General Mortgage Knowledge (23%) Flashcards
A _________________ is a fixed rate mortgage set up like a 30-year conventional mortgage loan with payments that increase regularly. It has a fixed interest rate and increasing payments so that the loan balance is paid off more quickly.
Growing Equity Mortgage (GEM)
A conventional mortgage requires Private Mortgage Insurance on loans with less than a ___% down payment.
20%
FNMA is known as
The Federal National Mortgage Association or Fannie Mae
Non-conforming loans _______ be sold on the secondary market.
Cannot
A conventional mortgage requires a minimum __% down payment for first-time home buyers.
3%
FHA insured loan requires ___% down payment (can be a gift).
3.5%
Non-conforming loans include, among other things: _______, ________ and ____________.
Jumbo loans, Alt-A loans and Subprime mortgages
GNMA is known as
The Government National Mortgage Association or Ginnie Mae
The party transferring contractual rights to another is known as the _________.
assignor
The ________________ prevents the lender from requesting a deficiency judgment against the borrower when the proceeds of the foreclosure are insufficient to pay off the mortgage lien.
Mortgage Exculpatory Clause
The nationwide maximum loan amount for a reverse mortgage is ________.
$726,525
On a conventional loan __% of the down payment amount must come from the borrower’s own funds.
5%
An Adjustable-Rate Mortgage (ARM) consists of two parts: an ______ which fluctuates and a ______ which is fixed.
index / margin
_________ are the riskiest loans and are associated with poor credit scores.
Subprime
The mortgage alienation clause is a provision in a mortgage enabling a lender to:
Demand full repayment if the borrower transfers the loan.
A ____________ is partially amortized. Monthly payments are usually calculated as if it was a 30-year term but the balance of the loan will come due before that time and has to be paid in one lump sum; 5, 7 and 10-year terms are popular.
Balloon Mortgage
FHA’s reverse mortgage is called a ____________________.
Home Equity Conversion Mortgage (HECM)
Private Mortgage Insurance is a policy that allows lenders to recover part of loss in the event of _________ or ____________.
borrower default / loss in collateral value
A ___________ has periodic payments that do not fully amortize the loan by the end of the loan term –The final payment is larger than the others and is known as a _________.
Balloon loan / Balloon payment
The _______ is a fixed percentage rate (typically 2% to 3%) that is added to the specified index at each adjustment period to determine the fully indexed rate.
margin
Fannie Mae’s automated underwriting system is known as ____________.
Desktop Underwriter (DU)
The 2020 maximum conforming loan limit was raised from $484,350 to ________.
$510,400
Fannie Mae does not purchase most _______ mortgages.
balloon mortgages
Ginnie Mae _______ buy or sell loans or issue mortgage-backed securities (MBS).
does not
If more than one individual is applying for the same mortgage, the lender should determine the single applicable credit score for each individual borrower and then select the ____________ from the group as the “representative” credit score for the mortgage.
lowest applicable score
Fannie Mae will NOT accept a co-borrower’s income for qualifying purposes, unless the co-borrower also ______________.
signs the mortgage note
The maximum term for a Fannie Mae loan is ________.
30 years
The prepayment penalty clause requires the borrower to:
Pay a fee if the loan is paid off early.
A loan that exceeds Fannie and Freddie’s maximum loan amount (aka non-confirming loans) are also known as __________.
A jumbo loan
There are three types of rate CAPS on most ARM loans: The ________ CAP applies to only the first rate adjustment, the ________ CAP applies to all subsequent adjustment periods, and the ______ CAP sets the maximum number of percentage points that the rate can increase for the life of the loan.
initial CAP / periodic CAP / life CAP
Fannie Mae requires a borrower to have a ___________ number or a ____________ number.
social security number / Individual Taxpayer Identification Number
The ______________ Method is the most common Government Land Survey Method.
Lot and Block
A _________________ is a form of revolving credit in which the home serves as collateral. The amount of the available credit line usually depends on the borrower’s equity in the home (appraised value — loan balance = borrower’s equity).
Home Equity Line of Credit (HELOC)
The lender who loans the money directly to a borrower is participating in the ________ mortgage market.
Primary mortgage market
__________ is when you pledge property as collateral for loan while maintaining possession. When you purchase a house or car, you __________ it. You use it as collateral but keep possession of it.
Hypothecation / Hypothecate
_______________ is when the homeowner fails to keep home insured. The lender has the right to buy and charge insurance to cover lender’s interest in home. Typically expensive. Covers lender; not homeowner or contents of home.
Force Placed Insurance
A 360/180 loan is a balloon loan amortized over __ years with a lump sum payment due after __ years.
30 years / 15 years
Conforming loans meet ________ and _________’s standards and can be sold on the secondary market.
Fannie Mae and Freddie Mac’s
The ________________ is a method used to transfer title for a property following full repayment of a loan.
Mortgage reconveyance deed
The margin is expressed in _______ where ___ points = 1%.
basis points / 100 points
Fannie Mae is the _______ institutional investor in the secondary mortgage market.
Largest
The mortgage ______________ requires that the loan balance is paid off when the title is transferred.
Due-on-sale Clause
The mortgage acceleration clause allows the lender to:
Call the entire loan balance due if the borrower is in default.
The ______________ Method is the most accurate Government Land Survey Method.
Metes and Bounds
Fannie Mae requires ___________ such as a cashier’s check from a bank or reputable financial institution to pay the closing costs; personal checks are not acceptable.
guaranteed funds
_________ loans are characterized by reduced documentation, high ratios or limited assets.
Alt-A
A conventional mortgage is not ______ or _____ by the government.
insured or guaranteed