Pearson VUE Exam Prep: Additional Government Influence in TX Study Guide
What is the formula for calculating the total debt ratio?
(monthly debt payments / gross monthly income) x 100
Which percentage reflects the top debt to income ratio limit for qualified mortgages?
43%
What is a government sponsored enterprise?
A private company the U.S. Congress created to make certain borrowing easier and cheaper
What is meant by pass through taxation?
Business income is taxed on the owner's personal return
Which of the following is NOT part of the Other Considerations section of the Loan Estimate?
Comparisons
Which of the following describes amortized debt?
Debt that's paid off by making periodic payments
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 market?
Expansion
From a secondary market player, Reginal state bank received an advance in exchange for collateral in the form of mortgages. Which entity likely issued this advance?
Federal Home Loan Bank
Which entity regulates government sponsored enterprises?
Federal Housing Finance Agency
after purchasing a property, what can Jeremiah do to clear a possible future claim on the property's title?
Fie a suit a quiet title
Which of these agencies is a government sponsored enterprise?
Freddie Mac
Payment history age of accounts, credit usage and types of accounts are factors considered in calculating a credit score. What's also a factor?
Inquiries
Commercial Banks fall into which of the following category of lenders?
Institutional Lenders
Which of the following is classified as the least liquid on the scale?
Institutional money market funds
Sean hasn't paid his property tax. The tax collector places a lien on his property. How is the lien classified?
Involuntary, specific
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 impact did the authorization of the Credit Union Membership Access Act have on credit unions?
It removed the union worker only membership restriction
The CFPB uses education to accomplish its mission such as the __________ publications
Know before you owe
What does the concept "first in time" refer to when discussing lien priority?
Liens are paid based on date of filing
FHA county loan limits are based on
Median price for the area and property type
Who originates their own loans?
Mortgage bankers
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
HUD's __________ has a goal of increasing the availability of safe and affordable housing to Native American Families
Office of native American programs
Chanel is buying a brand new home with a VA loan. She's obtained a certificate of reasonable value. For how long is that CRV valid?
One Year
While Fannie Mae considers total and housing debt-to-income ratios in its underwriting process, Freddie Mac considers ______.
Only total debt to income
Which of the following statements is true regarding closing costs on a VA loan?
Payment of closing costs may be negotiated
Kara is a lender who is working with prospective buyer, Stan. What does Kara ask Sam to provide to show his work history and earning information?
Paystub
During which phase of the real estate loan cycle is local government most directly involved?
Planning
What does REIT stand for?
Real Estate Investment Trust
A lender qualifies a borrower for a VA loan based on
Residual income and debt to income
In addition to lending money to member banks, FHLBanks also do which of the following?
Set rules and regulations that member banks must follow
Melanie is a buyer who has agreed to purchase Stan's property using a contract for deed. Who holds legal title to the property during the term of the loan?
Stan
Rules and regulations that protect consumers of financial services are now the responsibility of __________ which was created by the Dodd Frank Act
The CFPB
What government agency handles ECOA complaints?
The Consumer Financial Protection Bureau
Which of the following was created as a result of the Housing and Economic Recovery Act?
The Federal Housing Finance Agency
Which act establishes general requirements that state agencies must follow when adopting rules or conducting contested cases?
The Texas Administration Procedures Act
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
Rich wants to add a room to his house, so he takes out a home equity loan. This creates a(n) ______ lien.
Voluntary and specific
By stabilizing and improving the mortgage market, the FHA helped to build
a global market for mortgage backed securities
The Farm Credit system is
a government sponsored enterprise
Which property is Bertrand appraising if he's using the income approach?
a three unit rental property
When a buyer takes over the seller's original loan with the lender's permission this is called
an assumption
__________ 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
to qualify as a texas veteran, a person must
be at least 18 years old
Which of these appraiser requirements does AIR NOT specify?
be knowledgeable about the global market rates
As part of a defiencey judgement sought by a lender, a __________ may be placed on any current and future property the borrower owns until the lender recovers all losses.
blanket lien
What is one way that the FHA has helped to stablize and improve mortgage market?
by requiring appraisers to be state licensed or certified to evaluate property for FHA insured loans.
