Real Estate Finance, Unit 4

The BEST description of nonconforming loan is one that A) exceeds the loan limit set annually by Fannie Mae and Freddie Mac. B) does not meet Fannie Mae and Freddie Mac qualifying guidelines. C) is restricted to four-family units. D) is limited to low-income housing.

B) does not meet Fannie Mae and Freddie Mac qualifying guidelines.

Freddie Mac buys mortgages and packages them into securities called A) platinum securities. B) participation certificates. C) loan possibles. D) collateralized mortgage obligations.

B) participation certificates.

Freddie Mac is currently A. a government agency B. under conservatorship C. a subsidiary of the Federal Home Loan Bank System. D. a company under control of the Federal Home Loan Bank Board

B. under conservatorship

All of the following are government-sponsored enterprises EXCEPT A) Fannie Mae B) Freddie Mac C) Ginnie Mae D) the Federal Home Load Bank.

C) Ginnie Mae

A major function of the Federal Home Loan Bank System is to provide its members with A) platinum securities available for purchase. B) collateralized mortgage obligations C) a national market for purchase of their loans. D) pass-through certificates for purchase.

C) a national market for purchase of their loans.

Fannie Mae and Freddie Mac are able to replenish their own funds, enabling them to purchase loans from primary lenders by A) borrowing from the Federal Reserve Bank. B) borrowing from each other. C) requesting grant funds through HUD. D) selling mortgage-backed securities

D) selling mortgage-backed securities

The duties of the FHFA include all of the following EXCEPT A) establishing conforming loan limits. B) setting the percentage of loans to be made to low- and moderate-income borrowers. C) regulating Fannie Mae and Freddie Mac. D) supervising the FHA.

D) supervising the FHA.

A jumbo loan is a mortgage loan that A. covers multiple properties B. exceeds $500,000 C. exceeds the FHA maximum loan limit D. exceeds the current Fannie/Freddie maximum loan limit

D. exceeds the current Fannie/Freddie maximum loan limit

Freddie Mac's electronic underwriting system is known as A) Loan Prospector® B) Desktop Underwriter® C) Flex 97 D) Participation Certificates

A) Loan Prospector®

Which of the following is NOT one of the national credit repositories most used today to obtain credit scores for prospective borrowers? A. FICO B. Experian C. Equifax D. TransUnion

A. FICO

The Tax Reform Act of 1986 established an entity that can issue multiclass securities. This entity, which has added to the activities of the secondary market, is called A) the REIT B) the REMT C) the REMIC D) RESPA

C) the REMIC

Which of the following is NOT a well-paired match? A. Fannie Mae and Freddie Mac B. Federal Housing Administration (FHA) and Department of Veterans Affairs (VA) C. HUD and Treasury D. Desktop Underwriter® and Loan Prospector®

C. HUD and Treasury

A borrower has a credit score of 680. The largest percentage of his credit score is based on A. his payment history B. the amount he owes C. the length of his credit history D. the types of credit cards he uses

C. the length of his credit history

The Federal Housing Finance Agency (FHFA) regulates all of the following EXCEPT A. U.S. Department of Housing and Urban Development (HUD) B. Fannie Mae C. Freddie Mac D. Federal Home Loan Banks

A. U.S. Department of Housing and Urban Development (HUD)

A package of agricultural loans would MOST likely be purchased by A. Fannie Mae B. Freddie Mac C. Farmer Mac D. Federal Home Loan Bank

C. Farmer Mac

When Fannie Mae was reorganized in 1954 to include financing by private investors, mortgage loans could be purchased at A. par. B. a premium C. a discount D. face value

C. a discount

All of the following are related in some way to Ginnie Mae EXCEPT A. platinum securities B. collateralized mortgage obligation C. qualified residential mortgages D. pass-through certificates

C. qualified residential mortgages

Which of the following statements regarding Fannie Mae guidelines is TRUE? A) Loans with a higher-than-80% LTV require private mortgage insurance. B) Maximum loan limits are set annually by each individual lender. C) The seller may contribute up to 6% toward the borrower's closing costs on all loans. D) Homebuyer education and counseling is required of all borrowers.

A) Loans with a higher-than-80% LTV require private mortgage insurance.

The MOST important role played by Ginnie Mae today is A) originating FHA loans. B) purchasing VA loans. C) overseeing Fannie Mae and Freddie Mac. D) guaranteeing FHA and VA mortgage-backed securities.

D) guaranteeing FHA and VA mortgage-backed securities.

The action taken by the Federal Housing Finance Agnecy (FHFA) to stabilize Fannie Mae and Freddie Mac was to A) consolidate both agencies into one. B) dissolve both agencies. C) merge Fannie Mae and Freddie Mac with Ginnie Mae. D) place Fannie Mae and Freddie Mac into conservatorship.

D) place Fannie Mae and Freddie Mac into conservatorship.

The agency established to ensure the financial safety and soundness of Fannie Mae and Freddie Mac is A) the Federal Deposit Insurance Corporation (FDIC). B) the Office of Thrift Supervision (OTS). C) the Federal Reserve System (the Fed). D) the Federal Housing Finance Agency (FHFA).

D) the Federal Housing Finance Agency (FHFA).

Lenders may order either a mandatory or standby commitment to sell loans to Fannie Mae through A) the federal open market. B) the stock exchange. C) the free market auction. D) the administered price system.

D) the administered price system.

Ginnie Mae allows investors to combine mortgage-backed securities pools into a single security, receiving a single payment each month instead of separate payments for individual pools with A) collateralized mortgage obligations. B) platinum securities. C) Treasury Notes. D) gold securities

B) platinum securities.

Freddie Mac was originally chartered to A) compete with Fannie Mae. B) provide a secondary market for conventional loans (not FHA or VA). C) purchase government loans. D) provide mortgage loans for qualified applicants.

B) provide a secondary market for conventional loans (not FHA or VA).

Freddie Mac's electronic underwriting system, Loan Prospector®, provides the lender with all of the following EXCEPT A. an evaluation of the borrower's creditworthiness B. the estimated value of the property C. an estimate of appropriate pricing depending on the risk D. consideration of compensating factors .

D. consideration of compensating factors