FL: Post-Licensing: Real Estate Finance Quizzes

The Farm Credit System is ______.

A government-sponsored enterprise

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

Buyer Ed is reviewing the Loan Estimate he received from the lender he's working with. He notices the loan terms include a prepayment penalty. Because he's a savvy consumer, which of the following does Ed do?

Ask the lender if there are other options available that would not involve a prepayment penalty.

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

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

Builders required by the state to recycle aluminum during demolition

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

Charter

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 the following is NOT part of the Other Considerations section of the Loan Estimate?

Comparisons

Edward is an economic analyst. In his work, he keeps a particularly close eye on this industry, because action or inaction here is a leading indicator of the country's overall economy. Which industry is this?

Construction

Which of the following items directly influences real estate supply?

Construction

A local company wants to build a new office building. What type of loan will it most likely be seeking from its commercial bank?

Construction loan

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

Conversion of properties

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

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

Decrease

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

Decreased rates

Which of the following best describes a seller's market?

Demand is greater than supply.

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

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

How is Regulation B related to the Equal Credit Opportunity Act?

Enforcement

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

FHA

Which government entity oversees open-market operations?

Federal Open Market Committee

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

Federal funds

One of the following entities is primarily a secondary market player. Which one?

Freddie Mac

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.

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

High but stabilized unemployment and a high number of foreclosures

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

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

Hybrid REIT

Kathy decided to borrow funds from her retirement account to fund the down payment on her new house. Which of the following is true about this loan?

If Kathy's loan is through an employer-sponsored pension plan and she loses her job, the loan will become payable immediately.

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 general economic impact of mortgage loan payments?

Increase in economic growth

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

Increases in hiring, employment, and public confidence, and lots of buyers in the market

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

It provides additional cash flow for new loans.

What impact did the authorization of the Credit Union Membership Access Act have on credit unions?

It removed the union-worker-only membership restriction.

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

Know Before You Owe

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

Licensed and registered

Closing costs are itemized on page two of the Closing Disclosure, and all amounts are ______.

Listed according to who paid them: the borrower, seller, or other

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 considering the liquidity of financial assets, which category is the least liquid?

M3

Store of value, unit of account, and what other factor define money?

Medium of exchange

How much of a mutual savings bank's assets come from savings accounts?

More than 70%

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

What would likely happen to the real estate market if there were no lenders?

New construction and home purchases would greatly decrease.

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.

Joe works for a life insurance company that funds commercial investment projects and often insures these projects by insisting on an equity position. What type of financing does this describe?

Participation

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

Participation

During which phase of the real estate cycle is local government most directly involved?

Planning

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.

Which of the following resources are extremely helpful when working with investors?

REIT analysts and bond rating agencies

Which act ensures a buyer in a residential transaction that's financed by a federally related mortgage loan has knowledge of all settlement costs?

RESPA

What does RESPA stand for?

Real Estate Settlement Procedures Act

In which phase of the real estate market would you expect to see unemployment increasing, prices falling, and foreclosures on the rise?

Recession

What's the name of a discriminatory lending practice whereby lenders limit the scope of their loans to exclude neighborhoods with certain ethnic or economic characteristics?

Redlining

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

Repossessed homes

The CFPB promotes consumer protection in the credit market through a number of strategies, including ______.

Responding to and investigating consumer complaints regarding financial services

Hugh works as a loan officer at a bank. Because of the ______, he must be registered with the Nationwide Mortgage Licensing System.

SAFE Act

Which of the following would the FDIC most likely insure?

Savings account deposits

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

Savings accounts

Long- and short-term debt instruments are called ______.

Securities

If the Treasury encounters a deficit, what actions might it take?

Sell securities

There are fewer properties available in the market than there are interested buyers. What type of market does this describe?

Seller's market

What term is used to describe the housing inventory in default or foreclosure?

Shadow inventory

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

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

Supervises national banks and financial institutions.

Which agency regulates FHLBanks?

The Federal Housing Finance Authority

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.

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

Which was NOT part of the Fed's program quantitative easing?

The funds available to consumers froze.

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

Which of the following describes the federal funds rate?

The rate at which a bank can obtain a loan from another bank

Which of the following describes the prime rate?

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

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

Why are life insurance companies less concerned with liquidity than long term security of an investment?

They prefer financing larger projects, which inherently have more long-term security.

The ______ requires specific disclosures and was enacted in 1968 as part of the Consumer Credit Protection Act.

Truth in Lending Act

Which of the following statements is true about the Federal Reserve?

Twelve district banks comprise the Fed.

