Combo QUIZ 1-15 (RE FINANCE)

Paying points to reduce the amount of interest on a loan is called: a. a buydown. b. a loan origination fee. c. a point index loan. d. interest redemption.

a (p. 204)

A fixed-rate loan that gives the borrower a limited opportunity to reduce the interest rate without paying refinancing costs is called: a. a reduction option mortgage. b. a lower-than-market mortgage. c. an optional-rate mortgage. d. a biweekly mortgage.

a (p. 227)

Usury is: a. an interest payment in excess of the legally permitted rate. b. a form of personal property. c. a person who has a financial trust. d. an interest in real estate or real property.

a (p. 5)

Private, noninsured investment accounts are called: a. money market funds. b. certificates of deposit. c. mutual funds. d. money portfolios.

a (p. 51)

Mortgage bankers/mortgage companies: a. originate, service, and sell loans. b. act only as "go-betweens." c. are part of the secondary market only. d. none of the above.

a (p. 57)

A loan can often be seasoned in: a. 6-12 months. b. 12-18 months. c. 2 years. d. 5 years.

a (p. 58)

An underwriter: a. makes loans based on assessment of risk. b. makes loans based on assessment of net worth. c. denies loans based on FICO scores. d. none of the above.

a (p. 6)

Participants who make up the secondary mortgage market: a. raise the necessary funds to purchase the mortgages. b. borrow the necessary funds to purchase the mortgages. c. fund the purchase of mortgages with bond measures. d. none of the above.

a (p. 67)

An investment is said to be liquid when: a. it can be instantly sold. b. it has a high yield. c. it is guaranteed by the government. d. it is difficult to sell.

a (p. 69)

FAMC is also referred to as: a. Farmer Mac. b. Fannie Mac. c. Fannie Mae. d. FICO Mac.

a (p. 75)

Inducing property owners in a neighborhood to sell by predicting the entrance of minorities into a neighborhood is called: a. blockbusting. b. redlining. c. uniform settlements. d. none of the above.

a (p. 84)

Redlining is: a. refusal to make loans on properties in certain neighborhoods. b. not lending to bad credit customers. c. not lending on insufficient collateral. d. all of the above.

a (p. 84)

The smallest demographic area used by the Bureau of the Census is called a: a. census tract. b. caste system. c. census region. d. census block.

a (p. 86)

Ownership of the physical land itself is known as: a. real estate. b. leasehold estate. c. leased fee estate. d. reversionary estate.

a (p.105)

A real estate cycle refers to the real estate market's reaction to the forces of: a. supply and demand. b. war and peace. c. give and take. d. deposits and withdrawals.

a (p.27)

When the government is forced to borrow money, making less money available for construction and home loans, it is called: a. deficit spending. b. government spending. c. predatory loan practices. d. disintermediation.

a (p.35)

Alternative financing programs are popular: a. during times of low interest rates. b. with younger buyers. c. during times of high interest rates. d. with older buyers.

c (p. 201)

In alternative financing, "one point" is equal to: a. $10,000. b. 1% of the sales price. c. 1% of the loan amount. d. $1,000.

c (p. 203)

ARM mortgage payment caps are usually limited by lenders to an annual increase of: a. 2%. b. 5%. c. 7.5%. d. none of the above.

c (p. 217)

A fixed-rate mortgage loan that is set up in a fashion similar to a standard 30-year conventional loan is a: a. standard loan. b. reduction option. c. biweekly loan. d. reverse mortgage loan.

c (p. 227)

A fiduciary is: a. a person who is a lawyer. b. a person who is a lender. c. a person who has a financial trust. d. none of the above.

c (p. 3)

When prices begin to fall and production tapers off, the period is called a: a. low economy. b. seller's market. c. buyer's market. d. balanced market.

c (p. 31)

A loan held by a lender rather than sold into the secondary market is referred to as a: a. seasoned loan. b. retainment loan. c. portfolio loan. d. nonliquid loan.

c (p. 51)

Banks who supply capital for business ventures and construction activities on a short term basis are called: a. savings and loans. b. credit unions. c. commercial banks. d. none of the above.

c (p. 53)

A loan where the lender assumes a percentage of ownership is called: a. a percentage loan. b. a quasi-ownership loan. c. a participation loan. d. an unseasoned loan.

c (p. 56)

