Finiance Real Estate
Farm Credit System
"FCS is a government-sponsored enterprise, like Fannie Mae." "It provides financing for buyers of agricultural properties, such as farms and ranches, and housing in rural communities." "FCS is a network of financial cooperatives that are owned and operated by the customers it serves."
Up to what amount will the FDIC insure?
$250,000
how many districts does the federal Reserve Consist of?
12
Redlining
A discriminatory real estate practice in which members of minority groups are prevented from obtaining money to purchase homes or property in predominantly white neighborhoods. redlining is illegal.
Texas SAFE Act
A person who negotiates loan terms, for compensation, is a loan originator.
annual percentage rate (APR)
A rate derived according to a government formula; intended to reflect the true cost of financing, and includes financing fees, so it will always be higher than the actual interest rate on a loan
benifits of member banks
Access to Federal Reserve financial and information services Ability to borrow money from the district bank, when needed Stability of performing activities under the Federal Reserve's protection
Page three of the Loan Estimate shows some pretty detailed information. Lender Licensing
Allows consumers to research the lender and loan officer using the Nationwide Mortgage Licensing System
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
How does Farmer Mac support agricultural producers?
By creating a secondary market for agricultural loans, making it possible for agricultural lenders to fund more loans
The USDA Rural Development Program focuses on all residents of rural areas rather than on agricultural producers. How does this program provide support for rural Americans?
By providing financing that allows rural Americans to buy safe, affordable housing
The ______ was a response to the practice of redlining and was enacted in 1977.
Community Reinvestment Act (CRA)
Dodd-Frank Act created the CFPB-Consumer Financial Protection Bureau what does it do?
Consolidates consumer financial protection into one agency Regulates the actions of large banks as well as non-bank financial institutions Monitors financial markets for risks to consumers
The Equal Credit Opportunity Act is regulated by the ______.
Consumer Financial Protection Bureau
Unintentional violation of TILA
Damages of two times the finance charge, up to $1,000 maximum
factors that contribute to the 2007-2008 economic crisis
Easier credit increased the number of subprime mortgages. Fannie Mae's efforts increased homeownership rates. People generally believed that housing prices would continue to rise. The SEC relaxed capital requirements on investment firms.
Chapter 5 of the Texas Property Code set requirements and penalties for ___
Executory contracts
Licensees who stay current with ______ can better serve low- to moderate-income clients looking to purchase.
FHA financing requirements
Which source reports on the liquidity and financial strength of banks throughout its districts?
FHLB
Farm and Country Bank provides credit to the farmers, ranchers, and other rural residents of its community. What government program helps the bank maintain enough capital to fund those loans?
Farmer Mac
who are FHLbanks regulated by
Federal Housing Finance Authority.
Intentional violations of TILA
Fines of as much as $5,000 and/or imprisonment up to 12 months
Which of these HUD programs allows mortgage lenders to obtain a better price for their mortgage loans in the secondary mortgage market?
Ginnie Mae
Glen is assisting a buyer who makes an offer on a condo in a high-end area of town. The seller refuses the offer, and Glen's client believes this is discriminatory behavior. How should Glen advise his client in this situation?
Glen can recommend filing a complaint with HUD about the alleged discrimination.
Fred is an agricultural lender who helps the ranchers and farmers in his community by providing credit for purchasing land, making repairs to their buildings, and improving their agricultural property. He's able to do this in part because of the ______ offered by the USDA Farm Service Agency.
Guaranteed loans
HUD's ______ assists very low-income families, the elderly, and disabled individuals in affording decent, safe, and sanitary housing in the private market.
Housing Choice Voucher Program
Jeffrey has invested in real estate, and is preparing a residential building for rental. His real estate broker Paul encourages him to accept which of the following so that he is guaranteed of receiving at least a portion of every rental payment?
Housing Choice Vouchers-With a voucher, a landlord is assured of receiving at least the portion of the rent that the HUD program pays.
The ______ Act was legislation aimed primarily at addressing the effects of the subprime mortgage crisis.
Housing and Economic Recovery
Housing and Economic Recovery Act of 2008 (HERA)
Included the SAFE Mortgage Licensing Act Included the SAFE Mortgage Licensing Act
Federal Deposit Insurance Corporation (FDIC) was created in responce to Bank failures during the Great Depression, what does it do?
Insures deposits made at banks and thrift institutions and nspects bank operations
Page One of the Loan Estimate includes
Interest rate on the loan Estimated cash to close Property address Loan amount Sale price of property
Which type of support does the USDA Rural Development Program offer to its target audience of rural residents?
