If a borrower defaults on repayment promises, the lender is legally able to foreclose.
True
False
t
All of the following are participants in the primary mortgage market EXCEPT
a)
life insurance companies.
B)
the Federal National Mortgage Association.
C)
savings banks.
D)
commercial banks.
B
Real estate mortgage trusts (REMTs) derive income from apartment houses, offices, and shopping centers
T/F
F
Commercial banks primarily rely on demand deposits, which are better known as checking accounts(T/F)
T
A popular use of real estate bonds is to finance municipal improvement projects. These bonds are usually considered
A
corporate bonds.
B)
registered bonds.
C)
general obligation bonds.
D)
secured bonds.
C
The primary activity that differentiates a mortgage banker from a mortgage broker is that a mortgage banker will
A)
prepare the loan package for underwriting.
B)
service the loan after settlement.
C)
receive payment for originating the loan.
D)
charge a h
B
Upon default on the part of the borrower, the lender may demand immediate payment of the entire balance of the loan under the terms of the
A)
power-of-sale clause.
B)
amortization clause.
C)
acceleration clause.
D)
prepayment clause
c
The promissory note creates the evidence of the debt and the obligation to pay.
T/F
T
If the loan goes into foreclosure, the trustee is empowered to foreclose on the property through the power-of-sale clause. T/F
T
If the loan goes into foreclosure, the trustee is empowered to foreclose on the property through the power-of-sale clause.
T
When the loan is paid in full, the trustee will convey the property to the trustor through the release clause. T/F
T
Impound and escrow accounts may contain no more than two months of additional taxes and insurance
T/F
T
What is a lock-in clause in a note?
A)
A provision that allows the borrower to pay up to 20% of the loan balance without penalty
B)
A provision that prohibits prepayment of the loan balance
C)
A provision that allows the lender to require the borrower to
...
A novation of a loan would indicate that the seller has been relieved from all obligations on the loan. T/F
T
If a loan is assumed, the buyer, along with the original borrower, is personally liable to the lender for full repayment. T/F
T
The subordination clause involves placing an existing encumbrance or right in a lower position to a new loan secured by the same collateral
T/F
T
Lien theory means
A)
the lender and the borrower both have equal legal rights.
B)
neither the lender nor the borrower has legal rights.
C)
the lender has equitable rights and the borrower has legal rights.
D)
the lender has legal rights and the borrower h
C
Principal (loan amount) � interest rate = annual interest amount. T/F
T
Interest is the charge to borrow money. T/F
T
Discount points on a mortgage loan will
A)
decrease the yield to the lender.
B)
increase the yield to the lender.
C)
increase the interest rate to the borrower.
D)
lower the cost of the loan to the borrower
B
Par rate is the interest rate a borrower will qualify for without any adjustment up or down. T/F
T
A subprime loan has
A)
an interest rate below the prime rate.
B)
a lower interest rate and lower fees.
C)
a higher interest rate and higher fees.
D)
an interest rate below the current market rate.
C
A prepayment penalty is a charge by the lender if the loan is paid off early. T/F
T
Which of the following is the maximum amount that Federal Deposit Insurance Corporation (FDIC) will insure bank accounts
250,000
The federal agency often referred to as the nation's monetary manager is the
Federal Reserve
The federal agency often referred to as the nation's monetary manager is the (T/F)
T
The Truth-in-Lending Act (TILA) requires lenders to
A)
write in the effective date of the contract.
B)
add fees to the loan.
C)
disclose payment terms.
D)
disclose the buyer's credit score.
C
The Equal Credit Opportunity Act (ECOA) prohibits discrimination by lenders on the basis of all of the following EXCEPT
A)
dependence on public assistance.
B)
marital status.
C)
religion.
D)
sexual orientation.
D
The primary purpose of the Equal Credit Opportunity Act (ECOA) is to
A)
prevent discrimination by lenders.
B)
require the full disclosure of all costs of borrowing.
C)
avoid discrimination by sellers.
D)
provide mortgage loans to low-income families.
A
A lender is required to extend credit into any community in which the bank provides services according to which congressional act?
A)
Equal Credit Opportunity Act
B)
Community Reinvestment Act
C)
Home Mortgage Disclosure Act
D)
Fair Housing Act
B
The Texas Veterans Land Board Housing Assistance Program
A)
allows the term of the loan to only be for 15 or 30 years.