Private mortgage insurance is required on all loans that exceed what percentage of the value of a property? a. 60% b. 70% c. 80% d. 90%

c (p. 69)

The different classes of securities are called: a. caste systems. b. mortgage levels. c. tranches. d. fiat classes.

c (p. 70)

The FHFA refers to: a. Federal Harvest and Farm Agency. b. Federal Housing Freedom Act. c. Federal Housing Finance Agency. d. Farm Housing Financing Agency.

c (p. 71)

When a borrower has the right to cancel any agreement entered into within three business days after the close of the transaction, it is called: a. cancellation insurance. b. Regulation Z. c. right of rescission. d. right to change one's mind.

c (p. 92)

The role of FNMA (Fannie Mae) was further expanded in 1970 with the passage of the: a. Federal National Mortgage Act. b. Urban Development Act. c. Emergency Home Finance Act. d. none of the above.

c (p.39)

The Uniform Settlement Statement: a. must be kept by a lender for at least 2 years. b. provides a complete statement of all charges. c. is provided to the borrower. d. all of the above.

d (p. 88)

The effective yield on a loan is called the: a. prime rate. b. compound rate. c. adjustable rate. d. annual percentage rate.

d (p. 92)

Indirect lenders include: a. pension funds. b. mortgage brokers. c. insurance companies. d. both a and c are correct.

d (pp. 55-56)

The Real Estate Settlement Procedures Act: a. was passed to protect consumers from abusive lending practices. b. was established in 1974. c. requires that consumers receive a HUD booklet. d. all of the above.

d (pp. 87-88)

In the loan application process, the borrower pays up front for a: a. preliminary title report. b. credit report. c. property appraisal. d. all of the above.

d p. 143)

A subordination clause is most often used for: a. construction loans. b. refinancing loans. c. loans for open land. d. loans for public buildings.

a (p. 134)

Private mortgage insurance protects the: a. lender. b. borrower. c. seller. d. none of the above.

a (p. 187)

Usury laws in the United States limit: a. interest rates. b. loan amounts. c. title insurance amounts. d. all of the above.

a (p. 111)

In a foreclosure, a judge's order is called an: a. order of execution. b. order of disposition. c. order of redemption. d. none of the above.

a (p. 128)

A "due-on-sale" clause in a loan allows: a. the lender to declare the entire loan balance due immediately. b. the lender to declare foreclosure on a property. c. the lender to negotiate new terms on a loan. d. the lender to declare a trustee's sale.

a (p. 133)

When a property has been ordered to be sold by a court of law, the type of deed that will transfer the property is a: a. fee simple deed. b. sheriff's deed. c. judicial deed. d. reversionary deed.

b (p. 107)

A legal document that pledges the property of the borrower to a lender as security for a loan is called: a. a grant deed. b. a mortgage. c. collateral. d. legal title.

b (p. 110)

In a promissory note, the borrower is called the: a. lender. b. maker. c. benefactor. d. seller.

b (p. 121)

Negotiable instruments are promissory notes that are: a. non-negotiable. b. freely transferable. c. easily recordable. d. difficult to transfer.

b (p. 121)

An out-of-court sale or auction initiated at the direction of a beneficiary is called a: a. notice of sale. b. trustee's sale. c. sheriff's sale. d. nonjudicial sale.

b (p. 125)

A payment of principal at the end of a series of smaller periodic mortgage payments that is typically much higher than the previous payments is called a(n): a. final payment b. balloon payment c. escalated payment d. tiered payment

b (p. 13)

A clause in a finance instrument that limits a borrower's right to transfer the property without the lender's permission is called a(n): a. acceleration clause. b. alienation clause. c. prepayment clause. d. none of the above.

b (p. 133)

The first step in obtaining a real estate loan is: a. to find a real estate salesperson to represent you. b. to fill out the loan application. c. to have $10,000 in a savings account. d. to obtain a credit report.

b (p. 143)

Which of the following is FALSE regarding the purchase agreement? a. It contains the sale terms. b. It is given to seller by the buyer. c. It contains the date the parties expect the transaction to close. d. all of the above are false.

b (p. 143)

Bankruptcies must be reported on the application if they have occurred within the past: a. 3 years. b. 7 years. c. 10 years. d. 15 years.

b (p. 165)

