Real Estate Finance
You average one client from every seven leads, and each client represents 80% of a closed transaction. Each transaction you close has an average dollar value of $9,000. How much can you expect to earn from every seven leads? $2,700 $7,200 $8,000 $9,000
$7,200
If the annual taxes on a property are $1,000, how much is paid monthly? $67.82 $76.54 $83.33 $84.27
$83.33
The Davidsons' lender is trying to approve them for a conventional loan. What is the minimum percentage of total debt ratio they must have to be eligible a conventional loan? 36% 37% 38% 39%
36%
What is a collateralized mortgage obligation? A debt security holder A taxation schedule A tax-deferred exchange A type of mortgage
A debt security holder
Which statement describes a conforming loan? A loan that fails to meet the criteria set forth by Fannie Mae and Freddie Mac A loan that meets certain criteria that are accepted by Fannie Mae and Freddie Mac A loan that requires a larger-than-usual, one-time payment at the end of the term A loan to buy a high-priced or luxury home
A loan that meets certain criteria that are accepted by Fannie Mae and Freddie Mac
Jose is an investor who found and closed on an investment property, then decided to sell a property other than the one originally marked for the exchange. What is this an example of? A buy and hold A fickle investor A fix and flip A reverse tax-deferred exchange
A reverse tax-deferred exchange
What type of property is Aileen appraising if she's using the income approach? An industrial warehouse A short-term lake rental A townhome A two-story garden house
A short-term lake rental
What is the Torrens system? A title search method that goes back 10 years A title search method that goes back 60 years A title search method that goes back as far as records go A title search method that goes back as far as the previous title search
A title search method that goes back as far as the previous title search
In which of the following sections of a credit report might a lender expect to find a loan that has been paid off on time? Accounts in good standing Inquiries Personal information Potentially negative items
Accounts in good standing
Fannie Mae's multi-state note includes a due-on-sale clause, also known as a(n) ______ clause. Acceleration Alienation Exculpatory Subordination
Alienation
Curtis is completing a residential loan application. Which of the following would he include in the assets section? Amount on deposit at his bank Car loan Credit card balance Student loan
Amount on deposit at his bank
Which of the following individuals would qualify to purchase a home under the Good Neighbor Program? A college professor An emergency medical technician An investor with three current properties or fewer A parent who is purchasing the home for her child
An emergency medical technician
Because the buyer traditionally pays for this, page three of the Loan Estimate includes information about a consumer's right to receive a copy of the ______ from the lender. Amortization schedule Appraisal Mortgage servicing data Prepayment policy
Appraisal
Which generation are children of the Silent Generation and products of the U.S. population explosion after World War II? Baby Boomers Generation X Generation Y Millennials
Baby Boomers
Which event led to the establishment of the FDIC? Bank failures during the Great Depression Large institution bailouts during the 2007 financial crisis Market crash following the 1973 oil crisis Tech bubble burst around 2000
Bank failures during the Great Depression
Alternatives to foreclosure include deed in lieu of foreclosure, short sale, or ______. Bankruptcy Eviction Mortgage lien Specific lien
Bankruptcy
As part of a deficiency judgment 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 Foreclosure lien Mortgage lien Short sale
Blanket lien
Who's the mortgagor in a mortgage? Borrower Lender Trustee Trustor
Borrower
Jamal is active military. His cousin, Piper, is in the National Guard. If they both qualify for a VA loan ______. Both Jamal and Piper will pay the same funding fee if all other factors are the same. Jamal's funding fee will be one-half of Piper's. Jamal will pay less than Piper for his funding fee because of their difference in active versus National Guard status. Jamal will pay slightly more than Piper for his funding fee.
Both Jamal and Piper will pay the same funding fee if all other factors are the same.
In which U.S. market(s) do foreign lenders participate? Both the primary and secondary mortgage markets In the primary mortgage market only In the secondary mortgage market only In the stock market only
Both the primary and secondary mortgage markets
Which of these is an essential rule for a licensee's finances? All purchases should be made using credit cards to track expenses. A single checking account should hold both business and personal moneys so that finances can be maintained simply. Business and personal accounts should be maintained separately. Never use credit cards.
Business and personal accounts should be maintained separately.
In the event of a client lawsuit against an independent contractor who's operating under an LLC, only ______ are usually at risk. Business assets Personal assets Reputations Taxable funds
Business assets
Which party pays for the appraisal in a financed real estate transaction? Buyer Lender Seller Title company
Buyer
Tina just sold her investment property. She'll have to pay a transfer tax as well as recapture her depreciation. What other tax will apply? Capital gains Ordinary Property Tenant
Capital gains
Which of the following tells the lender how much entitlement the veteran has available under the VA loan program? Certificate of eligibility Certificate of entitlement Funding entitlement certificate Loan guarantee eligibility calculation
Certificate of eligibility
Kaycie is a new employee at a mutual savings bank. During orientation, she learned that mutual savings banks have limitations that are set by their ______. Articles of incorporation Board of directors Branch managers Charter
Charter
Which of these items is a demand deposit? 401(k) retirement account Checking account Home equity line of credit Individual retirement account
Checking account
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. Sue can increase the sale price of the property by the same amount she is paying for Fatima in closing costs. Sue is allowed to pay no more than 50% of Fatima's closing costs. This would be a seller concession and would be included within a 4% limit on seller concessions.
Closing costs aren't considered a seller concession.
Which of the following is designed to make consumer financial products and services fair and transparent? American Recovery and Reinvestment Act of 2009 (ARRA) Consumer Financial Protection Bureau Home Affordable Modification Program (HAMP) Home Affordable Refinance Program (HARP)
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 ______." Bring any questions you have about it to the closing so we can discuss them with your lender Contact your attorney immediately if you find errors or have any questions Contact your lender immediately if you find errors or have any questions Let me know immediately if you have any questions about it
Contact your lender immediately if you find errors or have any questions
As interest rates rise, what is the number of buyers in the market likely to do? Act independently from interest rate changes Decrease Increase Remain steady
Decrease
Which of the following actions did the Federal Reserve take in response to the 2007 financial crisis? Decreased rates Decreased reserve requirements Increased rates Increased reserve requirements
Decreased rates
Private mortgage insurance protects the lender in case the borrower takes which of the following actions? Chooses to prepay Decides to sell Defaults on the loan Refinances
Defaults on the loan
A lender was not able to recover all of the losses incurred during the foreclosure process. What could it pursue to recoup these losses? Deed in lieu of foreclosure Deficiency judgment Non-judicial foreclosure Short sale
Deficiency judgment
Bella is a lender. Joshua is the loan applicant. They both complete their part of the request for verification of the deposit form. The last party to complete the deposit form will be the _______. Appraiser Depository institution Seller Settlement agent
Depository institution
Joaquin is an appraiser. What purpose do Joaquin and other appraisers serve? Cause a sale to go through Determine a property's value Help buyers buy a property Make a real estate agent's life better
Determine a property's value
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 Equal Credit Opportunity Act Real Estate Settlement Procedures Act Truth in Lending Act
Dodd-Frank Wall Street Reform and Consumer Protection Act
Lenders are more comfortable when borrowers have around 20% of the property's purchase price to serve as what kind of payment? Co-borrower's interest Down payment Interest payment Price deduction due to savvy negotiation skills
Down payment
Before you can create a budget for your personal finances, you should ______. Cut up all of your credit cards Estimate annual and monthly income Open a variety of accounts in case you need them Save enough for six months of living expenses
Estimate annual and monthly income
Which of these HUD programs is primarily responsible for providing mortgage insurance on home loans? Community Development Block Grant FHA Ginnie Mae Office of Fair Housing and Equal Opportunity
FHA
Which of the following statements related to 1031 tax-deferred exchanges is true? Foreign investors may not participate. Foreign investors may participate. Investors may not participate. Residential homeowners may participate.
Foreign investors may participate.
What two types of data does an appraiser gather? Computer and hand-written General and specific Old and new Related and non-related
General and specific
From a lender's perspective, what does a credit score on the low end indicate? Better rates Credit usage Higher risk Lower risk
Higher risk
Mortgage, homeowners, and flood ______ may be included the mortgage payment. Addenda Fees Insurance Waivers
Insurance
Construction loans are a type of ______ financing. Immediate In-between Interim Intermediary
Interim
Kevin is having an appraisal performed on a piece of property he's interested in buying. He's especially interested in hearing about the estimated rate of return the property could pull. What type of value is he interested in? Assessed value Insured value Investment value Value in use
Investment value
The CFPB uses education to accomplish its mission, such as the ______ publications. Credit 101 Credit Is a Consumer's Responsibility Good Lender, Bad Lender Know Before You Owe
Know Before You Owe
Ramon is an independent contractor who is being sued by a client. Luckily, because of the business structure he formed, his personal assets aren't at risk. Ramon likely has a(n) ______. General partnership LLC Off-shore company Sole proprietorship
LLC
Which of these business structures offers personal liability protection in the event of a lawsuit against the licensee's business? General partnership LLC Multiple-partner partnership Sole proprietorship
LLC
HMDA requires lenders to collect, maintain, and report data on which of the following? Borrower names Borrower Social Security numbers Lending practices Specific property addresses
Lending practices
What information is listed on the promissory note? Appraised value of property pledged as collateral Legal description of the collateral property Loan amount and schedule of repayment Title history of the collateral property
Loan amount and schedule of repayment
Which of the following is a requirement for veterans who wish to use the Native American Direct Loan? Apply to a VA-approved lender Meet the same eligibility criteria as for the VA-guaranteed loan program Obtain approval from the tribal government Work with a VA-approved real estate agent
Meet the same eligibility criteria as for the VA-guaranteed loan program
When borrowers fail to pay property taxes, allow their property to go into disrepair, or ______, they could face loan default. Miss scheduled mortgage payments Pay down the principal balance of the mortgage quicker than the amortization schedule Pay off their mortgage early Refinance their existing mortgage
Miss scheduled mortgage payments
How much of a mutual savings bank's assets come from savings accounts? Between 20% and 40% Between 50% and 60% Less than 20% More than 70%
More than 70%
Under the "Projected Payments" section of the Loan Estimate, the consumer can view what is included in the monthly payment. Which of the following may be part of the total payment other than the principal and interest? Closing costs Loan term Mortgage insurance Prepayment penalties
Mortgage insurance
The ______ is where the borrower finds details about how, when, and by how much the interest rate will change in an adjustable rate mortgage (ARM). Closing Estimate County tax assessor's office Lender's website Mortgage note
Mortgage note
What does NCUA stand for? National Credit Union Administration National Credit Union Affiliation National Credit Union Alliance National Credit Union Association
National Credit Union Administration
When a buyer uses an FHA loan, the down payment amount is calculated ______. According to the FHA requirements for LTV at the time of origination On the FHA median price for similar properties in the area On the greater of the sales price or the appraised value of the property On the lesser of the sales price or the appraised value of the property
On the lesser of the sales price or the appraised value of the property
Mary has created her budget and defined her financial goals. What's her next step in developing her financial plan? Estimate her income Find an investment advisor Open an account for each savings goal Pay off her credit cards
Open an account for each savings goal
Life insurance companies sometimes like to insure their investment in commercial projects by insisting on an equity position. This is known as ______ financing. Equity-based Greedy Interim Participation
Participation
The two most common insolvency methods put in place when a bank fails are the purchase and assumption method and the ______ method. Foreclosure Hostile takeover Payout Rescission
Payout
When using a personal finance system with multiple bank accounts, which account should be electronically linked to all of your other accounts? Business checking Emergency fund Personal checking Retirement fund
Personal checking
How common are interest-only loans today? Rare Somewhat common Somewhat uncommon Very common
Rare
Which of these items is an asset to list on a residential loan application? Home equity loan Mortgage Real estate Unpaid property taxes
Real estate
A RAM is a type of equity financing. What does RAM stand for? Renewed annual mortgage Retired American mortgage Reverse annual mortgage Reverse annuity mortgage
Reverse annuity mortgage
What kind of communities does Farmer Mac serve? Low income communities Rural communities Suburban communities Urban communities
Rural communities
The ______ table discloses the amounts associated with the transaction that the seller will pay and receive, usually resulting in a total cash to seller. Paid by Seller Purchase Transaction Received by Seller Seller's Transaction
Seller's Transaction
In addition to lending money to member banks, FHLBanks also do which of the following? Set interest rates member banks can charge consumers Set loan maximums that member banks can offer consumers Set rules and regulations that member banks must follow Set the prime rate that member banks can charge their most creditworthy customers
Set rules and regulations that member banks must follow
John is looking for a home to purchase. If he represents demand, which of the following represents the supply that best fits his needs? Commercial building for sale Commercial space for lease Single-family house for rent Single-family house for sale
Single-family house for sale
Jamie is an independent contractor licensee. Her business structure puts both her personal assets and business assets at risk. What type of business structure does Jamie likely have? C corp LLC S corp Sole proprietor
Sole proprietor
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? Equitable right of redemption Mortgagor right of redemption Power of sale Statutory right of redemption
Statutory right of redemption
Borrowers who fall into the ______ category may be faced with paying interest 1% to 5% over the current market rate. Average Low-risk Subprime Troublesome
Subprime
Which of the following is a requirement to qualify for a VA loan? $10,000 in liquid assets Credit score of 620 or higher Homeowner education classes Sufficient income
Sufficient income
Margot is hoping to buy the Bransons' farm. However, lender Susan informs her that a cloud has been discovered on the Bransons' title. Who is usually responsible for clearing the cloud? Margot Susan The agent The Bransons
The Bransons
Sylvia is shopping for a mortgage. Because she's a veteran, she compares the VA home loan with the 3.5% down FHA mortgage. If she has only $5,000 available in cash, with all else being equal, which loan will allow her to spend more on a home? Both loans have the same features, so she could purchase at the same price with either loan. Sylvia can't be approved for either loan with only $5,000 in cash. The FHA loan The VA loan
The VA loan
A borrower who has received a certificate of eligibility will qualify for a VA loan under which of the following circumstances? The borrower also has sufficient credit and income. The borrower currently serves in the military. The borrower has never had a VA loan before. There's money left in the funding program that year.
