An appraiser has just completed a search of the records for comparable residential properties that have sold

he is using sales comparison approach

An equitable redemption period gives the borrower the opportunity to:

make up the outstanding balance before a foreclosure sale

Who may be held responsible for mortgage loan repayment when a loan is assumed as part of the real estate sale?

Both the purchaser and the seller

The aspect of FHA loan that makes them attractive to lenders is that

the government insures the full amount of the loan

Federal Deposit Insurance Corporation

Fannie Mae was created for the sole purpose of:

providing a secondary market for qualified loans

An underwriter can consider income from all of the following EXCEPT

a part-time job from the past year that will likely end soon

The Real Estate Settlement Procedures Act(RESPA) requires all of these disclosures at loan application EXCEPT

a list of closing vendor options

The primary activity that distinguishes a mortgage broker from a mortgage banker is that a mortgage banker will:

service the loan after settlement

The BEST way to describe a real estate mortgage investment conduit(REMIC) is:

an organized pool of loans securitized & sold as mortage backed securities

For a self-employed borrower the underwriter will analyze their tax returns for the past:

two years including a current P&L statement completed by an accountant

An equitable redemption period gives the borrower the opportunity to:

make up the outstanding balance before a foreclosure sale

A man is purchasing a house using a contract for deed. His contract will include all of the following EXCEPT:

conveyance of title to the purchaser

Financial leverage is:

when borrowed funds are used to acquire property

Which of the following information is on a credit report?

Status of the borower's current credit accounts

Fed open market operations include all of the following EXCEPT:

buying and selling loans in the open market

A requiredment for the borrower to be approved for a prime loan is for the borrower to have:

high credit scores and low debt

One of the primary indicators that the real estate market is rebounding is:

an increase in new home construction starts

The best description of a nonconforming loan is one that

does not meet Fannie Mae and Freddie Mac qualifying guidelines

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Real Estate Finance Study Guide

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This is a study guide for my students enrolled in the 30 classroom hour pre-license finance course

