front 1 Primary mortgage market | back 1 Loans are originated Lender derives income from servicing loans |
front 2 Secondary mortgage market | back 2 Helps lenders raise capital to continue making mortgage loans Mortgage loans are purchased and assembled into packages |
front 3 Federal Reserve System | back 3 Regulates interest rates Maintains sound credit conditions |
front 4 The Federal Reserve System regulates the flow of money and interest rates in the marketplace through its member banks by controlling their reserve requirements and discount rates. | back 4 true |
front 5 The primary mortgage market helps lenders raise capital to continue making mortgage loans. | back 5 False |
front 6 Would an FHA-insured loan be a good option for Adelaide? | back 6 yes |
front 7 Would a VA-guaranteed loan be a good choice Adelaide? | back 7 yes |
front 8 Would a conventional loan be a good option for Adelaide? | back 8 no |
front 9 Farm Credit | back 9 Provides loans to farmers and ranchers |
front 10 FSA | back 10 Helps borrowers purchase homes in rural areas |
front 11 FHA | back 11 Offers loans with LTV up to 96.5% Operating under HUD, it protects lenders from loss from borrower’s default |
front 12 VA | back 12 No down payment required with no maximum loan amount restriction |
front 13 Federal law requires that private mortgage insurance (PMI) must automatically terminate if a borrower has accumulated at least 20% equity in the home and is current on mortgage payments | back 13 False |
front 14 The lender of an FHA-insured loan may not charge discount points in addition to a loan origination fee. | back 14 False |
front 15 Buydown | back 15 A lump sum is paid in cash to the lender to reduce the borrower’s interest rate and monthly payments during the first few years of the loan. |
front 16 Package loan | back 16 Real and personal property are financed together. |
front 17 Home equity loan | back 17 The original mortgage loan remains in place while a second (junior) loan is obtained. |
front 18 Sale-and-leaseback | back 18 A business owner sells real estate to an investor but remains on the property as a tenant. |
front 19 A loan created when the seller agrees to finance all or part of the purchase price and receives a first or junior lien, depending on whether prior mortgage liens exist, is called a package loan. | back 19 False |
front 20 When a loan application is rejected, the applicant must be provided with the reasons for the rejection within 10 business days. | back 20 False |
front 21 TILA | back 21 Requires that consumers be notified of the sale of transfer of their mortgage loans Requires that credit institutions inform borrowers of the true cost of obtaining credit |
front 22 FCRA | back 22 Gives the loan applicant the right to a copy of the credit report Requires notification within 30 days if a loan application is rejected |
front 23 CRA | back 23 Helps banks meet communities' needs for low- and moderate-income housing Requires the deposit and credit needs of local residents to be met |
front 24 ECOA | back 24 Credit applications can be considered only on income, net worth, and credit rating Prohibits discrimination in the lending process |
front 25 Regulation Z was enacted pursuant to the Truth in Lending Act by the Federal Reserve Board. | back 25 true |
front 26 For purposes of Regulation Z, a creditor is any person who extends consumer credit more than 25 times each year or more than 5 times each year if the transactions involve dwellings as security. | back 26 true |
front 27 Loan origination fee | back 27 A charge to increase the lender’s yield (rate of return) on its investment |
front 28 Prepayment penalty | back 28 A fee assessed against the unearned portion of the interest for any payments made ahead of schedule |
front 29 Promissory note | back 29 A borrower’s written commitment to pay a debt |
front 30 Usury | back 30 Charging interest in excess of the maximum rate allowed by law |
front 31 Discount point | back 31 A charge by the lender to cover the expenses involved in generating the loan |
front 32 Conventional loans are viewed as the most secure loans because their loan-to-value ratios are often lowest. Traditionally, the ratio is | back 32 80% of the value of the property. |
front 33 Which types of loan includes both real and personal property? | back 33 Package |
front 34 VA and FHA loans require all of the following EXCEPT | back 34 private mortgage insurance. |
front 35 The conservatorship of Fannie Mae and Freddie Mac is the responsibility of | back 35 the Federal Housing Finance Agency. |
front 36 Regulation Z requires disclosure of all of the following EXCEPT | back 36 brokerage commissions. |