The borrower also has sufficient credit and income.
What's true about the draw period on a home equity line of credit (HELOC)? It's always at least five years. It's never more than 10 years. The draw period varies. There really isn't a draw period to speak of.
The draw period varies.
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 form? Maria's agent The appraiser The lender The seller
The lender
Who's the mortgagee in a mortgage? The beneficiary The borrower The lender The trustee
The lender
Who holds the promissory note while it's being repaid? The maker The mortgagor The payee The trustee
The payee
Which of the following is a true statement about when a promissory note is sold? Promissory notes cannot be sold. The note must be notarized. The promissory note is endorsed to the new owner of the loan. When the note is sold, the attached security instrument is assigned to the lender.
The promissory note is endorsed to the new owner of the loan.
Which of the following describes the prime 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 or lender may loan money to its most creditworthy borrowers
Who should sellers consult before agreeing to carry part of a loan for a buyer? Their financial advisor Their friends Their parents Their real estate professional
Their financial advisor
Mutual savings banks prefer to keep their lending activities in their immediate geographic area. Why? Their charter limits the geographical regions in which they can operate. They hate to travel. They prefer for their borrowers to be within driving distance in case a bank employee needs to visit. They prefer to personally monitor the loans they issue.
They prefer to personally monitor the loans they issue.
To be eligible for a ______, an applicant must have participated in farm or ranch management for at least three years. Farm Credit System loan Farmer Mac direct loan Federal Beginning Farmer Grant USDA loan through the Farm Service Agency
USDA loan through the Farm Service Agency
Which party to the loan approval process evaluates the loan application, the supporting documentation and data, and the property appraisal in order to make an approval recommendation? Buyer's agent Seller's agent Settlement agent Underwriter
Underwriter
A Treasury note is a Treasury security ______. With a maturity term between two and 10 years With a maturity term of 30 years With a maturity term of one year or less Without a specified maturity term
With a maturity term between two and 10 years
Which of the following actions might be considered a red flag signaling mortgage fraud? The buyer has disclosed that she's purchasing the property with her sister. The buyer's credit score is outstanding. While reviewing the sales agreement, you notice the buyer has impeccable handwriting. Your buyer requests a specific appraiser.
Your buyer requests a specific appraiser.
Under current tax law, what's the maximum tax-free gift an individual can give to another individual annually? $10,000 $12,000 $15,000 $56,000
$15,000
Up to what amount will the FDIC insure? $100,000 $1 million $250,000 $500,000
$250,000
It's possible for the adjustment period on an adjustable rate mortgage (ARM) to have ranges, such as three or ______ years apart. 10 12 15 8
10
Which percentage reflects the top debt-to-income ratio limit for qualified mortgages? 28% 35% 38% 43%
43%
What is a moratorium (or forbearance)? A lender forbids any modifications to a property. A lender makes a loan due immediately. A lender temporarily suspends a borrower's payments. A loan application is going through the approval process.
A lender temporarily suspends a borrower's payments.
When a buyer takes over the seller's original loan with the lender's permission, this is called ______. A buyout An assumption A substitution Subject-to financing
An assumption
A long-term security issued by the Treasury that has a maturity of 30 years is called a Treasury ______. Bill Bond Note Stock
Bond
Private loan companies may charge higher interest, larger fees, and could require ______ to secure a loan. An equity interest Collateral Interest-only payments Sponsorship
Collateral
Commercial banks offer interim financing in the form of ______ loans. Construction Conventional Manufactured home Personal
Construction
If your client's attorney contacts you, saying you were negligent in providing your client with service, which insurance coverage do you desperately hope you have? Errors and omissions Health Life Malpractice
Errors and omissions
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)
Historically, what do property values tend to do over long periods of time? Decrease Historically, property values have not followed a consistent pattern. Increase Remain the same
Increase
Which of the following clauses is included in Fannie Mae's multi-state note? Late charge Lock-in Prepayment penalty Subordination
Late charge
The loan applicant, the depository institution, and the _______ all complete parts of the request for verification of deposit form. Appraiser Lender Seller Settlement agent
Lender
Which party to the loan approval process is responsible for providing the Loan Estimate? Buyer Lender Seller Settlement agent
Lender
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
Which of the following is the best investment for a licensee? Buying a personal residence Paying down outstanding credit card debt Putting money into a mutual fund Putting money into a savings account
Paying down outstanding credit card debt
Ally is reviewing the personal information on her credit report. What information is NOT included in the personal information section? Addresses Name and name variations Race and ethnicity Spouse or co-applicant name
Race and ethnicity
When the Torrens system is used to perform a title search, who or what entity acts as title guarantor in case a claim is filed? Lender The seller The state Title insurance company
The state
Why might a homebuyer use an FHA 203(k) loan instead of the standard 203(b) loan? To create a loan-to-value ratio that's more acceptable to the lender To reduce the amount of the MIP paid on the loan To roll the cost of rehabilitating the purchased home into the mortgage To shorten the term of the mortgage loan
To roll the cost of rehabilitating the purchased home into the mortgage
Is a homeowner with an FHA loan allowed to obtain a second mortgage? No, this is not allowed Yes, but only if both mortgages are FHA insured Yes, if the loan limits for FHA-insured loans have increased since the first mortgage was originated Yes, if the total of the first and second mortgages is within the maximum loan to value ratio
Yes, if the total of the first and second mortgages is within the maximum loan to value ratio
What is the formula for calculating the total debt ratio? (Gross monthly income ÷ monthly debt payments) × 100 (Gross monthly income ÷ monthly housing expenses) × 100 (Monthly debt payments ÷ gross monthly income) × 100 (Monthly housing expenses ÷ gross monthly income) × 100
(Monthly debt payments ÷ gross monthly income) × 100
What's the most common ratio for borrowers who use split, or piggyback, mortgages? 75/15/10 80/10/10 80/20 90/10
80/10/10
Who or what entity directs the activities of credit unions? A board of directors A branch manager The head of the FDIC The NCUA chairperson
A board of directors
Your business is booming, and you'd really like someone else to maintain your financial records. Which of the following is the best person for this role? A bookkeeper A financial planner An attorney An investment advisor
A bookkeeper
Which of the following would be the best place to keep monies intended for long-term savings? A certificate of deposit A money market account A sock drawer A volatile hedge fund
A certificate of deposit
Cathy is hoping to purchase a home using a VA loan. A VA-assigned real estate appraiser is required to provide ______ for the property. A certificate of reasonable value A certificate of resale value A home inspection An appraisal report
A certificate of reasonable value
In a deed of trust, who is the trustee? A neutral third party The agent The borrower The lender
A neutral third party
Barb is considering a refinance. She wants to stick with a conventional loan. Why might she be wary of an introductory rate? After an initial low rate, her payments may increase beyond the level of affordability. A low initial rate may mean she's been duped into an adjustable rate mortgage that may fluctuate wildly over the life of the loan. Her best friend told her to look out for this sort of thing. She saw a documentary on predatory lending and thinks she may be dealing with an unscrupulous lender.
After an initial low rate, her payments may increase beyond the level of affordability.
Regional State Bank is a member bank of the Federal Home Loan Bank. In exchange for mortgage collateral, Regional State Bank received a loan from the FHLB so it can make additional loans to consumers. What is the loan called that Regional State Bank received? A collateralized mortgage obligation A mortgage-backed security An advance A real estate mortgage investment conduit
An advance
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 An amount to be paid from the lender to the seller The purchase price of the property The total loan amount
An amount due from the borrower, which will match the cash to close amount
What is an appraisal? A determination of property defects and conditions An opinion of listing price as determined by a real estate professional An opinion or estimate of a property's value as of a specific date A study on the feasibility of developing land
An opinion or estimate of a property's value as of a specific date
What type of value is of interest to taxing authorities? Assessed value Insured value Investment value Value in use
Assessed value
Chapo's property was foreclosed on and he is facing a deficiency judgment so the lender can recover losses incurred from the foreclosure process. What type of lien may the lender levy against Chapo until the losses are paid? Blanket lien Foreclosure lien Mortgage lien Tax lien
Blanket lien
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. Funds borrowed from a retirement account will be immediately subject to a penalty for early distribution. Funds from a pension plan loan can only be used for the purchase of investment property. The extended repayment term of 10 years may cause borrowers to become complacent and not pay the loan back as rapidly as they should.
