A
1. K has just purchased his first home
with a fixed-rate loan. The interest he
will pay over the life of the loan is
a. simple interest.
b. compound interest.
c. prepaid interest.
d. discounted interest.
B
2. The amount of a loan expressed as a
percentage of the value of the real estate offered as collateral is the
a. amortization ratio.
b. loan-to-value ratio.
c. debt-to-equity ratio.
d. capital-use ratio.
D
3. The purpose of the Real Estate
Settlement Procedures Act (RESPA)
is to
a. see that buyers do not borrow
more money than they can repay.
b. make real estate brokers more
responsive to the needs of
buyers.
c. help sellers know how much
money is required
D
4. If the quarterly interest at 10-1/2
percent is $3,150, the principal
amount of the loan is
a. $30,000.
b. $60,000.
c. $90,000.
d. $120,000.
B
5. Fannie Mae
a. makes FHA loans.
b. buys FHA loans.
c. services FHA loans.
d. insures FHA loans.
C
6. The grantor becomes the lessee and
the grantee becomes the lessor under which of the following financing
arrangements?
a. Partial sale
b. Wraparound mortgage
c. Sale and leaseback
d. Assumption of mortgage
A
7. Which of the following pairs of terms is considered synonymous?
a. Interim financing and
construction loan
b. Construction loan and
pass-through loan
c. Pass-through loan and take-out
loan
d. Take-out loan and construction
loan
B
8. The type of real estate loan that allows the lender to increase the outstanding
balance of a loan up to the original
sum in the note while advancing
additional funds is the
a. wraparound mortgage.
b. open-end mortgage.
c. growing-equity mortgage.
d. gr
D
9. Which of the following statements is
true?
a. The priority of a mortgage is
determined by the date on which
it was executed.
b. A mortgage document contains
no covenants or promises on the
part of the borrower.
c. A deed of trust is typically
conveyed
B
10. Which of the following loans to
individuals is NOT affected by
the Truth in Lending Law
implemented by Regulation Z, that
sets forth certain requirements
regarding real estate loans?
a. Household use
b. Business use
c. Room additions
d. Swimming pools
C
11. An FHA-insured mortgage loan would
be obtained from which of the following?
a. The Federal Housing
Administration
b. The Department of Housing and
Urban Development
c. Any qualified lending institution
d. Any qualified insuring institution
B
12. Fannie Mae, Ginnie Mae, and Freddie
Mac have in common the purpose of
a. originating residential mortgage
loans.
b. purchasing existing mortgage
loans.
c. insuring residential mortgage
loans.
d. guaranteeing existing mortgage
loans.
B
13. A mortgage broker generally offers
which of the following services?
a. Handling the escrow procedures
b. Bringing the borrower and the
lender together
c. Providing credit qualification and
evaluation reports
d. Granting real estate loans using
investo
D
14. An eligible veteran made a purchase
offer of $80,000 on a home he wants
to finance with a VA-guaranteed loan.
Four weeks after the offer was accepted, a certificate of reasonable
value (CRV) for $77,000 was issued for the property. In this situation,
C
15. A borrower obtained a $7,000 second
mortgage loan for 5 years at 6 percent
interest per annum. Monthly payments
were $50. The final payment included
the remaining outstanding principal
balance. What type of loan is this?
a. A fully amortized loan
b. A
D
16. The discount points charged on a VA
guaranteed mortgage loan could NOT
be paid by which of the following?
a. The buyer
b. The seller
c. The buyer and seller
d. The mortgage loan
B
17. The principal distinction between the
primary mortgage market and the secondary mortgage market is in the
a. insuring versus the guaranteeing
of mortgage loans.
b. origination versus the purchase
of mortgage loans.
c. use of mortgages versus the use
o
D
18. A real estate loan payable in periodic
installments that are sufficient to pay
the principal in full during the term of
the loan is called a(n)
a. conventional loan.
b. straight loan.
c. participation loan.
d. amortized loan.
B
19. An extension of credit from a seller to
a buyer to allow the buyer to
complete the transaction is called a
a. growing equity mortgage.
b. purchase money mortgage.
c. package mortgage.
d. blanket mortgage.
D
20. When compared with a 30-year
payment period, taking out a loan with
a 20-year payment period would
NOT result in
a. faster amortization.
b. higher monthly payments.
c. quicker equity buildup.
d. greater impound amounts.