Which of the following has a direct responsibility to pay the nation's bills?

U.S. Treasury

Direct farm ownership loans from the ______ may be used to buy farmland, construct and repair buildings, and make farm improvements.

USDA Farm Service Agency

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

USDA Farm Service Agency

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.

Which of the following best describes collateral?

Using a house as security on a mortgage

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

When the government's bills exceed income collected

There are three types of international buyers: those who have work visas and are looking for a home to purchase while they're in the U.S., those who are looking for a vacation home in the U.S., and those who are looking for ______.

A luxury home to purchase as an investment

Which of the following describes the Housing Choice Voucher Program?

A program to help very low-income families, the elderly, and disabled individuals to afford decent, safe, and sanitary housing in the private market

Which of these assets would be considered the most liquid, according to financial analysts?

Cash on hand

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

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

Farmer Mac

Iris is planning to purchase her first home. Based on what you know about the nature of real estate finance in our country, which approach is she most likely to use?

Obtaining a loan to purchase the home

Which of the following types of residential dwellings do life insurance companies purchase from the secondary mortgage market?

Single-family on one lot

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

Stock certificates

What is one of the main differences between the U.S. Mint and the Bureau of Engraving and Printing?

The U.S. Mint produces coins, and the Bureau of Engraving and Printing produces paper notes.

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 does loan processing include?

Application, review, and underwriting

An increase in property value is called ______.

Appreciation

Joyce and Danny purchased a home in 2009 for $280,000. They received a homebuyer credit of $8,000. Their friends Margie and Scott purchased a home in 2010 for $320,000. Margie and Scott didn't receive a homebuyer credit. Why not?

The homebuyer credit was part of the stimulus package enacted in 2009 and was only effective between January and December of 2009.

A borrower has a 30-year, $500,000 loan with an interest rate of 6.25%. His monthly principal and interest payment is $3,078.59. What's the total amount he'll pay over the life of the loan?

$1,108,292.40

Sophia's annual property taxes are $1,295, and her annual insurance premium is $942. How much of her monthly mortgage payment goes toward taxes and insurance?

$186.42

A buyer has a 30-year, $400,000 loan with a 7% interest rate. How much of the first month's mortgage payment is interest?

$2,333.33

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

Cheryl bought her home three years ago for $217,000. Assuming her home appreciated at the 3% rate typical of her current market, how much is her home worth now?

$237,121.76

A buyer with a $242,000 loan has a monthly principal and interest payment of $1,317.66. If $1,033.54 is interest, what's the new principal balance after the first payment is applied?

$241,715.88

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

$270,504

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?

$34,000

An annual insurance premium is $500. What's the monthly insurance payment?

$41.67

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

27.5 years

Fannie Mae's multi-state note includes a due-on-sale clause, also known as a(n) ______ clause.

Alienation

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

Alienation

Which of the following is the correct calculation for gross rent multiplier?

Divide the sales price by the gross monthly rent

What information is listed on the promissory note?

Loan amount and schedule of repayment

What does PITI stand for?

Principal, interest, taxes, insurance

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

Recasting

What is the formula for net to seller?

Sales price x (100% - commission rate)

Your first-time buyer, Abigail, is extremely nervous that she won't be able to afford the loan payments on her new home. Although she has a job that pays well, she's not great with numbers and she's never had to live within a budget. Which of the following could you use to present Abigail with a sample amortization schedule?

Table

Who should sellers consult before agreeing to carry part of a loan for a buyer?

Their financial advisor

Which of the following is considered an ineligible property type for which a loan to purchase or refinance wouldn't be purchased by Fannie Mae?

Vacant lot

What does the underwriting step of loan processing typically involve?

Verification of the borrower's financial situation

The ______ is provided by a VA-assigned appraiser.

CRV

What type of investment strategy is most similar to a 1031 tax-deferred exchange?

Rolling over funds from one IRA into another

The Federal Housing Administration's mission includes ______ through the establishment of lending standards and by insuring mortgages.

Stabilizing the mortgage market

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.

Which of the following is a benefit of automated underwriting?

There is no chance of personal prejudice entering into the decision.

What's another term for back-end ratio?

Total debt ratio

Your client, Judy, with a credit score of 620, has been approved for an FHA loan for a home with a sales price of $200,000. What is the minimum down payment that will apply?

$7,000

A buyer with a $750,000 loan has a monthly principal and interest payment of $4,376.80. If $3,593.75 is interest, what is the new principal balance after the first payment is applied?

