RE 6
Who or what entity directs the activities of credit unions?
A board of directors
What is a collateralized mortgage obligation?
A debt security holder
In a deed of trust, who is the trustee?
A neutral third party
Which of the following best describes annual percentage rate (APR)? A standardized measure for interest rates and other loan costs Fees charged by a lender, expressed as a percentage that's always rounded to the nearest whole percentage point The amount a borrower pays in interest for a single year The amount a lender is permitted by federal law to collect in interest from a borrower during a single year
A standardized measure for interest rates and other loan costs
The ______ was enacted in 1946 in response to the creation of several new federal agencies. It established a process for how the agencies could propose and establish regulations.
Administrative Procedure Act
What feature do most adjustable rate mortgages have?
Allows borrowers to convert to a fixed-rate during a specific period of the mortgage
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
According to RESPA, what must the lender give to the borrower in the days immediately prior to settlement?
Closing Disclosure
The ______ was a response to the practice of redlining and was enacted in 1977.
Community Reinvestment Act
CFPB
Consumer Financial Protection Bureau
The ______ uses education, enforcement, and research to promote fairness and transparency for consumer financial services.
Consumer Financial Protection Bureau
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
How is Regulation B related to the Equal Credit Opportunity Act?
Enforcement
Jonathan has come up with a plan. He's going to offer to buy property belonging to his neighbor, who's struggling financially, collect rent from his neighbor, and not make the mortgage payments. He'll rake in the rent until the bank forecloses. Which type of mortgage fraud scheme is this an example of?
Equity skimming
This could happen if a factory were put in next door that changed and impacted property value.
External obsolescence
FCS
Farm Credit System
Provides housing and economic-related research. Similar reasons for using as FHFA.
Freddie Mac
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
Fannie Mae is not a ____ program
HUD (Housing and Urban Development)
The three general groups of international buyers that real estate professionals may encounter are those who ______, those who are looking for a vacation home for when they travel to the U.S., and those who are looking for a luxury property as an investment.
Have work visas and are looking for a home to purchase while they're in the U.S.
Stacy is preparing to sell her home, but learns she can't transfer the property until she removes an encumbrance. Which of these is encumbering her property?
Her existing mortgage
The ______ Act was legislation aimed primarily at addressing the effects of the subprime mortgage crisis.
Housing and Economic Recovery
HERA
Housing and Economic Recovery Act
Why did investors purchase CMOs prior to the 2007 financial crisis?
Housing price appreciation appeared to be a sure thing.
Which of the following approaches to value uses a capitalization rate?
Income approach
How do VA loan programs compute "residual income"?
Income minus shelter expenses and debts
Ginnie Mae
Its mission is to expand funding for mortgages that are insured or guaranteed by other federal agencies.
Which of the following, once completed, initiates the loan process?
Loan application
Which of the following is the best example of the economic principle of leveraging, as it applies to a real estate transaction? Completing the loan process Making a down payment Making the loan payments Purchasing title insurance
Making a down payment
What does it mean if the Fed increases reserve requirements?
Member banks must keep more assets on deposit at the reserve bank.
MDIA
Mortgage Disclosure Improvement Act
Which is one of the benefits of the USDA loan program?
No down payment is required.
Jackie is 10 days late on her loan payment. Will her lender likely place her loan in default?
No, she needs to be 30 days late to be in default.
The Dodd-Frank Act created the CFPB in part to regulate ______, which were among the largest originators of subprime mortgages prior to the financial crisis of 2007‒2008.
Non-bank lenders
The two most common insolvency methods put in place when a bank fails are the purchase and assumption method and the ______ method.
Payout
Which clause is standard in a deed of trust and affects the foreclosure process that can be used if the borrower defaults?
Power of sale
Which interest rate do banks use to offer consumer loans?
Prime rate
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
Which act prohibits the payment of kickbacks from settlement service providers?
RESPA
What is the name of the set of regulations used to enforce the Equal Credit Opportunity Act?
Regulation B
Natalie is a licensee who assists buyers in the purchase of HUD ______ when they're listed for sale.
Repossessed homes
The three-business-day period following the latter of either the date that the transaction is consummated or the date the disclosure is made, during which a borrower can cancel their loan, is called the ______.
Right of rescission
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 of the following was created as a result of the Housing and Economic Recovery Act?