B)
limits the sales price to $125,000.
C)
provides financing up to $417,000.
D)
provides financing up to $325,000.
C
Which of the following is NOT a Texas Veterans Land Board (VLB) program?
A)
Veterans Housing Assistance Program
B)
Land Grant Program
C)
Home Improvement Program
D)
Land Loan Program
B
A note by itself is not evidence of debt (T/F)
T
a mortgage always needs a ------ in order to be legally enforceable
note
Equitable title confers no rights , except after loan ----
defaults
Mutual savings banks prefer to make loans near their home offices in order to supervise these loans.
true
Saving associations or Thrifts determine
1)set reserve requirements. when fed lowers reserve requirements for commercial banks, more money will become available for lending
2)set discount rates
3)provide insurance for their deposits
Mortgage broker vs banker
broker= puts entities together (earns origination fees, typically does not service the loan, responsible for qualifying the buyer)
banker=manages loans (income from originating and servicing loans)
Bonds (2 types)
1)Mortgage bonds by business firms
2)Municipal Bonds by local government
the value of a bond will fluctuate with the
money market
what are debentures
debentures are unsecured bonds against the general assets of a corporation
The mortgage or deed of trust is used to create the security or collateral for the note by
recording the mortgage or deed of trust creates a lien on the property
Promissory note
evidence of debt and the obligation to pay.
it is a negotiable instrument
the note and mortgage/deed of trust include a------ allowing the lender to accelerate the full amount owed if the borrower defaults
acceleration clause
what is a legal evidence of debt?
a note
a mortgage/deed of trust needs what to be legally enforceable ?
a note
a note with out any collateral is called
an unsecured loan (short term loans)
a note does not have to be tied to a mortgage (T/F)
T
Unsecured notes are used by banks and lenders for what?
short term personal loans
a promissory note includes what
1)date singed
2)participants signature
3)promise to pay
4)payment due dates, terms, and amount
5)acceleration clause
What is a trust
a trust is a right of property, real or personal , it is held by one party for the benefit of another
Parties to a Trust include
Trustor: who grants rights to a Trustee who hold the property in trust for the beneficiary
Trustor starts the trust
T
a deed of trust is executed by the (Trustor/borrower) to convey property as collateral.
T
a deed of trust conveys property as collateral to the name of the (third party/trustee) who hold title on behalf of (lender/beneficiary) until the terms of the loan are met.
T
if loan goes into foreclosure, the trustee is empowered to foreclose on the property through what
Power of sale clause (fast foreclosure)
In Texas foreclose notice must be posted at the courthouse at least how many days before the auction?
21 days
a deed of trust expedites the foreclosure process , making it easier to foreclose than with a
mortgage
equitable right of redemption
a borrower's legal right to redeem property after default BUT prior foreclosure
Statutory right of redemption
a borrower's legal right to redeem property after foreclosure
Texas has a statutory redemption for nonpayment of tax foreclosure of --------- (------- for investment properties).
2 years, 6 months
Texas has a statutory redemption of how long for foreclosure for non payment of HOA
180 days
alternatives to foreclousre
1)refinancing
2)a deed in lieu of foreclosure (sign deed to lender)
3)a short sale
loan pay off
release clause and deed of conveyance
Covenant of seisin
this is a clause stating that the trustees have title to the property described and can pledge it as collateral (lenders rely on title insurance(-negotiable who pays) and mortgage policy(-buyer pays))
Impound and escrow accounts may contain no more than -------- of additional taxes and insurances
2 months , and this is through RESPA
insurance must be kept current for whos protection
lender
due on sale clause or alienation clause
if borrower sells, transfers, encumber, assign, convey , the lender can ask for the money back or else needs written consent from lender
defeasance clause
defeats the mortgage when note is paid in full
lock in clause or pre-payment clasue
prohibits borrower from prepayment
assumption vs subject to
assumption: buyer and original borrower both legally liable
subject to: original borrower legally liable
either way the original borrower is primarily responsible