A fixed-rate mortgage: a. accrues or decreases depending on the current prime interest rate. b. remains at the same rate for the life of the loan. c. is favored by lending institutions. d. keeps pace with the rate of inflation.

b (p. 175)

Discount points are paid: a. when the loan application is submitted. b. at the closing. c. during the loan interview process. d. when escrow opens.

b (p. 203)

When minimum monthly payments result in unpaid interest that is added to the loan balance, it is called: a. positive amortization. b. negative amortization. c. inflationary amortization. d. none of the above.

b (p. 217)

A loss of savings deposits to higher yielding competitive investments is referred to as: a. deficit savings. b. disintermediation. c. pass-through deposits. d. mediation investing.

b (p. 32)

The study and description of the population of an area is called: a. regentrification. b. demographics. c. psychographics. d. demonstrative study.

b (p. 34)

Personal property that is included with real estate is called: a. pawn. b. chattel. c. legacy. d. all of the above.

b (p. 5)

Credit unions were first set up in: a. 1870. b. 1970. c. 1990. d. 2006.

b (p. 54)

When an investor has an "undivided interest" in the mortgage pool, it is commonly referred to as a: a. liquid investment. b. pass-through security. c. subordinate pass-through. d. mortgage-backed security.

b (p. 69)

The highest legal form of property ownership is: a. freehold estate. b. fee simple estate. c. leasehold estate. d. none of the above.

b (p. 7)

Often in times of war, a decree of the state will issue: a. wildcat loans. b. fiat money. c. pledge stocks. d. fiat bonds.

b (p. 8)

The first piece of legislation passed by Congress after the Civil War that dealt with real estate was: a. the Home Mortgage Disclosure Act 1968. b. the Civil Rights Act of 1866. c. the Equal Credit Opportunity Act of 1876. d. none of the above.

b (p. 83)

When a salesperson is channeling the various applicants to specific areas in order to maintain or change the character of those neighborhoods, it is called: a. morphing. b. steering. c. blockbusting. d. driving.

b (p. 84)

A 5-year Call Provision means: a. the borrower can wait 5 years before paying interest. b. PMI insurance is only needed for the first 5 years. c. a large balloon payment is due in 5 years. d. a borrower has the option to borrow more money in 5 years.

c (p. 182)

Borrowers seeking conventional loans with a larger LTV than the traditional ratio are required to: a. be first time buyers only. b. get additional approval from FHA. c. obtain private mortgage insurance. d. all of the above.

c (p. 183)

Another term used to describe private mortgage insurance is: a. primary monthly installment. b. property maintenance insurance. c. mortgage insurance premium. d. private monthly installment.

c (p. 184)

Real property rights are often referred to as: a. constitutional rights. b. fee simple rights. c. bundle of rights. d. bill of rights.

c (p. 105)

Insurance that is written by a title company to protect the property owner against loss if the title is imperfect is known as: a. warranty insurance. b. liability insurance. c. title insurance. d. homeowner's insurance.

c (p. 106)

Title to real property is transferred from one person to another by use of a legal document called a: a. mortgage. b. recording. c. deed. d. title insurance.

c (p. 106)

The effect of the Garn-St. Germaine Bill was to: a. protect the modern role of the states. b. create an adverse effect of federal regulation. c. transfer a part of the property owner's rights to the lender. d. transfer a part of the buyer's rights to the state.

c (p. 112)

A creditor is given the right to have the security property sold to satisfy the debt if the debtor fails to pay the debt according to the terms of the agreement. This is done with a: a. deed of reconveyance. b. power of sale. c. security instrument. d. title of theory.

c (p. 121)

A borrower must provide which kind of information when applying for a loan? a. Financial b. Personal c. Both a and b d. None of the above

c (p. 143)

A third-party opinion of the value of a property is called a(n): a. credit report. b. guesstimate. c. appraisal. d. preliminary title report.

c (p. 152)

FICO scores generally range from: a. 90-900. b. 200-500. c. 300-850. d. none of the above.

c (p. 153)

Discrimination in the loan process is prohibited by the: a. Lender Ethics Act. b. Federal Consumer Lending Commission. c. Equal Credit Opportunity Act. d. all of the above.

c (p. 157)

A borrower's assets include all of the following, except: a. automobiles. b. stocks. c. child support payments. d. savings accounts.

c (p. 167)

