the ce shop - finance part 2 final

What is a moratorium (or forbearance)?

A lender temporarily suspends a borrower's payments.

Which of the following describes an encumbrance?

A lien on the property due to an unpaid tax bill

Vantagestar Ltd. would like to construct a high-end condominium complex. Where will they likely go for financing this project?

A life insurance company

Which event led to the establishment of the FDIC?

Bank failures during the Great Depression

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

Bankruptcy

What information does Schedule A of a title commitment provide?

Basic facts related to the transaction and property, including a legal description

To qualify as a Texas veteran, a person must ______.

Be at least 18 years old

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

Bill

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.

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

Buyer -Loan-related closing costs are incurred by the buyer before, during, and after closing. These include fees for things like loan origination, loan application, underwriting, appraisal, credit report, title search, and title insurance.

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

Buying/selling

Dorinda is an investor. She recently purchased shares in a tranche that holds mortgages and mortgage-backed securities. In what did she invest?

Collateralized mortgage obligation

Synergy National Bank issued a conventional loan that is eligible for purchase by Fannie Mae. When Fannie Mae purchases the loan, what will Synergy National Bank receive in return?

Collection fee

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

Construction

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

Consumer Financial Protection Bureau

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

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

Fannie Mae

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

Farmer Mac

______ works with lenders to make long-term credit available to homeowners and businesses in agricultural and rural communities, including farmers and ranchers.

Farmer Mac

Sam has a mortgage that has a static interest rate, but monthly payments that increase over time according to a set schedule. What type of mortgage does Sam have?

Growing equity

Read through each of the following pieces of information about buyers' debt obligations and determine which one will qualify for an FHA loan based on the qualifying ratios.

Housing ratio of 31%, total debt obligations 40%

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 best describes the non-judicial foreclosure process?

It may be used if the deed of trust includes a power-of-sale clause.

Normal wages are considered when a lender is evaluating an applicant's income. Which of the following must be true for overtime pay to be considered?

It must have been received regularly over the last two years.

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

It provides additional cash flow for new loans.

What is the name for a loan that creates a lien against property that already has been pledged as collateral?

Junior loan

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

Late charge provision

Which party to the loan approval process is responsible for providing the Loan Estimate?

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.

Freddie Mac's mission is to provide ______, stability, and affordability in the U.S. housing market.

Liquidity

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

Loan Estimate

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

May 15, 2015

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

Mortgage or deed of trust

In the secondary market, how are mortgages grouped together and sold?

Mortgage-backed securities

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

Municipal bond

What does NCUA stand for?

National Credit Union Administration

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

Besides interest paid over the life of the loan, what responsibility does the buyer have to the lender in a real estate transaction that requires financing?

Pay loan-related closing costs

How can a foreclosure be stopped or prevented?

Paying all outstanding liens against the property

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

Payment of closing costs may be negotiated.

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

Perform a title search

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

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

Planning

In which section of a credit report may a lender expect to find a loan that the consumer is delinquent on?

Potentially negative items

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

Pre-approved credit

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

Pre-payment

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

Requirements that must met before a title policy will be issued

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

Which of the following requirements must a person meet to qualify as a Texas veteran?

Serve at least 90 active duty days

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

Shadow inventory

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

Subprime

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

Under AIR, there are limits to the actions licensees may take to avoid influencing the appraiser's value. What are licensees NOT allowed to do?

Suggest additional business be contingent upon the appraiser's value determination for a current property.

Which of the following statements about the Torrens system is true?

The approach is only used in a handful of states. -The Torrens system isn't a common approach, and is only accepted by a handful of states.

What do property taxes in a mortgage payment pay for?

The cost of public services as a percentage of the property value

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

Naomi is completing a residential loan application. On the application, she lists her assets and liabilities so that her net worth can be determined. What's net worth?

The difference between a borrower's items of value and obligations

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

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

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

The state

The house payment Tim and Vickie are considering would give them a housing ratio of 34% and a total debt obligation of 40%. Their credit score is 640. What do they need to change to meet the underwriting requirements for an FHA loan?

They should look for a home in a lower price range.