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Questions 100

Answers

1
An appraiser has just completed a search of the records for comparable residential properties that have sold
he is using a gross rent multiplier
he is using the income approach
he is using sales comparison approach
He is using a cost approach
2
The FICO credit score range is:
300-850
250-550
300-550
15-850
3
A buyer has a 90% LTV loan with an origination fee of 1%. The purchase price is $200,000. What's the origination fee?
$3,500
$1,800
$2,000
$9,000
4
An equitable redemption period gives the borrower the opportunity to:
delcare a moratorium on payments
make up the outstanding balance after the foreclosure sale
request forgiveness of payments
make up the outstanding balance before a foreclosure sale
5
When demand goes up:
supply goes down
supply remains constant
supply moves in the same direction
supply fluctuates
6
An investor purchased shares in a REMT. The REMT derives income from all of the following EXCEPT
registered debentures
mortgage interest
profits from buying and selling mortgages
loan fees
7
A carpenter plan to build a home to sell on a vacant lot. He will seek a loan for construction costs. This loan is:
interim financing
permanent financing
a construction bond
building fund financing
8
The 3.5% of the sale price from the borrower as down payment on a FHA loan may come from any of the following EXCEPT
a gift from the borrower's family member
the seller
the borrower's savings
a grant from a nonprofit assistance program
9
All of the following are true about the Veterans Housing Assistance Program (VHAP) EXCEPT
the loan term must be 30 years
it can only be used as a first lien on a primary residence
two married, eligible veterans may have only one active VHAP loan at a time
it provides financing of up to $417,000 toward the purchase of a home
10
Special provisions for agricultural loans may include any of the following EXCEPT:
pay larger portions of principal in good years
extended term to 40 years
folow a rigid payment program
provide open-end mortgage
11
Which participants in the residential mortgage secondary market was created to purchase FHA loans?
Fannie Mae
Freddie Mac
Sallie Mae
Ginnie Mae
12
The original maker of a VA loan remains liable when the laon is assumed unless the verteran receives:
a Release of Liability
a Partial Entitlement
a Certificate of Eligibility
a Certificate of Reasonalble Value
13
A buyer is putting $30,000 down on a purchase of a $100,000 property. The loan-to-value(LTV) is:
30%
100%
80%
70%
14
Who may be held responsible for mortgage loan repayment when a loan is assumed as part of the real estate sale?
Holder of the first mortgage
The seller
Both the purchaser and the seller
The purchaser
15
A right or interest in a property held by one who is not the legal owner of the property is know as an:
escheat
estate
encumbrance
eminent domain
16
A person's homestead would be subject to a forced sale for all of the following reasons EXCEPT?
IRS federal tax leins
judgment liens
purchase money mortgages
property tax liens
17
All of these factors influence an applicant's credit score EXCEPT:
payment history
credit history
types of credit
age and maturity
18
You invested in a real estate trust that will derive income from the net profits from rental and sale of rentals. It's
A REIT
A REMT
A hybrid
A joint venture
19
The newest demographic age group to influence the real estate market is:
the silent generation
generation X
baby boomers
millennials (echo boomers)
20
The aspect of FHA loan that makes them attractive to lenders is that
the government insures the full amount of the loan
a purchaser can make a very small down payment
a purchaser can borrow additional funds for closing costs
the government establishes qualifying standards for the property
21
A buyer is purchasing a condominium for $66,000. The buyer's minimum down payment using an FHA loan will be
$2,310
$3,300
$1,980
$660
22
FDIC stands for:
Federal Deposit Insurance Corporation
Financial Depost Insurance Corporation
Financial District Income Corporation
Federal District Income Corporation
23
Fannie Mae was created for the sole purpose of:
making loans to qualified borrowers
providing a secondary market for qualified loans
offering loan programs that require a 20% down payment
providing a loan exchange mechanism for qualified lenders
24
An underwriter can consider income from all of the following EXCEPT
a part-time job from the past year that will likely end soon
alimony
child support as part of a court order & will continue for at least 2 years
self-employed income documented by 2 years of income tax returns
25
The Real Estate Settlement Procedures Act(RESPA) requires all of these disclosures at loan application EXCEPT
Loan Estimate
Special Information Booklet
Mortgage Servicing Disclosure Statement
a list of closing vendor options
26
when a lender charges discount points, the yield to the lender will
not change
increase
be variable
decrease
27
A history of a property's title is called