------is a technique in which the seller of a property can end personal legal liability as the originator of a real estate loan when the loan is being assumed
novation
federal housing administration (FHA) and Department of Veterans affairs (VA) loans are assumable (T/F)
T
Subordination
order of priority when recording lien.. tax lien and special assessment liens always first and second followed usually by mortgage liens
title theory
mortgagor/borrower gives legal title to mortgagee/lender and retains equitable title
in title theory the lender actually owns the property until it is paid off
t
Lien theory
mortgagor/borrower retains both legal and equitable title and lender has a lien
Par Rate
is the interest rate a borrower will qualify for without any adjustment up or down ( best case scenario for best qualifier)
discount points can be paid by buyer or seller
T
one discount point is equal to
1% of loan amount
lenders charge discount points to --- their yield and -----interest rate for borrower
increase , lower
loan origination fee is usually
1% o loan amount
discount points and loan origination fees are charge to the ------- not the ------
loan amount , sales price
mortgage insurance is used to protect the
lender in case of default
when the LTV reaches -----the PMI terminates
78%
The secure and fair enforcement mortgage licensing act (SAFE Act)
encourages states to establish min standards to reduce fraud and predatory lending
FHFA (federal housing finance agency) regulates who
Fannie Mae, Freddie Mac, and Federal home loan bank (FHLB)
CFPB
Consumer Financial Protection Bureau
Consumer Financial Protection Bureau (CFPB) was created to
protect consumers by carrying out federal consumer financial laws, it includes the TRILA-TREC Integrated Disclosure rule
the 2 new rules form TRILA-TREC integrated Disclosure rule
1)Loan estimate - must be provided to borrowers w/in 3 days after making a loan application
2)Closing Disclosure - must be provided to borrowers 3 days prior to closing
the 2 new rules form TRILA-TREC integrated Disclosure rule ,replaced what
1)Good Faith Estimate
2)Initial Truth-in-Lending Disclosure
3)HUD-1 and final Truth-in-Lending Disclosure
Closing disclosures must be given (after August 1,2015)
no less than 3 days before closing and the consumer has 3 days after it has been delivered for total of 6 days (if it is not delivered in person)
Truth in Lending Act
-applies to all consumer Lending not just real estate
-requires lenders to disclose the total cost of obtaining credit
Truth in Lending Act - The annual Percentage Rate (APR)
-aka effective rate
-APR is higher than nominal rate/face rate because it includes fees such as origination fees and discount points
-Includes 3 day right of recession
-Price and/or APR are the only specific finance terms allowed in advertisement with out
Truth in Lending Act - right of recession
-Includes 3 day right of recession for refinance, remodeling, and home equity loans
-the right of recession does not include purchase of primary home, construction loans, vacation homes
Real Estate Settlement Protection ACT (RESPA) was intended to
inform consumers purchasing real estate of the total cost of settlement fees.
-Good faith Estimate (GFE) was required 3 days after a loan application was made.
-Prepaid interest is not shown on GFE
-Lender origination fee is limited to 1%
-origination fee
HUD-1 settlement Statement was supplied
to borrowers at closing to show the final costs
ECOA
equal credit opportunity act
ECOA prohibits lenders
from denying credit to qualified borrowers based on:
race, color, religion, national origin, sex, marital status, age, dependency on public assistance
ECOA doesn't protect against
sexual orientation
ECOA: the lender may not ask if you are divorced or widowed but can as if you are unmarried. (T/F)
T
ECOA: The lender may not ask about receiving alimony or child support if the borrower is not intending to use that to qualify but the lender can ask about obligation to pay for alimony or child support. (T/F)
t
ECOA: The lender may not discount or exclude any income because of the source of the income (T/F)
T
ECOA: The lender may ask about the race or national origin of the applicant , but the borrower can refuse to answer with out fear of jeopardizing the loan.
T
Interstate Land Sales Full Disclosure Act (ILSFDA) applies to subdivisions with ------ or more lots
25
ILSFDA - must provide HUD with a statement of record prior to purchase of property.
T
Home Mortgage Disclosure Act (HMDA) - mortgage originators have to report info about borrowers even when denied (income level, racial characteristics, gender...)