Benny is self-employed. He's experienced a bit of success over the last few years and is now ready to purchase a home. He's meeting with a lender later today. What can Benny expect?

To be asked for additional documentation to verify his income

Stacey's lengthy military service makes her uniquely eligible for a(n) ________.

VA loan

Which of the following terms means the price a property is worth to its owner as currently enjoyed?

Value in use

Sally, a lender with A+ Banking, has received a loan application from a prospective buyer hoping to purchase a four-bedroom house. What does Sally do with the information she's received?

Verify it

Which of the following statements is true about the VA's Native American Direct Loan program?

Veterans who use this program must live on federal trust land.

Brandon's home has been foreclosed on. He had an outstanding loan balance of $145,000, which he owed to his lender, XYZ Lending. 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.

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 -Add annual taxes and insurance ($1,295 + $942 = $2,237), and divide this total by 12 to calculate the monthly taxes and insurance payment.

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

5%

Captain Kirk is a veteran who sells his home to Leonard. Leonard is also a veteran, and they agree to let Leonard assume Captain Kirk's VA loan for the property. They agree to a novation, which is ______.

A new contract with the lender using a substitution of entitlement -A novation creates a new contract with the lender and the new borrower, which happens when the buyer assumes the VA loan with a substitution of entitlement.

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

A short sale can negatively impact the seller's credit, and the lender may seek a deficiency judgment for the amount not repaid.

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

A short-term lake rental

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

Buyer

Which party to the loan approval process is responsible for completing a loan application and supplying supporting documentation?

Buyer

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 describes amortized debt?

Debt that's paid off by making periodic payments

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

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

Farm Credit System

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

The Federal Agricultural Mortgage Company (FAMC), created in the late 1980s, is more commonly known as ______.

Farmer Mac

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

Fixed-rate

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.

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

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

Housing price appreciation appeared to be a sure thing.

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

Insurance

Which of the following characteristics applies to a partnership between mortgagors?

It Involves more than one mortgagor as owner, sharing responsibility for payment of a single mortgage.

Lewis is reviewing his Loan Estimate and notices under "Other Costs" that there are items listed that don't include an amount. What does this mean?

Lewis should ask his lender about it.

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

Limits for conforming loans

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

Native Americans living on tribal land

Yancey purchased a home six months ago using a VA loan. Due to an inheritance, he is suddenly able to pay off his mortgage. Will he pay a pre-payment penalty?

No -One benefit of the VA home loan is that it doesn't include a pre-payment penalty.

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

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

Obligations a borrower owes

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

Partnership among mortgagors

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

Payment

The two most common insolvency methods put in place when a bank fails are the purchase and assumption method and the ______ method.

Payout

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

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

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

Prime rate

Mortgage bankers are mostly what type of enterprise?

Private

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

Purchases loans from lending institutions

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

Returns on investments decrease.

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

SAFE Act -The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 sets a minimum standard for licensing and registering mortgage loan originators through the Nationwide Mortgage Licensing System Registry.

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

Sold

Dawn and Steve are planning to purchase a home, but are wary of the commitment of a mortgage. However, they have no other way to make home ownership a reality, so they decide to educate themselves on the process for obtaining a mortgage loan. Where would you recommend they go for clear, consumer-oriented education on this topic?

The CFPB website

What is the purpose of the Federal Reserve System?

The Fed regulates the U.S. depository institutions.

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 annual MIP is recalculated each year using ______.

The end-of-year loan balance, plus the balance after the next 11 payments

A homeowner who's preparing to sell can't transfer the property until an encumbrance is removed. Which of the following is an encumbrance that would delay the property sale?

The existing mortgage

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

Their financial advisor

Which of the following is a likely result if Federal Home Loan Banks did not exist?

There'd be fewer funds available for lending in the community.

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

Three

Which government program assists rural Americans by offering loans, grants, and loan guarantees for housing?

USDA Rural Development

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

Utility

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

Value is pushed downward.

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.

A Treasury BOND is a Treasury security ______.

With a maturity term of 30 years

A Treasury BILL is a Treasury security ______.

With a maturity term of one year or less

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

$80,000

Who or what entity directs the activities of credit unions?

A board of directors

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

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

Allowing moisture intrusion

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.

