Finance 2.0 Flashcards
How many Federal Reserve Districts are there?
12
what does the federal Open Market Committee do
Carries out open market operations
a “contractionary monetary policy” of the Federal Reserve does what…
reduces reserve requirements
The rate of interest charged by the Fed to member banks is called the:
Federal Funds rate
The minimum number of hours of mandatory pre-license education for MLOs is:
20
Who has the power of currency issue?
The Federal Reserve
The Truth in Lending Law is supervised by the
Consumer Financial Protection Bureau (CFPB)
When prices begin to fall and production tapers off, the period is called
buyer’s market
a loss of savings deposits to high yielding competitive investments is referred to as:
disintermediation
A real estate cycle refers to the real estate market’s reaction to the forces of:
supply and demand
Predatory loan practice include:
Fraud, usury, and deception
The role of FNMA (Fannie Mae) was further expanded in 1970 with the passage of the
Emergency Home Finance Act
When the government is forced to borrow money, making less money available for construction and home loans, it is called
deficit spending
The primary lending market is made up of
local lending institutions such as commercial banks and mortgage companies
In a seller’s Market:
demand exceeds expectation
the four phases of the business cycle are:
peak, recession, bottom, recovery
Credit unions were first set up in
1970
Private, noninsured investment accounts are called
money market funds
Banks who supply capital for business ventures and construction activities on a short-term basis are called
commercial banks
A loan held by a lender rather than sold into the secondary market is referred to as a
portfolio loan
what do Mortgage bankers/mortgage companies usually do:
originate, service, and sell loans
what purpose does FIRREA hold:
protects the federal deposit insurance funds
A loan can often be seasoned
in 6-12 months
A short term revolving credit used by mortgage bankers is called a
warehouse line of credit
a loan where the lender assumes a percentage of ownership is called
a participation loan
indirect lenders include:
Pension Funds and insurance companies
What would be considered securities:
loans, stocks, and limited partnerships
An entity that can issue CMO securities without double income taxation is called a
REMIC
What entity was created to help resolve the crisis created by the widespread collapse of the savings and loan industry
FICO
Private mortgage insurance is required on all loans that exceed what percentage of the value of the property
80%
When an investor has an “undivided interest” in the mortgage pool it is commonly referred to as a:
pass-through security
FAMC is also referred to as
Farmer Mac
Which agency is responsible for the regulation of the FNMA, FHLMC, and the federal home loan bank system
FHFA
The FHFA refers to
Federal Housing Finance Agency
obsolete information that must be removed from a consumers credit line file can include bankruptcy over____ years prior
10 years old
The first piece of legislation passed by congress after the Civil War that provided for equal property rights for all citizens was:
the Civil Rights Act of 1866
A creditor who fails to comply with the equal credit opportunity act shall be civilly liable for punitive damages for an individual applicant for up to
$10,000
A mortgage fraud scheme where the down payment is actually borrowed as a second mortgage by the seller but never documented the purchase agreement is called a:
silent second
redlining is the refusal to make loans:
on properties in certain neighborhoods
A high-cost mortgage does not include:
APR test or a PER test
A scheme in which a recently acquired property is resold for a considerable profit with an artificially inflated value, often as a result of collusion with an appraiser, is called:
Property Flipping
The Civil rights act of 1866:
applies only to purchase or sale of property
When applying for a loan, lender give borrowers a “loan estimate form” within
3 days
Which agency is responsible for the regulation and examination of all institutions in the Farm Credit System?
FCA
The total amount of interest a borrower will pay over the loan term as a percentage of the loan amount is referred to a:
TIP (total interest paid)
The right of rescission applies to
one-to-four-unit owner occupied residential property
Where in the closing disclosure forms can you find the Loan Calculations such as total payments, finance charge and amount financed?
Page 5
The act that requires lenders, mortgage brokers or servicers of home loans to provide borrowers with the pertinent and timely disclosure of the nature and costs of the real estate settlement process is known as the:
Real Estate Settlement Procedure Act (RESPA)
How many day prior to consummation can a revised loan estimate generally be provided to the borrower?
No later than 7 days prior to the consummation
According to Regulation Z, “triggers” include:
Downpayment amount, interest rate, and number and dollar amount of payments
The requirement that all pertinent information about a property or a loan be provided to enable a consumer to make informed choices is referred to as:
disclosure
What is the Truth in Lending Act often referred to as?
Regulation Z
The effective yield on a loan is referred to as:
the annual percentage rate (APR)
In a promissory note, the borrower is called the
maker
A creditor is given the right to have the security property sold to satisfy the debt if the debtor fails to pay the debt according to the term of the agreement. This is done with a:
security instrument
A subordination clause is most often used for:
construction loans
In a foreclosure, a judge’s order is called an:
order of execution
A clause in a finance instrument that limits a borrower’s right to transfer the property without the lenders permission is called a(n):
alienation clause
a “declaration of Default is prepared by:
the lender
In the event of a default, a creditor or seller may declare the entire outstanding balance immediately due and payable with a(n):
acceleration clause
Negotiable instruments are promissory notes that are:
freely transferable
a “due-on-sale” clause in a loan allows
the lender to declare the entire loan balance due immediately
An out-of-court sale or auction initiated at the direction of a beneficiary is called a
trustee’s sale
FICO score generally range from
300-850
In a loan application a borrower’s assets include all of the following:
child support payments, automobiles, savings accounts
the first step in obtaining a real estate loan is:
to fill out the loan application
Discrimination in the loan process is prohibited by the
Equal Credit Opportunity Act
All of the following are factors that comprise a credit score:
new credit, amounts owed, payment history
In the loan application process the borrower pays up front for a
preliminary title report, credit report, and property appraisal.