The Federal Housing Finance Agency
oversees these open-market operations. It meets monthly to decide what actions to take related to the trading of securities. This decision directly impacts the money supply and the economy.
The Federal Open Market Committee (FOMC)
What agency receives paper currency prior to its distribution but after it's printed?
The Federal Reserve
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 origination license?
The Texas SAFE Act
2012 taxpayer relief expansion
The bill increases the exemption amounts for 2012 to $50,600 (individuals) and $78,750 (married filing jointly) and indexes the exemption and phaseout amounts thereafter
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.
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.
1997 taxpayer relief program
The legislation reduced tax rates and introduced some new tax credits that remain in place today. Now-familiar concepts such as the child tax credit and the Roth IRA were introduced with this act.
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.
The Farm Credit System funds are acquired from ______.
The sale of debt securities and international money markets
Which statement most accurately describes the right of rescission? It's another term for squatting, in which a consumer unlawfully occupies a residence. It's the right of a consumer to take ownership of a property through the foreclosure process. The three-business-day period from the date a transaction is consummated or disclosures are delivered to the borrower, whichever is later, during which the borrower can cancel the loan The two-business-day period after a loan closes, during which the borrower can cancel the loan.
The three-business-day period from the date a transaction is consummated or disclosures are delivered to the borrower, whichever is later, during which the borrower can cancel the loan
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.
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
TILA
Truth in Lending Act
The ______ requires specific disclosures and was enacted in 1968 as part of the Consumer Credit Protection Act.
Truth in Lending Act
A lender and a borrower sign a mortgage agreement, placing a(n) ______ lien against the borrower's home.
Voluntary and specific
The American Recovery and Reinvestment Act provided mortgage assistance to ______.
Wounded servicemen and servicewomen
Which item would an appraiser find in the Improvements section of the Uniform Residential Appraisal Report?
Year built
In a deed of trust, who is the trustor?
borrower
T or F, The Federal Reserve Bank of Washington, DC always serves as a member of the FOMC.
false
Which of the following might involve old wiring or plumbing? Depreciation External obsolescence Functional obsolescence Physical deterioration
functional obsolescence
2007 Financial Crisis
losses on mortgage-related financial assets began to cause strains in global financial markets, and in December 2007 the US economy entered a recession
Hypothecation
offering an asset of value (collateral) as backing a loan. If you default on the loan, the lender can take the asset to recoup their money.
collateral
something pledged as security for repayment of a loan, to be forfeited in the event of a default. (A home with a mortgage lien - The house is collateral)
Federal Funds Rate
the interest rate at which banks make overnight loans to one another
leverage
the use of borrowed money to supplement existing funds for purposes of investment
In addition to itemizing all borrower-paid and seller-paid closing costs, page two of the Closing Disclosure also tells the borrower when each amount is paid by listing it under ______.
"At closing" or "before closing"
Your client, Ray, wants to purchase a home listed for $200,000. The home is in a revitalization area, and Ray can purchase it under the Good Neighbor Program. How much will he have to pay for the home?
$200,000, less 50%, plus $100
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
It's possible for the adjustment period on an adjustable rate mortgage (ARM) to have ranges, such as three or ______ years apart.
10
Which percentage reflects the top debt-to-income ratio limit for qualified mortgages?
43%
Interest rates that are more than ______ over the current market rate are considered predatory lending.
5%
John uses the VA home loan to purchase property. His mortgage is $200,000. Then, two years later, John defaults on his loan. How much will the VA reimburse the lender?
50,000
Which range of credit scores represents the average score for Americans overall?
670 to 739
Which of the following would be the best place to keep monies intended for long-term savings?
A certificate of deposit
What is an encumbrance?
A defect on a title that can be monetary or physical
The Farm Credit System is ______.
A government-sponsored enterprise
A homeowner has been paying her mortgage for several years and has built up equity. She decides to take out a home equity line of credit because she needs some cash. This credit will create ______.
A junior lien on the property
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
What is a government-sponsored enterprise?
A private company the U.S. Congress created to make certain borrowing easier and cheaper
A foreclosure occurs January 1, 2016. Of the following, which lien takes priority?
A property tax lien filed January 1, 2014
What is a carryback loan?
A second loan financed by the seller
Which of the following statements best describes a tranche?
