1. The American economy is MOST strongly affected by which of the following industries?
Construction
2. When a savings and loan institution found itself in the position of having more funds withdrawn than were being deposited, it was suffering from
disintermediation.
3. When a couple obtained a loan of $255,200 in order to purchase their new home, the lender required them to pledge the property as security for the loan. This is an example of real property used as
collateral.
4. All of the following contribute to the ups and downs of real estate cycles EXCEPT
d. consumer price index
5. The Taxpayer Relief Act of 1997 provided relief from capital gains tax on the sale of a personal residence up to
b. $500,000 for a couple.
6. Over 77 percent of all mortgage loans are made for which type of property?
b. One-to four-family dwellings
7. A new real estate cycle begins when
c. demand exceeds supply.
8. The government has instituted all the following to stem the financial crisis EXCEPT
d. the American Balanced Budget Agency
9. The main reason that MOST people strive to acquire money is to
a. purchase goods and services
10. As the central bank of the United States, the Fed is responsible for all the following EXCEPT
b. supervising activities of savings associations.
11. The federal funds rate is BEST described as the rate
b. Federal Reserve member banks charge each other.
12. Which of the following advertisements would trigger Regulation Z, requiring full disclosure of all aspects of the financing being offered?
c. "6.5 percent VA assumable loan
13. Which of the following amounts is the maximum that Federal Deposit Insurance Corporation (FDIC) will insure bank accounts?
d. $250,000
14. Which of the following statements is TRUE regarding the Federal Home Loan Bank System (FHLB)?
a. The FHLB was organized in 1932, patterned after the Federal Reserve System.
15. The Department of Housing and Urban Development is directly responsible for which of the following?
c. Federal Housing Administration (FHA)
16. The Interstate Land Sales Full Disclosure Act would apply to a subdivision of
c. 30 lots sold interstate
17. The primary purpose of the Equal Credit Opportunity Act is to
c. prevent discrimination by lenders
18. A good-faith estimate of all closing costs must be given to a borrower within three days of application according to which of the following congressional acts?
b. Real Estate Settlement Procedures Act
19. A lender is required to extend credit into any community in which the bank provides services according to which of the following congressional acts?
c. Community Reinvestment Act
20. Farm loans are unique in that they must have flexibility due to
c. climatic conditions affecting productivity.
21. Which of the following is are a major player in the residential mortgage secondary market?
Fannie Mae
Freddie Mac
Ginnie Mae
22. Fannie Mae was originated as a government agency in 1938 to establish a secondary market for the purchase of which type of mortgage loans?
a. FHA
23. Which of the following is one of the original Fannie Mae guidelines?
a. Minimum down payment of 20 percent
24. Nonconforming conventional loans are BEST described as
b. loans that do not conform to Fannie/Freddie guidelines
25. A credit score today is largely based on the borrower's
c. responsible use of credit
26. Freddie Mac's electronic underwriting system is known as
b. Loan Prospector�.
27. Mortgage-backed securities (MBS) backed by FHA and VA loans are insured by
c. Ginnie Mae.
28. Which of the following government entities regulates Fannie Mae and Freddie Mac?
d. Federal Housing Finance Agency
29. Which of the following is the single MOST important source of private financing funds?
b. Sellers
30. The Tax Reform Act of 1986 led to a greater interest by commercial banks in providing which of the following?
a. Home equity loans
31. Traditionally, the building and loan was the primary provider of which type of loan?
c. Home mortgage loan
32. Life insurance companies and pension funds are MOST concerned with
b. safety and stability of their investment.
33. A life insurance company would be MOST likely to provide financing for a
c. shopping center.
34. Credit unions have been able to expand their services to include home mortgage loans due to
b. legislation allowing for increased membership.
35. Thrifts are regulated by the
b. OCC.
36. The primary activity that differentiates between a mortgage broker and a mortgage banker is that a mortgage banker will
b. service the loan after settlement.
