American Direct Loan is the borrower must live ______.

On federal trust land

Don uses one hour each week to perform certain tasks, including ______, as part of his personal financial system.

Paying any bills that are due

Which agency sets the guidelines for qualified mortgages?

The Consumer Financial Protection Bureau

Tom's CRV came in low and he's decided to make up the difference in cash. What else will be required?

The VA may require Tom to prove the source of his funds.

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

The base loan amount

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

Which of the following statements is true about government loans?

They're insured or guaranteed by a government agency.

Which calculation looks at all recurring (or installment) debt—such as monthly mortgage, car, credit, and loan payments—as a percentage of the borrower's monthly gross income?

Total debt ratio

What does TILA stand for?

Truth in Lending Act

What type of interest rate might a HELOC have?

Variable or fixed

When is a loan modification considered?

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

A veteran who has received a certificate of eligibility will qualify for a VA loan ______.

With proof of sufficient credit and income

A buyer with a 20-year, $419,000 loan at a 4.25% interest rate has a monthly principal and interest payment totaling $2,594.59. If $1,483.95 is interest, how much is applied toward principal for that payment?

$1,110.64

Calvin purchased a house for $220,000, financing $200,000 using a 30-year conventional mortgage at 4% interest. His monthly payment is $955, including both principal and interest. The annual property taxes are $1,400 and the combined annual insurance premium is $900. What's Calvin's PITI payment each month?

$1,146.67

What is the maximum penalty a licensee can be assessed for MLO-related violations?

$10,000

Jason bought a home four years ago for $153,000. If his home appreciated at an annual rate of 3%, how much would his home be worth today (round to the nearest dollar)?

$172,203

The Ropers are purchasing a home using VA financing. The sales price of the home is $210,000. The CRV comes in at $215,000. On what number will the VA's loan guarantee be based?

$210,000, the sales price

What is the current value of a property that was purchased two years ago for $260,000, assuming an appreciation rate of 2%?

$270,504

A seller wants to net $10,000 after the broker's commission of 6% and a loan balance of $250,000 are paid. For how much does the property need to sell?

$276,596

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

A buyer with a $350,000 loan has a monthly principal and interest payment of $2,102.36. If $1,801.23 is interest, what's the new principal balance after the first payment is applied?

$349,698.87

A buyer with a 15-year, $250,000 loan at a 5.5% interest rate has a monthly principal and interest payment totaling $2,042.71. What's the total amount the borrower will pay back over the life of the loan?

$367,687.80

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

A shopping mall

Which of the following is a potential ramification for the seller if a short sale is completed?

A short sale can negatively impact the seller's credit.

Brandi is determined to pay off her outstanding credit card debt. She has four credit cards with outstanding balances: Card 1 has $1,500 dollars on it and a 12% rate, Card 2 has $2,000 on it and an 8% rate, Card 3 has $800 on it and a 15% rate, and Card 4 has $330 dollars on it and a 22% rate. Which one should she pay off first?

Card 4

A lender was not able to recover all of the losses incurred during the foreclosure process. What could it pursue to recoup these losses?

Deficiency judgment

Credit flows to rural communities largely through the actions of ______.

Farmer Mac

Matt owns Pic Bar Ranch and is looking to purchase the adjacent ranch. When he talked to his local lender, the lender offered Matt a loan that will likely be backed by _____.

Farmer Mac

When establishing guidelines for conforming loans, Fannie Mae and Freddie Mac use loan limits set by which entity?

Federal Home Financing Agency

MLO applicants give permission for a credit report to be pulled so the NMLS can evaluate whether the applicant demonstrates ______.

Financial responsibility

To qualify for a mortgage loan originator endorsement, applicants must meet education, examination, credit report, and ______ requirements.

Fingerprint

Chad had some major medical expenses that he didn't plan for, and he wants to slash his budget in order to pay off the debt quickly. He considers selling his home and renting an apartment, which will make a big difference in his _________ expenses.

Fixed, essential

Which of the following is NOT an accurate statement regarding the title?

Foreclosed properties rarely have clouded titles.

Which action can be taken if you don't pay a lien against your property?