A slice of a CMO that has specific rules for distributing income received from the collateral
What is a seller carry back?
A type of financing
Larry is a lender processing a loan application. Which of the following might he request to verify the applicant's bank deposit information?
Account statement
The FHLB is a secondary market player. What exactly does it do?
Advances funds to member banks
Fannie Mae's multi-state note includes a due-on-sale clause, also known as a(n) ______ clause.
Alienation
Under the "Summaries of Transaction" section on page three of the Closing Disclosure, amounts listed for the borrower's transaction are calculated to result in ______.
An amount due from the borrower, which will match the cash to close amount
When a buyer takes over the seller's original loan with the lender's permission, this is called ______.
An assumption
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.
When a promissory note is sold, what is recorded in county land records?
Assignment of the security instrument the note is attached to
A long-term security issued by the Treasury that has a maturity of 30 years is called a Treasury ______.
Bond
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.
Shelly's real estate investment strategy is to look for smaller multi-family properties, fix them up, and rent them out. Her investment strategy most closely matches which of the following?
Buy and hold
What is one way that the FHA has helped to stabilize and improve the mortgage market?
By requiring appraisers to be state licensed or certified to evaluate property for FHA-insured loans
Chuck needs to make a few repairs and upgrades to his home, but he needs some cash to do it. He decides to tap into the equity in his home, which he purchased using a VA home loan. What VA program can Chuck use to do this?
Cash-Out Refinance
Which of the following is included in HMDA data?
Census tract information
Which of the following would the FDIC most likely insure?
Certificates of deposit
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.
Which of these individuals may benefit from USDA Rural Development program offerings?
Community-managed lenders
Which of the following is NOT part of the Other Considerations section of the Loan Estimate?
Comparisons
A type of interim financing, specifically for new construction, with a term between three months and three years.
Construction Loan
Which entity sets the requirements for qualified mortgages?
Consumer Financial Protection Bureau
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
A vendor and vendee are the parties involved when the finance instrument is a ______
Contract for deed
When a buyer obtains an FHA loan, the seller may ______.
Contribute up to 6% of the sales price (or appraisal, if that's lower) to the buyer's closing costs
Which of the following is a true statement about an IRA?
Contributions to a SEP IRA are pre-tax contributions
Which of the following loans may require compliance with Appraiser Independence Requirements?
Conventional
Which of the following entities has the authority to place an equitable lien on a property?
Court order by judge
These bank deposits, such as those made to a checking or traditional savings account, must be made available upon demand.
Demand deposits
Amos is a new licensee who has just earned his first commission check. What should he do with it?
Deposit it into a business account separate from his personal account
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
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
When a promissory note is sold, how is ownership transferred?
Endorsement of the note
T or F, Rita could apply for an FSA Beginning Farmer Grant to fund her farm purchase.
False
Provides housing and mortgage information for consumers; business resources for mortgage professionals.
Fannie Mae
Which of the following entities buys primarily conventional loans from large commercial banks?
Fannie Mae
Which of the following is an example of a government-sponsored enterprise (GSE)?
Fannie Mae
In 2008, as a response to the 2007 financial crisis, the Federal Housing Finance Agency began acting as conservator over which institutions?
Fannie Mae and Freddie Mac
FHFA regulates certain secondary market players. Which institution is NOT regulated by the FHFA?
Farmer Mac
FDIC
Federal Deposit Insurance Corporation
Which entity provides disclosures and public information about the financial condition of FCS?
Federal Farm Credit Banks Funding Corporation
FHFA
Federal Housing Finance Agency
FOMC
Federal Open Market Committee
Jean is a high school English teacher. With the Good Neighbor Next Door program, she's able to buy a foreclosed FHA-insured property ______, though she does have to agree to live on the property for three years.
For a 50% discount off list price and a down payment of only $100
Which of the following entities buys loans primarily through thrifts?
Freddie Mac
Which of these agencies is a government-sponsored enterprise?
Freddie Mac
Which of the following might involve old wiring or plumbing?
Functional obsolescence
The amount of the ______ a veteran must pay depends on factors such as military status, down payment amount, and whether the veteran's entitlement is being used for the first time or a subsequent time.
Funding fee
How might a borrower avoid paying the mortgage insurance premium required by an FHA loan?