37. A woman recently invested in a real estate investment trust (REIT). The return on her investment will be based on
c. income from apartment houses, offices, and shopping centers.
38. A popular use of real estate bonds is to finance municipal improvement projects. These bonds are usually considered
b. general obligation bonds.
39. In order to finance a new toll bridge, a city could appropriately issue what type of bond?
c. Revenue bond
40. Corporate bonds may be classified in any of the following ways EXCEPT
d. by revenue (industrial, mortgage).
41. Which of the following is considered a private financier?
c. Seller
42. Which of the following is an example of a physical encumbrance?
b. Easement for local power company
43. A specific lien differs from a general lien in that it
b. applies only to a single property.
44. An equitable redemption period gives the borrower the opportunity to
a. make up the outstanding balance prior to foreclosure sale
45. A homeowner's property was foreclosed on in December 2014. In June 2015, the homeowner paid all monies past due and redeemed the property. The state in which the homeowner lives must have
b. a statutory period of redemption.
46. Which of the following BEST describes the lien theory?
c. Lender has equitable rights and borrower has legal rights.
47. A note secured by a deed of trust provides for an automatic action of the laws known as
b. a power of sale.
48. Which of the following statements is TRUE?
b. A mortgage must always refer to a note.
49. A buyer is purchasing a house using a contract for deed. The buyer's contract should include all the following provisions EXCEPT
d. conveyance of title to the purchaser.
50. The U.S. Supreme Court ruling in the California case Fidelity Federal Savings and Loan Association v. de la Cuesta confirmed the lender's right to enforce the
c. due-on-sale clause.
51. An individual has purchased a home subject to the existing FHA mortgage lien. If the purchaser should default on the loan, the lender will hold personally responsible the
b. original borrower.
52. A fixed-rate loan may be structured as all the following EXCEPT
c. variable interest rate
53. A self-amortizing loan of $100,000 at 8 percent interest would have a fixed principal and interest payment of $733.76. The amount that will be credited toward principal on the first payment is
a. $67.09.
54. The LIBOR index is often used on an adjustable-rate mortgage to establish
a. an index
55. In order to avoid being required to purchase private mortgage insurance, the borrowers will have to make a down payment of
d. 20 percent.
56. A couple has a combined annual income of $48,000. Using the 31% housing ratio, how much will they be allowed for monthly housing expense?
b. $1,240
57. The Federal Housing Finance Agency (FHFA) maximum loan limit for a conforming residential loan in 2012 is
d. $417,000.
58. Which of the following BEST describes a subprime loan?
c. Higher interest rate and fees
59. Lenders are willing to make low-down-payment FHA loans because the FHA
c. insures the entire amount of the loan.
60. A couple wants to buy an older home that needs a great deal of renovation. In order to obtain funds for both the purchase and the renovation, they should apply for the FHA
c. Section 203(k).
61. FHA maximum loan limits are set for each geographic area by calculating
b. area percentage of the median house price as established by the Federal Housing Finance Agency
62. For all FHA mortgage loans, the FHA requires a minimum down payment of
c. 3.50 percent of the sales price.
63. What percentage of the sales price can the seller provide for closing costs on an FHA loan?
c. 6
64. At a 31 percent housing ratio, how much will a first-time homebuyer making $30,000 per year be allowed for housing expense on an FHA loan?
b. $775
65. A couple wants to buy a house listed for sale at $190,000. According to the latest FHA guidelines, the minimum down payment required is
c. $6,650.
66. Which of the following statements is TRUE?
a. All FHA borrowers must pay a monthly fee for annual mortgage insurance premium (MIP) renewal.
67. Although it is now required, FHA previously did not require up-front mortgage insurance for the purchase of a
c. condominium.
68. A veteran will be eligible for a VA loan if the veteran served
d. 180 days in peacetime before 1980
69. The maximum loan amount for a zero-money-down VA mortgage loan is based on
c. lender allowing four times the VA guarantee.
70. Before a VA loan will be approved, there must be a formal estimate of value of the property that is called
d. a certificate of reasonable value.