The supply of properties available in the market is greater than the number of buyers. What type of market does this describe?

Buyer's market

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

Buyers

The ______ tells the lender how much entitlement the veteran has available under the VA loan program.

Certificate of eligibility

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.

The ______ was a response to the practice of redlining and was enacted in 1977.

Community Reinvestment Act

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

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

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

Foreclosed properties rarely have clouded titles.

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

Freddie Mac

Which of the following entities buys loans primarily through thrifts?

Freddie Mac

Susan's cat bit and scratched her neighbor, who's suing Susan. The lawsuit resulted in a judgment against her. Susan does not want to pay the neighbor according to the judgment, so the court placed a lien against her property. How is this lien classified?

Involuntary, general

What's the purpose of a typical subordination agreement?

It allows a junior mortgage to move into first lien position.

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

Items of value a borrower owns

What type of provision is standard with either the mortgage or the deed of trust, but is included in the promissory note rather than the security instrument?

Late charge

Which of the following is the best example of the economic principal of leveraging, as it applies to a real estate transaction?

Making a down payment

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

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

Mortgage REIT

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

Mortgage value

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

Sophie only has 15% to put down on her new home. What might the lender require in order for Sophie to obtain conventional financing?

Private mortgage insurance -Because Sophie's LTV ratio will be greater than 80%, most lenders will require private mortgage insurance to cover the lender's interests, though there are exceptions. PMI covers the gap between required down payment (e.g., 20%) and actual down payment.

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

Which of the following lending regulations apply to mortgage loans and settlement services?

Real Estate Settlement Procedures Act

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

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

Seller's market

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

Supervises national banks and financial institutions.

The Mortgage Disclosure Improvement Act amends ______ in terms of the timing of lender disclosures.

TILA

Declan has a mortgage on his property, but allows the property to fall into disrepair. Which of these is a possible consequence of this action?

The lender can put Declan's loan in default.

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.

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

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

Remy's mortgage payment is $1,256.28. His annual property taxes are $809, and his annual insurance premium is $712. How much of his payment goes toward the principal and interest?

$1,129.53 -Annual taxes ($809) and insurance ($712) are divided by 12 ($1,521 ÷ 12) to get the monthly amount for these items ($126.75), and this is subtracted from the total payment ($1,256.28) to get the principal and interest portion.

Under current tax law, what's the maximum tax-free gift an individual can give to another individual annually?

$15,000 -Under current tax law, individuals may gift up to $15,000 tax-free to any individual annually.

Up to what amount will the FDIC insure?

$250,000

Which percentage reflects the top debt-to-income ratio limit for qualified mortgages?

43%

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

A property tax lien filed January 1, 2014

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

A shopping mall

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

A single-family residence built six years ago

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

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

In which of the following sections of a credit report might a lender expect to find a loan that has been paid off on time?

Accounts in good standing

When a buyer takes over the seller's original loan with the lender's permission, this is called ______.

An assumption

Which of these would most likely be found in the "accounts in good standing" section of a credit report?

An open car loan that has never been late

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

An unlimited loan-to-value ratio

A standardized measure for interest rates and other costs of the loan is called _______.

Annual percentage rate

FHA may adjust loan limits for each county ______.

Annually

Because of the Mortgage Disclosure Improvement Act, the only advance fee that a creditor can charge to a consumer before providing required loan disclosures is a(n) ______ fee.

Credit report

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

Decrease

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

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

Equity

Veterans who use the VA's Specially Adapted Housing grant must ______.

Have permanent and total service-connected disability

Mike has had some financial problems and is considering borrowing from his retirement plan. Which of the following is a true statement?

He should consult with a financial expert before doing so.

A seller buydown can ______.

Help a borrower meet lender qualification standards

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

Highest and best use

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

Highest and best use

The Consumer Financial Protection Bureau

Home Affordable Refinance Program (HARP)

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

Institutional money market funds

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

It removed the union-worker-only membership restriction.

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.

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

Liquidity

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

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

Loan modification agreement

FHA county loan limits are based on ______.

Median price for the area and property type

Who originates their own loans?

Mortgage bankers

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

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

New construction and home purchases would greatly decrease.