Foreclosure

Your client has a VA loan and wants to refinance to a lower rate. Which of the following is likely the simplest option?

Interest rate reduction refinance

What is the interest rate on a VA loan?

It varies by lender

Melissa is a new licensee. Which of these items will be among the expenses she will incur as she begins her business?

Lockbox fee

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

Recreational vehicles

Which of the following activities must occur before a trustee can begin a non-judicial foreclosure?

The mortgage service must notify the borrower of their delinquency and foreclosure alternatives

When does the mortgage insurance requirement end for a borrower with a VA loan?

There is no mortgage insurance requirement for a VA loan.

Which of the following is true about mortgage brokers?

They don't service the loan beyond placement.

Rhonda is purchasing a house from the Brookses. She has obtained financing, and her lender requires her to have title insurance. The company she selects conducts a title search. Why?

To ensure that the title to her new home is marketable

The purpose of a living expenses savings account is ______.

To hold extra living expenses when income is high, so that the money is "out of sight."

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

What is the purpose of the California Foreclosure Reduction Act?

To regulate lenders so that borrowers have a better chance to avoid foreclosure

The Federal Housing Administration is part of the ______.

U.S. Department of Housing and Urban Development

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

A buyer is purchasing a property for $500,000. His lender's loan-to-value ratio is 90%. How much is the buyer financing?

$450,000

Three months ago, Jamie started performing MLO activities, but she has yet to obtain an MLO endorsement. How much will she be penalized?

$50 per day for the first 30 days of the violation, $100 per day starting on the 31st day

A buyer obtained a 30-year, $205,000 loan with a 5.0% interest rate. How much of the monthly payment is interest?

$854.17

What is the formula for calculating the total housing ratio?

(Monthly housing expenses ÷ gross monthly income) × 100

In calculating PITI for a mortgage payment, the annual taxes and insurance are divided by ______ and are added to the monthly principal and interest payment to make up the total monthly payment.

12

In a judicial foreclosure, if a deficiency judgment will be sought, how soon after the Notice of Levy is recorded can the Notice of Sale be issued?

20 days

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

Over how many years is a residential income-producing property depreciated?

27.5 years

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%

Over how many years is a commercial property depreciated?

39 years

The Covered Loan Law limits total fees and points paid by the borrower prior to closing to what amount?

6%

Homeowners over the age of ______ are eligible for the HECM program.

62

You're working with a buyer who's purchasing a home that appraised at $80,000. The buyer is obtaining a 90% loan, and the lender will charge a one-point origination fee at closing. How much will the loan origination fee be?

720

A property valued at $500,000 is returning a net annual income of $45,000. What is the cap rate for this investment?

9%

Which of the following describes loan-to-value ratio?

A calculation that describes the amount being borrowed compared to the value of a property

Which of the following describes total debt ratio?

A calculation that looks at all recurring (or installment) debt, such as monthly mortgage, car, credit, and loan payments, as a percentage of the borrower's monthly gross income

Which of the following would be the best place to keep monies intended for long-term savings?

A certificate of deposit

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

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.

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

A fee paid to lenders for the use of their money

What's a deficiency judgment?

A judgment that allows the lender to collect the difference from the borrower if the foreclosure sale does not satisfy the debt.

Which of the following describes an encumbrance?

A lien on the property due to an unpaid tax bill

In a deed of trust, who is the trustee?

A neutral third party

Which of these statements about a buydown is true?

A permanent buydown will cost more than a temporary buydown.

A foreclosure occurs January 1, 2016. Of the following, which lien takes priority?

A property tax lien filed January 1, 2014

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

A short-term lake rental

Which of the following would be a receipt you should save for tax purposes?

A toll fee for a business trip

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

A transfer between parent and child

What is a seller carry back?

A type of financing

Janice is extremely excited to have purchased her first home. She was able to lock in her monthly payment at a very low rate for the first five years. In year six, Janice's payments will become significantly larger based on the going market rates. What type of loan does Janice have?

Adjustable rate mortgage

When completing a loan application, applicants must list any items of value they own. What's another term for these items?

Assets

How should you analyze data obtained from tracking your personal spending?