Borrowing without consulting a financial expert can result in unintended consequences, such as income tax liability and loss of retirement income.
Who is responsible for paying the loan-related closing costs in a financed real estate transaction? Buyer Lender Seller Title company
Buyer
Cheyenne is selling the family farm via an installment contract. What is one advantage of selling the farm this way? Cheyenne is not subject to fair housing requirements if she sells the property through an installment sale. Cheyenne will owe no property taxes as long as the property is under an installment sales contract. Cheyenne will pay less in capital gains taxes by receiving the proceeds from the sale over time, rather than in a lump sum. The buyer in an installment transaction is likely to have better credit than a buyer in a traditional sale.
Cheyenne will pay less in capital gains taxes by receiving the proceeds from the sale over time, rather than in a lump sum.
Georgette and Elise are buying a home together, and have taken out a loan with a private loan company. They'll pay a bit more interest, and larger fees, but they feel it's worth it to have the home they've always dreamed of. What else might the private loan company require? An equity interest Collateral Interest-only payments Sponsorship
Collateral
When obtaining a mortgage to purchase a home, for what does the borrower use the property? Collateral Equitable title Hypothecation Leverage
Collateral
Dorinda is an investor. She recently purchased shares in a tranche that holds mortgages and mortgage-backed securities. In what did she invest? Collateralized mortgage obligation Property management agreement Real estate investment trust Reverse mortgage
Collateralized mortgage obligation
Synergy National Bank issued a conventional loan that is eligible for purchase by Fannie Mae. When Fannie Mae purchases the loan, what will Synergy National Bank receive in return? Brokerage fee Collection fee Origination fee Points
Collection fee
Joe's applying for a mortgage that meets all of the Fannie Mae/Freddie Mac criteria. Based on this, how would we classify this loan? Conforming Conventional Government Non-conforming
Conforming
Which of the following items directly influences real estate supply? Construction Employment wages Interest rates Loan availability
Construction
In a 1031 tax-deferred exchange, what role does the qualified intermediary serve? Acts as trustee Coordinates the exchange Insures the replacement property Records the deed
Coordinates the exchange
Which appraisal approach is likely the best choice for appraising a movie theater? Competition Cost Income Sales comparison
Cost
Which process temporarily stalls foreclosure? Filing for Chapter 7 bankruptcy Fleeing the state Making a request for a break Paying off all debts
Filing for Chapter 7 bankruptcy
Which of these is actually an amendment to the Truth in Lending Act (TILA)? Consumer Mortgage Protection Act Home Ownership and Equity Protection Act Honest Lending Education Act Real Estate Settlement Procedures Act
Home Ownership and Equity Protection Act
Which of the following best describes the state of the market during the expansion phase of the real estate cycle? High but stabilized unemployment and a high number of foreclosures Increases in hiring, employment, and public confidence, and lots of buyers in the market Properties selling at inflated prices, many buyers in the market, and lots of new construction Unemployment increasing, prices falling, and foreclosures on the rise
Increases in hiring, employment, and public confidence, and lots of buyers in the market
The Wilsons are selling their home and have asked that an appraiser they know perform the appraisal on the property. Sidney, the buyer's agent, is surprised when the appraised value comes in considerably higher than the competitive market analysis she prepared. Sidney is concerned that this might be an example of which type of mortgage fraud scheme? Equity skimming False identity Inflated appraisal Straw buyers
Inflated appraisal
In the early years of a mortgage loan term, which portion of the payment is likely to be the largest? Insurance Interest Principal Taxes
Interest
Which of the following statements is true about the annual MIP on an FHA mortgage? It's amortized and will be the same for every mortgage payment the borrower makes. It's a one-time charge that the borrower may choose to pay at closing or finance into the loan amount. It will decrease each year as the loan is paid down. It will increase each year as the loan is paid down.
It will decrease each year as the loan is paid down.
Payment history, age of accounts, credit usage rate, and inquiries are factors considered in calculating a credit score. Which of the following is also considered? Income Length of credit history Marital status Race
Length of credit history
Why is it a good idea for real estate licensees to carry auto insurance? All states require it. It's helpful to have in the event a client sues for negligence. It's required by federal law. Most states require it and it's recommended for all real estate licensees.
Most states require it and it's recommended for all real estate licensees.
An industrial development bond is a variety of ______ bond. Corporate Municipal Revenue Secured
Municipal
One common predatory lending practice is to charge fees for unnecessary or ______ loan products or services. Expensive Needed Non-existent Outrageous
Non-existent
What's the term for a loan modification in which the outstanding loan balance is reconfigured? Deferring Recasting Redefining Reshaping
Recasting
Long- and short-term debt instruments are called ______. Bills Equities IOUs Securities
Securities
Which of these items did the Federal Housing Administration (FHA) implement to stabilize and improve the mortgage market? Educate the public about the benefits and responsibilities of having a mortgage Establish the home inspection industry Set construction standards for homes purchased with FHA loans Set standards for interest rates on mortgage loans
Set construction standards for homes purchased with FHA loans
What term is used to describe the housing inventory in default or foreclosure? At-risk inventory Flooded inventory Shadow inventory Shallow inventory
Shadow inventory
Travis made the final payment on his loan according to the loan terms. What must the note holder do to acknowledge that the debt has been repaid? Assign the note to Travis. Destroy the note. Endorse the note and return it to Travis. Sign the note, mark it "paid in full," and return it to Travis.
Sign the note, mark it "paid in full," and return it to Travis.
When a homeowner has repairs made to a home using an FHA 203(k) loan, HUD requires ______. That the contractor agree to a 10% discount for all labor That the work be completed within one year of closing on the loan That the work be done by a HUD-approved contractor That the work meet FHA's basic energy efficiency and structural standards
That the work meet FHA's basic energy efficiency and structural standards
Lender Ron is running Sally's credit report. In which section of the credit report might Ron expect to find information regarding her loan that was paid off on time? The Accounts in Good Standing section The Inquiries section The Negative Items section The Personal Information section
The Accounts in Good Standing section
______ sets conforming loan limits for mortgages. Fannie Mae Freddie Mac The Federal Home Financing Agency The Federal Reserve
The Federal Home Financing Agency
The annual MIP is recalculated each year using ______. The borrower's housing ratio and the current loan value The borrower's total debt obligation ratio The end-of-year loan balance, plus the balance after the next 11 payments The lesser of the home's original or current appraised value
The end-of-year loan balance, plus the balance after the next 11 payments
Rachael is purchasing a house from the Browns. After obtaining financing, what does her lender require her to have for her own protection? A good credit score Mortgage search Title binder Title insurance
Title insurance
Monica is selling her house. Her appraiser, Tom, is using a title search method that only looks back as far as when the last title search was performed. The method he's using assumes the last search was done accurately and legally, and that any issues were resolved. Which method is Tom using? Abstract of title Title certificate Title commitment Torrens system
Torrens system
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? Condominium Cooperative Single family residence Vacant lot
Vacant lot
The American Recovery and Reinvestment Act provided mortgage assistance to ______. Homeless persons Low-income and rural neighborhoods Subprime borrowers Wounded servicemen and servicewomen
Wounded servicemen and servicewomen
Bob just closed on his investment property. He's already identified a replacement property that he'll be exchanging into by using a 1031 tax-deferred exchange. How many days does he have to close on his replacement property? 180 30 45 60
180
John wants to do a 1031 tax exchange. He just sold his property. How many days does he have to close on a new property? 180 30 45 60
180
In the residential mortgage market, charging borrowers more than ______ over market rate for interest is considered a predatory lending practice. 10% 3% 5% 8%
5%
Homeowners over the age of ______ are eligible for the HECM program. 55 62 71 80
62
Which range of credit scores represents the average score for Americans overall? 580 to 669 670 to 739 740 to 799 800 or higher
670 to 739
Which of the following is Fannie Mae most likely to purchase? A commercial loan being used to purchase a new warehouse A conventional fixed-rate mortgage issued by a commercial bank A home equity line of credit A loan issued to a developer for the construction of a new subdivision
A conventional fixed-rate mortgage issued by a commercial bank
Which of the following results from the Treasury selling securities? A decrease in interest rates A decrease in money in the economy An increase in interest rates An increase in money in the economy
A decrease in money in the economy
How's interest defined as it's related to a mortgage loan payment? A fee paid to lenders for the use of their money A fee to keep other borrowers from taking interest in your property and buying it out from under you Extra money paid to cover any unexpected bank fees Random charges
A fee paid to lenders for the use of their money
Which of the following best describes a non-recourse mortgage? A clause that exists in mortgages in every state A mortgage clause that allows the borrower to sue the lender if interest rates make their payments difficult A mortgage with a clause that allows the lender to sue the borrower for damages if foreclosure occurs A mortgage with a clause that prohibits the lender from suing the borrower for unpaid amounts if foreclosure occurs
A mortgage with a clause that prohibits the lender from suing the borrower for unpaid amounts if foreclosure occurs
Captain Kirk is a veteran who sells his home to Leonard. Leonard is also a veteran, and they agree to let Leonard assume Captain Kirk's VA loan for the property. They agree to a novation, which is ______. An addition to the property A new contract with the lender using a substitution of entitlement A reduction in sales price to match the CRV A release of Captain Kirk's liability
A new contract with the lender using a substitution of entitlement
What is a red flag for an Equal Credit Opportunity Act violation? An applicant was denied a loan because of a low credit score. A person was denied credit without explanation or given resources that explain why. The interest rate was not listed on the application. The lender only offered one financing option.
A person was denied credit without explanation or given resources that explain why.