Trixie purchased her one-bedroom beach cottage in 1992 with an FHA loan. Now she's selling it, and the buyer wants to assume her loan. The buyer intends to rent the cottage to vacationers. Will the FHA allow this buyer to assume Trixie's loan?

No, investors aren't allowed to assume FHA loans; the property must be owner-occupied -FHA loans may be assumed, but a creditworthiness review is required if the loan were originated after 1986, and the new borrower must occupy the property.

Maxine is purchasing a small craft shop, including the underlying real estate. She applies for a commercial loan from her federally insured bank to complete the purchase. Is Maxine's transaction covered by the Real Estate Settlement Procedures Act?

No; commercial and business loans are exempt from RESPA requirements.

What are the types of institutions that issue loans directly to consumers commonly called?

Primary market players

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.

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

Property damage and judgment liens

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

Purchase and assumption

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

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

Repossessed homes -Many buyers are interested in HUD repossessed homes when they're offered for sale, so it's an area where a licensee can find clients.

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.

Zack and April are purchasing a home. They apply to three different lenders and review the Loan Estimates they receive. Each form includes a field identifying the National Mortgage Licensing System ID number for the lender. What is the act that requires this licensing identification to be available to consumers?

SAFE Act

Which appraisal approach will likely weigh most heavily during the reconciliation step when appraising a single-family residence?

Sales comparison

The characteristics of value include which of the following?

Scarcity

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

Stock certificates

Which agency sets the guidelines for qualified mortgages?

The Consumer Financial Protection Bureau

______ sets conforming loan limits for mortgages.

The Federal Home Financing Agency

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

The Texas Administrative Procedures Act

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

The _______ requires lenders to disclose financing terms to consumers in a manner that's not misleading or deceitful.

The Truth in Lending Act (TILA) was enacted in 1968 and requires lenders to disclose financing terms to consumers in a manner that's not misleading or deceitful.

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.

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

They prefer to personally monitor the loans they issue.

Roger is a veteran with a service-connected disability that requires him to use a wheelchair. He is eligible for the VA's Specially Adapted Housing grant. What can he use this grant for?

To remodel a home he owns to accommodate his disability

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

U.S. Treasury

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

Until the borrower reaches a 22% equity position

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

VA

What does the "T" in PITI stand for?

What does the "T" in PITI stand for?

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.

Mutual savings banks were created to serve ______ during the mid-19th century.

Workers

The American Recovery and Reinvestment Act provided mortgage assistance to ______.

Wounded servicemen and servicewomen

Is a homeowner with an FHA loan allowed to obtain a second mortgage?

Yes, if the total of the first and second mortgages is within the maximum loan to value ratio

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

$41.67

What is the formula for calculating the total housing ratio? / The formula for the total debt ratio is:

(Monthly housing expenses ÷ gross monthly income) × 100

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

0%

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

10

The minimum down payment for an FHA 203(b) loan is ______.

3.5%

Margo, a mother of three, is in the largest percentage of consumers with a score of _______. Margot's tried unsuccessfully to get approved for loans, but she was issued a credit card that included many extra fees and required deposits.

579 or lower

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

62

Which range of credit scores do most consumers fall into?

670 to 739

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

80%

You have a client who wants to obtain a VA loan. You refer them to ______.

A VA-approved lender

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.

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.

If Freddie Mac didn't exist, which of the following would be a likely effect?

A decrease in the amount of credit available to loan originators

What happens after a lien foreclosure sale if not enough money were made from the auctioning of the property to pay off the lien holders?

A deficiency judgment against the property owner for the outstanding balance to the lien holders is issued.

Which of the following types of properties may be eligible for purchase by Freddie Mac?

A triplex purchased as a primary residence -Eligible property types include a primary residence that is a single-family home, condo, or manufactured home or properties with up to four units, single-unit second homes, and residential investment properties.

Some countries have banks that issue loans for U.S. real estate purchases. What are the main countries that participate?

According to NAR, Taiwan, the U.K., and Canada are three main players in the international lending arena.