Assign categories to all items and look for trends.

How much should the emergency fund hold, according to the recommendation for creating a responsible financial plan for personal finances?

At least six months

Kendra and her real estate agent are preparing to close on the property she's purchasing on Thursday. Kendra will sign the paperwork with her lender to close on the loan at the same time. When does the lender need to provide Kendra with the Closing Disclosure form?

At least three business days prior to closing on the loan

Philomena and Barbara are the buyer and seller in a real estate transaction. By when must the closing disclosure be provided to them?

At least three days prior to closing

Dana typically drives clients to and from showings. Which of the following types of insurance provides the best coverage while transporting clients?

Auto

Ava is borrowing money to buy some commercial property for her business. The loan agreement she signs includes a lock-in clause. What does that mean?

Ava will not be allowed to pre-pay the loan prior to the date specific in the loan agreement.

Linda is estimating her annual income. She expects that her commission will be 2.5%, and she plans to close at least seven transactions in the year. What else does she need to complete her estimate?

Average sale price of homes in the area where she'll be working

Completing a residential loan application requires providing information about the loan being requested, the property being purchased, and the ________.

Borrower purchasing the property

What is one way that the FHA has helped to stabilize and improve the mortgage market?

By requiring appraisers to be state licensed or certified to evaluate property for FHA-insured loans

Biff is completing a residential loan application. Which of the following would he include in the liabilities section?

Car loan

A VA loan program that allows a veteran to refinance at a lower rate and receive cash proceeds to fund other investments or purchases is ______.

Cash Out Refinance

Mutual savings banks have limitations on their lending activities, as specified in their ______.

Charter

Which of these items is a demand deposit?

Checking account

Mark is a single father applying for a loan to buy a house of his own. Which of these items is a liability on a residential loan application?

Child support payment

Two days before closing, Barb reviews her final loan terms and closing costs. She must bring $100,000 to the closing. What document is she reviewing?

Closing Disclosure

Fatima is using a VA loan to purchase a home from Sue. Sue agrees to pay Fatima's closing costs. Which of the following statements is true?

Closing costs aren't considered a seller concession.

Georgette and Elise are buying a home together, and have taken out a loan with a private loan company. They'll pay a bit more interest, and larger fees, but they feel it's worth it to have the home they've always dreamed of. What else might the private loan company require?

Collateral

Private loan companies may charge higher interest, larger fees, and could require ______ to secure a loan.

Collateral

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

Which type of loan is commonly used for the purpose of building improvements?

Construction loan

Stan builds new homes. He feels good knowing that he's providing safe and healthy homes for the community and that they are quality structures that will shelter people for many years to come. Which FHA benefit is at work here?

Construction standards

Which real estate finance instrument includes the promise to repay and the security instrument within the same document?

Contract for deed

When a buyer obtains an FHA loan, the seller may ______.

Contribute up to 6% of the sales price (or appraisal, if that's lower) to the buyer's closing costs

Which of the following is a true statement about an IRA?

Contributions to a SEP IRA are pre-tax contributions.

Memoryjet, Inc has developed a new technology for high-volume jump drives. In order to manufacture their new devices they will need to gear up a new production line, which will cost about $85 million. What kind of bond instrument could they use to help secure the funds they need for their new line?

Corporate bond

Which of the following entities has the authority to place an equitable lien on a property?

Court order by judge

The ______ restricts refinancing when the new loan has no identifiable benefit to the borrower.

Covered Loan Law

If you have a specific health issue, which of the following is most critical for you to thoroughly investigate when selecting health insurance?

Covered events

Juan's credit score is being pulled. Which of these actions would have a positive effect on his score?

Credit accounts with low or no balances

Jackson has received several inquiries on his credit report. Which of these inquires was one he did NOT initiate?

Credit monitoring

A lender, reviewing a prospective applicant's loan application, wants to verify that he has a solid history of paying obligations on time. What should the lender request from him?

Credit report

To qualify for a mortgage loan originator endorsement, applicants must meet education, examination, fingerprint, and ______ requirements.

Credit report

Which of the following is an alternative to foreclosure?