Which of the following describes the Housing Choice Voucher Program? A program protecting individuals against discrimination in housing based on a protected class A program that allows mortgage lenders to obtain a better price for their mortgage loans in the secondary mortgage market A program that benefits American Indian and Alaska Native tribal governments, tribal members, the Department of Hawaiian Home Lands, Native Hawaiians, and other Native American organizations A program to help very low-income families, the elderly, and disabled individuals to afford decent, safe, and sanitary housing in the private market
A program to help very low-income families, the elderly, and disabled individuals to afford decent, safe, and sanitary housing in the private market
Which of the following could be a concern for a lender regarding property condition? A broken-down car in the driveway A roof that's missing shingles Exterior paint that doesn't match the trim Grass that hasn't been cut in a week
A roof that's missing shingles
Which of the following would be a receipt you should save for tax purposes? A ticket for a sporting event A toll fee for a business trip Breakfast out with your football buddy Entry fee to a museum
A toll fee for a business trip
In which of the following situations is a lender prohibited from enforcing an alienation clause? A transfer between parent and child A transfer between real estate agent and client A transfer between siblings A transfer where the buyer is employed by the lender
A transfer between parent and child
Which of the following types of properties may be eligible for purchase by Freddie Mac? A commercial investment property A duplex used as a second home A single-unit commercial space A triplex purchased as a primary residence
A triplex purchased as a primary residence
What type of clause is this? "If any monthly installment under this Note is not paid when due and remains unpaid after a date specified by a notice to Mortgagor, the entire principal amount outstanding and accrued interest thereon shall at once become due and payable at the option of the Note holder." Acceleration clause Alienation clause Defeasance clause Subordination clause
Acceleration clause
Payment history, credit usage, inquiries, and types of accounts are factors considered in calculating a credit score. Which of the following options is also a factor? Age of accounts Income Marital status Race
Age of accounts
Albert wants to sell his house to his cousin, who's willing to assume his FHA loan. What clause in Albert's mortgage requires him to obtain the lender's permission to do this? Acceleration clause Alienation clause Non-recourse clause Transfer clause
Alienation clause
Assuming a CMO uses the sequential pay structure, how is interest passed through from borrowers paid to investors? All tranches receive interest payments. Interest is first paid to investors holding the greatest number of shares. Only the first tranche receives interest payments. Only the last tranche receives interest payments.
All tranches receive interest payments.
What is the three-property rule as it relates to tax-deferred exchanges? An investor can identify up to three replacement properties and not encounter a restriction regarding fair market value as long as debt load requirement is met. An investor cannot exchange into more than three properties per exchange. An investor can only perform an exchange with three properties. An investor must own three properties before they qualify for tax-deferred exchanges.
An investor can identify up to three replacement properties and not encounter a restriction regarding fair market value as long as debt load requirement is met.
For borrowers who already have an FHA loan, the Streamline Refinance program offers the benefit of ______. Allowing the borrower to borrow extra cash over the outstanding mortgage amount An unlimited loan-to-value ratio Prohibiting the lender from charging financing fees Removing the MIP requirement
An unlimited loan-to-value ratio
Who needs to obtain a mortgage loan originator endorsement and register with the Nationwide Mortgage Licensing System and Registry? Any licensed real estate professional who works with investors Anyone who acts as a mortgage loan originator Any real estate professional Any real estate professional who performs mortgage loan origination activities for commercial properties
Anyone who acts as a mortgage loan originator
When a borrower is completing a loan application, items of value the borrower owns are listed in the ______ section. Assets Income Liabilities Net worth
Assets
Ava is borrowing money to buy some commercial property for her business. The loan agreement she signs includes a lock-in clause. What does that mean? Ava must use the same lender for any new loans she needs. Ava will not be allowed to pre-pay the loan prior to the date specific in the loan agreement. The lender has the right to prohibit certain ways of using the property used as collateral for the loan. The lender is not allowed to transfer the loan without Ava's permission.
Ava will not be allowed to pre-pay the loan prior to the date specific in the loan agreement.
______ 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 Foreclosure Judgement lien Tax sale
Bankruptcy
Which of the following describes mutual savings bank loans? Banks focus lending offerings on local businesses and residents. They're funded by private investors. They're purchased by secondary mortgage markets. They're regulated by federal the government.
Banks focus lending offerings on local businesses and residents.
To qualify as a Texas veteran, a person must ______. Be a resident of Mexico Be at least 18 years old Be dishonorably discharged Serve at least 181 days of wartime active duty
Be at least 18 years old
Which party to the loan approval process is responsible for completing a loan application and supplying supporting documentation? Buyer Lender Seller Settlement agent
Buyer
Ralph and his wife are hoping to purchase their new home. Their lender is running their credit scores. How are Ralph and his wife's credit scores determined? By running a credit report By voter registry Through employment history Through school transcripts
By running a credit report
A VA loan program that allows a veteran to refinance at a lower rate and receive cash proceeds to fund other investments or purchases is ______. Cash Out Refinance IRRC Negative amortization conversion Senior disability refinance
Cash Out Refinance
Edward is an economic analyst. In his work, he keeps a particularly close eye on this industry, because action or inaction here is a leading indicator of the country's overall economy. Which industry is this? Construction Education Healthcare Manufacturing
Construction
Which entity sets the requirements for qualified mortgages? Consumer Financial Protection Bureau Federal Home Loan Bank Federal Housing Finance Agency U.S. Congress
Consumer Financial Protection Bureau
Which of the following best describes a seller's market? Demand is greater than supply. Loans are widely available. Supply and demand are equal. Supply is greater than demand.
Demand is greater than supply.
Mario lives in a state that requires an abstract of title for property conveyance. The chain of title is broken approximately 50 years prior to the current date. Which of these properly identifies the status of Mario's title? As long as the chain of title is traceable for at least the past 30 years, Mario will have marketable title. Depending on his state's laws, Mario may have marketable title. Mario will have to perform his own research to find information necessary for repairing the broken link. Unless the chain of title can be tracked back to its beginning, Mario won't have marketable title.
Depending on his state's laws, Mario may have marketable title.
Which of these would be considered a variable, essential expense? Ballet lessons Electric bill Mortgage Movie night
Electric bill
A home equity line of credit (HELOC) is based on the homeowner's available ______. Cash Credit Equity References
Equity
The ______ clause protects the borrower's assets that aren't part of the voluntary lien from a deficiency judgment in case of foreclosure. Cross-default Exculpatory Non-recourse Subordination
Exculpatory
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 in the market? Expansion Over supply Recession Recovery
Expansion
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? Agri-Industry Credit Market Farm Credit System Farmer Mac Federal Agricultural Credit Capital Program
Federal Agricultural Credit Capital Program
The statutory right of redemption may be available for Regina, depending on the laws of the state where the property is located. It's a right that's only available with judicial foreclosure, which is standard when a mortgage instrument is used. Question 46 With what type of loan do the principal and interest payments remain the same for the life of the loan? Balloon payment Fixed-rate Graduated mortgage Pledged-account
Fixed-rate
Which of these transactions must comply with Appraiser Independence Requirements? Duplex being purchased with a Federal Housing Administration loan Five-unit residence being purchased with a conventional loan Four-unit residence being purchased with a conventional loan Single-family home property being purchased with a Veterans Administration loan
Four-unit residence being purchased with a conventional loan
Which institution guarantees mortgage-backed securities with the full faith and credit of the United States? Fannie Mae Farmer Mac Freddie Mac Ginnie Mae
Ginnie Mae
Wendy is buying a house from Tom. Tom helps Wendy out by paying for a 2-1 buydown. The lender has given Wendy an interest rate of 5%. Which of the following describes what the buydown will do to Wendy's interest rate? Her rate will be 3% for the first year, 4% the second year, and 5% after that. Her rate will be reduced to 3% for one year. Her rate will be reduced to 3% for the life of her loan. Her rate will start at 2% for the first year, and then will stay at 5% for the rest of the loan term.
Her rate will be 3% for the first year, 4% the second year, and 5% after that.
Appraiser John is determining how a property is being used to determine a more optimal function. What is he determining? Cost to replace Highest and best use Mortgage value Value in use
Highest and best use
Bindy received a loan based on the amount of equity she had in her house. She used this lump sum to fund her daughter's college education. What type of loan did she get? Conventional Convertible Home equity Scholastic interest
Home equity
Which type of loan is meant specifically for improvements, such as additions or renovations? Conventional loan Home equity line of credit Home equity loan Home improvement loan
Home improvement loan
Which of the following is classified as the least liquid on the scale? Checking accounts Institutional money market funds Savings accounts Traveler's checks
Institutional money market funds
Which of the following describes a mechanic's lien? It's a general equitable lien. It's an involuntary general lien. It's a specific involuntary lien. It's a voluntary statutory lien.
It's a specific involuntary lien.
David purchased a house three years ago for $300,000. Considering historical property value fluctuations, what is the likely value of the property today? Exactly $300,000 It's difficult to tell. Historically, property values fluctuate up and down in the short term. Less than $300,000 More than $300,000
It's difficult to tell. Historically, property values fluctuate up and down in the short term.
Someone with great carpentry skills pairs up with someone with working capital to purchase an investment property. This is known as ______. Buy and hold Contractor equity Fix and flip Joint venture
Joint venture
What is the name for a loan that creates a lien against property that already has been pledged as collateral? Additional loan Junior loan Step loan Sub loan
Junior loan
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? It's not an arm's length transaction. Lenders don't approve carryback loans. Lenders don't like contract for deed arrangements. Lenders won't approve a loan in combination with seller financing of any kind.
Lenders don't like contract for deed arrangements.
When a borrower is completing a loan application, obligations owed by the borrower are listed in the ______ section. Assets Income Liabilities Net worth
Liabilities
Denzel's loan payments have been reduced because his lender agreed to extend the amortization schedule stated on his note. This is the result of a ______. Carryback loan Loan modification agreement New home equity loan Refinance
Loan modification agreement
What are advances? Loans the Federal Home Loan Bank makes to consumers Loans the Federal Home Loan Bank makes to member banks Loans the Federal Reserve makes to consumers Loans the Federal Reserve makes to member banks
Loans the Federal Home Loan Bank makes to member banks
Conforming loan limits vary based on two factors: the number of units being purchased with the property and what else? Construction material Location Type of ownership Year built
Location
A mortgage with a clause that prohibits the lender from suing the borrower for unpaid amounts if foreclosure occurs is called a ______ mortgage. Deficiency Fixed rate Non-recourse Recourse
Non-recourse
A ______ is a mortgage-backed security issued by Freddie Mac. Home equity line of credit Participation certificate Real estate investment trust Reverse annuity mortgage
Participation certificate
Your client, Skip, is an investor who's just opened a thriving new sporting goods store in a location outside the city. What principle of value indicates that his thriving business will attract others to engage in similar activity in the same area, driving down his profits? Principle of competition Principle of conformity Principle of progression Principle of substitution
Principle of competition
The document that describes the loan amount and the terms for repaying and is attached to a security instrument is called the ______. Contract for deed Deed of trust Mortgage Promissory note
Promissory note
What does REIT stand for? Real estate international trust Real estate internet tax Real estate Investment tax Real estate Investment trust
Real estate Investment trust
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 Request a subordination Sign an assumption agreement Sign a release of liability with the lender
Request a novation
Which of the following is a significant drawback to an FHA loan as compared to conventional financing? Down payment requirements are higher. Interest rates are higher. Loan amounts are lower. Required mortgage insurance must remain in place for the life of the loan.
Required mortgage insurance must remain in place for the life of the loan.
A developer, Howard, has purchased land with the expectation of constructing an apartment building. He explains to his lender that he'll need a construction loan as well, so the mortgage they sign includes what kind of clause to allow the construction loan's lien position to take priority? Exculpatory Non-recourse Pre-payment Subordination
Subordination
Under AIR, there are limits to the actions licensees may take to avoid influencing the appraiser's value. What are licensees NOT allowed to do? Ask an appraiser to consider additional, appropriate property information. Ask an appraiser to correct errors in an appraisal report. Ask for more detail or an explanation of the appraiser's value determination. Suggest additional business be contingent upon the appraiser's value determination for a current property.