Get conventional financing
Which is a requirement for veterans to use the VA's Specially Adapted Housing grant?
Have permanent and total service-connected disability
When appraisers look past how a property is being used to determine a more optimal function, what are they determining?
Highest and best use
HARP
Home Affordable Refinance Program
Which of the following programs broke the normal 80/20 ratio rule usually required as a loan-to-value and offered favorable interest rates? American Recovery and Reinvestment Act of 2009 (ARRA) Home Affordable Modification Program (HAMP) Home Affordable Refinance Program (HARP) Wall Street Reform and Consumer Protection Act (Dodd-Frank Act)
Home Affordable Refinance Program (HARP)
An open line of credit based on the available equity in the borrower's home.
Home Equity Line of Credit (HELCO)
Financing for home improvements (such as additions or modernization), with terms of up to five years.
Home improvement loan
HAMP
Homeowner Affordability and stability Plan
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 are potential private loan resources that may be willing to finance a home?
Individual entrepreneurs
Generally short term, this kind of financing is obtained to finance a construction project and is usually open-ended.
Interim Financing
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's the purpose of a typical subordination agreement?
It allows a junior mortgage to move into first lien position.
What primary benefit does a living trust have over a will?
It avoids probate.
Karen has saved $30,000 of her $40,000 goal for a down payment on a house. Why is it unwise to keep all of that money in a traditional savings account?
It doesn't earn high enough interest.
What are the effects on a property if it includes an encumbrance?
It restricts the owner's use or decreases the value.
What is the name for a loan that creates a lien against property that already has been pledged as collateral?
Junior loan
Which of the following clauses is included in Fannie Mae's multi-state note?
Late charge
Ralph and Mort are neighbors. Ralph is selling, Mort is buying, and Ralph is offering a second loan to help Mort with his down payment, using a contract for deed. When Mort presents this idea to his lender, his lender balks. Why might that be?
Lenders don't like contract for deed arrangements.
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
Life insurance companies are more concerned with long-term stability of investments than they are ___________.
Liquidity
Which document provides an estimate of the costs a buyer is likely to pay at settlement before the closing?
Loan Estimate
What information is listed on the promissory note?
Loan amount and schedule of repayment
The lender, the depository institution, and the _______ all complete parts of the request for verification of deposit form.
Loan applicant
Which of the following items directly influences real estate demand? Construction costs Construction of new homes Conversions to residential properties Loan availability
Loan availability
Zara is reviewing the "Calculating Cash to Close" table on page three of the Closing Disclosure to see what has changed from her Loan Estimate. She found this extremely helpful and easy to understand because the table explicitly lists _______.
Loan estimate and final amounts side-by-side
Which of the following loan types can be packaged into a mortgage-backed security eligible for guarantee by Ginnie Mae?
Loans insured or guaranteed by U.S. government agencies
What are advances?
Loans the Federal Home Loan Bank makes to member banks
Used for purchasing manufactured homes, with terms starting at 10 years. Longer loan terms are available to finance for homes permanently attached to their foundations.
Manufactured home loan
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
Which of the following is a requirement for veterans who wish to use the Native American Direct Loan?
Meet the same eligibility criteria as for the VA-guaranteed loan program
Financing for a real estate transaction can use a note with a ______ or a note with a deed of trust.
Mortgage
Which type of real estate investment trust involves both residential and commercial properties?
Mortgage REIT
Life insurance companies participate in real estate in the ______ arena.
Mortgage blocks from secondary mortgage market
An industrial development bond is a variety of ______ bond.
Municipal
NCAU
National Credit Union Administration
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
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
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.
Which of the following is NOT a benefit government-sponsored enterprises receive?
Non-profit status
To qualify for the FHA Streamline Refinance program, a homeowner must ______.
Not be delinquent on mortgage payments
A beneficiary, trustor, and trustee are the parties involved when the finance instrument is a ______.
Note with deed of trust
Conforming loan limits vary based on two factors: location and what else?
Number of units being purchased with the property
HUD's ______ has a goal of increasing the availability of safe and affordable housing to Native American families.
Office of Native American Programs
When a buyer uses an FHA loan, the down payment amount is calculated ______.