Deed in lieu of foreclosure

Which factor influences property value and addresses questions such as, "What's the market like?" and "Are there more buyers than sellers, or vice versa?"

Demand

Which of the following is a form of commercial bank revenue related to mortgage financing?

Demand Deposits

Which of these financial tasks should be planned on a quarterly basis?

Disburse funds from the income tax savings account

To qualify for a mortgage loan originator endorsement, applicants must meet examination, fingerprint, credit report, and ______ requirements.

Education

How many hours of continuing education must real estate licensees complete each year to renew their MLO endorsement?

Eight hours

Jackson holds a real estate broker license with an MLO endorsement. How many hours of continuing education must he complete each year to renew this endorsement?

Eight hours

Which of the following is an aspect of government loans?

Either insured or guaranteed by the government

Kathy has some unexpected expenses when she breaks her leg skiing. Which of the accounts in her personal finance system is designed to help her pay bills while she is recovering and unable to work at her usual pace?

Emergency fund

When a promissory note is sold, how is ownership transferred?

Endorsement of the note

Your clients, the Nguyens, have signed a contract for deed to purchase a property. What rights do the Nguyens receive?

Equitable title and possession of the property

Which type of real estate investment trust is designed to deal exclusively in equities?

Equity REIT

Dan is being sued by a former client who feels that Dan didn't provide him with adequate service. Which of the following insurance coverage will Dan need?

Errors and omissions

Before you can create a budget for your personal finances, you should ______.

Estimate annual and monthly income

Jackson holds a real estate broker license with an MLO endorsement. How often must he renew his MLO endorsement?

Every year

To qualify for a mortgage loan originator endorsement, applicants must meet education, fingerprint, credit report, and _____ requirements.

Examination

This could happen if a factory were put in next door that changed and impacted property value.

External obsolescence

Goldie and Kurt are looking at purchasing their first home. Their credit history is a little shaky and they don't have enough money saved to put down 20%. What type of loan seems most appropriate?

FHA

Carmen purchased a single-family residence in Monterey County for $480,000 using an FHA loan and FHA's minimum down payment. At the same time, Yancy made an offer on a single-family residence not far away in Fresno County for $300,000 with FHA's minimum down payment and was told he could not use an FHA loan for the purchase. Why?

FHA loan limits in Fresno County are lower than they are in Monterey County.

Commander Halfback retires after 25 years of service in the Coast Guard. He is looking to buy a home. What type of loan should he use?

FHA, VA, or conventional

Which institution was created as the Federal National Mortgage Association in 1938?

Fannie Mae

Which secondary market player would be interested in purchasing a loan from a commercial bank?

Fannie Mae

In 2008, as a response to the 2007 financial crisis, the Federal Housing Finance Agency began acting as conservator over which institutions?

Fannie Mae and Freddie Mac

Robbie's lender notified him of an impending foreclosure, and told Robbie that his property will be sold at public auction. After the auction occurred, he receives a notice of eviction for which the lender had to petition a court. What does this describe?

Foreclosure by advertisement

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

A loan with lower payments in the early years that increase gradually until they are sufficient to amortize the loan fully is a(n) ______ mortgage.

Graduated payment

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

The Federal Housing Administration's loan program is designed for borrowers who ______.

Have a minimal down payment and less than stellar credit

When a real estate transaction is financed using a contract for deed, what advice should real estate agents give to their clients?

Have an attorney review the contract.

The three general groups of international buyers that real estate professionals may encounter are those who ______, those who are looking for a vacation home for when they travel to the U.S., and those who are looking for a luxury property as an investment.

Have work visas and are looking for a home to purchase while they're in the U.S.

Dylan has to choose between spending money on a new guitar or on a dishwasher to replace the one that recently died. What would be an appropriate choice?

He should align his choice with the thing he values more: a new guitar or conveniently clean dishes.

Janice is selling her five-bedroom, three-bath home. She has a marketable title. What does that mean?

Her property's title is free and clear of liens and is only subject to loan payoff and any taxes owed.

Dennis is a new licensee who's estimating his annual gross income for his first year. He plans to close at least five transactions that year, and he's researched average home prices in the area where he'll be working. Dennis finds that the average sale price is $280,000. What other data point does he need to complete his estimate?