$749,216.95

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

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

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

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

A buyer anticipates a house payment of $1,000 per month, with monthly homeowner association fees of $150. The buyer also has a car payment of $400 per month. If the buyer earns a monthly gross income of $5,000, what's the housing ratio?

23%

What must a qualified mortgage's loan term limit be?

30 years or less

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

38%

Over how many years is a commercial property depreciated?

39 years

Gary, your investor client, has an annual net income of $50,000. His annual debt service is $12,500. What is his debt coverage ratio?

4.0

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

62

Glenn is purchasing a home for $400,000. The property appraised at $415,000 and Glenn is financing $300,000. What's the loan-to-value ratio?

75%

What's a typical loan-to-value ratio for an FHA loan?

96.5%

Which of the following is true about a home equity line of credit?

A borrower can use the funds as needed, repay them, and borrow them again.

Which of the following describes housing ratio?

A calculation of a borrower's monthly housing obligation, including principal, interest, taxes, insurance, and any homeowners or condo association fees, as a percentage of the monthly gross income

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

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

A conventional fixed-rate mortgage issued by a commercial bank

What is an encumbrance?

A defect on a title that can be monetary or physical

A homeowner has been paying her mortgage for several years and has built up equity. She decides to take out a home equity line of credit because she needs some cash. This credit will create ______.

A junior lien on the property

What is another name for an installment sale contract?

A land contract

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

Which of these statements about a buydown is true?

A permanent buydown will cost more than a temporary buydown.

What type of professional must an investor use to conduct a tax-deferred exchange?

A qualified intermediary

What is a carryback loan?

A second loan financed by the seller

Which of the following may a lender request to verify an applicant's bank deposit information?

Account statement

Who is usually responsible for ordering and reviewing the survey of the property?

Buyer

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

Car loan

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

Jorge and Maria are purchasing a new home. They will both be listed on the mortgage loan. What kind of relationship do Jorge and Maria have as it relates to the loan?

Co-borrowers

Which entity insures government loans?

FHA

When borrowers miss scheduled mortgage payments, allow their property to go into disrepair, or ______, they could face loan default.

Fail to pay property taxes

Which of the following is regulated by the Federal Housing Finance Agency?

Fannie Mae

Federal Home Loan Bank is regulated by what agency?

Federal Housing Finance Agency

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

Have a minimal down payment and less than stellar credit

Lydia struggled to hold down a job several years ago, resulting in multiple late payments to creditors. How is this credit history likely to affect her loan application?

Her application may be denied.

Stacy is preparing to sell her home, but learns she can't transfer the property until she removes an encumbrance. Which of these is encumbering her property?

Her existing mortgage

Though not a loan, buyers may be able to enlist the help of ______, who can give them a tax-free gift to help them with their purchase.

Individuals, such as family members

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

What are advances?

Loans the Federal Home Loan Bank makes to member banks

What effect do low interest rates have on borrowing?

Makes borrowing less expensive

Samantha is an assistant to Matt, a real estate licensee with an MLO endorsement. She performs administrative tasks on his behalf. Does she need an MLO endorsement?

No, she doesn't need an MLO endorsement because she is only performing administrative tasks.

Jackie is 10 days late on her loan payment. Will her lender likely place her loan in default?

No, she needs to be 30 days late to be in default.

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

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

None

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

Which of the following statements best describes a foreclosure by advertisement?

Notification of pending auction, public auction, notice of eviction

Borrowers must list their liabilities when completing a residential loan application. What are liabilities?

Obligations a borrower owes

Which type of lenders take on higher risk borrowers that most other types of lenders won't?

Private lenders

Two areas of vulnerability for the lender occur when homeowners insurance is allowed to lapse. What are they?

Property damage and judgment liens

Residential property owners don't often default on property taxes. Why not?

Property taxes are usually paid with the monthly mortgage payment.

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

Recasting

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

Recreational vehicles

Marissa is obtaining a VA loan, and she's decided to place 20% down. What's her responsibility for paying the VA loan funding fee?

She won't be required to pay it since she made a large down payment.

Who's the mortgagee in a mortgage?

The lender

Borrowers who refinance and use equity to pay off credit card debt should be aware that ______.

They're exchanging short-term debt for long-term debt

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

Which of the following is the process the lender uses to evaluate whether to make the loan?

Underwriting

A lender and a borrower sign a mortgage agreement, placing a(n) ______ lien against the borrower's home.

Voluntary and specific

When is private mortgage insurance typically required on a conventional loan?

When the borrower's down payment is less than 20%.