A borrower must provide which kind of information when applying for a loan?
Financial and personal
Bankruptcies must be reported on the application if they have occurred within the past
7 years
As mandated by the new TRID rule, the final Truth-in-lending statement and uniform settlement statement were integrated and replaced by the:
Closing disclosure
A third-party opinion of the value of a property is called:
an appraisal report
Private mortgage insurance protects the
lender
a loan that provides for repayment with an agrees period by mean of the regular level payments is called
amortized loan
Another term used to describe private mortgage insurance is
mortgage insurance premium
If a buyer does not have enough month for a 20% down payment for a conventional loan some options include
a. a down payment of 10% with a conventional loan up to 75% and the seller carrying a second mortgage
b. a 90% conventional loan with a 10% down payment
A loan origination fee is normally paid by the
buyer
a fixed-rate mortgage
remains at the same rate for the life of the loan
a 5-year call provision means
a large balloon payment is due in 5 years
What is an advantage of having a 15 year mortgage?
- Saving thousands of dollars because of lower payments 2. Home ownership in half the time. 3. Lower fixed interest rates
Borrowers seeking conventional loans with a larger LTV than the traditional ratio are required to
obtain private mortgage insurance
a private mortgage insurer usually requires how many month’s mortgage in reserve?
2
The interest rated stated in the promissory note is called
the nominal or coupon rate
alternative financing programs are popular:
during times of high interest rates
in alternative financing, “one point” is equal to:
1% of the loan amount
A borrower who have a 90% LTV ARM loan at 3.5% initial interest with a 2% annual interest rate cap and a 5% lifetime cap must qualify at:
5.5%
Payment points to reduce the amount of interest on a loan is called a
buydown
discount points are paid:
at the closing
A fixed-rate loan that gives the borrower a limited opportunity to reduce the interest rate without paying refinancing costs is called;
a reduction option mortgage
A fixed-rate mortgage loan that is set up in a fashion similar to a standard 30-year conventional loan is a
biweekly loan
when minimum monthly payments result in unpaid interest that is added to the loan balance it is called:
negation amortization
ARM mortgage payment caps are usually limited by lenders to an annual increase of:
7.5%
A program designed to allow homeowners to finance light repairs or permanent improvements to their homes is know as the
FHA title 1 program
The FHA Charges a monthly mortgage insurance premium equal to ___% of the loan amount annually on a 30-year loan over 95% LTV
1.75%
How many days of continuous active service must a current active veteran have to be eligible for VA loan
181 days
In a VA loan the veteran borrower may pay for:
title insurance, recording fees, and credit report fees
Which legislative bill provides for VA loan guarantees
the G.I. Bill
The indemnity obligation means that:
veterans must reimburse the U.S. government for any loss on the loan.
The FHA only insures…
insures loans only
The maximum loan origination fee in a VA loan is not:
2,5,3%`
the format that notifies a lender of a veterans eligibility for a VA loan is called
Certificate of Eligibility
A distinguishing feature of a land contract is that, until all the payment have been made on the contract, legal title to the property is retained by the
sellers
when a buyer makes payments into the escrow account and the escrow agent pays the seller’s loan payments out of the account it is called a
contract escrow
If a lender is estopped, it means that he/she is
legally prevented from doing something
In a purchase money mortgage, the seller is called the:
mortgagee
Which type of clause could prevent a loan from being assumed
due on sale clause
In order for the seller to be relieved of his/her responsibility in a loan he/she must obtain from the lender a(n):
release
In a wraparound mortgage, the seller receives
the benefit of the existing low-interest rate loan.
An agreement to keep open the right to purchase or sell property for a predetermined period of time is called
an option
Something of value given by the optionee to the optionor in return for a commitment to sell the property to the optionee at some time in the future is called
consideration
The difference between the market value of the property and the sum of selling expenses, mortgages and other liens against property is referred to as
equity
a loan that meets the requirements of FHMLC is called a(n)
investment quality loan
the individual who conduct the loan application evaluation process is called a
underwriter
As a general rule, a borrower should have continuous employment for at least
2 years
secondary earning take the form of
interest on savings, disability payments, bonuses and commissions.
Income that can be expected to continue for a substantial period is called
durable income
According to the FNMA/FHLMC guideline , the maximum total debt service ratio for loans that do not exceed 90% loan-to-value ratio is what percentage of stable monthly income?
36%
In valuing a property, the most easily understood approach is called
the market approach
the comparative property sales that appraisers actually use are
those properties that have closed escrow
A gross rent multiplier helps an appraiser to determine
the income approach to a properties values
Atypical properties:
must be appraised by a Certified Level Appraiser only
In California, personas not licensed by CalBRE can still engage in residential real estate lending by operating under the NMLS and the:
Department of Business Oversight
The maximum amount the real estate recovery fund in California is liable for in an dingle action is
$50,000
In California, who can deny, suspend, or revoke any licensed issued by the Bureau of Real Estate
The Real Estate Commissioner
The purpose of licensing is to
protect the public
In California, real estate licensees who wish to engage in residential real estate loan origination must
obtain an endorsement for the NMLS
The principle officer of the California Bureau of real estate is the
Real Estate Commissioner
A mortgage broker is required to provide to a borrower that discloses the maximum costs and expenses associated with obtaining a loan
Mortgage loan disclosure statement
What does ARM stand for.
Adjustable rate mortgage