His expected commission rate, minus his broker's split

What type of loan is given based on the amount of equity a borrower has in the home?

Home equity loan

What's another name for California's Foreclosure Reduction Act?

Homeowner Bill of Rights

Why did investors purchase CMOs prior to the 2007 financial crisis?

Housing price appreciation appeared to be a sure thing.

What's the name of the calculation that looks at a borrower's monthly housing obligation—including principal, interest, taxes, and insurance, as well as any homeowners or condo association fees—as a percentage of their monthly gross income?

Housing ratio

Julia is applying for a loan. Her lender uses her credit scores to determine whether to approve her loan application. What do Julia's scores tell the lender?

How likely Julia is to repay the money that she's borrowed

Which type of real estate investment trust derives its income from the rent or sale of property and interest dividends?

Hybrid REIT

What makes the HECM program safer for borrowers than a traditional reverse mortgage?

If more equity is paid out than remains, the homeowner doesn't have to make up the difference.

Which of the following is a risk most associated with wholesaling as a real estate investment strategy?

Inability to immediately resell the property for a profit

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

Ginnie Mae only guarantees mortgage-backed securities that contain loans ______.

Insured or guaranteed by U.S. government agencies

What's a key feature of the Federal Housing Administration's loan program?

Insures lenders against loss from borrower default

Which of the following could be different from the amount on the initial Loan Estimate and can impact the monthly payment?

Interest Rate

Which of the following is a true statement about deducting interest on mortgages taken out in tax years between 2018 and 2025?

Interest on the first $750,000 of mortgage debt is deductible for married couples filing jointly or $375,000 for married couples filing separately.

Which of the following may cause the Loan Estimate to be revised?

Interest rate change, switch to fixed-rate loan, down payment amount change, and property appraisal reveals increase in value

Which of the following best describes an equity real estate investment trust?

Invests in equity by owning income-producing property, such as malls, apartments, or office parks

Which of the following best describes the function of a deficiency judgment in the case of a foreclosure?

It allows the lender to recover losses incurred in the foreclosure process.

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.

In the non-judicial foreclosure process, when does a borrower's reinstatement period begin and end?

It begins when the Notice of Default is filed and ends five days before the trustee's sale occurs.

In California, how has state law modified the way the deed of trust works?

It creates a lien on the property, and the borrower, not the trustee, holds legal title.

What is the purpose of the Loan Estimate?

It gives buyers an idea of loan costs so they'll be able to make an informed decision about the loan.

Which of the following best describes a blanket lien?

It gives lenders the ability to recover losses due to a foreclosure sale from any current or future property the borrower owns.

Lucas would like to be a homeowner, but his low credit score makes lenders unwilling to give him a mortgage. What makes the 203(b) loan a more likely option for Lucas to qualify for a mortgage?

It has less stringent qualifying requirements than a conventional loan.

Buyer Sally is hoping to buy the Sandersons' condo. During a title search, a cloud on the title is discovered. What might happen to the transaction?

It will come to a halt until the cloud is cleared.

Brian is completing a residential loan application. On the application, he lists his assets. What are assets?

Items of value the borrower owns

You don't qualify for financing, but are able to invest in real estate because your role as a licensee is helpful in this type of investment strategy.

Joint venture

Armitage Bank is placing the Kellermans in default for failure to pay their homeowners insurance. The lender is concerned about property damage and ______.

Judgment liens

This foreclosure process must be used when the security instrument doesn't contain a power of sale clause.

Judicial

Which of these business structures offers personal liability protection in the event of a lawsuit against the licensee's business?

LLC

Which of the following clauses is included in Fannie Mae's multi-state note?

Late charge

In a deed of trust, who is the beneficiary?

Lender

A seller is offering a second loan to help the buyer with her down payment via a contract for deed. Why might the buyer's lender have an issue with this?

Lenders don't like a contract for deed arrangements.

Laura is considering her personal financial goals. Which of these should be first on her list?

Living within her means

Freddie Mac and Fannie Mae set guidelines for conforming loans. Which of these are qualifying guidelines?