Suggest additional business be contingent upon the appraiser's value determination for a current property.
Which agency regulates FHLBanks? The Consumer Finance Protection Bureau The Federal Housing Finance Authority The Federal Reserve The U.S. Senate
The Federal Housing Finance Authority
Jasmine has a mortgage on her property, but allows her homeowner's insurance to lapse. Which of these is a possible consequence of this action? Jasmine can't occupy the residence. Jasmine can't pay off her loan early. The lender can put Jasmine's loan in default. The lender can sue Jasmine.
The lender can put Jasmine's loan in default.
The appraiser of Garran's property used the Torrens system to perform a title search. Now a claim has been filed. Who or which entity will be the title guarantor? The buyer The lender The seller The state
The state
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
Chrissy and Jack are purchasing a new condo. When they sign their new mortgage document, to whom are they conveying title to the property until their loan is paid off? A third party beneficiary A third party trustee Their lender The seller
Their lender
How many parties does a deed of trust involve? Five: borrower, lender, trustee, trustor, and beneficiary Four: borrower, lender, trustee, and trustor Three: borrower, lender, and trustee Two: borrower and lender
Three: borrower, lender, and trustee
How does the VA fund the mortgage guarantee program so that lenders can be reimbursed for any losses from borrower default? Through a funding fee charged to most borrowers Through homeowners insurance Through mortgage insurance premiums charged to most borrowers Through property taxes
Through a funding fee charged to most borrowers
What's one reason a borrower may choose a piggyback (or split) loan? To avoid paying private mortgage insurance To give the lender a little extra commission To stay under the radar of the IRS To trick the system into a lower combined interest rate
To avoid paying private mortgage insurance
A Treasury bill is a Treasury security ______. With a maturity term between two and 10 years With a maturity term of 30 years With a maturity term of one year or less Without a specified maturity term
With a maturity term of one year or less
Which item would an appraiser find in the Improvements section of the Uniform Residential Appraisal Report? Property dimensions Utilities Whether the present use of the property is the highest and best use Year built
Year built
Which factor is NOT used to determine a FICO® credit score? Credit usage Employment history Payment history Types of accounts
Employment history
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. Capital Grants Guaranteed loans Secondary market for agricultural loans
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. FHA Program Housing Choice Voucher Program Office of Fair Housing and Equal Opportunity Safe Haven Housing Incentive
Housing Choice Voucher Program
Which generation financed their homes due to also having other debt obligations? Baby Boomers Echo Boomers Generation X Millennials
Millennials
A local town has been growing and needs a new elementary school. What kind of bond instrument will the town use to finance this project? Corporate bond Debenture Industrial revenue bond Municipal bond
Municipal bond
Natalie is a licensee who assists buyers in the purchase of HUD ______ when they're listed for sale. FHA loans Homes for low-income buyers Housing choice vouchers Repossessed homes
Repossessed homes
Which of the following was created as a result of the Housing and Economic Recovery Act? The Collateralize Debt Obligation program The Federal Housing Finance Agency The Housing Choice Voucher program The Securities and Exchange Commission
The Federal Housing Finance Agency
What do sellers who agree to carry part of a loan for a buyer need to understand? Mortgage banking regulations Private loan regulations Real estate laws The risks involved
The risks involved
What's one reason a homeowner would want to refinance their mortgage? To change mortgage brokers To change the bank that owns their loan To get a lower interest rate To increase their equity
To get a lower interest rate
Sophia's annual property taxes are $1,295, and her annual insurance premium is $942. How much of her monthly mortgage payment goes toward taxes and insurance? $107.91 $186.42 $232.12 $78.50
$186.42
An annual insurance premium is $500. What's the monthly insurance payment? $21.83 $37.74 $41.67 $43.35
$41.67
Which section of the Internal Revenue Code allows the owner of real property to sell that property, then reinvest the proceeds in a "like-kind" property and defer paying any capital gains taxes? 1030 1031 180 360
1031
Which of the following best describes a recourse mortgage? Allows the lender to sue the borrower for damages if foreclosure occurs Gives the borrower a recourse for exiting the loan when financial difficulties occur Prohibits the borrower from suing the lender for mortgage fraud Prohibits the lender from suing the borrower for damages if foreclosure occurs
Allows the lender to sue the borrower for damages if foreclosure occurs
Which of the following is a true statement about FHA financing? An FHA loan is best for borrowers who have large down payments. An FHA loan is usually more attractive to borrowers who have lower credit scores and down payments. FHA loans are available to all borrowers, regardless of credit history. FHA loans have more stringent requirements than conventional loans do.
An FHA loan is usually more attractive to borrowers who have lower credit scores and down payments.
Which of these appraiser requirements does AIR NOT specify? Be able to access the data needed to perform an appraisal Be knowledgeable about the global market rates Be licensed or certified in the state where the property is located Be qualified to appraise the property involved in the transaction
Be knowledgeable about the global market rates
Why do some financial experts recommend that those with outstanding debt on several credit cards pay off the card with the lowest balance first, regardless of interest rate? Because a card without an outstanding balance can be used to pay bills, so it's good to get one paid off quickly Because financial experts make money from the outstanding credit, and don't want large balances to be paid off Because getting a card paid off quickly is motivating, and the lowest balance will be paid off soonest Because you can then take cash out from that card to pay off other cards
Because getting a card paid off quickly is motivating, and the lowest balance will be paid off soonest
Britney is selling her bungalow via an installment contract. The buyer made payments dutifully for five years, but has not made any payments for more than a year. Which of the following is true? Britney can keep all of the proceeds received and repossess the property. Britney must petition the court to receive title to the property. Britney must return the proceeds received, but she can repossess the property. The buyer can sell the property for a profit.
Britney can keep all of the proceeds received and repossess the property.
During which phase of the real estate cycle does a real estate professional have the most direct impact? Buying/selling Construction Living Planning
Buying/selling
How does the Federal Housing Administration fund its mortgage insurance program? By charging borrowers a mortgage insurance premium From federal taxes From the sale of foreclosed homes Through fees paid by lenders that participate in the direct endorsement program
By charging borrowers a mortgage insurance premium
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 By funding and servicing loans directly to the farmers and ranchers who need them By providing economic education to farmers and ranchers seeking credit By providing oversight to the Farm Credit System
By creating a secondary market for agricultural loans, making it possible for agricultural lenders to fund more loans
What is one way that the FHA has helped to stabilize and improve the mortgage market? By educating the public about the benefits and responsibilities of having a mortgage By protecting borrowers from predatory lending practices through federal legislation By requiring appraisers to be state licensed or certified to evaluate property for FHA insured loans By setting standards for interest rates on FHA-insured mortgage loans
By requiring appraisers to be state licensed or certified to evaluate property for FHA insured loans
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 No more than 2% of the sales price toward Erika and Doug's closing costs The first three months of PITI for Erika and Doug Up to 6% of the sales price as Erika and Doug's down payment
Discount points to buy down Erika and Doug's interest rate
When a promissory note is sold, how is ownership transferred? Assignment of the note Endorsement of the note Exchange of the note Notarization of the note
Endorsement of the note
How is Regulation B related to the Equal Credit Opportunity Act? Enforcement Fortification Negation Restriction
Enforcement
This could happen if a factory were put in next door that changed and impacted property value. Depreciation External obsolescence Functional obsolescence Physical depreciation
External obsolescence
Licensees who stay current with ______ can better serve low- to moderate-income clients looking to purchase. FHA financing requirements Landlord and tenant law Short sales Tiny home trends
FHA financing requirements
A homeowner may go into default on a home loan due to ______. Failure to carry flood insurance, even if the property isn't in a floodplain Failure to combine property tax payments with the monthly mortgage payment Failure to meet loan terms and conditions Failure to pay a conventional mortgage payment once
Failure to meet loan terms and conditions
Which of the following led to the 2007 financial crisis and negatively impacted investors that purchased properties in the early 2000s? Falling home prices Falling interest rates More home sales Rising home prices
Falling home prices
Abigail doesn't want the lenders to know that she's the buyer in a real estate transaction, so she's using her aunt's name and credit information to obtain the loan. Which type of mortgage fraud scheme is this an example of? Equity skimming False identity Property flipping Wire transfer fraud
False identity
Which of the following entities generally acts in the secondary market? Credit unions Fannie Mae Insurance companies Local banks
Fannie Mae
Stephanie was having trouble making her mortgage payments. Now her payments are lower than they were, and she's able to pay them each month. This is because her lender ______. Gave her a loan modification Is preparing to foreclose and doesn't care if her loan is in default Is supplementing her payments with a grant fund Told her to pay whatever she could afford
Gave her a loan modification
Which of the following applicants fall within the guidelines for an FHA-insured loan? Beth has a credit score of 610. Her housing ratio is 38%, and her total debt obligation is 43%. Gena is a single mom with three kids. Her credit score is 620, her housing ratio is 29%, and her total debt obligations come to 40%. Tara has a credit score of 650. Her housing ratio is 35%, and her total debt obligation is 41%. Will has a housing ratio of 29%, and his total debt obligations are at 49%. His credit score is 500.
Gena is a single mom with three kids. Her credit score is 620, her housing ratio is 29%, and her total debt obligations come to 40%.
Real estate professionals keep a multitude of other professionals busy during the buying and selling process. Which of these professionals or entities are most active during the construction phase of real estate? Appraisers General contractors Lenders Title companies
General contractors
The interest rate on an FHA Section 251 adjustable rate mortgage will ______. Always go down or stay the same each year Always go up or stay the same each year Go up or down, but can't change more than a maximum number of points allowed by the FHA over the life of the loan Go up or down, but can't exceed a two-percentage-point change over the life of the loan
Go up or down, but can't change more than a maximum number of points allowed by the FHA over the life of the loan
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 extra money to spend and want to invest in the cheapest U.S. properties available Have work visas and are looking for a home to purchase while they're in the U.S. Want to purchase large commercial complexes to house their international operations Want to purchase vacant land in the U.S. and resell it to U.S. developers
Have work visas and are looking for a home to purchase while they're in the U.S.
Jarod has obtained an FHA loan for which he pays an annual mortgage insurance premium. How will he likely make this payment? He will make a separate annual lump sum payment. He will pay 1/12 of it monthly, separate from his mortgage payment. He will pay 1/12 of it monthly with his mortgage payment. He will roll it into the cost of his loan.
He will pay 1/12 of it monthly with his mortgage payment.
A seller buydown can ______. Help a borrower meet lender qualification standards Reduce the purchase price of a property Reduce the transfer tax Remove a lien
Help a borrower meet lender qualification standards
Celia was obtaining a conventional loan, and she put $50,000 down as a down payment. Why might her lender also require her to obtain private mortgage insurance? Her down payment of $50,000 isn't at least 20% of the purchase price. Her lender is a subprime lender. PMI is triggered at the $50,000 down payment amount. She has poor credit.
