Ch 13 - Types of mortgages and sources of financing Flashcards
True or false, to qualify for a reverse annuity mortgage a homeowner must be 62 years old or older and have a significant amount of equity built up in their house.
True
True or false, all savings associations are insured by the national credit union administration.
False
All savings associations are insured by the FDIC up to $250,000 per depositor per account.
True or false, negative amortization arises when the payment made by the borrower is less then the interest due and the difference is added to the loan balance.
True
True or false, the real estate settlement procedures act (RESPA) requires that prospective buyers get a special information booklet within three business days of submitting a loan application information on closing costs to be given to loan applicant.
True
True or false, straw buyers are people who consent to the use of their names and personal details by companies or people who will obtain mortgage loans but do not intend to live in the homes. This is considered mortgage fraud and is illegal.
True
True or false, with an Amortized Mortgage, as the loan is paid off, the amount applied to the principal decreases in the amount applied to the interest increases.
False
With an amortized mortgage, as the loan is paid off, the amount applied to the principal increases and the amount applied to the interest decreases
True or false, a conventional loan is a mortgage loan that is not guaranteed or insured by the government.
True
True or false, because an applicant needs to be able to prove that they can pay a mortgage payment for the entire life of a loan, lenders are allowed to factor in someone’s age when approving or denying them for a loan.
False
The equal credit opportunity act (ECOA) prohibits discrimination in loan underwriting on the basis of sex, marital status, race, religion, age, or national origin. Plus it prohibits discriminatory treatment of income from alimony, child support, public assistance, or part time employment. And it prohibits inquiry about, or consideration of, child bearing plans or potential for childbearing.
True or false, disintermediation is the normal flow of money into financial institutions from the public in the form of deposits.
False
Intermediation is the normal flow of money into financial institutions from the public in the form of deposits. Disintermediation occurs when depositors take their money out of financial institutions because they can earn more money in other investments.
True or false, the Federal Reserve system was established to provide a safer and more stable monetary system and to influence the availability and cost of money and credit.
True
Geoff want to buy a home with a conventional mortgage. The total PITI on the home he wants to buy will total $1500. He is already paying $1000 in other long-term debt obligations. Geoff’s gross monthly income is $4200. Which of the following statements is true?
Geoff doesn’t qualify for a conventional loan because his TOR is above 36%
Geoff qualifies for a conventional loan
Geoff doesn’t qualify for a conventional loan because his HER is 36%
Geoff qualifies for the loan because his TOR is 24%
Geoff doesn’t qualify for a conventional loan because his TOR is above 36%
Total monthly obligations/Monthly gross income = TOR
Total monthly obligations = $2500/$4200 = .5952 or 60%. TOR cannot exceed 36%: doesn’t qualify for a conventional loan. HER doesn’t apply to conventional mortgages
Which statement is false regarding the government national mortgage market association (GNMA)?
GNMA is part of the primary mortgage market
GNMA is a wholly owned government corporation under HUD
The mortgage back securities program provided by GNMA are pass-through securities as GNMA acting as a guarantor of the securities rather than the actual purchase or or creator of the securities.
GNMA provides the full faith and credit guarantee of the US government.
GNMA is part of the primary mortgage market
The truth in lending act disclosure requirements considers which of the following statements to be a triggering term?
25% down
Pay weekly
Terms to fit your budget
5% below our standard rate
25% down
Which of the following statements are false regarding the real estate settlement procedures act (RESPA)?
Giving a kickback in exchange for referring a settlement service business to another person is prohibited
Kickbacks are said to harm consumers by driving down the cost of transactions
Mortgage brokers can only pay other mortgage brokers a referral fee
Real estate license he can only pay other real estate license he is a referral fee
Kickbacks are said to harm consumers by driving down the cost of transactions.
An increase in the discount rate:
Results in less lending and reduces money supply
Is actually the least effective way to influence the interest rate charged with real estate loans
Is one of three ways for the Federal Reserve to conduct monetary policy
All of the above
All of the above