Loan amount, down payment requirement, loan-to-value ratio, and housing debt-to-income ratio

The lender, the employer, and the ______ all complete parts of the request for verification of employment form.

Loan applicant

Zara is reviewing the "Calculating Cash to Close" table on page three of the Closing Disclosure to see what has changed from her Loan Estimate. She found this extremely helpful and easy to understand because the table explicitly lists _______.

Loan estimate and final amounts side-by-side

Conforming loan limits vary based on the number of units being purchased with the property and ______.

Location

Which of the following is an example of an involuntary, specific, statutory lien?

Materialman's lien

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

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

Mortgage REIT

Which type of real estate investment trust involves both residential and commercial properties?

Mortgage REIT

Which person or entity works with many different lenders to find the best loan for the customer?

Mortgage broker

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

Beth needs help with the down payment to buy Mark's property. Mark is going to supplement Beth's bank loan with a second loan, allowing her to meet her lender's down payment requirements. What finance instruments may be used for this agreement?

Mortgage or deed of trust

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

Mortgage value

What's the term for a group of loans packaged together and then sold to investors on the secondary market?

Mortgage-backed security

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

Which type of bond is used to pay for community improvements?

Municipal bond

Private loan companies may be found in many places. There are ______, regional, and local lenders, and even individual entrepreneurs who loan money.

National

Any person acting as a mortgage loan originator must register with the ______.

Nationwide Mortgage Licensing System and Registry

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

A refinance is always a ______.

New loan

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.

Which method of foreclosure does not involve the court, but includes a trustee's sale?

Non-judicial

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

A mortgage with a clause that prohibits the lender from suing the borrower for unpaid amounts if foreclosure occurs is called a ______ mortgage.

Non-recourse

Siobhan has a mortgage with a clause that prohibits her lender from suing her for unpaid amounts if foreclosure occurs. This is called a ______ mortgage.

Non-recourse

To qualify for the FHA Streamline Refinance program, a homeowner must ______.

Not be delinquent on mortgage payments

Your client, Yolanda, is a nurse. Does she qualify for the Good Neighbor Program?

Not unless she is also an EMT

Victor is selling his property to Sheila. He's acting as the lender, and the property is unencumbered. Which of the following options describes the type or types of financial instruments Victor may use for the loan agreement?

Note with a contract for deed, mortgage, or a note with a deed of trust

Lisa, a seller, is providing Darwin, a buyer, with a seller second on the purchase of her property. Darwin's conventional lender uses a note with deed of trust to secure the first loan. What instrument is Lisa most likely to use for her second loan with Darwin?

Note with deed of trust

Jacob is selling his unencumbered property to Shem and is acting as lender in the transaction. Which type(s) of finance instrument can Jacob use for the loan agreement?

Note with mortgage, note with deed of trust, or contract for deed

Bobby is completing a residential loan application. On the application, he lists his liabilities. What are liabilities?

Obligations the borrower owes

Maura is a real estate salesperson who does not have an MLO endorsement. Which of these actions can she perform for her client, who is financing the purchase of a single-family home?

Offer to provide the client with a list of lenders they could consider working with to obtain the loan.

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

How long is an MLO endorsement valid?

One year

While Fannie Mae considers total and housing debt-to-income ratios in its underwriting process, Freddie Mac considers ______.

Only total debt-to-income

Several actions take place on the secondary mortgage market. Which of these is a common activity?

Packaging loans into mortgage-backed securities

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

Participation

In which type of partnership is the lender a partner as well as the financier?

Partnership between mortgagees and mortgagors

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

Which of the following may a lender request to verify an applicant's work history and earning information?

Pay stub

How can a foreclosure be stopped or prevented?

Paying all outstanding liens against the property

Which of these are established by the Federal Housing Finance Agency?

Percentage targets for loans made to low- to moderate-income borrowers

Which of the following is an MLO violation?

Performing MLO activities before notifying the Bureau of Real Estate

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

Power of sale

The ______ clause allows the borrower to pre-pay principal on the loan at any time without penalty.

Pre-payment

Ronald marries and wants to start a family. Which of the following would be important in his selection of an insurance carrier?