It offers direct loans, grants, and loan guarantees for housing and other rural needs, as well as advisor services to agricultural producers.
How does the Administrative Procedure Act (APA) impact how federal agencies work?
It requires agencies to keep the public informed of how they're organized, as well as their procedures, policies, and rules. It establishes uniform standards for agency rule making.
Regulation Z
Legislation from the Truth in Lending Act that requires disclosure of terms by lenders
FHLBanks
Lend money to member banks s may not have the access to the funds needed in the community to keep businesses running and consumers purchasing.
CRA Requirements
Lenders are periodically reviewed by federal agencies for compliance, Lenders must post their lending policies, Lenders must prepare annual statements about their compliance with the CRA.
RESPA requirement
Lenders must provide applicable borrowers with a Loan Estimate within within three days of receiving the loan application. ensures that a buyer in a residential real estate transaction financed by a federally related mortgage loan has knowledge of all settlement costs. RESPA disclosures include costs associated with the settlement, lender servicing, and escrow account practices, and business relationships between settlement service providers.
TILA (truth in lending act) Violations
Lenders that violate TILA face fines and imprisonment.
Identify which items are and are not components of the FSA (Farm service Agency) program.
Loans can be used to purchase a farm, such as the one that Rita has her eye on.- FSA Component The maximum amount Rita could receive from a direct FSA loan to purchase a property is $300,000.-FSA Component Rita could apply for a loan from an FCS bank, and the lender could receive an FSA guarantee on the loan.- FSA Component Rita could apply for an FSA Beginning Farmer Grant to fund her farm purchase.- Not an FSA Component
commercial paper
Loans made by banks to consumers who need funds to purchase personal property or to meet short-term needs
Which of the following is a true statement about FHLBanks?
Member banks can borrow for up to one year without collateral.
mortgage-backed security (MBS)
Mortgages that are pooled together and sold to investors on the secondary mortgage market
Which is one of the benefits of the USDA loan program?
No down payment is required.
The buying and selling of government securities as a way to influence the money supply and balance economic growth describes
Open-market operations
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
Which interest rate do banks use to offer consumer loans?
Prime Rate
. Identify which of these are functions of the treasury?
Produce currency and coins, Collect duties, moneys, and taxes owed to the U.S. and Enforce tax laws
American Recovery and Reinvestment Act (ARRA)
Provided rental assistance to prevent homelessness Created tax credits for financing low-income housing construction
Member Banks
Purchase stock in their district reserve bank equivalent to a specific percentage of their capital (in order to maintain sufficient reserves). Obey Federal Reserve rules and regulations.
Which of the following actions best supports HUD Goal #2, which is to meet the need for quality, affordable rental homes?
Simplify the delivery of rental housing programs.
Troubled Asset Relief Program (TARP) important program developed in response to the 2007 financial crisis. Which of these were goals of the program?
Stabilize the financial system and boost credit markets
HUD's goals
Strengthen the housing market to bolster the economy and protect consumers. Meet the need for quality affordable rental homes. Utilize housing as a platform for improving quality of life. Build inclusive and sustainable communities free from discrimination.
the federal reserve does
Supervises bank activities and Facilitates the selling and discounting of commercial paper
Texas Administrative Procedures Act
The Administrative Procedures Act sets requirements for state agencies. Decisions by state agencies must be available for public inspection. Individuals can petition state agencies to adopt rules. Any parties to a contested case must be given an opportunity for hearing and to respond to or present evidence or arguments
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 (Consumer Financial Protection Bureau) website
The 2007 financial crisis presented a challenge to the Fed. What actions did the Fed take in response?
The Fed decreased rates, and purchased open market securities.
What is the purpose of the Federal Reserve System?
The Fed regulates the U.S. depository institutions
Federal Open Market Committee
The Federal Open Market Committee (FOMC) enacts monetary policy with a goal of stable prices and economic growth. It does this by managing the countryʼs money supply. The FOMC consists of 12 members: Seven Board of Governor members President of the Federal Reserve Bank of New York Four presidents from the other Federal Reserve Banks (which serve on a rotating basis)
Which act prohibits the payment of kickbacks from settlement service providers?
The Real Estate Settlement Procedures Act (RESPA)
Which act establishes general requirements that state agencies must follow when adopting rules or conducting contested cases?
The Texas Administrative Procedures Act
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
Which act requires that individuals making more than five "owner-financed" loans per year, obtain a residential mortgage loan originator license?
The Texas SAFE Act
Mortgage Disclosure Improvement Act (MDIA)
The act amends the timing of TILA disclosures. Following MDIA rules for disclosure could put a scheduled closing in jeopardy.