an opinion of title
an abstract
a title insurance policy
a title commitment
28
Credit scores are an important part of the underwriting process, and the minimum requirement is set by
the marketplace
HUD (for all loans with a LTV greater than 80%)
FICO
the loan product guidelines
29
The Truth in Lending Act (TILA) requires lenders to
write in the effective date of the contract
add fees to the loan
disclose payment terms
disclose the buyer's credit score
30
The primary activity that distinguishes a mortgage broker from a mortgage banker is that a mortgage banker will:
receive payment for originating the loan
service the loan after settlement
charge a higher rate of interest
perpare the loan package for underwriting
31
The BEST way to describe a real estate mortgage investment conduit(REMIC) is:
the vehicle for selling loan from one institution to another
an organized pool of loans securitized & sold as mortage backed securities
a Fannie Mae loan product that has the backing of Wall Street
a commercial loan product/residential loans sold to Fannie Mae/Freddie Mac
32
London Interbank Offered Rate(LIBOR) internet rates are often used on ARM loans to establish:
an index
an adjustment period
a cap
a margin
33
For a self-employed borrower the underwriter will analyze their tax returns for the past:
three years
two years including a current P&L statement completed by an accountant
four years if the borrower's income is declining
none of these; only a Dun & Bradstreet credit report on the business
34
ECOA includes protection for all of the following protected classes EXCEPT:
marital status
sexual orientation
age
receipt of public assistance
35
A couple would be able to make a wedding gift to their daughter and her new husband of up to:
$42,000
$28,000
$56,000
$14,000
36
An equitable redemption period gives the borrower the opportunity to:
make up th eoutstanding balance after the foreclosure sale
declare a moratorium on payments
make up the outstanding balance before a foreclosure sale
request forgiveness of payments
37
A man is purchasing a house using a contract for deed. His contract will include all of the following EXCEPT:
terms and conditions for repayment
consequences of default
pledge of a specific property
conveyance of title to the purchaser
38
A veteran may regain eligibility at the maximum entitlement if the purchaser provides:
a Certofocate pf Reasonable Value
a Certificate of Eligibility
a Release of Liability
a Substitution of Entitlement
39
Financial leverage is:
the equity the owner has in a property
when borrowed funds are used to acquire property
using equity to borrow money
borrowing against a free and cleasrly owned property
40
The ECOA prohibits lenders from discriminating against qualified applicants on all factors EXCEPT:
receipt of public assistance
age
marital status
handicap
41
Which of the following information is on a credit report?
The borrower's income
List of assets owned by the borrower
Status of the borower's current credit accounts
The borrower's martial status
42
Fed open market operations include all of the following EXCEPT:
buying and selling securities issued by federally sponsored agencies
buying and selling Treasuries in the open market
setting the discount rate
buying and selling loans in the open market
43
A requiredment for the borrower to be approved for a prime loan is for the borrower to have:
high credit scores and low debt
low debt and now credit
low credit scores and high debt
low debt and low credit scores
44
One of the primary indicators that the real estate market is rebounding is:
an increase in subprime lending
the Fed lowering the discount rate even further
an increase in new home construction starts
new modification programs being offered
45
All of the following are examples a mortgage default EXCEPT
letting the insurance lapse
alienation
waste
nonpayment of principal and interest
46
Under consumer credit laws, which in an advertisement would require full disclosure of all loan terms?
Easy monthly payments
Low down payment
FHA assumption possible
6.5% VA assumable loan
47
Under the Veterans Home Inprovement Pogram(VHIP) the VLB will lend eligible Texas veterans up to $10,000 for:
30 years
20 years
10 years
15 years
48
Using standard Fannie Mae guidelines of 28/36, a total monthly income of $5,000, the total monthly obligations must NOT
exceed $1,900
exceed $1,400
exceed $1,650
exceed $1,800
49
To qualify for an FHA reverse mortgage, one of the homeowners must be at LEAST how old?
60
65
62
68
50
The best description of a nonconforming loan is one that
is restricted to four family units
does not meet Fannie Mae and Freddie Mac qualifying guidelines
exceeds the loan limit set annually by Fannie Mae and Freddie Mac
is limited to low-income housing
51
Allowing one lein to take or have priority over other leins or debts is know as:
substitution
usury
subordination
fair dealings
52
Which of the following clauses whould be associated exclusively with junior mortgages?
Acceleration
Defeasance
Lifting
Prepayment
53