Premiums and deductibles

Scott is an MLO. Arthur, his assistant, does not have an MLO endorsement. Which of these activities must be performed by Scott?

Presenting a loan offer to a consumer for acceptance

One of these actions is considered an MLO activity. Which one?

Presenting a revised loan offer to the consumer after they requested a lower rate

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.

The document that describes the loan amount and the terms for repaying and is attached to a security instrument is called the ______.

Promissory note

What's the purpose of PMI?

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

A borrower sued a foreclosure consultant for violating the Mortgage Foreclosure Consultant Law. The borrower may receive actual damages, legal fees, and, in severe cases ______.

Punitive damages up to three times the borrower's actual damages

Ally is reviewing the personal information on her credit report. What information is NOT included in the personal information section?

Race and ethnicity

A mortgage that allows the lender to sue the borrower for damages if foreclosure occurs is called a ______ mortgage.

Recourse

Jackson holds a real estate broker license with an MLO endorsement. When he renews his MLO endorsement, what does he need to submit to the NMLS?

Renewal fee

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.

Seth is purchasing a vacant piece of land, on which he'll build a new single-family home for his growing family. His real estate agent, Dani, is authorized to assist him with the loan he uses to buy the property because Dani has her MLO endorsement and this is a ______ loan.

Residential mortgage

______ 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

What qualifying ratios are used in a VA home loan?

Residual income and debt-to-income

Section 255 of the Title II FHA-insured loan program covers ______ mortgages for borrowers age 62 or older.

Reverse

Margaret isn't ready to buy Jill's property, but she pays Jill a fee that guarantees she'll be notified if another buyer appears. If another buyer does make an offer, Margaret has the opportunity to purchase at the price and terms of the offer. Margaret has a(n) ______ on Jill's property.

Right of first refusal

Which of the following made mortgages attractive investments?

Rising home prices

Jared is buying a condo from Luke. Sally is Jared's lender, and Thomas is Jared's agent. Meredith is Luke's agent. Who is responsible for providing the Loan Estimate?

Sally, Jared's lender

Gertrude is buying Sam's house, and Sam has agreed to finance the purchase. Gertrude is aware that a seller-financed transaction creates certain risks for her that a conventional loan wouldn't. Which of the following is an issue that Gertrude is protected from via her loan agreement?

Sam could sell the property to another person at any time, canceling Gertrude's equitable interest in the property and her right to possess it.

More than 70% of the assets of mutual savings banks are derived from ______.

Savings accounts

Which commitment section matches the schedule to its description and provides information related to the transaction, including legal description and parties?

Schedule A

Where can a party that's reviewing a title commitment find exceptions that aren't covered by the title insurance policy?

Schedule B-2

Which section of a commitment identifies exceptions to title insurance coverage?

Schedule B-2

Institutions that purchase loans, package them into mortgage-backed securities, then sell these to investors may commonly be referred to as ______.

Secondary market players

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 ______ sets requirements for mortgage loan originators.

Secure and Fair Enforcement for Mortgage Licensing Act

Elijah has identified his personal values, estimated his income, and analyzed his current expenses. With this information, he's ready to ______.

Set his financial goals

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

A homeowner is behind on his mortgage. He's decided to try to sell the property and is working with his lender to do so. He owes $315,000 on his loan balance and closing costs. He has an offer for $300,000, which the lender approves. What is this an example of?

Short sale

With this alternative to foreclosure, borrowers receive permission from their lender to sell the property for less than the amount owed on the borrower's mortgage.

Short sale

Shania is having work done on the house she just purchased using an FHA 203(k) loan. How much time does the contractor have to complete the work?

Six months

Regina has defaulted on the terms of her mortgage, and now her lender has foreclosed. The property was sold at a sheriff's sale three months ago. Regina suddenly learns that she has inherited a great deal of money. She wants her property back. Under a judicial foreclosure, what right might allow her to buy her property from the winner of the foreclosure auction?