T
Housing and economic recovery act of 2008 (HERA)
helps 1st time homebuyers by providing direct tax credit of 10% or up to $7500
Neighborhood Stabilization Program (NSP) provides funds for
rehabilitating abandoned homes,
demolishing blighted structures , and
purchasing foreclosed homes
Usury
charging an interest rate higher than the max rate allowed
Usury laws are set at ------ level
state
programs for Texas Veterans
-Texas Veterans Land Board (VLB)
-Veterans Housing Assistance Program (VHAP)
-Veterans Home Improvement Program (VHIP)
Texas Veterans Land Board (VLB) provides
low interest , long term loans to purchase land
Veterans Housing Assistance Program (VHAP) provides
financing up to $417,000 toward purchase of home, only for first lien on primary residence
Veterans Home Improvement Program (VHIP) provides
loans up to $25,000 for up to 20 years (substantial repairs to primary residence) or 10 years for $10,000
Leverage
financial leverage is when borrowed funds are used to acquire property
conventional loans are not backed by the government
T
Conventional Conforming loan - principal , interest , taxes, property insurance, PMI, HOA, shall not exceed ------- of the borrower's gross monthly income and all of these plus monthly debt should not exceed ------ of the borrower's gross monthly income.
28%, 36%
Conforming conventional loans meet Fannie Mae and Freddie Mac guidelines and are backed by the federal government (TF)
False, not backed by government
The use of borrowed funds to acquire property is
A)collateral.
B)
hypothecation.
C)
leverage.
D)
disintermediation.
C
Leverage is the use of a proportionately small amount of money to secure a large loan for the purchase of a property. Buyers invest a portion of their money as a down payment and then leverage it by borrowing the balance needed for the full purchase price
True
A borrower pays the interest only on the mortgage loan for seven years; at that time, the principal balance is due in full. This is
A)
a term loan.
B)
an amortized loan.
C)
a partially amortized loan.
D)
an adjustable-rate loan
A
Traditionally, the 30-year fixed rate mortgage has been the MOST popular loan. TF
T
Fully amortized fixed rate
interest rate remains fixed for over life of loan, no balloon payment
Partially amortized
equal payment of principle and interest, balloon payment at end
Term or Straight mortgage
interest only, and a balloon payment
ARM Mortgage: Interest rate % =
index % + Margin %
ARM: the note rate or the calculated rate is the
adjusted rate
ARM: the initial rate is often called the
teaser rate
ARM: Index is the
starting point for adjusting a borrower's applicable interest rate.
ARM: Index commonly used are :
the one year Constant Maturity Treasury Index (CMT)
the 11th District Court of Funds Index(COFI)
the London Interbank offered Rate (LIBOR)
ARM: Margin is
added by each lender as a % rate to the index at every adjustable period to derive the new note rate
ARM: interest caps are important because they govern how much the payment increase or decrease (TF)
T
Home Affordable Refinance Program (HARP)
HARP is a federal loan program that allows a homeowner to refinance from an ARM to a fixed rate even if they don't have equity
Question: the margin is 2% and the index is 5% what is the note?
7%
The LIBOR index is often used on an adjustable-rate mortgage to establish
A)an index.
B)a cap.
C)a margin.
D)an adjustment period.
A
The margin is the starting point for adjusting a borrower's applicable interest rate. TF
False , the index is
Graduated Payment Mortgage (GPM)
low payments early and then increase. fully amortized.
payments can be so low that sometimes won't cover the interest rate causing negative amortization (your principal goes up)
Blanket Mortgage is usually used by
developers
Blanket Mortgage
pledge more than one property for a mortgage
Blanket Mortgage comes with a release clause that enables a property or parcel to be freed from the lien.
T
Package mortgage
loan for real and personal property , usually for resort property that comes with all furniture
A blanket mortgage includes collateral, fixtures, and personal property. (TF)
false, a packaged mortgage
A builder purchased 50 lots that are being used as collateral in a loan that contains a partial release clause. What type of loan did the builder obtain?
A)
Reverse loan
B)
Blanket mortgage
C)
Purchase money mortgage
D)
Package loan
B
Reverse Annuity Mortgage (RAM)
-for seniors who own their house free and clear
-must be 62 or older
-payments can be monthly , lump sum or line of credit
Participation Mortgage types
-Partnership among several mortgagees (lenders)
-Teaming of several Mortgagors (borrowers)
-Partnership of Mortgagee and Mortgagor
Construction / interim Mortgages
- made available in installments (obligatory advances) as improvements are completed
-usually adjustable rate / short term loans
A reverse annuity mortgage (RAM) is particularly beneficial to
A)
rehab specialists.
B)
investors.
C)
elderly homeowners.
D)
first-time homebuyers
C
Construction mortgages are made available in installments as improvements are completed. TF
T
A property's market value less any debts against it is known as the owner's equity
T
The advantage of a home equity loan is that the homeowner can use equity money now.