Her down payment of $50,000 isn't at least 20% of the purchase price.
Veronica is an independent contractor, so in addition to setting aside money for an emergency fund in case there is a lapse in her income, she knows that she must save money to pay for ______. A diamond ring A second home Her income taxes Installation of a pool in her backyard
Her income taxes
Lee manages a rental property for her client, and is accepting applications for tenants. Applicants Damian and Maria are young, newly married, and have a baby on the way. They can't afford a typical rent on a clean, well-maintained two-bedroom home such as the one that Lee has available; but they are recipients of the ______, which Lee knows the property would also qualify for. Lee is glad to accept them as tenants. Family Self-Sufficiency program Good Neighbor Next Door program Housing Choice Voucher program Project-Based Voucher program
Housing Choice Voucher program
Before you can create a budget for your personal finances, you should ______. Cut up all of your credit cards Identify and analyze your current expenses Open a variety of accounts in case you need them Save enough for six months of living expenses
Identify and analyze your current expenses
What makes the HECM program safer for borrowers than a traditional reverse mortgage? If more equity is paid out than remains, the homeowner doesn't have to make up the difference. It's free. Neither the borrower nor the home have to qualify. The homeowner is not responsible for property taxes during the life of the loan.
If more equity is paid out than remains, the homeowner doesn't have to make up the difference.
Which of the following is a possible result of a community growing too fast? Communities can never grow too fast Inadequate resources to support the population The community enters a recession The economy stalls
Inadequate resources to support the population
What is the general economic impact of mortgage loan payments? Collapse of economic growth Decrease in economic growth Increase in economic growth Segregation of economic classification
Increase in economic growth
Payment history, age of accounts, credit usage, and types of accounts are factors considered in calculating a credit score. What's also a factor? Income Inquiries Marital status Race
Inquiries
Question 100 Commercial banks fall into which of the following category of lenders? Institutional lenders Non-institutional lenders Peripheral lenders Subsidiary lenders
Institutional lenders
Ginnie Mae only guarantees mortgage-backed securities that contain loans ______. Insured or guaranteed by U.S. government agencies Issued by commercial banks Issued by rural lenders Issued by thrifts
Insured or guaranteed by U.S. government agencies
Which of the following is a true statement about deducting interest on mortgages taken out in tax years between 2018 and 2025? Interest on the first $500,000 of mortgage debt is deductible for married couples filing jointly or $375,000 for married couples filing separately. Interest on the first $750,000 of mortgage debt is deductible for married couples filing jointly or $375,000 for married couples filing separately. The loan can be used for purchase or making improvements, as well as for other purposes. The loan cannot be for more than the borrower's most recent year's salary.
Interest on the first $750,000 of mortgage debt is deductible for married couples filing jointly or $375,000 for married couples filing separately.
Mary Ann is looking for the potential rate of return. What sort of value is she interested in? Assessed value Investment value Market value Value in use
Investment value
What type of value may consumers be interested in if they are looking for the potential rate of return? Assessed value Insured value Investment value Value in use
Investment value
Which of the following best describes an equity real estate investment trust? Gets its income from property rent or sale as well as mortgage interest, fees, and profits earned from buying and selling mortgages Invests in equity by owning income-producing property, such as malls, apartments, or office parks Makes mortgage loans and invests in mortgage-backed securities Owned exclusively by banks and insurance companies
Invests in equity by owning income-producing property, such as malls, apartments, or office parks
Jessica hasn't paid the roofing company that replaced the roof on her home. The contractor placed a mechanic's lien on her property, which is a(n) ______ lien. Involuntary and general Involuntary and specific Voluntary and general Voluntary and specific
Involuntary and specific
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. It allows a junior mortgage to move into first position when a borrower refinances. It raises interest rates incrementally over time. It removes a lien from a property when it's been repaid.
It allows a borrower to refinance a first mortgage without affecting its lien position even when a junior mortgage is in place.
What does the right of redemption allow? It allows a property owner to freely give away her property to another and release it of any and all liens against it. It allows a property owner to pay back any debts or liens against their property until a foreclosure sale is held. It allows a property owner to sue a neighboring property owner over boundary disputes. It allows the government to satisfy liens against a property through a foreclosure sale.
It allows a property owner to pay back any debts or liens against their property until a foreclosure sale is held.
What advantage does the 1031 tax-deferred exchange offer? It allows investors to avoid ever paying taxes from gains realized on their investments. It allows investors to defer capital gains taxes when selling a property, provided they buy another property. It offsets capital gains for homeowners who have lived in the home for at least two years. It provides a tax shelter for non-real estate investments.
It allows investors to defer capital gains taxes when selling a property, provided they buy another property.
Which of the following best describes the function of a deficiency judgment in the case of a foreclosure? It allows the lender to recover losses incurred in the foreclosure process. It expedites the foreclosure process. It initiates the eviction process for borrowers who are still living in a foreclosed property. It makes re-selling the foreclosed property more efficient.
It allows the lender to recover losses incurred in the foreclosure process.
Which of these is an advantage to maintaining business and personal accounts separately? Banks usually reduce fees for clients holding multiple accounts. Each account is covered by federal insurance, so having multiple accounts increases the amount that is insured. It allows you to make personal expenses look like business expenses. It allows you to track business expenses for tax purposes.
It allows you to track business expenses for tax purposes.
Why might self-employed individuals who want to obtain financing for a home purchase, choose not to write off valid expenses on their tax statements? It increases demonstrated income. Lenders don't like write-offs. Only invalid write-offs should be included. Write-offs show poor creditworthiness.
It increases demonstrated income.
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 be at least 10% of the person's income. It must have been paid in the last six months. It must have been received regularly in the last year. It must have been received regularly over the last two years.
It must have been received regularly over the last two years.
Nicole is a young licensee just starting her business and doesn't have any income yet. She decides to purchase insurance as soon as she has the money. Which of the following can she likely skip for now? Auto Errors and omissions Health Life
Life
Martha and Ben are selling their home to Linda and her three kids. They've purchased title insurance for obtaining insurance of good title. Whom does the title insurance protect? Linda and her kids Martha and Ben The settlement agent The underwriter
Linda and her kids
Life insurance companies are more concerned with long-term stability of investments than they are ___________. Assets Borrowers' credit ratings Liquidity The size of the project
Liquidity
Freddie Mac and Fannie Mae set guidelines for conforming loans. Which of these are qualifying guidelines? Down payment requirement, loan-to-value ratio, housing debt-to-income ratio, and length of employment Loan amount, down payment requirement, housing debt-to-income ratio, and marital status Loan amount, down payment requirement, loan-to-value ratio, and housing debt-to income ratio Loan amount, down payment requirement, loan-to-value ratio, and property square footage
Loan amount, down payment requirement, loan-to-value ratio, and housing debt-to income ratio
The lender, the depository institution, and the _______ all complete parts of the request for verification of deposit form. Appraiser Loan applicant Seller Settlement agent
Loan applicant
Which of the following, once completed, initiates the loan process? Closing Disclosure Loan application Loan Estimate Pre-qualification request
Loan application
Which of the following is a legitimate business deduction that you, as a real estate licensee, could claim on your income tax return? A trip to attend your cousin's wedding (air fare, rental car, food and gas) Business cards and stationery given to you by your brokerage Lunch with your mom to discuss the sale of her town home Tux rental for your spouse's Christmas cruise
Lunch with your mom to discuss the sale of her town home
Business expenses, personal expenses, and financial goals can all be tracked easily when you ______. Commit to being financially responsible Make more money than you spend Manage cash flow through appropriate accounts Use credit cards wisely
Manage cash flow through appropriate accounts
Which of the following is a true statement about FHLBanks? It offers low-cost funding to consumers. Member banks can borrow for up to one year without collateral. The Fed regulates FHLBanks operations. The U.S. Treasury manages the operations of FHLBanks.
Member banks can borrow for up to one year without collateral.
What does it mean if the Fed increases reserve requirements? Member banks can keep fewer assets on deposit at the reserve bank. Member banks must increase interest rates on loans they make. Member banks must keep more assets on deposit at the reserve bank. Member banks must lend more money to the public.
Member banks must keep more assets on deposit at the reserve bank.
Which type of real estate investment trust involves both residential and commercial properties? Equity REIT Investment REIT Mortgage REIT Security REIT
Mortgage REIT
The acronym PITI is a reference to what real estate-related concept? Annual property maintenance Annual property taxes Mortgage payment Required loan documentation
Mortgage payment
Which of the following is the price a lender believes the property will bring at a foreclosure sale? Insured value Investment value Mortgage value Value in use
Mortgage value
In the secondary market, how are mortgages grouped together and sold? Collateral Equitable titles Leverage Mortgage-backed securities
Mortgage-backed securities
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. Community Reinvestment Neighborhood Stabilization Rebuild Our Homes SAFE Neighborhood
Neighborhood Stabilization
What piece of information would an appraiser NOT find in the Subject and Contract sections of the report? Amount of real estate taxes HOA assessment amounts Legal description Neighborhood characteristics
Neighborhood characteristics
Yancey purchased a home six months ago using a VA loan. Due to an inheritance, he is suddenly able to pay off his mortgage. Will he pay a pre-payment penalty? It depends on the terms of the loan, not the VA No Yes Yes, but Yancey may petition the VA to request removal of the pre-payment penalty
No
Bill makes sure to say "real estate, real estate, real estate" when he takes his friends to lunch. "We discussed real estate," he says. "Now I can write the meal off on my taxes." Is this true? No, because this doesn't constitute a discussion of real estate. Only if no personal discussions took place. Yes, because he discussed real estate. Yes, up to 25% of the cost of the meal may now be deducted.
No, because this doesn't constitute a discussion of real estate.
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, FHA loans can't be assumed under any circumstances No, investors aren't allowed to assume FHA loans; the property must be owner occupied Yes, as long as the buyer passes a credit check and qualifies to assume the loan Yes, because the loan was originated before 2008, it can be assumed without conditions
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. No, she doesn't meet the housing ratio requirement. No, she doesn't meet the total debt obligation requirement. Yes
No, she doesn't meet the credit score requirement.
Mary Frances is on her way home from work and stops at the grocery store. The business account she opened recently gave her an ATM card to go with it. Should she use the card to buy groceries? No, she should not pay for personal items with her business account. No, the grocery store won't accept a card from a business account. Yes, groceries can be considered a necessary business expense. Yes, it doesn't matter which card she uses.
No, she should not pay for personal items with her business account.
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 credit score requirement. No, they don't meet the housing ratio requirement. No, they don't meet the total debt obligation requirement. Yes
No, they don't meet the housing ratio requirement.