Purchase price is $315,000 with a 30 year fixed rate loan & an 80% first lien & 10% second lien. How much is the second?
$31,500
$15,750
$25,200
$63,000
54
Financial Leverage is described as:
using an income stream from rental property to acquire more real estate
"margin" purchasing, which is only used to buy stocks and bonds
using other people's money to acquire something of value
using tax deductions to lower a property owner's taxable income
55
Short-term treasury securities are called:
Treasury bills
Treasury bonds
Treasury notes
Treasury MCO's
56
Open market operations:
reserve the right to charge fees
buy and sell Treasuries
manage bank accounts
set interest rates
57
All of the following are true about VA loans EXCEPT
the appraisal for a VA loan is call a certificate of reasonalble value
once closed, the VA will insure the lender against any default by the Vet.
some of a verteran's dependents may be able to use the veteran's benefits
the veteran must supply a certificate of eligibility
58
When evaluating a loan application, a loan officer will consider all of the following EXCEPT
the value of the property being offered as security
the ability of the borrower to repay the loan
the borrower's rental payments for the previous two years
the applicant's past credit record
59
First in time, first in right generally gives the first lender a priority lien position, the exception being a
second lender
property tax lien
judgment lien
mechanic's lien
60
The secondary market for agricultural loans is:
Farmer Mac
Sallie Mae
Fannie Mae
Freddie Mac
61
All of the following are considered separate property EXCEPT:
property acquired during the marriage with seperate funds
property acquired during marriage by gift or inheritance
the income earned during marriage from a seperate property
property owned prior to marriage
62
Loans created using the underwriting guidelines for Fannie Mae & Freddie Mac are know as:
unlimited loans
insured government loans
uninsured government loans
conforming loans
63
A $76,000 mortgage at 11 1/2% interest with monthly payments of $785. What's the loan balance after the first payment?
$75,305.28
$75,543.66
$75,943.33
$75,215.00
64
All of the following are true about a reverse mortgage EXCEPT
a tenant who is at least 62 years old may use this loan
at least one of the applicants for the loan must be 62 years old
funds may be in either monthly payments or a lump sum
the borrower must have significant equity in the property being pledged
65
Which of the following circumstances would create a voluntary lien?
Unpaid contractor who installed a swimming pool
judgment from an unpaid hospital bill
Overdue property taxes
Mortgage on the property
66
A married couple has a combined income of $50,000 with Fannie Mae/Freddie Mac; what will they be allowed for total debt?
$1,400
$1,500
$1,900
$1,800
67
The Community Development Block Grant(CDBG) does all of the following EXCEPT:
generate additional funds through local bond initiatives
provide oney for raods and sewer systems
help extinguish poverty in urbban areas
provide help in rural areas
68
The difference between mortgage brokers and mortgage bankers is that mortgage brokers:
only offer subprime loans
insure all loans they make
find a borrower and always use their own money to fund the loan
bring borrowers and lenders together but do not fund the loan
69
Fannie Mae was created for the sole purpose of
offering loan programs that require a 20% down payment
providing a secondary market for qualified loans
making loans to qualified borrowers
providing a loan exchange mechanism for qualified lenders
70
Homebuyers can avoid paying PMI by putting:
3.5% down on a FHA loan combined with a 16.5% secondary loan
10% down on a Fannie Mae loan
20% down on a Freddie Mac loan
10% down on a FHA loan
71
The Texas Department of Savings and Mortgage Lending
administers Banking Commission rules
oversees the licensing of real estate agents and mortgage originators
is a state agency setting mortgage rates for lenders
enforces the Texas Mortgage Broker License Act
72
The underwriter may decline an applicant for all of the following reasons EXCEPT:
the borrower has an outstanding judgment and is unable to pay it
the credit report reveals a series of erratic and delinquent payments
the borrower is over 80 years old
the borrower does not have enough money to complete the transaction
73
A private loan company or an individual provides additional financing using the borrower's equity. That loan is called
junior financing
securitization
personal bond
hypothecation
74
Which statement regarding a note is FALSE?
A note is a complete contract
A note is a promise to pay a debt
A note must be tied to either a mortgage or a deed of trust
A note is a fully negotiable instrument
75
A developer wants fiancing. Lender says they form a partnership. This financing is known as:
blanket financing
force place financing
bilateral financing
participation financing
76
Predatory lending practices inlcude all of the following EXCEPT:
providing an interst-only loan with a final balloon payment