T
min for home equity loan is
$4000
a home equity loan is based on equity in the home and the
loan called the a combined loan to value ratio (CLTV)
Home equity line of credit
no one lump some , only line of credit
FHA operates from self generated income through the proceeds of
MIP , mortgage insurance premiums
MIP
mortgage insurance premiums acts like PMI and is there to protect the lender
FHA loans are often used for
first time buyers, or borrowers who have low credit scores or limited down payments
FHA 203B vs 203K
203B most common, 203K single loan to cover both acquisition and rehabilitation
how can a FHA loan be used to purchase a manufactured house?
take off the wheels and set it on a foundations and some other guidelines
Lenders are willing to make low down payment FHA loans because the FHA
A)
guarantees the entire loan amount.
B)
insures the entire loan amount.
C)
insures the top 25% of the loan.
D)
guarantees the top 25% of the loan.
B
The FHA insures 100% of the loan amount, which eliminates the lender's risk.
T
The Federal Housing Administration (FHA) insures lenders against loss.
T
The FHA down payment of 3.5% may be from all of the following EXCEPT
A)
grant from a down payment assistance program.
B)
loan from a family member.
C)
borrower's own funds.
D)
gift from a family member
b
Purchase-money loans for condominiums require an up-front MIP of 1�%.(T/F)
False, The FHA requires no up-front MIP on condominium loans.
FHA guidelines:
-max loan amount set annually
-down payment of 3.5% (borrower's fund, gift from family member, grant from local, federal, nonprofit that receive no money from transaction)
-income ratios (higher than conventional ratios)
housing ratios 31%, total obligati
income rations for conventional vs FHA
conventional 28%/36%, FHA 31%/43%
purchase money loans and refinances have an upfront MIP of
1-3/4%
No up front MIP is charged for
condominium loans
the annual premium MIP, which is included in the monthly payment , is ------ with a min down payment of ----
1-1/4% , 3.5%
Before a VA loan will be approved, there must be a formal estimate of the value of the property, which is called
A)
an appraisal.
B)
a Certificate of Eligibility.
C)
an entitlement.
D)
a certificate of reasonable value
d
The maximum loan amount for a zero-money-down VA mortgage loan is based on
A)
four times the VA guarantee.
B)
conforming loan limits.
C)
FHA maximum loan limits.
D)
congressional legislation.
A
The maximum loan amount for a zero-money-down VA mortgage loan is based on 4 times the VA guarantee
The lender regards this guaranteed amount the same as a 25% down payment, so the lender will loan four times the guaranty for a single family home. A lende
T
VA loan criteria ; up to a ------- loan to value ratio is allowed
100%
VA loan criteria: who is eligible
veterans, active national guard , retired military reserve (parents not eligible)
VA max loan amount
$104,250 or 25% of current Freddie mac loan limit of $417,000
VA certificate of eligibility
certificate of eligibility received with discharge, there is no time limit , once loan is paid off the eligibility is restored
what is a CRV? certificate of reasonable Value
VA loan required VA approved appraiser to do inspection and get a CRV , this is good for 6 months or 1 year on new construction , can not be extended
what happens if CRV is less than asking price?
buyer can pay difference in cash, seller come down on price..hu!, buyer and seller can compromise, cancel transaction
VA qualifying requirements
qualifying ratio is 41% of gross monthly income
VA funding fees
used to cover expenses in case of borrower default.
it may be paid in cash or financed
financing and funding fee may exceed CRV
Total financing is not to exceed max allowable loan amount
VA funding is required by all except
veterans receiving compensation for service related disabilities,
veteran receiving retirement in lieu of disability compensation
spouses of veterans who died in service or died form service connected disabilities
in some cases when a large downpayment is
If the maximum amount for a VA loan is $417,000 and the veteran is borrowing $415,000, will the veteran be able to finance the funding fee as part of the loan?
A)Yes, the funding fee plus the loan amount is less than $417,000.
B)
Yes, the funding fee can
C, The answer is no, the funding fee plus the loan amount exceeds $417,000. The funding fee may be paid in cash or included in the loan amount, even in excess of the certificate of reasonable value. However, the addition of the funding fee to the original
A couple wants to use the husband's VA eligibility to obtain a VA loan in order to purchase a $250,000 house with no money down. The lender will use qualifying ratios of
A)33/38.
