Government Sponsored & Other Financing Flashcards
All of the following are characteristics of FHA loans EXCEPT
(a) For housing only
(b) Guarantees loans
(c) Insures loans
(d) High loan-to-value ratio
(b)Guarantees loans
The FHA does not guarantee loans, rather it insures loans on real property.
A discount point is
(a) 1% of the loan amount.
(b) 2% of the loan amount.
(c) 5% of the loan amount.
(d) 10% of the loan amount.
(a)1% of the loan amount.
The type of loan where the interest charged is adjusted by increases in monthly payment, outstanding principal balance, loan term, or a combination of the three, is called a(n)
(a) FLIM.
(b) FLAM.
(c) SAM
(d) ARM.
(d)ARM.
An adjustable-rate mortgage (ARM) is a broad term for a loan (mortgage or deed of trust) with rates and terms that can change. FHA allows use of an ARM for owner-occupied residences of not more that four units.
The VA guarantees payment of specified loans up to a maximum amount. If the borrower defaults, the VA will
(a) foreclose on the borrower under the “power of sale” clause in the trust deed.
(b) pay the lender’s net loss up to the amount of the guarantee.
(c) foreclose on the lender which in turn forecloses on the borrower.
(d) recover the lender’s loss through a specific military foreclosure process.
(b)pay the lender’s net loss up to the amount of the guarantee.
The VA does not usually lend money directly but rather guarantees payment of the remaining mortgage indebtedness, up to a maximum amount. If the borrower defaults, the VA will pay the lender’s net loss up to the amount of the guarantee, which is decreased proportionately as the loan amount is repaid.
Which of the following requires a Notice of Value (NOV)?
(a) VA
(b) FHA
(c) Conventional mortgage
(d) All of the above
(a)VA
The lender on a VA loan will request a determination of reasonable value from a panel of VA-recommended appraisers, who will provide a Notice of Value (NOV), formerly called a certificate of reasonable value., for the subject property. The NOV sets the maximum loan amount the VA will guarantee.
Which of the following generally DOES NOT require a down payment?
(a) Conventional lender
(b) FHA
(c) VA
(d) HUD
(c)VA
As long as the Notice of Value (NOV) does not exceed the amount of the VA loan guarantee, the VA does not require a down payment, although the lender may.
All of the following are similarities between VA-guaranteed and FHA-insured loans EXCEPT
(a) both loans are available for first mortgages of owner-occupied property.
(b) both VA and FHA allow lenders and borrowers to negotiate the interest rate offered.
(c) both VA and FHA always require a down payment.
(d) both FHA and VA loans can be refinanced to avoid imminent default.
(c)both VA and FHA always require a down payment.
VA generally does not require a down payment. FHA requires a down payment of at least 1.25 to 2.85 percent of the sales price or appraised value, whichever is less.
Funds for CalVet loans come from
(a) state bonds.
(b) property taxes.
(c) surplus funds.
(d) federal grants.
(a)state bonds.
Funds for CalVet loans come from voter-approved State General Obligation Bonds and Revenue Bonds issued by the legislature.
Which of the following statements is TRUE about CalVet loans?
(a) A loan application must be made before purchase.
(b) The loan term is typically 30 years.
(c) CalVet loans may be prepaid at any time.
(d) All of the above
(d)All of the above
Why would a lender be interested in making a government-insured or government-guaranteed loan over a traditional conventional loan?
(a) Faster repayment
(b) Lower risk
(c) Easier qualification
(d) Faster foreclosure
(b)Lower risk
A government guarantee or government insurance lowers the risk for the lender.
A form of seller financing in which the buyer takes possession of property and makes payments on its purchase but does not receive legal title to the property for at least one year from the date of possession is called a(n)
(a) all-inclusive trust deed.
(b) land contract.
(c) option.
(d) mortgage.
(b)land contract.
A the land contract is an agreement between two parties in which the seller (vendor) passes possession and equitable title of the property to the buyer (vendee) but retains title until the total or a substantial portion of the purchase price is paid. This type of contract usually does not require conveyance of title within one year. It is similar to the beneficiary/trustor relationship in that the buyer only has a possessory interest with equitable title and is making monthly installment payments over a period of time.
A method of financing where the existing loan is left unchanged, but the buyer receives additional funds to make the purchase, and the lender of those new funds receives payment sufficient to cover both old and new loans is called a
(a) sale-leaseback.
(b) land contract.
(c) trust deed.
(d) wraparound.
(d)wraparound.
A wraparound mortgage is a method of financing in which the new mortgage is placed in a secondary or subordinate position; the new mortgage includes both the unpaid principal balance of the first mortgage and whatever additional sums are advanced by the lender. In essence, it is an additional mortgage in which another lender refinances a borrower by lending an amount over the existing first mortgage amount, without cashing out or disturbing the existence of the first mortgage. The entire loan combines two or more debts and is treated as a single obligation, and the wrap, or secondary, mortgagee pays the obligations of the first mortgage from the total payments received.
A method of property transfer in which the property owner sells the property to an investor or lender and, at the same time, retains possession of the property by leasing it back from the buyer is called a(n)
(a) option.
(b) all-inclusive deed of trust.
(c) sale-leaseback.
(d) wraparound mortgage.
(c)sale-leaseback.
A sale-leaseback is a real estate financing technique in which a property owner sells the property and, at the same time leases it back from the buyer. Using this approach, a seller/lessee enjoys many benefits; retaining possession of the property while obtaining the full sales price and, in some cases, keeping the right to repurchase the property at the end of the lease. This frees capital that was frozen in equity.
The original mandate of Fannie Mae in the secondary market involved
(a) FHA loans only.
(b) all types of real estate loans.
(c) FHA-insured and VA-guaranteed loans.
(d) second mortgages and trust deeds up to $20,000.
(c)FHA-insured and VA-guaranteed loans.
Fannie Mae was originally organized to create a secondary market in mortgage loans. The original mandate of the agency involved FHA-insured and VA-guaranteed loans. Fannie Mae’s authority has now been expanded to take in conventional mortgage loans as well.
The functions of Ginnie Mae include all of the following EXCEPT
(a) guarantees securities issued by FHA-approved home mortgage lenders.
(b) offers high-yield, risk free, guaranteed securities.
(c) guarantees timely payment by the borrower.
(d) buys securities for resale on the secondary market.
(d)buys securities for resale on the secondary market.
The Government National Mortgage Association (Ginnie Mae) does not buy securities. Instead, Ginnie Mae guarantees securities issued by FHA-approved home mortgage lenders. Ginnie Mae securities are backed by FHA-insured and VA-guaranteed mortgages, as well as those guaranteed by Farmer Mac (the Farmers Home Administration).