Prime rate refers to: a. the most popular rate. b. the best rate available with points purchased. c. the bank's lowest rate. d. the bank's highest rate.

c (p. 17)

If a buyer does not have enough money for a 20% down payment for a conventional loan, some options include: a. a down payment of 10% with a conventional loan up to 75% and the seller carrying a second mortgage. b. a 90% conventional loan with a 10% down payment. c. both a and b. d. none of the above.

c (p. 178)

A loan origination fee is normally paid by the: a. lender. b. seller and buyer, splitting the cost. c. buyer. d. none of the above.

c (p. 179)

A Quitclaim Deed: a. contains no warranties. b. relinquishes any interest in a property. c. is often used to remove items from public record. d. all of the above.

d (p. 107)

A deed most often used to transfer real estate to children or other loved ones is called a: a. tax deed. b. deed of trust. c. quitclaim deed. d. gift deed.

d (p. 107)

A declaration of default is prepared by a: a. tenant. b. sheriff. c. borrower. d. lender.

d (p. 125)

In the event of a default, a creditor or seller may declare the entire outstanding balance immediately due and payable with a(n): a. quiet title. b. prepayment clause. c. due-on-sale clause. d. acceleration clause.

d (p. 132)

All of the following are factors that comprise a credit score, except: a. new credit. b. amounts owed. c. payment history. d. savings accounts.

d (p. 152)

A loan that provides for repayment with an agreed period by means of regular level payments is called: a. a straight note loan. b. an unconventional loan. c. an annualized loan. d. an amortized loan.

d (p. 175)

Which of the following is an advantage of having a 15-year mortgage? a. Saving thousands of dollars because of lower payments b. Home ownership in half the time c. Lower fixed interest rates d. All of the above

d (p. 176)

The Truth in Lending Law requires: a. borrowers to be honest in their dealings. b. each lender to form a federal open market committee. c. lenders to give borrowers the lowest interest rate. d. lenders to inform borrowers of the total costs of obtaining a loan.

d (p. 18)

A private mortgage insurer usually requires how many months' mortgage payments in reserve? a. 18 b. 12 c. 6 d. 3

d (p. 192)

The interest rate stated in the promissory note is called the: a. prime rate. b. coupon rate. c. nominal rate. d. both b and c.

d (p. 203)

A borrower who has a 90% LTV ARM loan at 3.5% initial interest with a 2% annual interest rate cap and a 5% lifetime cap must qualify at: a. 3.5%. b. 8.5%. c. 11%. d. 5.5%.

d (p. 219)

The four phases of the business cycle are: a. peak, expansion, bottom, recovery. b. peak, depression, bottom, expansion. c. trough, recession, bottom, recovery. d. peak, recession, bottom, recovery.

d (p. 27)

In a seller's market: a. supply exceeds demand. b. demand exceeds expectations. c. home prices decline. d. none of the above.

d (p. 31)

Predatory loan practices include: a. fraud. b. usury. c. deception. d. all of the above.

d (p. 35)

The degree of risk in a real estate loan: a. can be controlled by qualifying a buyer and a property before a loan is made. b. refers to the likelihood of default by the borrower. c. refers to the ability of the lender to recover loan proceeds through foreclosure. d. all of the above.

d (p. 37)

FIRREA: a. protects the federal deposit insurance funds. b. applies to all federally related transactions. c. sets procedures for loans in federally related transactions. d. all of the above.

d (p. 52)

The primary market consists of: a. mortgage companies. b. savings banks. c. local banks. d. all of the above.

d (p. 61)

The process of tracking and comparing mortgage interest rates held in a pool to current market interest rates is called: a. forecasting the market. b. marking the system. c. coordinating the market. d. marking to market.

d (p. 70)

FNMA and FHLMC are: a. government agencies. b. primary lenders. c. funded by the U.S. Treasury. d. government-chartered private lenders.

d (p. 71)

If established as a REMIC, collateralized mortgage obligations may be issued by: a. a trust. b. a corporation. c. a partnership. d. all of the above.

d (p. 71)

A bond is a(n) a. tax lien. b. ownership document. c. form of usury. d. debt instrument.

d (p. 8)

A Standard Metropolitan Statistical Area: a. is a city. b. includes suburbs. c. has 50,000 or more in population. d. all of the above.

d (p. 85)