Housing Counseling

Question 1

Redlining

Answer 1

A process by which banks draw lines on a map and refuse to lend money to purchase or improve property within the boundaries. Based on “safety” and “risk” associated with investment.

Question 2

Collateral

Answer 2

Lenders will often request a borrower to pledge specific property or assets as collateral to a lender to secure repayment of a loan. For a homebuyer, the collateral is the home s/he is purchasing.

Question 3

Closing Disclosure

Answer 3

Settlement statement created by the Consumer Financial Protection Bureau that must be used for any conventional residential mortgage loans that will be sold to Fannie Mae or Freddie Mac, or that are subject to RESPA

Question 4

GSE Loan or Mortgage

Answer 4

A government-sponsored enterprise, or GSE, is a financial services entity created by Congress. A GSE loan or mortgage refers to a mortgage owned by Fannie Mae or Freddie Mac.

Question 5

Subprime Loan

Answer 5

loans given to borrowers with credit problems at a higher cost than conventional loans. Subprime loans are often offered to borrowers with lower credit scores, which are typically below 600.

Question 5

Bankruptcy

Answer 5

A legal process that allows debtors to gain a fresh start by protecting them from creditors. Bankruptcy courts can discharge a debtor’s personal liability for most debts

Question 5

Personal Liability Coverage

Answer 5

Part of homeowners insurance that protects against expensive medical bills or litigation. It covers you if you are legally responsible for injuring someone or damaging their property. If you are sued, your policy can pay for your legal fees and other expenses up to your coverage limit.

Question 5

Earned Income Tax Credit

Answer 5

large tax refund payments that people can receive when they file a tax return. The 2021 American Rescue Plan expanded who can receive these payments and increased the amount of money available to many families and individuals. These tax credits are not income.

Question 6

Deed-in-lieu

Answer 6

an agreement between a borrower and their lender where the borrower gives the property to the lender in exchange for being released from their mortgage obligations. HUD acquires properties that have been foreclosed or taken by deed in lieu of foreclosure on FHA-insured mortgages.

Question 7

Surplus income

Answer 7

the amount of cash left over after subtracting the amount needed for day-to-day operations. The calculation for surplus cash is total cash minus total liabilities

Question 8

Escrow

Answer 8

when a third party holds assets, such as money, funds, or securities, on behalf of two other parties until a transaction is complete. Escrow accounts are used to hold funds for various purposes

Question 9

Reverse mortgage

Answer 9

federally-insured home loan that allows homeowners to convert a portion of their home’s equity into cash.

Question 10

Housing and Urban Development Act of
1965

Answer 10

New housing subsidy programs and made federal loans and public housing grants easier to obtain. Ginnie Mae -moderate income level

Question 11

HOLC (Home Owners Loan Corporation)

Answer 11

Effort to avoid mass foreclosures during the Great Depression. HOLC was tasked with identifying which neighborhoods were worthy of investment. Ultimately led to redlining, segregation and
inequitable quality of housing

Question 12

Assessor

Answer 12

a government official responsible for determining the value of a property for taxation purposes.

Question 13

Capital

Answer 13

Lenders will inquire about how much money a borrower has saved to pay a deposit or down payment for the home s/he intends to purchase.

Question 14

Collateral

Answer 14

Lenders will often request a borrower to
pledge specific property or assets as collateral to a lender to secure repayment of a loan. For a homebuyer, the collateral is
the home s/he is purchasing.