Principles Q10

The Real Estate Settlement Procedures Act (RESPA) applies to which of the following?

A loan secured by a first trust deed securing real estate upon which there is one-to-four family residential dwelling

The secondary mortgage market is for buying and selling existing mortgages from the primary mortgage market or from each other. Which of the following is not a major participant in the secondary mortgage market? a. Fannie Mae b. Freddie Mac c. Carlie Mac d. Ginnie Mae

Carlie Mac Hint:There are three major participants in the secondary mortgage market: (1) Fannie Mae, (2) Freddie Mac, and (3) Ginnie Mae

Which institutional lender commonly makes short-term construction loans?

Commercial banks

All consumers are given an equal chance to obtain credit through the:

Equal Credit Opportunity Act

Which of the following activities is not commonly performed by a mortgage broker? a. Mortgage brokers qualify borrowers. b. Mortgage brokers take applications. c. Mortgage brokers underwrite loans and fund them at closing. d. Mortgage brokers send completed loan packages to the lender.

Mortgage brokers underwrite loans and fund them at closing

Which economic stimulation tool of the Federal Reserve involves purchasing and selling government securities?

Open market operations

What regulation implements the Federal Truth in Lending Act?

Regulation Z Hint: Regulation Z implements the Federal Truth in Lending Act. [12 CFR §1026]. A creditor must furnish certain disclosures to the consumer before a contract for a loan is made.

Which of the following statements is true regarding the mortgage market?

The primary mortgage market is where lenders make mortgages to borrowers

The Seller Financing Disclosure Statement only applies to a(n):

arranger of credit

The Truth-In-Lending Act (Regulation Z) requires:

creditors to disclose credit terms so consumers can make comparisons

All of the following are risk factors that the lender assesses during the underwriting process, except the borrower's:

highest level of education completed

RESPA

is a federal law that requires disclosure to borrowers of closing costs and procedures by means of a pamphlet and forms approved by the United States Department of Housing and Urban Development (HUD).

The use of property's location to deny financing is known as:

redlining

Since the security for a mortgage loan is the property, a lender will want to ensure fair market value for the property by:

requiring an appraisal

The __________ market is the market that does not originate loans.

secondary mortgage

The broker negotiating the loan must keep a signed copy of the Mortgage Loan Disclosure Statement for how many years?

3

__________ occurred when people moved money from savings and loans into investments paying a higher rate of interest.

Disintermediation Hint: Deregulation is a process whereby regulatory restraints are gradually relaxed. The first indication of a problem came in the late 1970s, when savers began to take their money out of savings and loan associations (S&Ls) and put it into investments that paid a higher rate of interest. This process, called disintermediation, began due to uncontrolled inflation, causing interest rates to increase dramatically.

Which Act established the Consumer Financial Protection Bureau and authorized it to regulate consumer financial products and enforce several consumer protection laws?

Dodd-Frank Act

An economic situation in which the supply of money is limited and the demand for money is high, as evidenced by high interest rates is:

Tight Money

Which of the following is not one of the credit reporting agencies used by lenders to research a borrower's credit record?

TransAmerica

_____ is the process of evaluating a borrower's risk factors before the lender will make a loan.

Underwriting