Chapter 10: The Residential Lending Process

Question 1

The California state-sponsored residential finance program for veterans is called the:

Answer 1

California Veterans Farm and Home Purchase Program.

Question 2

A loan structured to gradually pay off the entire loan debt by regular installment payments of principal and interest is known as a:

Answer 2

fully amortized loan.

Question 3

A percentage amount of a loan charged at the beginning of the loan to increase the lender’s yield is called:

Answer 3

discount points.

Question 4

APR refers to:

Answer 4

the annual percentage rate after all finance charges have been applied.

Question 5

The Department of Veterans Affairs will issue a __________ based on the results of a appraisal by a VA appraiser.

Answer 5

Certificate of Reasonable Value (CRV)

Question 6

A Cal-Vet loan: (name three correct statements about)
Purchased from?
Loan Amounts?
May Require?

Answer 6

1. is purchased from the state under a land contract.
2. has established maximum loan amounts that vary from county to county.
3. may require the veteran to purchase life insurance.

Question 7

A mortgage broker:

Answer 7

brings lenders and borrowers together.

Question 8

The relationship, expressed as a percentage, between the loan amount and the sales price or appraised value of the property (whichever is less) is the:

Answer 8

loan-to-value ratio.

Question 9

In an adjustable rate mortgage, the difference between the index rate and interest rate charged to the borrower is known as the __________ .

Answer 9

margin

Question 10

When a property is being purchased by a veteran wanting to finance the property with a VA loan, the veteran must be in possession of a __________ obtained from the Department of Veterans Affairs.

Answer 10

Certificate of Eligibility

Question 11

When the interest rate charged to the borrower is adjusted at specified intervals, the payment:

Answer 11

will increase or decrease along with the interest rate.

Question 12

RESPA is a federal law that: (name three)
Requires..
Requires..
governs..

Answer 12

1. requires institutional lenders to make disclosures regarding closing costs to loan applicants.
2. requires escrow agents to prepare a Closing Disclosure.
3. governs residential real estate closings.

Question 13

The Truth in Lending Act is implemented by:

Answer 13

Regulation Z.

Question 14

__________ is the payment of discount points to reduce the interest rate on a buyer’s loan.

Answer 14

A buydown

Question 15

Generally, FHA loans:(name two)
Requires..
have less…

Answer 15

require MIP.

have less stringent qualifying guidelines.

Question 16

Loans that meet the standard requirements of the secondary mortgage market are known as:

Answer 16

conforming loans.

Question 17

A conforming loan is a:

Answer 17

loan that meets the standard requirements to be offered for sale on the secondary market.

Question 18

A REIT is:

Answer 18

an unincorporated association of real estate investors.

Question 19

Conventional loans with a loan-to-value ratio that exceeds 80% generally require:

Answer 19

private mortgage insurance.

Question 20

Which of the following loans are generally assumable, under specified conditions, by any buyer? (name two)

Answer 20

1. FHA loans

2. VA loans