B)
29/41.
C)
41 only.
D)
28/36.
c
To qualify for a VA loan, the veteran's monthly payments, including PITI, utilities, maintenance, repairs, and other monthly obligations, cannot exceed 41% of the monthly total gross income with an amount set aside as residual income.
T
an appraisal is not required with
seller financing
Mortgage-backed securities (MBS) backed by FHA and VA loans are insured by
A)
Ginnie Mae.
B)
Fannie Mae.
C)
Freddie Mac.
D)
Sallie Mae
A
Mortgage-backed securities are pools of mortgages used as collateral for the issuance of securities, commonly called pass-through certificates because the principal and interest payments are passed through to the investor.
T
Which of the following government entities regulates Fannie Mae and Freddie Mac?
A)Department of Housing and Urban Development
B)The Fed
C)Department of the Treasury
D)Federal Housing Finance Agency
d
The Federal Housing Finance Agency (FHFA) was established under the Federal Housing Reform Act of 2007 as an independent agency to regulate Fannie Mae, Freddie Mac, and the Federal Home Loan Bank (FHLB).
T
Fannie Mac and Freddie Mac have the following purchase requirements
buy mortgages that meet stated guidelines,
package loans into mortgage backed securities (MBSs)
sell the securities to investors on Wall Street
Fannie Mac and Freddie Mac have following underwriting guidelines
-Loan limits are set annually
-any loan with LTV of greater than 80% must PMI
-20% downy payment can be a gift
-seller can contribute up to 3% with 5% down , and up to 6% with 10% down
Ginnie May does not buy or sell loans, it issues certificates that are backed by full faith and credit of US government
T
------------ guarantees that investors will receive timely payments of principle and interest on mortgage backed securities (MBSs)
Ginnie May
Ginnie May: MBSs backed by who
FHA, Rural housing services RHS, VA, offices of Native American Programs (ONAP)
Fannie Mae, Freddie Mac, and Ginnie Mae all offer REMIC mortgage-backed securities
T
An investor recently invested in a real estate investment trust (REIT). The return on the investment will be based on
A)interest on mortgages.
B)profit from selling mortgages.
C)income from apartment houses, offices, and shopping centers.
D)a combination
C
Designed to deal in equities, equity REITs are owners of improved income properties, including apartments, office buildings, shopping centers, and industrial parks.
T
NOI = investment amount x ROR
T
The standardized loan application form identifies all of the following EXCEPT
A)the amount of money requested.
B)
the borrower.
C)
the property to be pledged.
D)
the seller.
d
The standardized loan application form identifies the property to be pledged, the borrower, and the amount of money requested.
t
Loan processing includes all of the following procedures EXCEPT
A)
preparing the documents necessary to approve the borrower.
B)
determining the ability of a borrower to repay the loan.
C)
tracing the chain of title.
D)
estimating the value of the propert
c
Loan processing includes determining the ability of a borrower to repay the loan, estimating the value of the property being pledged as collateral to guarantee the payment, and preparing the documents necessary to approve the borrower.
t
Most loan applications show the borrower's
employment
income
statement of assets and liabilities
list of credit refrences
Assets are all things of value, encumbered or not, that are owned by the applicant
T
Liabilities are all monetary obligations of the borrower-applicant.
T
If total liabilities exceed total assets, a loan would probably be approved.
F
Cosigners on a note are individually and collectively responsible for repayment.
T
A co-borrower does NOT take title to the property, but a cosigner does.
False, it is the opposite
a 2nd part time job is considered for loan if continued for ------- years and good reason it will cont
2
child support is considered if it is court ordered and has proven track record and it will have to cont for ------ or more years
2
Government entitlement funds are considered for loans
t
for self employment for loan application how many years is required
2
for loan application alimony can be counted as income but it is requires a ------ year history of payment receipts and reasonable assurance that it will cont
1
child support and alimony are counted against the applicant as debt
T
front end ratio vs back end ratio
front end = PITI + HOA
back end = PITI + HOA + monthly installments (minus things ending in 10 months)
All of the following are credit reporting agencies EXCEPT
A)
TransUnion.
B)
Credit Karma.
C)
Equifax.
D)
Experian.
B
The Federal Right to Privacy Act prohibits banking institutions from verifying an account without the signed written consent of the account holder.