Your client, Yolanda, is a nurse. Does she qualify for the Good Neighbor Program? Not unless she is also an EMT Not unless she plans to live in the home Yes, because she is a nurse Yes, if her income level meets the requirements
Not unless she is also an EMT
Which HUD program is responsible for protecting individuals against discrimination in housing based membership in a protected class? Community Development Block Grant FHA Housing Anti-Discrimination Department Office of Fair Housing and Equal Opportunity
Office of Fair Housing and Equal Opportunity
While Fannie Mae considers total and housing debt-to-income ratios in its underwriting process, Freddie Mac considers ______. Both total and housing debt-to-income, as well as employment history Neither total nor housing debt-to-income Only housing debt-to-income Only total debt-to-income
Only total debt-to-income
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? Expansion Over supply Recession Recovery
Over supply
Which type of participation agreement involves more than one mortgagee as owner of the finance instrument in which each receives an equal share of the mortgage payment? Partnership among mortgagees Partnership among mortgagors Partnership between developers Partnership between mortgagees and mortgagors
Partnership among mortgagees
Which type of partnership may involve several mortgagors financing a multi-family dwelling? Partnership among mortgagees Partnership among mortgagors Partnership between financiers Partnership between mortgagees and mortgagors
Partnership among mortgagors
In which type of participation agreement would a financier lower the interest on the mortgage in exchange for partial ownership of the project? Limited liability partnership Partnership between mortgagees Partnership between mortgagees and mortgagors Partnership between mortgagors
Partnership between mortgagees and mortgagors
For the vast majority of loans, a single late ______ does not automatically mean the loan has gone into default. Appointment Audit Notice Payment
Payment
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? APR and finance charges only No information is required, but lenders are strongly encouraged to disclose as much information as possible. Payment schedule, APR, finance charges, pre-payment penalties, late penalties, and total financed amount Payment schedule, lender name, APR, and secondary market holder
Payment schedule, APR, finance charges, pre-payment penalties, late penalties, and total financed amount
The section on the Loan Estimate called "Services You Cannot Shop For" includes fees for services ______. A third party mandated by the government performs Performed by a third party that the borrower selects Performed by a third party that the lender selects The lender performs
Performed by a third party that the lender selects
Lucy uses a personal financial plan recommended for licensees. When she receives a commission check, she deposits it in her business checking account. She should now transfer anything not required for business expenses to her ______. Emergency fund Living expenses savings account Personal checking account Retirement fund
Personal checking account
Which of the following best describes foreclosure by entry and possession? Notification of pending auction, public auction, notice of eviction Notification of police presence, forced entry, repossession Petition for legal ownership, opportunity to redeem property, notice of eviction if property is not redeemed Petition to enter, repossession, notice of eviction
Petition to enter, repossession, notice of eviction
Jody is concerned about the ______ encumbrance that doesn't allow her to start her gardening greenhouse because it sits next to a nature conservancy. Accounting Covenant Financial Physical
Physical
Which of the following occurs when the property is damaged or just has normal wear and tear? Depreciation External obsolescence Functional obsolescence Physical depreciation
Physical depreciation
Which clause is standard in a deed of trust and affects the foreclosure process that can be used if the borrower defaults? Acceleration Alienation Power of sale Reconveyance
Power of sale
Ronald marries and wants to start a family. Which of the following would be important in his selection of an insurance carrier? Catastrophic coverage Medicaid Medicare Premiums and deductibles
Premiums and deductibles
What does the lump sum payment at the end of an interest-only mortgage loan consist of? Interest and principal Interest only Interest, principal, and taxes Principal only
Principal only
What does PITI stand for? Price, information, trust, interest Price, interest, taxes, insurance Principal, interest, taxes, insurance Public Insurance Trust Information
Principal, interest, taxes, insurance
Residential property owners don't often default on property taxes. Why not? Banks are required to remind them that the IRS has heavy penalties, including immediate foreclosure, if they default on property taxes. Banks are required to remind them to pay. Property taxes aren't required. Property taxes are usually paid with the monthly mortgage payment.
Property taxes are usually paid with the monthly mortgage payment.
Which of the following characteristics would the appraiser find in the Neighborhood section of the URAR? Ethnicity breakdown Median income Property value trends Racial composition
Property value trends
Which is not one of the lender requirements under the Community Reinvestment Act? Offering financing in low-income housing communities Participating in development and rehabilitation projects in low-income neighborhoods Providing loan programs for housing, small businesses, and small farms Providing school loans in low-income areas
Providing school loans in low-income areas
Which of these acts has special provisions for borrowers who are victims of over-charging? Homeowner and Equity Protection Act Honest Lending Education Act Real Estate Settlement Procedures Act Truth in Lending Act
Real Estate Settlement Procedures Act
______ is when the outstanding loan balance is reconfigured. It is a form of loan modification. Deferring Recasting Redefining Reshaping
Recasting
Which clause in the deed of trust is the equivalent of the defeasance clause in the mortgage? Acceleration Alienation Power of sale Reconveyance
Reconveyance
What is the name of the set of regulations used to enforce the Equal Credit Opportunity Act? Regulation 120, Part B Regulation B Regulation C Regulation ECOA
Regulation B
Randolph is a real estate licensee whose fluctuating income wouldn't qualify him for conventional financing. However, he's able to get financing on a 10-plex. How is this possible? He lied to the lender. He lives in one of the units. Rent covers the mortgage. Ten-plex properties have more flexible financing requirements.
Rent covers the mortgage.
Which of the following taxes apply while an investor holds an investment property? Capital gains Recaptured depreciation Rental income Transfer
Rental income
Kristoff got a bit behind on his mortgage and missed several payments. He and his lender devised a schedule that gives Kristoff an opportunity to make up those delinquent payments. What is this an example of? Bankruptcy Repayment plan Short sale Voluntary conveyance of deed
Repayment plan
The ______ account is a recommended component of a personal financial plan that should be started as early as possible and contributed to throughout your working life. College tuition Dream Emergency Retirement
Retirement
Which of the following is a required part of a sound plan for your personal finances? Dedicate 20% of income to wealth-building activities Increase income Reduce expenses Review your plan on a regular basis
Review your plan on a regular basis
Hugh works as a loan officer at a bank. Because of the ______, he must be registered with the Nationwide Mortgage Licensing System. Consumer Credit Protection Act Mortgage Originator Licensing Act NMLS Act SAFE Act
SAFE Act
When using a financial system, which activity should you complete on a daily basis? Balance checkbook Pay bills Review financial goals Save all receipts from spending
Save all receipts from spending
Where can a party reviewing a title commitment find requirements that must be met before a title insurance policy will be issued? Schedule A Schedule BSection I Schedule BSection II Schedule C
Schedule BSection I
Institutions that purchase loans, package them into mortgage-backed securities, then sell these to investors may commonly be referred to as ______. Intermediaries Loan originators Primary market players Secondary market players
Secondary market players
If the Treasury encounters a deficit, what actions might it take? Buy securities Lower interest rates Raise interest rates Sell securities
Sell securities
Rules and regulations that protect consumers of financial services are now the responsibility of ______, which was created by the Dodd-Frank Act. HUD The CFPB The ECOA The U.S. Department of Commerce
The CFPB
The FHA is part of ______. The Consumer Finance Protection Bureau The Department of Housing and Urban Development The Federal Deposit Insurance Corporation The MLO
The Department of Housing and Urban Development
What is the purpose of the Federal Reserve System? The Fed controls consumer spending. The Fed monitors international trade. The Fed regulates the U.S. depository institutions. The Fed sets minimum and maximum loan distribution
The Fed regulates the U.S. depository institutions.
What is one of the main differences between the U.S. Mint and the Bureau of Engraving and Printing? The Bureau of Engraving and Printing produces engraved commemorative coins and paper notes, and the U.S Mint produces money-related coins. The U.S. Mint only produces commemorative coins, and non-monetary paper documentation. The U.S. Mint produces all money-related coins and paper notes, and the Bureau of Engraving and Printing produces other official documentation, as well as commemorative coins and medals. The U.S. Mint produces coins, and the Bureau of Engraving and Printing produces paper notes.
The U.S. Mint produces coins, and the Bureau of Engraving and Printing produces paper notes.
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 one year, and the employment must be expected to continue. The applicant must have been employed for at least six months, and the employment must be expected to continue. The applicant must have been employed for at least three years, and the employment must be expected to continue. The applicant must have been employed for at least two years, and the employment must be expected to continue.
The applicant must have been employed for at least two years, and the employment must be expected to continue.
Which statement best describes the most common approach used to reconcile the three appraisal approaches? The appraiser may choose not to reconcile the three appraisal approaches. The appraiser may weigh one or two approaches more heavily than the others, as appropriate for the property type. The appraiser may weigh only one approach more heavily than the others. The appraiser will weigh the value produced from each approach equally.
The appraiser may weigh one or two approaches more heavily than the others, as appropriate for the property type.
Which one of the following statements about the Torrens system is true? The approach is only used in a handful of states. The approach is only used in northern states. The approach is only used in southern states. The approach is used nationwide.
The approach is only used in a handful of states.
How is a loan assumption documented? The buyer and seller both sign an assumption agreement. The buyer must add his or her signature to the existing promissory note and security instrument, which must be recorded. The lender must return the promissory note to the original maker and attach a new note to the security instrument. The loan is refinanced with a new loan agreement.
The buyer and seller both sign an assumption agreement.
Which statement correctly describes a contract for deed? Contract for deed is another name for a deed of trust. The contract for deed is usually used in a seller-financed transaction. The contract for deed is usually used when a commercial lender is securing a mortgage loan. The parties to a contract for deed are the beneficiary and the vendee.
The contract for deed is usually used in a seller-financed transaction.
In response to the increase in foreclosures and losses on their balance sheets, not to mention a reduced market for subprime loans, many lenders slowed their lending activities. What was the impact of this on the overall economy? Businesses expanded and hired additional employees. Construction of new homes increased. The economy expanded. The economy headed into a recession.
The economy headed into a recession.
Page one of the Loan Estimate includes a section called "Costs at Closing." The amount shown as estimated cash to close is ______. The estimated amount of principal and interest that will be due with the first monthly payment of the loan The estimated amount of settlement provider commissions and fees that the borrower and/or seller will pay to complete the transaction The estimated amount the client will pay by cashier's check or wire transfer at closing The estimated amount the client will pay to get the loan and transfer ownership of the property
The estimated amount the client will pay by cashier's check or wire transfer at closing
Joyce and Danny purchased a home in 2009 for $280,000. They received a homebuyer credit of $8,000. Their friends Margie and Scott purchased a home in 2010 for $320,000. Margie and Scott didn't receive a homebuyer credit. Why not? Joyce and Danny used a loan backed by the Federal Housing Administration, which automatically credits the homebuyer, while Margie and Scott used a conventional loan. Margie and Scott received a subprime mortgage and weren't eligible for the homebuyer credit. The homebuyer credit was part of the stimulus package enacted in 2009 and was only effective between January and December of 2009. The house that Margie and Scott purchased was in a neighborhood with a large minority population.
The homebuyer credit was part of the stimulus package enacted in 2009 and was only effective between January and December of 2009.
Carla and Sven have a previous foreclosure, but now they are a few years away from that. They make good money with their jobs, and have about $30,000 available to use for a down payment and closing costs. Why might they consider an FHA 203(b) loan, even if they have sufficient down payment for a conventional loan? An FHA loan puts them in a better negotiating position with the seller. Past foreclosures are not considered when qualifying borrowers for a 203(b) loan. The FHA will pay their mortgage insurance for the life of the loan. The lender can consider compensating factors, even if their credit history isn't great.