lending on properties with an inflated appraisal value
knowlingly lending more money than the borrower can be expected to pay
charging fees for unnecessary products of services
77
A mortgage becomes null and void when the note is paid in full under the terms of the
hypothecation clause
defeasance clause
perpayment clause
alienation clause
78
Lenders would be required to fund a loan for all of the following EXCEPT:
a single parent with good credit a full time job, & gets a day care voucher
a married couple with poor credit using public assistance to qualify
a single parent who used publis assistance to qualify
an unmarried couple who meets the underwriting criteria
79
The discount rate is the rate
mortgage bankers will pay to the secondary market
charged to member banks borrowing from the Federal Reserve Bank
mortgage brokers will pay to the secondary market
at which borrows will be charged one point
80
The main difference in qualifying standards for Freddie Mac from Fannie Mae is that Freddie Mac:
requries higher credit scores
only purchases conventional loans
uses only the total debut-to-income ratio
may require private mortgage insurance
81
The APR (annual precentage rate) is the
true cost of borrowing money
lender's yield for the term of the loan
actual interest rate for the first year of the loan
note rate plus the margin
82
One of the primary duties of the Federal Housing Finance Agency is to:
regulate Fannie Mae and Freddie Mac
provide low-cost housing
supervise the mortgage industry
maintain the Consumer Price Index to less than 2% annual growth
83
A release clause is found in a:
deed of trust
promissory note
sales contract
deed
84
All of the following would be associated with coporate bonds EXCEPT:
zero coupon
debentures
nature of issuer of security
type of termination
85
The impactof a foreclosure on a borrower does NOT include:
high interest rates for future car loans
a default judgment
tax consequences
not being approved for another property loan for three or more years
86
A veteran used VA guarantee of $46,000 in 1989. Based on a $104,250 guarantee today with $0 down how much can he buy?
$439,120
$359,650
$233,000
$58,250
87
The most commonly used loan for residential home purchases is a:
30 year flexible rate
15 year flexible rate
15 year fixed rate
30 year fixed rate
88
An elderly couple who needs extra monthly income but does not want to sell their home could apply for
A Housing Choice Voucher program
a Good Neighbor Next Door Mortgage
a Reverse Mortgage
an Energy Efficient Mortgage
89
Which of the following is considered a private financier?
Credit union
Real estate mortgage investment conduit (REMIC)
Mortgage broker
Seller
90
A specific lien differs from a general lien in that it:
is always categorized as an involuntary lien
takes a higher priority
attaches to a single property only
is always categorized as a voluntary lien
91
In Texas, what is a possible reason that a person's homestead may be subject to a forced sale?
IRS federal tax liens
All of these
Reverse mortgages
Home equity liens
92
Charges subject to 0% tolerance in the required Loan Estimate include all of the following EXCEPT
charges for third-party services paid to an affiliate of the lender
property insurance premiums
origination charges paid to the lender
transfer taxes
93
A teaser rate is typically associated with which type of loan?
7/23 FHA loan
ARM
Hybrid loan of any size or term
Convertible loan
94
Pools of loans are originated in the primary market and
sold into the secondary market
have no cash flow
not FNMA conforming
are no longer used
95
What type of trust would be used by an investor to earn money from apartments, house, offices & shopping centers?
REMT
REIT
Auditor's trust
Banking trust
96
Which of these is a basic concept of community property in Texas?
Property acquired by gift or inheritance is seperate property
Earnings on sperate property are considered community funds
All of these
Property owned before mariage can be seperate property
97
A buyer gets a loan to purchase a home, the lender requires a pledge of the property as security. The property is:
an example of leverage
an example of escrow
an example of collateral
an example of hypotecation
98
The Primary function of the Federal Home Loan Bank today is to
provide fully collateralized loans to member institutions
supervise state-chartered thrifts
provide any thrift with business guidance
none of these; it was replaced by the Federal Housing Finance Agency
99
A company seeks financing through the securities mkt. What's it called when they are NOT offering security on the bond?
Debenture
Warehouse line
Novation
Capital improvement loan
100
to qualify for the $500,000 exemption from capital gains tax on the sale of their primary residence a couple must have
lived there the two years prior to selling
lived there two years plus be at least 55 years of age
never used the residence as a rental property
lived there at least two out of the past five years

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