Statutory right of redemption

Samuel and Yoshi have worked at the same firm for a few months and get along well. Samuel mentions he has a credit score in the low 800s. Yoshi, who's just starting out, persuades Samuel to sign for a loan to help Yoshi buy a property, since his credit isn't good enough. Yoshi promises to make the mortgage payments, but two months after the deal closes, Yoshi moves across the country. Samuel's now stuck with a $400,000 mortgage. What type of scheme is this?

Straw buyer

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

Subject to existing financing

A developer, Howard, has purchased land with the expectation of constructing an apartment building. He explains to his lender that he'll need a construction loan as well, so the mortgage they sign includes what kind of clause to allow the construction loan's lien position to take priority?

Subordination

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

Borrower Max is reviewing his Closing Disclosure to check the amount of prepaid mortgage insurance, taxes, and interest. In addition to itemizing what his borrower-paid closing costs are, the prepaid section includes ______ for each item.

The applicable time period

Which of the following is a true statement about borrower qualification standards for a VA-guaranteed loan?

The applicant must have a certificate of eligibility.

Which statement best describes the most common approach used to reconcile the three appraisal approaches?

The appraiser may weigh one or two approaches more heavily than the others, as appropriate for the property type.

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.

What is a short sale?

The borrower sells the property, but for less than the amount owed on the property

Sara has finished completing her loan application. She has gathered the necessary documentation and will be informed whether the application will be approved. Who is Sara?

The buyer

How is a loan assumption documented?

The buyer and seller both sign an assumption agreement.

Borrowers Ava and Liam are expecting their first child and want to be sure they're both comfortable with the monthly payments they'll be responsible for in the new house. Under the "Projected Payments" section of their Loan Estimate, Ava and Liam can review ______.

The estimated breakdown of each monthly mortgage payment, including any items that will be included in escrow

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

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.

Jasmine has a mortgage on her property, but allows her homeowner's insurance to lapse. Which of these is a possible consequence of this action?

The lender can put Jasmine's loan in default.

When calculating loan-to-value ratios, which of the following will be used by the lender?

The lesser of the sales price or appraisal value

Who holds the promissory note while it's being repaid?

The payee

Which of the following is a true statement about when a promissory note is sold?

The promissory note is endorsed to the new owner of the loan.

What is a statutory right of redemption?

The right of a borrower to redeem the property by paying amounts owed plus costs, even after the foreclosure sale

The loan amount plus the down payment should equal ______.

The sales price of the home

Jacqueline found a ready, willing, and able buyer for her client's condo, with a sales price of $20,000 more than the asking price. However, the appraisal came in just under the asking price. Which number will the lender use to calculate the loan-to-value ratio?

The smaller number

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

The state

If someone dies without a will and has no next of kin, what happens to the deceased person's assets?

The state can claim the assets.

When a borrower has paid off the loan, how is the release handled if the security instrument is a deed of trust?

The trustee executes and records a deed of reconveyance and the lender returns the note to the borrower.

Mutual savings banks prefer to keep their lending activities in their immediate geographic area. Why?

They prefer to personally monitor the loans they issue.

Which of the following statements is true about active real estate investments?

They require an effort to make a profit.

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

To avoid paying private mortgage insurance

Why does the federal government have agricultural lending programs?

To ensure that credit is available to agricultural producers, who often can't meet conventional underwriting standards due to the nature of their work

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

Verify it.

The FHA Section 203(h) program assists ______ with an insured mortgage.

Victims of a presidentially declared disaster

Bob is selling a four-bedroom house that he bought as an investment property. Victoria would like to buy it, but she has a low credit rating and can't find a bank that will offer her a loan. After reviewing Victoria's financial situation, Bob feels confident that she's an acceptable risk. He offers to extend her a line of credit for the purchase in the form of a contract for deed. What issue should Bob be aware of?

Victoria could cause an involuntary lien to be placed on the property.

Jennifer drives her car for business purposes as well as for personal errands. She records every mile she drives, regardless of the purpose. Is any of the mileage on the car eligible for a deduction on her income tax return?

Yes, but only the mileage driven for business purposes is eligible for a deduction and should be recorded.

Mavis uses an extra bedroom in her home as her office. Can she claim this as a deduction?

Yes, she can claim a deduction based on the amount of her home she uses for business.