front 37 A buyer purchased a new residence from a builder for $350,000. The buyer made a down payment of $30,000 and obtained a $320,000 mortgage loan. The builder of the house paid the lender 3% of the loan balance for the first year and 2% for the second year. This represented a total savings for the buyer of $16,000. What type of mortgage arrangement is this? | back 37 Buydown |
front 38 A developer obtained a loan for 12 parcels of real estate. The loan provides for the release of the mortgage lien on each parcel when certain payments are made on the loan. What type of loan is this? | back 38 Blanket loan |
front 39 All of the following are examples of loans to individuals that are affected by the Truth in Lending Act under Regulation Z EXCEPT | back 39 commercial use. |
front 40 RESPA is a federal law that was enacted to protect consumers from all of the following in the settlement process EXCEPT A)excessive escrow account deposits.B)kickbacks.C)referral fee requirements.D)property defects. | back 40 D)property defects. |
front 41 What type of loan arrangement provides for the release of the mortgage lien on each parcel of a large group of properties when certain payments are made on the loan? | back 41 Blanket loan |
front 42 Which federal law requires that finance charges be stated as an annual percentage rate (APR)? | back 42 Truth in Lending Act |
front 43 The grantor becomes the lessee (tenant) and the grantee becomes the lessor (landlord) under which of the following financing arrangements? | back 43 Sale and leaseback |
front 44 If the purchase price of a property exceeds its FHA-appraised property value | back 44 the buyer will qualify for an FHA-insured loan if the buyer pays the difference between FHA-appraised value and the purchase price in cash as part of the down payment. |
front 45 The buyers purchased a model home and all its furnishings and appliances by using | back 45 a package loan. |
front 46 The basic components of the real estate financing market are | back 46 primary mortgage market, secondary mortgage market, and government influences, primarily the Federal Reserve System. |
front 47 A loan that includes both real and personal property is | back 47 a package loan. |
front 48 After a borrower's default on home mortgage loan payments, the lender obtained a court order to foreclose on the property. At the foreclosure sale, the property sold for $164,000; the unpaid balance on the loan, at the time of foreclosure, was $178,000. What must the lender do to recover the $14,000 that the borrower still owes? | back 48 Seek a deficiency judgment |
front 49 A borrower obtains a $100,000 home equity loan for 30 years at 6% interest. If the monthly payments of $599.55 are credited first to interest and then to principal, what will be the balance of the principal after the borrower makes the first payment? | back 49 $99,900.45 |
front 50 Some lenders derive added income from | back 50 servicing loans. |
front 51 The document that sets forth the maximum loan guarantee to which a veteran is entitled is | back 51 the certificate of eligibility. |
front 52 The maximum loan limits for loans sold to Fannie Mae and Freddie Mac are established by | back 52 the Federal Housing Finance Agency. |
front 53 The Federal Reserve System divides the country into | back 53 12 federal reserve districts. |
front 54 Which of the following is NOT a participant in the secondary mortgage market? | back 54 Credit union |
front 55 If buyers seek a mortgage on a single-family house, they would be LEAST likely to obtain the mortgage from A) a commercial bank B)a life insurance company. C)a credit union. D)a mutual savings bank. | back 55 B)a life insurance company. |
front 56 Regulation Z was enacted pursuant to the Truth in Lending Act by the Federal Reserve Board but enforcing the law is now primarily the responsibility of | back 56 he Consumer Financial Protection Bureau (CFPB). |
front 57 A mortgage broker is | back 57 an intermediary. |
front 58 One of the federal laws requiring disclosure to a loan applicant who is rejected for a loan on the basis of a credit report is | back 58 the Fair Credit Reporting Act. |
front 59 The lowest down payment requirements typically are those of | back 59 FHA. |
front 60 The amount of a loan expressed as a percentage of the value of the real estate offered as collateral is | back 60 the loan-to-value ratio. |
front 61 The Truth in Lending Act (TILA) provides penalties for noncompliance. A successful class action alleging that a creditor understated the APR and/or finance charge of the involved loans could make the creditor liable for punitive damages of | back 61 the lesser of $500,000 or 1% of the creditor's net worth, plus attorney's fees and court costs. |
front 62 If a lender agrees to make a loan based on an 80% LTV, what is the amount of the loan if the property appraises for $114,500 and the sales price is $116,900? | back 62 $91,600 |
front 63 Who usually provides funds for FHA-insured loans? | back 63 Approved lenders |