Texas 30-Hour Real Estate Finance with Flex Units

Seller Jerome found financing that would include his current mortgage inside the buyer's mortgage. What type of mortgage is this?

A wrap-around mortgage

FHA may adjust loan limits for each county ______.

Annually

Which of these appraiser requirements does AIR NOT specify?

Be knowledgeable about the global market rates

Which of the following situations would make a borrower ineligible for a loan modification?

Borrower has filed for bankruptcy

Which of the following represents a potential concern when borrowing funds from a pension or retirement plan?

Borrowing without consulting a financial expert can result in unintended consequences, such as income tax liability and loss of retirement income.

Which of the following statements about liens is true?

Both mechanic's and materialman's liens are junior liens.

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

Both the primary and secondary mortgage markets

When HUD pursues actions that are designed to reduce housing discrimination and help communities recover from disasters, which of its goals is it supporting?

Build strong, resilient, and inclusive communities

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

Builders required by the state to recycle aluminum during demolition

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

When Fannie Mae purchases a loan, they pay the loan originator a(n) ______ fee.

Collection

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

Defaults on the loan

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

M3

Contributions for this type of IRA aren't tax-deferred.

Roth

After bonds are ______, their value goes up and down with the market.

Sold

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 role did CMOs play in the financial crisis of 2007?

They increased market speculation.

Borrowers should be wary of lenders who offer mortgages at more than ______ over current market interest rates.

5%

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

5%

For conventional loans in which the loan-to-value ratio is in excess of a certain percentage, lenders generally require private mortgage insurance. What's this percentage?

80%

What is a government-sponsored enterprise?

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

Which of the following is a requirement if you set up a corporation in order to perform real estate services?

A separate bank account in the corporation's name

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

Advance

Barb is considering a refinance. She wants to stick with a conventional loan. Why might she be wary of an introductory rate?

After an initial low rate, her payments may increase beyond the level of affordability.

Licensee Lynn has several accounts set up as part of her personal financial plan to help her manage cash flow. She's allocated 10% of each commission check to business expenses, 15% to taxes, 8% to her retirement fund, 12% to various savings goals, and the rest goes to her living expenses. When she receives a check, how does she direct the funds?

After depositing it in her business checking account, she puts 90% of it in her personal checking account to be distributed to the other savings accounts as appropriate.

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

CMOs weren't collecting the expected principal and interest payments

River City Bank needs to cut back on lending. For several months, the bank has seen more withdrawals from customers than deposits. This has led to a decrease in deposits typically used for lending. What term can be used to describe what the bank has experienced?

Disintermediation

A second mortgage on property secured by a VA loan is acceptable under certain conditions, one of which is that the first and second mortgage liens ______.

Don't exceed the CRV

Which of the following best describes a marketable title?

Ensures the title to property is free and clear of liens and only subject to loan payoff and any taxes owed.

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

External obsolescence

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

Fannie Mae

What entities make up the secondary mortgage market?

Fannie Mae, Ginnie Mae, Freddie Mac, Farmer Mac, and lending institutions that buy loans from other lenders

Which of the following resources will give you reports and statistics including house price index, foreclosures, and refinancing?

Federal Housing Finance Agency

Randall needs some new equipment for his ranching operation, and he needs a loan to purchase the equipment. When he approaches his local bank and applies for a Farm Credit System loan, how is the loan funded?

From the sale of Farm Credit System debt securities

Kobi, an appraiser, is appraising a single-family home used for a rental. If he wants to use the income approach, which of the following will come into play?

GRM

Which of the following applicants fall within the guidelines for an FHA-insured loan?

Gena is a single mom with three kids. Her credit score is 620, her housing ratio is 29%, and her total debt obligations come to 40%.

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.

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

Hybrid REIT

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

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

Maybe, but they'll have to petition their lender

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

Mortgage payment

Which of the following made mortgages attractive investments in the early 2000s?

Price of homes relative to anticipated future value

Mortgage bankers are mostly what type of enterprise?

Private

What information would an appraiser record in the Site section of the Uniform Residential Appraisal Report?

Property dimensions

Which one of the following assumptions does the Torrens system make?

That any issues that arose in the previous title search have been resolved

What act was introduced to combat discriminatory lending practices against individuals and businesses in low- and moderate-income neighborhoods?

The Community Reinvestment Act

Which of the following features is shared by the mortgage and the deed of trust?