What is the most likely effect when the Fed sells securities on the open market?
The economy may slow down due to a decreased money supply.
Closing Disclosure (CD)
The lender is required to provide this within three business days after receiving a consumer's application. This expires after 10 business days if the consumer doesn't act to move forward.
Which of the following describes the discount rate?
The rate at which a bank can obtain a loan from its Federal Reserve bank when using commercial paper as collateral
Which of the following describes the prime rate?
The rate at which a bank or lender may loan money to its most creditworthy borrowers
What is a potential cause for a decrease in local economy driven by the Fed?
The reserve percentage is increased by the Fed.
The Housing and Economic Recovery Act and the American Recovery and Reinvestment Act were enacted in response to _
The subprime mortgage crisis and economic meltdown of 2007-2008
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.
Loan Estimate (LE)
This includes all of the costs of the borrower's transaction. The lender is required to provide this to the borrower at least three days before the loan closes.
While the Fed can increase or decrease reserve requirements to influence the money supply and economy, these requirements serve another purpose. What is it?
To ensure that banks will have funds available when they're needed
Why does the federal government have agricultural lending programs?
To ensure that credit is available to agricultural producers, who often can't meet conventional underwriting standards due to the nature of their work
All members of the Board of Governors serve on the FOMC.
True
The Federal Reserve district banks rotate participation in the FOMC.
True
The ______ requires specific disclosures and was enacted in 1968 as part of the Consumer Credit Protection Act.
Truth in Lending Act (TILA)
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
Open-market operations
When government securities are bought and sold in the open market in order to increase or decrease the amount of money in the banking system
The American Recovery and Reinvestment Act provided mortgage assistance to _____
Wounded servicemen and servicewomen
SAFE- Secure and Fair Enforcement for Mortgage Licensing Act.
act sets minimum standards for licensing of mortgage loan originators. helps consumers make an informed choice about the lending professionals they use.
Department of Housing and Urban Development (HUD)
affordable for consumers, providing access to financing, and ending homelessness
HUD's Office of Fair Housing and Equal Opportunity (FHEO)
aims to eliminate housing discrimination, promote economic opportunity, and achieve diverse, inclusive communities through enforcement, administration, public education, and development of federal fair housing policies and laws.
Government National Mortgage Association (Ginnie Mae or GNMA)
created to expand affordable housing in America by linking global capital markets to the nation's housing markets. develpoed mortgage-backed security (MBS)
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
Truth in Lending Act (TILA)
enacted as part of the Consumer Protection Act in 1968. Requires disclosure of all financing terms when specific trigger terms are used in advertising
RESPA (Real Estate Settlement Procedures Act)
ensures that a buyer in a residential real estate transaction financed by a federally related mortgage loan understands all settlement costs by requiring that borrowers receive disclosures at various times. also realted to Kickbacks require lenders to give LE loan est. and CD closing disclosures
Farmer Mac
govenment sponsered enterprise It buys agricultural loans from lenders to pool and sell in the secondary market as securities. Without Farmer Mac, fewer lenders would be able or willing to make agricultural and rural loans.
Community Reinvestment Act (CRA)
introduced to reduce discriminatory lending practices against individuals and businesses in low- and moderate-income neighborhoods. The CRA requires lenders to serve their communities first by: Meeting the deposit and credit needs of their low-income and moderate-income housing communities Investing in development and rehabilitation efforts that will enable low- and moderate-income individuals and families to afford a home Participating in loan programs for housing, small businesses, and small farms
According to RESPA, what must the lender give to the borrower at either the time of loan application or within three days following application?
loan est.
Community Development Block Grant (CDBG) program
merged seven individual competitive grant programs into a block grant that gives local communities the right to decide how best to meet their own community development needs.
Federal Housing Administration (FHA)
provides mortgage insurance on loans made by FHA-approved lenders throughout the U.S. and its territories and insures mortgages on single-family and multifamily homes, including manufactured homes and hospitals.
discount rate
rate the Federal Reserve charges for loans to commercial banks
Reserve Requirements
regulations on the minimum amount of reserves that banks must hold against deposits usually between 3% to 22% of total deposits
If the Treasury encounters a deficit, what actions might it take?
sell securities
how does the treasury Resolving a Deficit
sell securities, or debt instruments, called treasuries.
Federal funds rate
the interest rate at which banks make overnight loans to one another
Federal Open Market Committee (FOMC)
trade government securities govenernment in the open market operations.
FHLBanks are privately owned cooperatives.
true
The FHLB system comprises 11 FHLBanks that serve the U.S.
true