B
21. If the interest rate on an FHA-insured
mortgage loan is 11-1/2 percent and the monthly payment is $1,412, the
principal sum would be
a. $12,278.
b. $147,339.
c. $162,383.
d. $194,561.
A
22. PMI is the acronym for Private Mortgage Insurance often used by borrowers whose LTV (loan-to-value) ratio is less than 20%. Lenders must cease charging PMI when the LTV is
a. 22%.
b. 27%.
c. 29%.
d. 35%.
D
23. From which of the following would a
borrower most likely obtain a
residential real estate mortgage loan?
a. An insurance company
b. A pension fund
c. A commercial bank
d. A savings and loan association
D
24. Regulation Z applies to
a. business loans.
b. real estate sales agreements.
c. commercial loans under $10,000.
d. personal credit transactions under $25,000.
C
25. FNMA's activities do NOT include
a. buying and selling FHA and VA mortgages.
b. buying and selling conventional mortgages.
c. buying and selling mortgages at full face value.
d. buying and selling mortgages at discounted values.
C
26. As an entity operating in the secondary mortgage market, the Federal Home Loan Mortgage Corporation was established to assist the
a. Federal Housing Administration.
b. Federal National Mortgage Association.
c. federal savings and loans.
d. federal ban
C
27. A graduated payment loan is one
in which
a. mortgage payments decrease.
b. mortgage payments balloon in 5 years.
c. mortgage payments increase.
d. the interest rate on the loan adjusts annually.
B
28. If the amount of a loan is $13,500 and the interest rate is 7 1/2% what is the amount of the semiannual interest payment?
a. $596.55
b. $506.25
c. $602.62
d. $457.14
B
29. The type of mortgage loan that uses both real and personal property as security is a
a. blanket mortgage.
b. package mortgage.
c. purchase money mortgage.
d. wraparound mortgage.
A
30. The supply of mortgage money for single-family homes is regulated by the Federal Reserve System through which of the following?
a. Reserve requirements and discount rates
b. Federal National Mortgage Association
c. Federal Housing Administration
d. Re
B
31. Which of the following normally purchases mortgages in the secondary mortgage market?
a. Mortgage bankers
b. Ginnie Mae
c. Federal Housing Administration
d. Veterans Administration
C
32. If a house sold for $80,000 and the buyer obtained a loan for $72,000, how much money would the buyer pay if the lender charged 3 points?
a. $2400
b. $2328
c. $2160
d. $240
C
33. A mortgage loan requires monthly payments of $175.75 for 20 years and a final payment of $5,095. This type of a mortgage loan is a(n)
a. wraparound mortgage.
b. accelerated mortgage.
c. balloon mortgage.
d. variable mortgage.
D
34. In a sale-and-leaseback arrangement the
a. seller retains legal title to the real estate.
b. buyer becomes the lessee.
c. broker will not earn a commission.
d. buyer becomes the lessor.
C
35. Last month's loan payment included $412.50 interest on a $60,000 loan balance. What is the annual rate of interest?
a. 7 1/2 percent
b. 7 3/4 percent
c. 8 1/4 percent
d. 8 1/2 percent
B
36. Mrs. D has owned her house for over 50 years. It has fallen into disrepair but, because she lives on a fixed income, she does not have the money to make the needed repairs. She has a considerable amount of equity in the house. What type of loan best s
D
37. The type of loan that will most likely have the lowest loan-to-value ratio is a
a. VA loan.
b. FHA loan.
c. PMI loan.
d. conventional loan.
A
38. A lender may protect its interest in a mortgage loan by obtaining additional security from
a. private mortgage insurance.
b. title insurance.
c. the borrower's note.
d. impound accounts.
A
39. A lender will take certain factors into consideration when deciding whether to grant a borrower a mortgage loan. One of the following is NOT a legitimate factor.
a. The marital status of the borrower
b. The creditworthiness of the borrower
c. The amou
C
40. One of the ways lenders increase their revenue is by servicing loans. Which of the following is NOT an activity of servicing loans ?
a. Collecting payments
b. Paying real estate taxes from escrow accounts
c. Renegotiating interest rates
d. Sending ove
A
41. A developer had a mortgage loan on his entire housing development. When he sold a lot to a buyer, he was able to deliver title to that lot free of the mortgage lien by obtaining a partial release. What type of loan did the developer have?
a. Blanket m