71. A couple wants to use one of the spouse's eligibility to obtain a VA loan to purchase a $250,000 house with no money down. The lender will use qualifying ratios of
d. 41 only
72. A homeowner is selling a house to a veteran of the Persian Gulf War. The seller will be required to pay which of the following closing costs?
c. Document prep fee
73. A novation of a VA loan would indicate that the veteran
b. has been relieved from all obligations on the loan.
74. A veteran with no dependents makes $36,000 per year and has no long-term debt. For a VA loan, what is the total allowed housing expense?
c. $1,230
75. A veteran is willing to allow another veteran to assume her VA loan but she wants to be able to use her VA eligibility again. From the veteran purchaser she must obtain a
c. substitution of entitlement.
76. The final procedure in processing a mortgage loan is
d. preparing the necessary documents to close the loan.
77. Today's lenders are more concerned with the borrower's ability to repay the loan than they are with the value of the collateral property due to the advent of
d. increased loan-to-value ratios.
78. In evaluating the assets listed on a loan application, the lender would have the least interest in
c. $30,000 in jewelry.
79. Which of the following would NOT be counted as part of an applicant's total income?
c. $400 child support (voluntary, not court ordered)
80. An appraisal may be BEST described as
b. an estimate of value at a specific point in time.
81. An appraiser is appraising a church that is being placed on the market for sale. The appraiser will MOST likely use the
b. cost approach.
82. Title insurance policies are issued for the protection of the
d. purchaser and lender.
83. A synopsis of the recorded condition of a property's title is called
a. an abstract.
84. The first step taken by a city or a county in the taxing process is to
a. determine the funds needed to meet the budget
85. An improvement district assessment might be charged on a property to cover the cost of any of the following EXCEPT
c. increasing property taxes.
86. Impound funds (or escrow accounts) may include monies for all the following EXCEPT
d. income taxes.
87. Using simple interest, rent for the use of the money is paid
c. only for the amount of principal still owed.
88. A borrower pays the interest only on a mortgage loan for seven years, and then the principal balance is due in full. This is
c. a balloon loan.
89. Negative amortization will occur when the
b. payments in the early years do not cover the amount of interest due.
90. In the third year of a one-year adjustable-rate mortgage tied to the one-year T-bill with an initial rate of 5.5 percent and 2/6 caps, the interest rate could NOT exceed
c. 9.5 percent
91. A reverse annuity mortgage (RAM) is particularly beneficial to
b. elderly persons needing a source of income.
92. A farmer obtained a mortgage loan that will allow the farmer to secure additional funds for the purchase of seed and fertilizer. This is
c. an open-end mortgage.
93. All the following are characteristics of a construction loan EXCEPT
a. funds are distributed in a lump sum.
94. A seller has agreed to carryback a portion of the sales price as a loan to a buyer. This is called a
a. purchase-money mortgage.
95. A buyer recently purchased Unit 1204 in a 12-story building located near a lake, golf course, and shopping center. The buyer will obtain an individual mortgage loan for a fee simple interest in the unit plus an undivided interest in the common areas.
c. condominium.
96. An investor has refinanced a rental property with an existing loan balance of $50,000 with a new $90,000 mortgage. The $40,000 cash-out he received is called
b. realized capital gain, not subject to being taxed.
97. The MOST common loan default occurs when the borrower
a. is delinquent in making principal and interest payments.
98. A couple suffered a great financial loss when their home was heavily damaged by a hurricane. Their lender has agreed to reduce their monthly payments by taking the remaining loan balance and starting a new 30-year loan. This is called
b. recasting the loan.
99. In a judicial foreclosure, the lender must take all the following steps EXCEPT
c. notify the trustee that the loan is in default.
100. When a couple defaulted on their mortgage loan with a mortgage company, the lender foreclosed. The house was sold at auction, but the mortgage company did not receive enough money to cover the loan balance due and all costs of the foreclosure proceed
c. a deficiency judgment.