Exam 3

Question 1

The four main types of mortgages are:

Answer 1

conventional mortgages, FHA mortgages, VA mortgages, and home equity mortgages.

Question 2

When choosing a mortgage you must decide on the:

Answer 2

type, amount of leverage (size), refinancing, and default

Question 3

Where loans originate and borrowers/mortgage originators come together to negotiate terms.

Answer 3

Primary Mortgage Market

Question 4

Mortgage bankers, mortgage brokers, banks and thrifts are all part of the:

Answer 4

Primary Mortgage Market

Question 5

Wholesale market among lenders where existing home loans are resold.

Answer 5

Secondary Mortgage Market

Question 6

Privately held corporations with public purposes created by the U.S. Congress:

Answer 6

Government-Sponsered Enterprises (GSEs)

Question 7

Fannie Mae and Freddie Mac are:

Answer 7

Government-Sponsored Enterprises

Question 8

(True or False) Conventional Mortgage Loans are the oldest form of mortgages.

Answer 8

True

Question 9

Any standard home mortgage loan not insured by FHA or guaranteed by Department of Veterans Affairs.

Answer 9

Conventional Mortgage Loans

Question 10

Meets the standard requirements for purchase by Freddie Mac or Fannie Mae.

Answer 10

Conforming conventional home loan

Question 11

Does not meet GSE requirements in some respect.

Answer 11

Nonconforming conventional home loan

Question 12

If a loan falls below 80% of CURRENT value and the borrower is in good standing, a private mortgage insurer:

Answer 12

MAY allow termination

Question 13

If a loan falls below 80% of ORIGINAL value and the borrower is in good standing, a private mortgage insurer:

Answer 13

MUST allow termination

Question 14

If a loan falls to 78% of ORIGINAL value and the borrower is in good standing, a private mortgage insurer:

Answer 14

MUST terminate

Question 15

(True or False) Veterans Affairs Guarantees loan covers funding fee and closing costs.

Answer 15

False.

Veterans Affairs Guarantees loan covers funding fee, but not closing costs.

Question 16

Mortgage given by a property buyer simultaneous with receipt of title:

Answer 16

Purchase money mortgage

Question 17

A second mortgage paired with an underlying 1st mortgage to keep the 1st below 80 percent LTV, thus avoiding required mortgage insurance.

Answer 17

Piggyback loan

Question 18

Converts home equity to income without

requiring borrower to move.

Answer 18

Reverse Mortgage

Question 19

Interest-only payments for up to

fifteen years, then converts to a full payment for the remainder of the term.

Answer 19

Interest-only amortizing

Question 20

Interest-only payments for five to seven years, ending with a full repayment of principal.

Answer 20

Interest-only with balloon

Question 21

(True or False) Interest-only amortizing, interest-only with balloon, hybrid adjustable rate mortgages, and options adjustable rate mortgages are all recent mortgage forms.

Answer 21

True

Question 22

Converts regular interest expense and up-

front loan fees into a single equivalent interest expense.

Answer 22

Annual Percentage Rate (APR)

Question 23

Governs relationship between a principal (client) and someone charged to act on principal’s behalf.

Answer 23

Law of Agency

Question 24

Agent that has the power to act for principal in all matters.

Answer 24

Universal agent

Question 25

Agent that has the power to act within limits of a business or employment relationship.

Answer 25

General agent

Question 26

Agent that has the power to act in a specific event or transaction.

Answer 26

Special agent

Question 27

An agent represent both the buyer and seller is known as a:

Answer 27

dual agency

Question 28

In real estate a contract requires:

Answer 28

competent parties, lawful intent, offer and acceptance, consideration, no defects to mutual assent, to be in writing, and a legal description.

Question 29

(True or False) A legal contract can be made by an oral agreement.

Answer 29

False. | A contract must be in writing per Statute of Frauds

Question 30

(True or False) A buyer obtains equitable title when a contract for sale of real estate is fully signed.

Answer 30

True

Question 31

Ownership of a freehold estate.

Answer 31

Legal title

Question 32

The right to obtain a title.

Answer 32

Equitable title

Question 33

The _____ normally handles the funds for a transaction.

Answer 33

Broker

Question 34

An account with an insured institution or title company dedicated for a particular purpose.

Answer 34

Escrow account

Question 35

(True or False) A broker may transfer funds of a transaction to either of the parties savings accounts.

Answer 35

False. | Broker must put deposits in an escrow account

Question 36

Obligation of a party to perform depends on one or more conditions being met.

Answer 36

Contingent contract

Question 37

One party’s contractual rights and obligations are transferred to someone else.

Answer 37

Assignment

Question 38

Third party who holds moneys or documents on behalf of contract parties that distributes items in accordance with contract.

Answer 38

Escrow agent

Question 39

An escrow agent can be a(n):

Answer 39

attorney, financial institution, or title company

Question 40

Buyer can force seller to | convey title in a:

Answer 40

specific performance

Question 41

Seller can retain | deposit if buyer backs out.

Answer 41

Liquidated damages

Question 42

Mutual agreement to cancel.

Answer 42

Rescission

Question 43

A facilitator for the buyer that has no legal role after the contract is signed is a:

Answer 43

selling broker

Question 44

A broker that may handle closing if no lender is involved and may assist in retaining services for seller.

Answer 44

Listing broker

Question 45

(Paid by buyer or seller) | Owner's title insurance

Answer 45

Seller

Question 46

(Paid by buyer or seller) | Lender's title insurance

Answer 46

Buyer

Question 47

(Paid by buyer or seller) | Management state document tax

Answer 47

Buyer

Question 48

(Paid by buyer or seller) | State document tax for the deed

Answer 48

Generally by the seller

Question 49

(Paid by buyer or seller) | Management intangibles tax

Answer 49

Buyer

Question 50

(Paid by buyer or seller) | Recording of new management

Answer 50

Buyer

Question 51

(Paid by buyer or seller) | Recording of deed

Answer 51

Buyer

Question 52

(Paid by buyer or seller) | Brokerage commission

Answer 52

Seller

Question 53

A contract for services, not real estate.

Answer 53

Listing contract

Question 54

Usually between a seller and broker, but becoming more common with buyer and broker.

Answer 54

Listing Contract

Question 55

Listing contract that states the broker is assured commission if a buyer is found in time.

Answer 55

Exclusive Right of Sale

Question 56

Listing contract that states the seller agrees to pay commission to broker if a buyer is found in time.

Answer 56

Exclusive Agency

Question 57

Listing contract that state the broker has no exclusive protection, only commission if he sells the property.

Answer 57

Open Listing

Question 58

Obligation of a party to perform depends on one or more conditions being met

Answer 58

Contingency Clause

Question 59

Income capitalization and discounted cash flow techniques to make individual property acquisition and disposition decisions.

Answer 59

REIT Valuation

Question 60

(True or False) REITs seek to purchase properties that have positive net present values (NPVs) and internal rates of return (IRRs) in excess of the REIT’s opportunity cost of capital

Answer 60

True