The lender can consider compensating factors, even if their credit history isn't great.
When a borrower has paid off the loan, how is the release handled if the security instrument is a mortgage? The lender executes and records a deed of reconveyance and returns the note to the borrower. The lender executes and records a satisfaction of mortgage and returns the note to the borrower. The lender files for a release of lien and returns the note to the borrower. The lender returns the note and mortgage to the borrower.
The lender executes and records a satisfaction of mortgage and returns the note to the borrower.
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? He has until retirement to pay back the pension plan money he borrowed. He must refinance his home to pay back the balance. His home is at risk of being repossessed. The loan must be repaid immediately.
The loan must be repaid immediately.
John's home is up for sale. He originally bought it five years ago for $300,000. Its current value is $350,000. His real estate agent notified him that a buyer just made an offer on his home for $365,000, which is the price for which other similar homes in the neighborhood are selling, and John accepts. What does the price of $365,000 represent? The appraised value The assessed value The investment value The market value
The market value
Which of the following is true regarding value? The principle of conformity says that the more a property looks like nearby properties, the lower it will be valued by the market. The principle of contribution means that buyers want a property to contribute to their overall well-being. The principle of substitution means that people won't pay more for a property than they have to if there are two similar properties. The principle of valuation means that properties are worth what the market will bear.
The principle of substitution means that people won't pay more for a property than they have to if there are two similar properties.
As part of a good financial plan, a business checking account is ______. A good place to put trust funds that clients give you to hold Not required The only account you'll need for simple personal money management The proper place to deposit your commission check
The proper place to deposit your commission check
How are creditors or lien holders paid during a foreclosure process? Lien holders are given a referee's deed to the property. Tax refunds are disbursed after supplying a foreclosure affidavit to the court. The property is portioned among the lien holders to have or to sell. The property is sold at auction and lien holders are paid from the proceeds of the sale.
The property is sold at auction and lien holders are paid from the proceeds of the sale.
Which of the following real estate transactions is subject to recaptured depreciation? The purchase of an investment property The purchase of a residential, owner-occupied home The sale of a family home The sale of an investment property
The sale of an investment property
The loan amount plus the down payment should equal ______. Approximately half of the purchase price The borrower's cash to close The sales price of the home The seller net
The sales price of the home
When a borrower has paid off the loan, how is the release handled if the security instrument is a deed of trust? The lender executes and records a satisfaction of mortgage and returns the note to the borrower. The lender returns the note and deed of trust documents to the borrower. The trustee executes and records a deed of reconveyance and the lender returns the note to the borrower. The trustee files for a release of lien and the lender returns the note to the borrower.
The trustee executes and records a deed of reconveyance and the lender returns the note to the borrower.
The funding fee on a VA loan is waived when ______. The sale price of the house is less than the CRV The veteran has a 10% or higher VA disability The veteran or active duty service member is ranked as an officer The veteran's full entitlement is not used
The veteran has a 10% or higher VA disability
Why are life insurance companies less concerned with liquidity than long term security of an investment? It's in their business charter to avoid projects that aren't long-term investments. They generally have an abundance of liquid assets already. They prefer financing larger projects, which inherently have more long-term security. They've been around for hundreds of years and have no worries about the future or time.
They prefer financing larger projects, which inherently have more long-term security.
Which of the following statements is true about active real estate investments? They're most attractive to those who want to be silent partners. They require an effort to make a profit. They require a real estate license. They typically don't require any skill or money.
They require an effort to make a profit.
Jim is self-employed. He and his wife want to obtain a home loan. Which of the following statements is true? A co-signer will need to qualify them for a loan. They'll need to provide additional proof of income. They must obtain non-conventional financing. They won't qualify for a loan.
They'll need to provide additional proof of income.
What is the benefit Ginny Mae investors have over those who invest in other MBSs? Returns are guaranteed to increase due to the payment scale. They collect lump-sum payments. They're able to charge interest. They're able to collect timely principal and interest payments.
They're able to collect timely principal and interest payments.
Which of the following statements is true about government loans? They originate in the secondary market. They're insured or guaranteed by a government agency. They're serviced by the U.S. Department of the Treasury. They're underwritten by the Federal Reserve.
They're insured or guaranteed by a government agency.
The purpose of a living expenses savings account is ______. To experiment with how little you can live off of each month, and save the difference To hold extra living expenses when income is high, so that the money is "out of sight." To pay regular expenses each month To save enough money to live off of for six months in case of an emergency
To hold extra living expenses when income is high, so that the money is "out of sight."
What is the trustee's role when a deed of trust is used to secure property for a loan? To collect payments and service the loan To hold funds in escrow To hold legal title to the property on behalf of the beneficiary until the loan is repaid To hold the note to the property on behalf of the trustor until the loan is repaid
To hold legal title to the property on behalf of the beneficiary until the loan is repaid
Which of the following best describes the state of the market during the recession phase of the real estate cycle? High but stabilized unemployment and a high number of foreclosures Increases in hiring, employment, and public confidence, and lots of buyers in the market Properties selling for more than they're worth, many buyers in the market, and lots of new construction Unemployment increasing, prices falling, and foreclosures on the rise
Unemployment increasing, prices falling, and foreclosures on the rise
Store of value, medium of exchange, and what other factor define money? Depreciating asset Diminishing value Permanence Unit of value
Unit of value
Sally, a lender with A+ Banking, has received a loan application from a prospective buyer hoping to purchase a four-bedroom house. What does Sally do with the information she's received? Accept it Ignore it Perform a background check on it Verify it
Verify it
The FHA Section 203(h) program assists ______ with an insured mortgage. Homeowners over the age of 62 Native Americans living on tribal land Recipients of Housing Choice Voucher funds to purchase a home Victims of a presidentially declared disaster
Victims of a presidentially declared disaster
the Loan Estimate and Closing Disclosure form. Reapplication period without penalty Right of cancellation Right of first refusal Waiting period
Waiting period
Which of the following is part of the Consumer Financial Protection Bureau's mission of consumer protection? Enforce consumer financial protection laws. Level discrimination penalties and fines. Provide loan programs for first-time homebuyers. Provide low fee loans to consumers.
Enforce consumer financial protection laws.
Ned doesn't want the lenders to have his personal information, so he's applying for a home loan under an assumed name. Which type of mortgage fraud scheme is this an example of? Equity skimming False identity Property flipping Silent second
False identity
The Federal Agricultural Mortgage Company (FAMC), created in the late 1980s, is more commonly known as ______. Fannie Mae Farmer Mac FHLBank Freddie Mac
Farmer Mac
Which entity provides disclosures and public information about the financial condition of FCS? Farm Credit Administration Farm Credit Services of America Farm Credit System Insurance Corporation Federal Farm Credit Banks Funding Corporation
Federal Farm Credit Banks Funding Corporation
Fannie Mae, Freddie Mac, and the Federal Home Loan Bank are regulated by the ______. Federal Banking Institute Federal Housing Finance Agency Federal Reserve U.S. Congress
Federal Housing Finance Agency
Federal Home Loan Bank is regulated by what agency? Consumer Financial Protection Bureau Federal Housing Finance Agency The Federal Reserve U.S. Treasury
Federal Housing Finance Agency
Janice is selling her five-bedroom, three-bath home. She has a marketable title. What does that mean? Her property's title is free and clear of liens and is only subject to loan payoff and any taxes owed. She can prove ownership of the property. She can provide evidence of title from a title insurance company. She's protected from defects in the title.
Her property's title is free and clear of liens and is only subject to loan payoff and any taxes owed.
Which of the following is a risk most associated with wholesaling as a real estate investment strategy? Inability to immediately resell the property for a profit Running out of money before repairs are finished Tenant issues Vacancies
Inability to immediately resell the property for a profit
You want to make $50,000 in a year from your real estate business. You know that about 15% of the leads you get turn into clients. You earn an average of $8,000 on every closed transaction. Is this everything you need to know to use a funnel to determine how many leads you need to generate to get your $50,000? No, you also need to know the percentage of clients who turn into closed transactions. Yes, this means you'll need 1,200 leads to earn $50,000. Yes, this means you'll need 3,333 leads to earn $50,000. Yes, this means you'll need 41 leads to earn $50,000.
No, you also need to know the percentage of clients who turn into closed transactions.
When using a financial system, what activities should you complete on a weekly basis? Adjust budgeted percentages Record purchases and file receipts Review financial goals Talk with your tax professional
Record purchases and file receipts
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 amount is included as part of the loan. The L indicates that the creditor didn't approve the amount paid. The L indicates that the creditor pays the item at consummation. The L is a code indicating that the amount is still an estimate.
The L indicates that the creditor pays the item at consummation.
Sarah is selling her home and must provide proof of ownership. She's received an abstract of title. Which of the following statements is NOT correct? Obtaining assurance of a good title is critical before moving forward with the transaction. The attorney's opinion provides a guarantee of title. The attorney's opinion will include items that impact the title and public record, such as liens and easements. The buyer should retain an attorney to provide an opinion of the title's soundness.
The attorney's opinion provides a guarantee of title.
What do property taxes in a mortgage payment pay for? Taxes have no real purpose in a mortgage payment, except to fatten government coffers The cost of public services as a percentage of the property value The cost of the local community budget divided by the total number of homes in the area The cost of the property divided by the local population
The cost of public services as a percentage of the property value
Ron and Dawn hope to qualify for an FHA mortgage so they can buy a home for their family. Their housing ratio is 28%, their total debt obligation is 45%, and their credit score is 650. Do they qualify under FHA underwriting guidelines? No, they don't meet the credit score requirement. No, they don't meet the housing ratio requirement. No, they don't meet the total debt obligation requirement. Yes
No, they don't meet the total debt obligation requirement.
How is a mortgage banker paid? Buying loans for investors and earning a commission Commissions from selling loans on the secondary market Fees from originating and servicing loans Flat fees for documenting loans
Fees from originating and servicing loans
Brandon's home has been foreclosed on. He had an outstanding loan balance of $145,000, which he owed to his lender, XYZ Lending for a loan taken out in 2009. There's also a lien against the property recorded in 2014 for an unpaid student loan of $25,000, and a HELOC established in 2012 of $30,000, of which he'd used $10,000. If his foreclosure nets $150,000, how much will each creditor be paid? The student loan will be paid off, then XYZ Lending will receive $125,000 of what it's owed, and his HELOC will receive nothing. The student loan will be repaid, then XYZ Lending and the HELOC lender will split the remaining proceeds. XYZ Lending and the HELOC will each get half of what they're owed, and the lien holder for the student loan will not be repaid. XYZ Lending will receive $145,000, the HELOC lender will receive $5,000, and the lien holder for his student loan will not be repaid.
XYZ Lending will receive $145,000, the HELOC lender will receive $5,000, and the lien holder for his student loan will not be repaid.