Brandon's home has been foreclosed on. He had an outstanding loan balance of $145,000, which he owed to his lender, XYZ Lending for a loan taken out in 2009. There's also a lien against the property recorded in 2014 for an unpaid student loan of $25,000, and a HELOC established in 2012 of $30,000, of which he'd used $10,000. If his foreclosure nets $150,000, how much will each creditor be paid?

XYZ Lending will receive $145,000, the HELOC lender will receive $5,000, and the lien holder for his student loan will not be repaid.

Nadia uses a VA loan to buy a house for $125,000. She wants to buy the neighboring property, an empty lot, so she can improve the house using the extra land. The lot is for sale for $135,000. Can she use a VA loan for this purchase?

Yes, she should have partial entitlement left.

Molly's father has a service-related disability. He lives with Molly and her family in a home that she owns. Can funds from a VA-specific housing grant be used to modify Molly's home to accommodate her father's disability?

Yes, the smaller Special Housing Adaptation grant may be used to adapt a home owned by a family member where the eligible veteran lives.

Which of the following could be a concern f

or a lender regarding property condition? [A roof that's missing shingles

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

A buyer is purchasing a property for $400,000. His loan-to-value ratio is 80%. The lender also charges a one-point loan origination fee. How much is the loan origination fee?

$3,200

One alternative to foreclosure is a voluntary conveyance of ______.

Deed

How is title usually conveyed to the buyer during a foreclosure process?

Through a referee's deed

FHA offers a program for loan insurance on adjustable-rate mortgages under ______ of the National Housing Act.

Title II

David is buying a home for $400,000 and financing 90% of it. If his lender charges a 1% loan origination fee, how much will the lender charge to originate the loan?

$3,600

A client makes regular monthly payments on a loan. In addition to paying interest, the client is slowly paying down the principal of the loan. With each payment that is made, more will go towards the principal and less to interest. What type of loan does the client have?

Amortized

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.

For which of these properties would using the gross income multiplier be appropriate?

Apartment building with 50 units

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.

In a deed of trust, who is the trustor?

Borrower

Jamal is active military. His cousin, Piper, is in the National Guard. If they both qualify for a VA loan ______.

Both Jamal and Piper will pay the same funding fee if all other factors are the same.

Britney is selling her bungalow via an installment contract. The buyer made payments dutifully for five years, but has not made any payments for more than a year. Which of the following is true?

Britney can keep all of the proceeds received and repossess the property.

Cheyenne is selling the family farm via an installment contract. What is one advantage of selling the farm this way?

Cheyenne will pay less in capital gains taxes by receiving the proceeds from the sale over time, rather than in a lump sum.

The Equal Credit Opportunity Act is regulated by the ______.

Consumer Financial Protection Bureau

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

Consumer Financial Protection Bureau

The three types of finance instruments that can be used when financing a real estate purchase are the note with mortgage, note with deed of trust, and ______.

Contract for deed

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

Contract for deed

In a 1031 tax-deferred exchange, what role does the qualified intermediary serve?

Coordinates the exchange

Terrence has received a loan pre-qualification. Which of the following steps must have been completed?

Correspondence with a lender, in which he provided some basic financial information

What factors does the underwriter consider in reviewing a mortgage loan application?

Credit, capacity, and collateral

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

Defaults on the loan

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

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

Lenders are more comfortable when borrowers have around 20% of the property's purchase price to serve as what kind of payment?

Down payment

Which of the following is an aspect of government loans?

Either insured or guaranteed by the government

A home equity line of credit (HELOC) is based on the homeowner's available ______.

Equity

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

Fannie Mae

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

Farmer Mac

If you were a farmer who obtained a loan for your business, it's most likely that your lender will sell your loan to which of the following entities?

Farmer Mac

From a secondary market player, Regional State Bank received an advance in exchange for collateral in the form or mortgages. Which entity likely issued this advance?

Federal Home Loan Bank

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

Federal Housing Finance Agency

Which process temporarily stalls foreclosure?

Filing for Chapter 7 bankruptcy

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

Fixed-rate

______ is regulated by the Federal Housing Finance Agency.

Freddie Mac

Stephanie was having trouble making her mortgage payments. Now her payments are lower than they were, and she's able to pay them each month. This is because her lender ______.

Gave her a loan modification

Which entity guarantees mortgage-backed securities which have the full support of the U.S. government?

Ginnie Mae

Which institution guarantees mortgage-backed securities with the full faith and credit of the United States?

Ginnie Mae

Wendy is buying a house from Tom. Tom helps Wendy out by paying for a 2-1 buydown. The lender has given Wendy an interest rate of 5%. Which of the following describes what the buydown will do to Wendy's interest rate?