T
the permission form to verify bank accounts must be signed by borrower for each account
t
Fair Isaac Corporation (FICO) assigns relative risk rankings to applicants based on statistical analyses of credit histories. FICO scores range from 300 to 850.
t
A credit score is largely based on the borrower's
A)
amount of down payment.
B)
future income possibilities.
C)
responsible use of credit.
D)
available reserves.
c
Credit scores are not based on age, race, gender, religion, national origin, marital status, a current address, or the receipt of public assistance. Credit scores are based on factors such as history of bills paid on time, amount of outstanding debt, type
T
FICO score range from
300 to 850
FICO scores is based on following
35% payment history
30%amount owed
15% length of credit
10%new credits
10%other factors
Value in use
value is defined as the ability to satisfy, directly or indirectly, the needs of desires of human beings.
Value in exchange
when the value of an object is measured in terms of its ability to purchase
value is a function of
use and demand
an appraiser must make an objective estimate of value based on
supply and demand
Market price is the price a property would MOST likely bring if it were exposed for sale in the open market for a reasonable price.TF
False, market value
Value is the ability to satisfy, directly or indirectly, the needs or desires of human beings.TF
T
Market value is the price a property would most likely bring if it were exposed for sale in the open market for a reasonable price.
T
Underwriting is the evaluation of the risks involved when issuing a new mortgage or deed of trust.TF
T
An appraisal may be BEST described as
A)
a scientific skill.
B)
an exact determination of value.
C)
one person's opinion.
D)
an estimate of value at a specific point in time.
D
An appraisal is an estimate of a property's value at a 1.--------
It must be reported in 2.---------
in accordance with the 3.---------
using the 4.---------- Report by competent individuals whose professional integrity is beyond reproach.
1.specific point in time.
2.writing,
3.Uniform Standards of Professional Appraisal Practice (USPAP),
4.Uniform Residential Appraisal
Appraisal: all lenders are required to select an appraiser who is compliance with
Appraiser Independence Requirements (AIR)
Appraiser must be certified or licensed
in the state where the property is located
Appraiser must be
familiar w local market, competent to appraise the subject property, has access to the data source needed
Usually who selects the appraiser?
the lender, from a rotating roster or a preapproved listed or panel
lenders may not choose an appraiser if an employee of the lender involved in the list selection is not
connected to any appraiser
The process of underwriting determines whether the borrower and the property meet min requirements to be able to
sell in the secondary market
the average life of a real estate loan is how long?
7 to 8 years
a recorded deed or recorded not and mortgage is considered a
constructive notice
a type of title insurance that includes the state as the guarantee of title is called
The Torrens system
in which circumstance would an ALTA title insurance policy NOT protect both the lender and the new owner?
a)if the signature has been forged
b)if there is an error on the survey
c)if there is an unrecorded easement
d)if a mechanic's lien is filed a year a
d
Torrens Certificate
includes the state as guarantor of the title in case of claim.
it places the search in the hands of the state.
it only searches back to the previous search and a Torrens certificate is issues.
Title insurance is based on risk elimination rather than risk assumptions
T
Title insurance policy insures the quality of title on real estate as it exists on the date of the policy but
it does not insure against future events
ALTA policy is
extended coverage policy.
a standard title policy insures against items overlooked in the
search of the record of chain of title
an ALTA policy goes beyond standard policy insurance and expands this to include many unusual risks such as
-forgeries
-incompetency of parties
-surveying errors
Plus additional such as
-unrecorded liens and easements
-right of party in possession of property, water, air, mineral rights
The -------- policy is usually required by participants in the secondary mortgage markets -
Fannie Mae , Freddie Mac, and Ginnie Mae
expanded ALTA policy
Torrens System of title guarantees is designed to shorten the time needed to search the title
T
Texas does not allow the Torrens System
T
the lender may order mandatory or standby commitment to sell loan to Fannie Mae through the
a)federal open market
b)stock exchange
c)free market auction
d)administered price system
C
all of the following are government sponsored enterprises except
a)Fannie Mae
2)Freddie Mac
3)Ginnie Mae
4)Federal Home Loan Bank
C
The most important role of Ginnie Mae today is
a)originating FHA loans
b)purchasing VA loans
c)overseeing Fannie Mae and Freddie Mac
d)guaranteeing FHA and VA mortgage backed securities
D