The borrower is required to maintain the property and pay property taxes and insurance.

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

The buyer's lender

What is reconciliation?

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

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

Select the choice that best translates this clause into plain English. "Upon payment of all sums secured by this Mortgage, Mortgagee shall discharge this Mortgage without cost to Mortgagor. Mortgagor shall pay all costs of recordation, if any."

When the borrower has fully paid off the loan, the lender will record that the note is satisfied.

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

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

When should a licensee begin setting money aside for quarterly estimates?

With the first commission check

You attend a business-related conference that includes an overnight stay away from home. Can you deduct the cost of your meals during the conference?

Yes, you can deduct 50% of the cost of your meals

Which act, which was the first act passed to address the subprime mortgage crisis and was also known as "the stimulus package," sought to create new jobs and save existing ones, spur economic activity and invest in long-term growth, and foster new accountability and transparency in government spending?

American Recovery and Reinvestment Act of 2009 (ARRA)

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

An estimate of the energy savings that would result

What is 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.

Which of the following actions toward an appraiser would be considered proper?

Asking an appraiser to correct errors in the appraisal report

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

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

Investment value

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

Items of value the borrower owns

How much should you keep in your tax savings account in order to be prepared to pay your quarterly estimated tax?

Just over what you expect to owe

Ralph and Mort are neighbors. Ralph is selling, Mort is buying, and Ralph is offering a second loan to help Mort with his down payment, using a contract for deed. When Mort presents this idea to his lender, his lender balks. Why might that be?

Lenders don't like contract for deed arrangements.

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

Leveraging

Julia is trying to buy a house and is going through the loan application process. As part of the process, her credit score was run. Which of these issues would harm her score?

Missed payments

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 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

Ron and Dawn hope to qualify for an FHA mortgage so they can buy a home for their family. Their housing ratio is 28%, their total debt obligation is 45%, and their credit score is 650. Do they qualify under FHA underwriting guidelines?

No, they don't meet the total debt obligation requirement.

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

On federal trust land

When a buyer uses an FHA loan, the down payment amount is calculated ______.

On the lesser of the sales price or the appraised value of the property

Which type of partnership may involve several mortgagors financing a multi-family dwelling?

Partnership among mortgagors

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 best describes foreclosure by writ of entry?

Petition for legal ownership, opportunity to redeem property, notice of eviction if property is not redeemed

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

Population size

Which is not one of the lender requirements under the Community Reinvestment Act?

Providing school loans in low-income areas

Which of the following actions is completed by the secondary mortgage market?

Purchases loans from lending institutions

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

Recovery

Kristoff got a bit behind on his mortgage and missed several payments. He and his lender devised a schedule that gives Kristoff an opportunity to make up those delinquent payments. What is this an example of?

Repayment plan

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

Right of rescission

What is the most common structure for a CMO?

Sequential pay

Which of the following is a requirement to qualify for a VA loan?

Sufficient income

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.

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

They prefer to personally monitor the loans they issue.

Why might a homebuyer use an FHA 203(k) loan instead of the standard 203(b) loan?

To roll the cost of rehabilitating the purchased home into the mortgage

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

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

Which act requires that individuals making more than five "owner-financed" loans per year, obtain a residential mortgage loan origination license?

The Texas SAFE Act

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

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

Nicole is a young licensee just starting her business and doesn't have any income yet. She decides to purchase insurance as soon as she has the money. Which of the following can she likely skip for now?

Life

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

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

Set rules and regulations that member banks must follow

Travis made the final payment on his loan according to the loan terms. What must the note holder do to acknowledge that the debt has been repaid?

Sign the note, mark it "paid in full," and return it to Travis

The FHA ______ program allows a borrower to refinance an FHA loan without verifying income or assets.

Streamline Refinance

When a veteran assumes a VA loan, the ______ agreement can restore the original buyer's level of entitlement as if the loan were repaid in full.

Substitution of entitlement

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

The Texas SAFE Act

The average commission you earn from each transaction is $6,000, and 20% of your leads turn into clients. Using the funnel, what else do you need to know to calculate how many leads you will need if you want to earn $50,000 in a year?

The percentage of clients who turn into closed transactions

Which approach to finding value would licensed appraiser Christina probably weigh most heavily when appraising a three-unit rental property?

Income

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

Predatory