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

Amount on deposit at his bank

Regional State Bank is a member bank of the Federal Home Loan Bank. In exchange for mortgage collateral, Regional State Bank received a loan from the FHLB so it can make additional loans to consumers. What is the loan called that Regional State Bank received?

An advance -FHLB lends money—called advances—to member banks in exchange for collateral.

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

Application for a loan

The Federal Housing Administration's qualifying standards for a mortgage loan ______, but the mortgage insurance the FHA provides balances the risk for the lender.

Are somewhat less stringent than standards for conventional loans

When a borrower is completing a loan application, items of value the borrower owns are listed in the ______ section.

Assets

Which of the following is NOT required to transfer ownership of a note?

Assignment of the note to the new owner

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

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

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

Both the primary and secondary mortgage markets

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 party pays for the appraisal in a financed real estate transaction?

Buyer

Which of the following VA programs requires a credit check, new appraisal, and income verification?

Cash Out Refinance

Which of the following would the FDIC most likely insure?

Certificates of deposit

Who typically performs an appraisal?

Certified appraiser

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

Charter

Jonathon is selling his home to Chris and Samantha. He's at closing, and the underwriting fee must be paid. Who pays for that?

Chris and Samantha

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

Comparisons

A vendor and vendee are the parties involved when the finance instrument is a ______.

Contract for deed

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

Conversion of properties

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

Coordinates the exchange

Secured corporate bonds use ______ as collateral.

Corporate assets -Corporate assets are used as collateral so that bond purchasers can repossess the asset in the event of default.

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

Decreased rates

Bella is a lender. Joshua is the loan applicant. They both complete their part of the request for verification of the deposit form. The last party to complete the deposit form will be the _______.

Depository institution

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

Determine a property's value

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

Determine the value of the loan that the VA will guarantee

Andy is selling his home to Erika and Doug, who are using an FHA loan for the purchase. To facilitate the purchase, Andy can agree to pay ______.

Discount points to buy down Erika and Doug's interest rate

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

Disintermediation

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 -Disintermediation occurs when banks or other financial institutions are seeing more withdrawals than deposits over a long period of time.

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

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

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

Expansion

Which banking-related entity shares similarities with the purpose and function of the NCUA?

FDIC -As an insurer of funds deposited, the NCUA acts similarly to the Federal Deposit Insurance Corporation (FDIC), with the full faith and credit of the U.S. as backing.

Lydia put the minimum 3.5% down on her $210,000 home. She'll have to pay an MIP. What type of loan does Lydia have?

FHA

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

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

Which of the following contributed to the 2007 financial crisis?

Falling home prices

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

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

File a suit to quiet title.

Which of these agencies is a government-sponsored enterprise?

Freddie Mac

______ is regulated by the Federal Housing Finance Agency.

Freddie Mac

What two types of data does an appraiser gather?

General and specific

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

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

Ginnie Mae

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

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

Home equity loan

The ______ Act was legislation aimed primarily at addressing the effects of the subprime mortgage crisis.

Housing and Economic Recovery of 2008

An intermediate-term security issued by the Treasury that has a maturity term of between two and 10 years is called a Treasury ______.

Individual entrepreneurs

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

Which of the following is the cost of replacing a building in the case of total loss?

Insured value

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.

To whom would a 1031 tax exchange usually appeal?

Investors

Max has a dog that bit his neighbor. The neighbor sued Max, which resulted in a judgment against him. Max refused to pay the neighbor according to the judgment. The neighbor placed a lien against Max. How is this lien classified?

Involuntary, general

What is the purpose of a lifting clause?

It allows a borrower to refinance a first mortgage without affecting its lien position even when a junior mortgage is in place.

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.

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.

Why might self-employed individuals who want to obtain financing for a home purchase, choose not to write off valid expenses on their tax statements?

It increases demonstrated income.

An ARM usually offers an initial interest rate that's ______ a fixed rate mortgage for a period of time.

Lower than

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

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

Meet the same eligibility criteria as for the VA-guaranteed loan program

Which of the following is a true statement about FHLBanks?

Member banks can borrow for up to one year without collateral. -FHLBanks offer short-term loans without collateral to member banks with FHLBanks stock.

What does it mean if the Fed increases reserve requirements?