On the lesser of the sales price or the appraised value of the property
The buying and selling of government securities as a way to influence the money supply and balance economic growth describes ______. Discount window Federal funds rate Open-market operations Reserve requirements
Open-market operations
Lenders who ______ can underwrite and approve FHA loans without requiring the FHA to review each borrower's qualifications.
Participate in the direct endorsement program
Joe works for a life insurance company that funds commercial investment projects and often insures these projects by insisting on an equity position. What type of financing does this describe?
Participation
After a loan passes Freddie Mac's underwriting process, the institution may purchase the loan then package it into an MBS to be sold to investors. What term does Freddie Mac use to describe its MBS product?
Participation certificate (PC)
What type of partnership is a cooperative?
Partnership between mortgagors
Rhoda is a first-time homebuyer. She has applied for a VA loan to buy a house from Phyllis. When the CRV values the home at less than the sale price, Phyllis refuses to come down on the sales price, so Rhoda must either ______ or find a different home to buy
Pay the difference between the CRV and sales price in cash
Which of the following made mortgages attractive investments in the early 2000s?
Price of homes relative to anticipated future value
What are the types of institutions that issue loans directly to consumers commonly called?
Primary market players
The document that describes the loan amount and the terms for repaying and is attached to a security instrument is called the ______.
Promissory note
Which of the following best describes the state of the market during the over-supply phase of the real estate cycle?
Properties are selling for more than their appraised value, many buyers are in the market, and there is lots of new construction.
Prime Rate
Rate of interest banks charge on short-term loans to their best customers
Which of the following lending regulations apply to mortgage loans and settlement services?
Real Estate Settlement Procedures Act
Which of the following taxes apply while an investor holds an investment property?
Rental income
Violet purchased a house from Nick, and assumed the existing loan. Nick wants to make sure he isn't liable if Violet ever defaults. What can he do to remove his name from the loan agreement?
Request a novation
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.
A lender qualifies a borrower for a VA loan based on ______.
Residual income and debt-to-income
How do falling interest rates impact investors in mortgage-backed securities?
Returns on investments decrease.
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)
More than 70% of the assets of mutual savings banks are derived from ______.
Savings accounts
SAFE
Secure and Fair Enforcement for Mortgage Licensing Act.
The mortgage and the deed of trust are ______ that pledge property as collateral for a loan.
Security instruments
Which of the following is an option that might allow a licensee without much work history or very many assets to finance a real estate investment?
Seller financing
What term is used to describe the housing inventory in default or foreclosure?
Shadow inventory
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.
What's the first step an appraiser will perform when conducting an appraisal?
State the problem.
Regina has defaulted on the terms of her mortgage, and now her lender has foreclosed. The property was sold at a sheriff's sale three months ago. Regina suddenly learns that she has inherited a great deal of money. She wants her property back. Under a judicial foreclosure, what right might allow her to buy her property from the winner of the foreclosure auction?
Statutory right of redemption
When a veteran assumes a VA loan, the ______ agreement can restore the original buyer's level of entitlement as if the loan were repaid in full.
Substitution of entitlement
The Mortgage Disclosure Improvement Act amends ______ in terms of the timing of lender disclosures.
TILA
Which of the following is a typical benefit of a retirement account?
Tax deferment of income
Which agency sets the guidelines for qualified mortgages?
The Consumer Financial Protection Bureau
Maria is a borrower reviewing her Closing Disclosure. She notices that the appraisal fee is listed under "Paid by Others" and has an L listed with the amount. What does this mean?
The L indicates that the creditor pays the item at consummation.
Borrower Max is reviewing his Closing Disclosure to check the amount of prepaid mortgage insurance, taxes, and interest. In addition to itemizing what his borrower-paid closing costs are, the prepaid section includes ______ for each item.
The applicable time period
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
How is a loan assumption documented?
The buyer and seller both sign an assumption agreement.
Which statement correctly describes a contract for deed?
The contract for deed is usually used in a seller-financed transaction.
What do property taxes in a mortgage payment pay for?
The cost of public services as a percentage of the property value
The annual MIP is recalculated each year using ______.
The end-of-year loan balance, plus the balance after the next 11 payments
How does a 3-2-1 buydown work?
The interest rate starts low but increases by 1% each year for three years until it reaches the rate stated in the note.
What did a 2021 National Association of REALTORS® study say about foreign investment in U.S. real estate?