Her rate will be 3% for the first year, 4% the second year, and 5% after that.

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

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

Interest

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.

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

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

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

Involuntary, specific

What does the right of redemption allow?

It allows a property owner to pay back any debts or liens against their property until a foreclosure sale is held.

Tina is purchasing a home that appraised for $10,000 more than the sales price. On which figure will the lender base the loan-to-value ratio?

It will be based on the sales price.

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

Materialman's lien

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

Moratorium (or forbearance)

Financing for a real estate transaction can use a note with a ______ or a note with a deed of trust.

Mortgage

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

Mortgage REIT

Which of the following is true of commercial banks?

Mortgage loans are not the banks' primary source of business.

The ______ is where the borrower finds details about how, when, and by how much the interest rate will change in an adjustable rate mortgage (ARM).

Mortgage note

Information about which of the following is included in the Uniform Residential Loan Application?

Mortgage type

Special mortgage loan programs for ______ include the FHA248 and HUD 184 programs.

Native Americans living on tribal land

When buyers haven't spoken to their bank or another lender, how should you handle the situation?

Offer to refer them to a lender and prepare them for the meeting.

Where does a veteran have to live to qualify for the Native American Direct Loan?

On federal trust land

When does PMI end?

Once the loan-to-value ratio reaches 78% of the original value.

A ______ is a mortgage-backed security issued by Freddie Mac.

Participation certificate

In which type of partnership is there is more than one mortgagor as owner?

Partnership among mortgagors

In which type of partnership do participants have shared responsibility for a single mortgage?

Partnership between mortgagors

How can a foreclosure be stopped or prevented?

Paying all outstanding liens against the property

For the vast majority of loans, a single late ______ does not automatically mean the loan has gone into default.

Payment

Leslie has applied for a loan modification. As part of the process, her lender will likely ______.

Perform a title search

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

Power of sale

Which act prohibits the payment of kickbacks from settlement service providers?

RESPA

Which clause in the deed of trust is the equivalent of the defeasance clause in the mortgage?

Reconveyance

Since the FHA was established, it has taken strategic action to stabilize the mortgage market. Which of these items is one of the FHA's strategies?

Reduce lender risk by establishing borrower qualification standards

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.

Sara's mortgage lender has denied her loan. What happens now?

Sara can apply with a different lender to see if she qualifies.

Which mortgage-related document is the equivalent of the deed of reconveyance used with a deed of trust?

Satisfaction of mortgage

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

The signature lines on the multi-state Fannie Mae promissory note are set up for ______ to sign.

The borrower

How is a loan assumption documented?

The buyer and seller both sign an assumption agreement.

Who's responsible for doing the final walk-through of a property?

The buyer and the buyer's agent

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.

What's a closing in its simplest form?

The buyer receives title to the property, and the seller receives consideration for it.

What's true about the draw period on a home equity line of credit (HELOC)?

The draw period varies.

The FHA has helped to significantly improve the mortgage market through ______.

The introduction of the long-term amortized loan

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.

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.

Which of the following statements about the VA guaranteed home loan program is true?

The service member's length of service, duty status, and character of service determine eligibility.

Which of the following best describes the loan processing step of financing?

The step that determines whether or not applicants will get the loan they're requesting

Which of the following should be taken into account when considering refinancing a mortgage loan?

The timeline for the loan repayment may be extended.

When does the need for mortgage insurance end for a borrower who has a VA loan?

There is no mortgage insurance requirement for a VA loan.

Which of the following are ways a private loan company insulates themselves from the risk of lending funds to a borrower who has had problems securing them elsewhere?

They may charge higher interest, higher fees, and require the borrower provide collateral to secure the loan.

Jeff has filed a quiet title suit against Roger. What's the purpose of this suit?

To clear up a cloud on title

Which of the following describes mutual savings bank loans?

Banks focus lending offerings on local businesses and residents.

Greg is selling his home to a veteran who's using a VA loan. When the transaction starts to stall, Greg tries to motivate the buyer by including his giant flat screen TV, valued at $1,200, as a gift. Is Greg allowed to do this?

Yes, this is considered an allowable seller concession

The housing ratio is the borrower's monthly housing obligation as a percentage of what sort of income?

Monthly gross

______ sets conforming loan limits for mortgages.

The Federal Housing Finance Agency

A new apartment building is going up downtown. The owner secured interim financing for the job. Which of these loan types is interim financing?

Construction loan

Commercial banks fall into which of the following category of lenders?

Institutional lenders