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Sales Associate Pre-Licensing > Chapter 13: Types of Mortgages & Sources of Financing > Flashcards

Chapter 13: Types of Mortgages & Sources of Financing Flashcards

1
Q

Types of Mortgages

What are the three types of mortgages?

A

FHA insured, VA guaranteed, and conventional

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2
Q

When was the Federal Housing Administration (FHA) created and why was it created?

A

1934 to provide sound lending practices, promote home ownership, and upgrade housing standards

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3
Q

True or False

The FHA issues loans

A

False

The FHA DOES NOT make/issue loans, it INSURES loans

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4
Q

FHA Insured Loan Programs

What is the qualifying loan ratios for an FHA insured loan?

A

31% housing expense

43% total obligations

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5
Q

Mortgage Loan Terms (FHA)

FHA insured mortgage loans have a maximum term of ____ years.

A

30

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6
Q

VA Guaranteed Loan

When and why was the VA mortgage loan program created?

A

In 1944 to assist military vets w/financing the purchase of reasonably priced homes

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7
Q

VA Guaranteed Loan

What is the maximum loan amount on VA guaranteed loans?

A

No max amount

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8
Q

VA Guaranteed Loan

The VA mortgage loan program guarantees permanent long-term mortgage loans for _______________ residences.

A

owner-occupied

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9
Q

VA Guaranteed Loan

What are the qualifying ratio for a VA loan?

A

No housing expense ratio

41% Total obligations

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10
Q

Conventional Mortgage Loans

What qualifies a loan as a conventional loan?

A

Any loan not insured or guaranteed by the government

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11
Q

Conventional Mortgage Loans

To offset higher risk and to allow conventional lenders to compete with FHA and VA loans, _________ ________ ________ was developed.

A

private mortgage insurance (PMI)

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12
Q

Conventional Mortgage Loans

When was PMI introduced?

A

1957

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13
Q

Conventional Mortgage Loans

When does federal lending regulators require PMI?

A

When the loan amount exceeds 80% of the value of the property

(Loan to value ratio is above 80%)

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14
Q

Laws Regarding Fair Credit and Lending Procedures

Real Estate Settlement Procedures Act (RESPA)

RESPA (of 1974) covers most residential mortgage loans used to finance the purchase of _______________-family properties.

A

one- to four-

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15
Q

Laws Regarding Fair Credit and Lending Procedures

RESPA standardizes closings by:

Requiring lenders to provide a _______ _________ of _________ costs no later than 3 business days following the date of the mortgage application

A

loan estimate; settlement

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16
Q

Laws Regarding Fair Credit and Lending Procedures

RESPA standardizes closings by:

Requiring each applicant to be provided with the __________ __________ titled “Your Home Loan Toolkit” with examples of closing charges

A

information booklet

17
Q

Laws Regarding Fair Credit and Lending Procedures

RESPA standardizes closings by:

Requiring a ___________ ____________ be completed and provide to the borrower no later than 3 business days before the closing

A

Closing Disclosure

18
Q

Laws Regarding Fair Credit and Lending Procedures

RESPA standardizes closings by:

Prohibiting kickbacks/rebates on any transaction regulated under _______ except those defined. Kickbacks/rebates are allowed. if a service has been provided, the recipient of the fee has the __________ ____________, and all parties to the transaction have been advised of the payment.

A

RESPA

appropriate license

19
Q

Laws Regarding Fair Credit and Lending Procedures

RESPA standardizes closings by:

Requiring a __________ _________ ________ statement that discloses to the borrower whether the lender intends to service the loan or transfer it to another lender.

A

mortgage servicing disclosure

20
Q

Truth-in-Lending Act

The Truth-in-Lending Act is also known as the ________ ________ _____ __ _____

A

Consumer Protection Act of 1968

21
Q

Truth-in-Lending Act

Why was the Truth-in-Lending Act enacted?

A

To assure consumers receive meaningful information concerning true cots of credit

22
Q

Truth-in-Lending Act

What does Regulation Z, published by the Board of Governors of the Federal Reserve require?

A

That residential borrowers be clearly shown the cost of credit in both dollars and percentages

23
Q

Primary Market

What are the components and the purpose of the primary mortgage market?

A

Purpose: create mortgage loans

Components: commercial bank; savings association; credit union; mortgage lenders

Its components call for the deposit of money

24
Q

Secondary Mortgage Market

What is the purpose of the secondary market and what are its components?

A

Purpose: buy mortgage loans from primary market

Components: government agencies—FANNIE MAE; FREDDIE MACK; GINNIE MAE

Its components does not call for deposits of money

Sales Associate Pre-Licensing (17 decks)

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