When obtaining a mortgage to purchase a home, for what does the borrower use the property?
collateral
In a loan to purchase which of the following property types is NOT eligible for purchase by Fannie Mae?
commercial space
Commercial banks offer interim financing in the form of ______ loans
construction
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
How might a borrower avoid paying the mortgage insurance premium required by an FHA loan?
get conventional financing
Freddie Mac
is regulated by the Federal Housing Finance Agency
Armitage Bank is placing the Kellermans in default for failure to pay their homeowners insurance. the lender is concerned about property damage and
judgement liens
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
Making a down payment than obtaining a loan is an example of
leveraging
Store of value, unit of account, and what other factor define money?
medium of exchange
In which phase of the real estate market would you expect to see properties selling for more than they're worth, many buyers in the market, and lots of new construction?
over supply
When the Treasury collects fewer funds than what is needed to pay the government's bills, what action might it take?
sell securities
After bonds are _________, their value goes up and down with the market
sold
What did the Troubled Asset Relief Program allow the U.S. treasury to do in response to the 2007 financial crisis?
spend billions
The upfront MIP on an FHA loan is calculated on
the base loan amount
Who must provide the buyer and seller with a copy of the closing disclosure?
the buyer's lender
The FHA has helped to significantly improve the mortgage market through
the introduction to the long term amortized loan
What's one reason a homeowner would want to refinance their mortgage?
to get a lower interest rate
Kendra has applied for a mortgage with Best Bank. When is Best Bank required to provide Kendra with a loan estimate?
3 business days.
What must a qualified mortgages loan term limit be?
30 years or less
The VA loan program offers a basic entitlement of
36,000
Interest rates that are more than __________ over the current market rate are considered predatory lending.
5
Consumers in the _______ range have an above-average credit score. They tend to qualify for better interest rates than those in the "acceptable" category.
740-799
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
What's the term for a loan modification in which the outstanding loan balance is reconfigured?
recasting
A mortgage that allows the lender to sue the borrower for damages if foreclosure occurs is called a ___________ mortgage
recourse
__________ is the term that the VA uses to describe the amount of net income remaining after deduction of debts, obligations, such as utility and phone bills, and monthly shelter expensses
residual income
More than 70% of the assets of mutual savings banks are derived from
savings accounts
What is a carryback loan?
A second loan financed by the seller
Regional State Bank has made a lot of loans to consumers in the community and is running low on funds. It seeks a loan from Federal Home Loan Bank. This loan is called a(n)
Advance
If the treasury encounters a deficit, what actions might it take?
sell securities
Under current law, what's the maximum tax free gift an individual can give to another individual annually?
15,000
Which of the following represents a potential concern when borrowing funds from a pension or retirement plan?
Borrowing without consulting a financial expert can result in unintended consequences, such as income tax liability and loss of retirement income
Which of the following loans may require compliance with Appraiser Independence Requirements?
Conventional
Which real estate finance instrument includes the promise to repay and the security instrument within the same document?
Deed
What process temporarily stalls foreclosure?
Filing for chapter 7 bankruptcy
Which of these transactions must comply with Appraiser Independence Requirements?
Four unit residence being purchased with a conventional loan
How do VA loan programs compute "residual income"?
Income minus shelter expenses and debts
Which of the following statements is true about the annual MIP on the FHA mortgage
It will decrease each year as the loan is paid down
The interest rate on an FHA Section 251 loan is adjusted based on
Market indices approved by the FHA
What's the definition of a qualified mortgage?
One that meets stringent CFPB guidelines
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
Ally is reviewing the personal information on her credit report. What information is NOT included in the personal information section?
Race and ethnicity
With this IRA, withdrawals of contributions are tax-free.
Roth IRA
Which of the following is a true statement about when a promissory note is sold?
The promissory note is endorsed to the new owner of the loan
The funding fee on a VA loan is waived when
The veteran has 10% or higher VA disability
Why are vision and life insurance optional for real estate licensees to purchase?
They're not required for their profession or the lawW
What is the purpose behind Appraisal Independence Requirements?