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

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

Mortgage REIT

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

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

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

Non-existent

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

HUD's ______ has a goal of increasing the availability of safe and affordable housing to Native American families.

Office of Native American Programs

A mortgage banker gets paid through fees from ______ and servicing loans.

Originating

On the Loan Estimate under "Loan Costs," the points, application fee, and underwriting fee are considered ______.

Origination charges

Which of the following statements is true about conventional loans?

Originators usually package and sell the loans on the secondary market.

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 -Page three of the Loan Estimate includes a section called "Comparisons" that makes it easy for a consumer to compare the costs of loans with different interest rates.

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 does each mortgagee receive a share of the mortgage payment?

Partnership among mortgagees

What type of partnership is a real estate mortgage investment conduit?

Partnership between mortgagees

Which of these describes the My First Texas Home program?

Provides down payment and closing cost assistance to low-to moderate income buyers

Which of these describes the Texas Mortgage Credit Certificate program?

Provides eligible homeowners the opportunity to reduce their federal tax liability

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

Race and ethnicity

What does REIT stand for?

Real Estate Investment Trust

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

Recasting

In which phase of the real estate market cycle would you expect to see properties sit vacant and prices drop?

Recession

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

Recreational vehicles

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

Residual income and debt-to-income

What qualifying ratios are used in a VA home loan?

Residual income and debt-to-income

A loan that's offered based on a homeowner's equity in which funds are drawn over time and the bank gains corresponding property ownership is called a ______.

Reverse annuity mortgage

Monty retired 10 years ago and would like to see the world, but his retirement account won't support his desire to travel. Monty heard of a loan that would allow him to take advantage of the equity in his home by getting monthly payments from the bank by using his house as collateral. What is this type of loan called?

Reverse annuity mortgage (RAM)

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

Rolling over funds from one IRA into another

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.

If a cloud on a title is discovered, which party is generally responsible for clearing the cloud?

Seller

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.

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

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

Single-family on one lot

Krista is obtaining a loan to buy a home. Her loan agreement consists of one document called a note and one called a deed of trust. What's the role of the note?

States who owes money to whom, how much, and how it will be repaid

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

Store of value

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

Subject to existing financing

What standards do appraisers follow?

The Uniform Standards of Professional Appraisal Practice (USPAP) provides standards for appraisers to follow.

In order for earnings from a second or part-time job to be considered as part of a lender's income evaluation, what must be true?

The applicant must have been employed for at least two years, and the employment must be expected to continue.

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

The borrower

Which parties must be identified on the promissory note?

The borrower and the lender

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.

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

The draw period varies.

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

The economy may grow due to an increased money supply.

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

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

Ronald is having his existing loan modified. During the application process, why will Ronald's lender perform a title search on his property?

The lender wants to ensure that an existing lien won't take priority over the modified loan.

What is a potential cause for a decrease in local economy driven by the Fed?

The reserve percentage is increased by the Fed.

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

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

The right to foreclose

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

The risks involved

The Farm Credit System funds are acquired from ______.

The sale of debt securities and international money markets

The loan amount plus the down payment should equal ______.

The sales price of the home

What is the benefit Ginny Mae investors have over those who invest in other MBSs?

They're able to collect timely principal and interest payments.

Which of the following statements is true about buydowns with a VA loan?

They're allowed only on fixed rate loans.

Kendra has applied for a mortgage from Best Bank. When is Best Bank required to provide Kendra with a Loan Estimate?

Three business days

How does the VA fund the mortgage guarantee program so that lenders can be reimbursed for any losses from borrower default?

Through a funding fee charged to most borrowers

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

Through a referee's deed

Which of the following will be issued only if title is acceptable and an attorney provides a certificate of title opinion?

Title insurance policy

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

To avoid paying private mortgage insurance

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

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

To strengthen the housing market

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

Truth in Lending Act

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

Type of accounts

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

Buyers Romy and Steven are looking over closing documents and don't know if the Loan Estimate matches everything on the Closing Disclosure. Usually, amounts shown on the Closing Disclosure that don't exactly match the figures on the Loan Estimate will be due to _______.

