Chapter 10 Flashcards
A mortgage originated by a lender and insured by the Federal Housing Administration (FHA)is characterized by a:
a. small down payment requirement.
b. high loan-to-value (LTV) ratio.
c. Both a. and b.
d. Neither a. nor b.
C
The most commonly used Federal Housing Administration (FHA) program is the Owner-occupied, One-to-Four Family Home Mortgage Insurance Program:
a. Section 234(c).
b. Section 203(h).
c. Section 203(k).
d. Section 203(b).
D
The buyer needs to pay _____________ as an added cost for the privilege of making a small down payment using an Federal Housing Administration (FHA)-insured mortgage.
a. private mortgage insurance (PMI)
b. a mortgage insurance premium (MIP)
c. Either a. or b.
d. Neither a. nor b.
B
A buyer’s effective income before any reduction for the payment of taxes is referred to as:
a. gross effective income.
b. adjusted gross income.
c. net equity income.
d. effective income.
A
Even if the buyer’s ratios exceed Federal Housing Administration (FHA) requirements, the mortgage may be approved on the basis of compensating factors if the buyer:
a. makes a large down payment.
b. has a good credit history.
c. has substantial cash reserves.
d. Any of the above.
D
The goal of the _____________ program is to reduce utility charges, allowing applicants to make higher monthly mortgage payments to fund the cost of the energy efficient improvements.
a. Federal Housing Administration (FHA) insurance
b. Veteran’s Administration (VA)-guaranteed mortgage
c. Home Affordable Modification Program (HAMP)
d. Energy Efficient Mortgage (EEM)
D
_____________ indemnifies a mortgage holder against losses on their investment in a mortgage when a borrower defaults.
a. Mortgage life insurance
b. Private mortgage insurance (PMI)
c. Hazard insurance
d. Unemployment insurance
B
Some mortgage holders and private mortgage insurance (PMI) carriers offer a ______________ program in which the lender pays the mortgage insurance premium.
a. Guaranteed Payment Mortgage Plan (GPMP)
b. Lender-Assist Mortgage Insurance (LAMI)
c. Lender-Paid Mortgage Insurance (LPMI)
d. Premium-Paid Mortgage Insurance (PPMI)
C
If the borrower is current on private mortgage insurance (PMI) payments and has not taken out other mortgages on their property, they may terminate their PMI coverage when the equity in their property reaches_______ of its value at the time the mortgage was originated.
a. 7%
b. 10%
c. 15%
d. 20%
D
To qualify for private mortgage insurance (PMI), the borrower needs to:
a. be a natural person, not a corporation, partnership or limited liability company (LLC).
b. take title as the vested owner of the property.
c. Both a. and b.
d. Neither a. nor b.
C