The pandemic may be affecting some of these purchase numbers.
Which of the following describes the federal funds rate? The rate at which a bank can obtain a loan from another bank The rate at which a bank can obtain a loan from its Federal Reserve bank when using commercial paper as collateral The rate at which a bank or lender may loan money to its most creditworthy borrowers The rate at which borrowers can refinance their mortgage
The rate at which a bank can obtain a loan from another bank
Which of the following describes the discount rate? The rate at which a bank can obtain a loan from another bank The rate at which a bank can obtain a loan from its Federal Reserve bank when using commercial paper as collateral The rate at which a bank or lender may loan money to its most creditworthy borrowers The rate at which borrowers can refinance their mortgages
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 real estate transactions is subject to recaptured depreciation?
The sale of an investment property
Margot reviewed page three of her Closing Disclosure to see the amounts she'll pay and receive, and the total cash amount. She located this information under the "Summaries of Transaction" in the "Seller's Transaction" table, which is completed by ______.
The settlement agent
Who distributes the trust assets of a person who died?
The successor trustee
Which statement most accurately describes the right of rescission?
The three-business-day period from the date a transaction is consummated or disclosures are delivered to the borrower, whichever is later, during which the borrower can cancel the loan
What is the 95% rule as it relates to tax-deferred exchanges?
The total value of the property (or properties) being exchanged is at least 95% of the value of the property being sold.
Page four of the Closing Disclosure includes consumer education about ______.
The use of an escrow account
What role did CMOs play in the financial crisis of 2007?
They increased market speculation.
FHA offers a program for loan insurance on adjustable-rate mortgages under ______ of the National Housing Act.
Title II
What's one reason a borrower would choose a split—or piggyback—loan option?
To avoid going over the conforming loan limit
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
Next, let's consider the principal portion of the payments. Again, assume this CMO has three tranches, none of which are retired. Investors in which tranche will get their hands on principal payments passed through the CMO? Tranche one Tranche two Tranche three
Tranche One
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
In what situation would the U.S. Treasury be most willing to sell securities?
When the government's bills exceed income collected
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 ______.
Whether partial payments are accepted
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
An equitable lien is placed on
a property as a result of a court order.
A statutory lien is placed on
a property by statute
A general lien is attached to
all property
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
Which real estate finance instrument includes the promise to repay and the security instrument within the same document?
contract for deed
Private companies such as Fannie Mae, Freddie Mac, and the Federal Home Loan Bank, created by the U.S. Congress to make borrowing easier and more cost effective
government-sponsored enterprises (GSEs)
Someone with great carpentry skills pairs up with someone with working capital to purchase an investment property. This is known as ______.
joint venture
Which of the following is a passive type of real estate investment?
limited partnership
Financing for a real estate transaction can use a note with a ______ or a note with a deed of trust.
mortgage
A specific lien is attached to
only one property
Which parties must be identified on the promissory note?
the borrower and the lender
Who holds the promissory note while it's being repaid?
the payee
T or F, All members of the Board of Governors serve on the FOMC.
true
Celeste hopes to qualify for an FHA loan. She calculates her housing ratio as 31%, and her total debt obligation as 42%. Her credit score is 580. Does she qualify under FHA underwriting guidelines?
yes
Maggie has a neighbor, Jim, who is facing foreclosure. She likes Jim and wants to help him out, so they agree to do a "subject to" purchase. What does this mean?
Maggie will take over Jim's loan payments without telling his lender she's doing so.
Direct farm ownership loans from the ______ may be used to buy farmland, construct and repair buildings, and make farm improvements.
USDA Farm Service Agency
The ______ can offer direct loans to farmers and ranchers. The loans are funded by congressional appropriation.
USDA Farm Service Agency
A loan made by leveraging available equity in the borrower's home. Proceeds may be applied to anything from home improvement to purchasing a new car.
Home Equity Loan
subprime loans
Loans made to homeowners who do not qualify for standard (prime) home loans. Subprime loans can have high fees, and costly prepayment penalties that "lock in" the borrower to a high interest rate.
Chris and Nick hope to qualify for an FHA loan. Their lender calculates their housing ratio as 33% and their total debt obligation as 43%. Their credit score is 620. Do they qualify under FHA underwriting guidelines?
No, they don't meet the housing ratio requirement.