To protect appraisers ability to assess an accurate value for a property by avoiding outside pressure or influence
Which of the following is the best investment for a licensee?
paying down outstanding credit card debt
Who's the mortgagee in a mortgage?
the lender
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
Jackson has received several inquiries on his credit report. Which of these inquiries was one he did not initiate?
credit monitoring
What's the term for an extended period of time during which banks experience more withdrawels than deposits?
disinterminidation
Chapter 5 of the Texas Property Code set requirements and penalties for ______.
executory contracts
One common predatory lending practice is to charge fees for unnecessary or ______ loan products or services.
non-existent
HUD's second goal in support of its mission is to meet the need for ______ homes.
quality affordable rentals
What factors directly affect an adjustable rate mortgage?
rate, index, and margin
Institutions that purchase loans, package them into mortgage backed securitites, then sell these to investors may commonly be referred to as
secondary market players
Which item would an appraiser find in the Improvements section of the Uniform Residential Appraisal Report?
Year Built
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
Which of the following would be the best place to keep monies intended for long term savings
a certificate of deposit
Which of the following would the FDIC most likely insure?
certificates of deposit
What do loans create for banks and other financers?
future cash income
Jerry is appraising a five-bedroom home in the suburbs. After identifying the purpose of the appraisal, what does he need to do next?
identify the data that is needed
Which of the following best describes an equity real estate investment trust
invests in equity by owning income producing property, such as malls, apartments or office perks
Which of the following clauses is included in Fannie Mae's muli state note?
late charge
which of the following is a passive type of real estate investment
limited partnership
Which of the following is an example of an involuntary specific statutory lien?
materialiams' lein
Residential property owner's dont often default on property taxes. why not?
property taxes are usually paid with the monthly mortgage payment
What term is used to describe the housing inventory in default or foreclosure
shadow inventory
What's the first step an appraiser will perform when conducting an appraisal?
state the problem
Borrowers who fall into the ______ category may be faced with paying interest 1% to 5% over the current market rate.
subprime
Which of the following is a true statement about borrower qualifications standards for a VA loan guaranteed
the applicant must have a certificate of eligibility
What agency receives paper currency prior to its distribution but after it's printed?
the federal reserve
Maria is applying for a loan. maria's employer has been asked to provide employment verification. Who else must complete parts of the request for proof of employment?
the lender
Who should sellers consult before agreeing to carry part of a loan for a buyer?
their financial advisor
When a promissory note is sold, what is recorded in county land records?
assignment of security instrument the note is attached to
When HUD pursues actions that are designed to reduce housing discrimination and help communities recover from disasters, which of its goals is it supporting?
build strong, resilient, and inclusive communities
Under which section of the Loan Estimate will you find any credits provided by the seller?
calculated cash to close
Private loan companies may charge higher interest, larger fees, and could require ______ to secure a loan.
collateral
Which entity sets the requirements for qualified mortgages?
consumer financial protection bureau
What program allowed the U.S. Treasury to spend hundreds of billions of dollars to stabilize our financial system, boost credit markets, help families avoid foreclosure, and promote economic growth
troubled asset relief program
Which of the following is considered an ineligible property type for which a loan to purchase or refinance wouldn't be purchased by Fannie mae?
vacant lot
A Treasury note is a Treasury security ______.
with a maturity term between two and 10 years
The american recovery and reinvestment act provided mortgage assistance to
wounded serviceman and servicewomen
Freddie Mac targets which type of loans to purchase?
conventional
The acronyom for PITI is a reference to what real estate related concept?
mortgage payment
Andrea's lender has notified her of its intent to foreclose. Her loan is secured with a deed of trust. What rights does she have to redeem her property?
Andrea can cure the default and reinstate the loan
Why did investors purchase CMOs prior to the 2007 financial crisis?
Housing price appreciation appeared to be a sure thing
Which type of real estate investment trust involves both residential and commercial properties?
Mortgage REIT
What person or entity works with many different lenders to find the best loan for the consumer?
Mortgage broker
What type of partnership is a real estate mortgage investment conduit?
Partnership between mortgagees
RESPA prohibits kickbacks between which parties?
Settlement service providers
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
How is a loan assumption documented?
The buyer and seller both sign an assumption agreement.
A vendor and vendee are the parties involved when the finance instrument is ________
contract for deed
The three types of finance instruments that can be used when financing a real estate purchase are the note with mortgage, note with deed of trust and
contract for deed
Financing for a real estate transaction can use a note with a ________, a note with a deed of trust
mortgage