Updates to reflect the terms of the borrower's legal obligation when the loan closes

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

Victims of a presidentially declared disaster

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

Voluntary conveyance of deed

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

When the government's bills exceed income collected

Which of the following applicants do NOT fall within the guidelines for an FHA-insured loan? - Beth has a credit score of 610. Her housing ratio is 38%, and her total debt obligation is 43%. -Gena is a single mom with three kids. Her credit score is 620, her housing ratio is 31%, and her total debt obligations come to 40%. -Tara has a housing ratio of 29%, and his total debt obligations are at 49%. His credit score is 500. -Will has a credit score of 650. Her housing ratio is 35%, and her total debt obligation is 41%.

Will has a credit score of 650. Her housing ratio is 35%, and her total debt obligation is 41%.

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

With proof of sufficient credit and income

Which item would an appraiser find in the Improvements section of the Uniform Residential Appraisal Report?

Year built

Sissy is a veteran who used her full entitlement to purchase a home. The loan has since been paid off, and Sissy still owns the home. Now, she'd like to buy a second home using another VA loan. Is Sissy allowed to do this?

Yes, Sissy can apply to have her entitlement restored and can buy a second house using a VA loan.

Does the VA make direct loans?

Yes, for Native Americans on trust lands

Suzy has lost her job and wasn't able to make last month's mortgage payment. How is her lender most likely to help Suzy stay in her home?

Agreeing to modify her loan

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

Alienation clause

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 the interest rate on a VA loan?

It varies by lender

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 mortgage and the deed of trust are ______ that pledge property as collateral for a loan.

Security instruments

When the Treasury collects fewer funds than what is needed to pay the government's bills, what action might it take?

Sell securities

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

Supply is greater than demand

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

Equal Credit Opportunity Act

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

Exculpatory

Which of the following entities buys primarily conventional loans from large commercial banks?

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

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

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

Leveraging

When a borrower is completing a loan application, obligations owed by the borrower are listed in the ______ section.

Liabilities

Wendy has been approved for her first mortgage. The lender advertised a 4.6% interest rate. She's nervous about the terms and fees. What information is the lender required to provide?

Payment schedule, APR, finance charges, pre-payment penalties, late penalties, and total financed amount

In order for the spousal support Kayla receives to be considered in the lender's income evaluation when Kayla applies for a home loan, what must be true?

Payments must have been received for at least one year, and must be expected to continue for at least three more years.

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

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

The loan must be repaid immediately.

Janie and Sam are newly married and are looking for their first home. They're fortunate that Janie's mom set aside some money to help with this purchase. Janie's mom says it's a loan, though, and they will have to pay her back. What's wrong with this?

The loan will go against their debt load.

Which of the following is true regarding value?

The principle of substitution means that people won't pay more for a property than they have to

Which of the following is a reason a seller might consider selling his property through an installment contract rather than a traditional sale?

The seller may pay less in capital gains taxes if he receives the proceeds from the sale over time rather than in a lump sum.

Which one of the following statements is true for a sale that's subject to an existing mortgage lien?

The seller's credit score may improve although he's not making any mortgage payments.

What may happen to a transaction if a cloud on the title is discovered?

The transaction comes to a standstill until the cloud is cleared.

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 -Gifts are considered seller concessions and can't exceed 4% of the sales price.

Which factor is NOT used to determine a FICO® credit score?

Employment history

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

Enforce consumer financial protection laws.

Page four of the Closing Disclosure includes consumer education about ______.

The use of an escrow account

How are account numbers displayed in a credit report?

Accounts numbers are truncated for security purposes.

Sandra is a single woman fresh out of college. She hopes to qualify for an FHA loan. Her lender calculates her housing ratio as 31% and her total debt obligation as 43%. Her credit score is 480. Does she qualify under FHA underwriting guidelines?

No, she doesn't meet the credit score requirement.

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.

Page four of the Closing Disclosure lists specific disclosures about the loan, such as the penalty for late payments, whether a demand feature applies, whether the loan can be assumed, and ______.

The use of an escrow account

Which of the following statements is true about national lending intuitions?

They sell packaged loans to investors.

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

Licensed and registered

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 would the FDIC most likely insure?

Savings account deposits