Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Real Estate License > Law of Finance > Flashcards

Law of Finance Flashcards

1
Q

mortgage broker

A

someone who brings together a borrower and a lender in order to create a mortgage

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

mortgage banker

A

An entity or person who provides mortgage financing by using their own funds

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

correspondent lender

A

A lender who offers loans using their own money at their own risk, generally on a smaller scale than mortgage brokers and bankers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

origination

A

the creation of a new mortgage

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

underwriting

A

The process of deciding the level of risk a lender would take on by offering a loan to a certain borrower for a specific property

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

servicing

A

The ongoing collection of monthly payments and maintenance of records by a loan servicer

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

How can local governments influence real estate market economies?

A

by imposing zoning policies to either encourage or slow down the growth of the community.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

portfolio lender

A

Local banks that lend their own money and do not sell their loans on the secondary market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

servicing

A

is a collection of monthly payments, usually including payments on the principal, interest, taxes, and insurance, or PITI

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

primary market

A

Market in which mortgages are first created by connecting lenders to borrowers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

secondary market

A

Market in which loans and servicing rights are sold to investors

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

sales comparison approach

A

Property valuation method that determines value by comparing the subject property to the sales prices of similar properties that have sold recently

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

cost approach

A

Method of estimating the value of a property by determining how much it would cost to completely replace it and then subtracting from that value to account for depreciation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

income approach

A

Method of estimating the value of a property based on the amount of income it could produce for its owner

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

conforming loan

A

A loan that has been made according to the guidelines that will allow the loan to be sold on the secondary market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

non conforming loan

A

A loan that does not meet the guidelines to be sold on the secondary market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

hypothecation

A

it involves a borrower pledging a certain asset as collateral for the loan

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Can loan ownership be transferred?

A

yes. Ownership of a loan can change without action on the part of the debtor. A new owner must provide notice to the borrower within 30 days of possessing the loan.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

2 types of conventional loans

A

conforming conventional loans and non conforming conventional loans

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Total annual interest =

A

loan amount x interest rate

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

hard money lending

A

Private investors (lenders) may have higher interest rates or unusual terms compared to banks

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Who is responsible for the foreclosure fees?

A

the borrower

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Secure and Fair Enforcement for Mortgage Licensing Act

A

SAFE Act- national law required the states to pass legislation saying that all mortgage loan originators (MLOs for short) must be licensed in accordance with national standards.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

recovery

A

The economic phase in which conditions stabilize after a recession and the outlook for the market starts to look brighter

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

expansion

A

The economic phase in which market activity really picks up (businesses start hiring again, people are investing in real estate)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

hyper supply

A

The economic phase in which supply catches up with (and then surpasses) demand; the first warning sign is an increase in vacant or unsold property

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

recession

A

A period in which economic activity drastically declines and stays declined for more than six months

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

economic bubble

A

Forms when the value of something (typically real estate or stocks) grows so much that its market value is higher than its actual value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

Housing affordability index

A

Compares median household income to the income needed to purchase a median-priced home

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

inflation

A

A general rise in prices as the result of a decrease in the dollar’s purchasing power

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

4 major phases of real estate cycle

A

recovery, expansion, hyper supply, recession

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

GDP

A

gross domestic product can predict inflation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

assessed value

A

The value a government places on land or buildings for real estate taxes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

What is TRUE of USDA loans?

A

it doesn’t require down payments

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

legal tender

A

United States coins and currency good for all debts, public charges, taxes, and dues ex. money

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

Federal Reserve Act

A

The 1913 act that created the Federal Reserve

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

The Federal Reserve

A

Centralized United States bank created to conduct monetary policy and stabilize the U.S. economy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
38
Q

Monetary Policy

A

A term used to refer to the actions of central banks to achieve big, macroeconomic policy objectives

39
Q

Federal Reserve System

A

known as “the Fed”). This system is composed of 12 member banks across the United States, each serving a different geographical area.

40
Q

By becoming a member of the Federal Reserve System:

A

banks are able to borrow money from the Fed. However, all banks who are members then must also abide by federal rules and regulations.

41
Q

Federal Reserves 2 monetary policies

A

maximum employment and price stability (known as dual mandate)

42
Q

Federal Open Market Committee (FOMC

A

The Federal Reserve’s policy-making body, which is charged with overseeing the federal government’s open market operations

43
Q

Open Market Operations

A

Adjustments to the supply of money implemented by the Federal Reserve to influence the interest rate

44
Q

Discount Rate

A

The interest rate at which the Fed lends money to its member banks

45
Q

The Reserve Requirement:

A

Requirement that all depository institutions (not just member banks) keep a certain percentage of their funds in the regional Reserve bank

46
Q

Securities:

A

Any financial asset that can be traded, including futures, stocks, mortgage loans, and options

47
Q

Interest rates are manipulated by either giving or restricting money flow to commercial banks.

A

True

48
Q

Primary dealers

A

are banks and securities broker-dealers that trade in U.S. Government securities with the Federal Reserve Bank of New York (FRBNY)

49
Q

federal funds rate

A

is the rate that depository institutions pay when they borrow money from each other to adjust their reserve balances and to keep an adequate amount of money in their account at the Federal Reserve.

50
Q

the Fed’s three instruments for implementing its monetary policy by influencing the money supply:

A

the discount rate, the reserve requirement and open-market operations

51
Q

The Federal Reserve can influence the supply of money by changing the discount rate. When they raise the discount rate, lenders tend to:

A

lend less money

52
Q

The committee that is a part of the Federal Reserve System and is responsible for buying and selling securities is the:

A

Federal Open Market Committee

53
Q

Money Laundering

A

Financial transaction in which criminals, including terrorist organizations, attempt to disguise the proceeds, sources, or nature of their illicit activities by funneling the money through otherwise legitimate business transactions

54
Q

Shell Companies

A

Companies that don’t have any real operation, but exist as vehicles for business transactions

55
Q

The US Treasury manages the government’s revenue by:

A

promoting conditions abroad that support economic growth

promoting national conditions that stabilize the economy

strengthening national security against financial threat

56
Q

Office of Terrorism and Financial Intelligence (TFI)

A

Treasury tracks crimes such as money laundering through this

57
Q

Shell companies are often used:

A

to obscure the identity of or limit the liability of the true owner/owners of real property

58
Q

Troubled Asset Relief Program (TARP)

A

created in response to 2008 market crash. created Making Home Affordable® (MHA) and the Hardest Hit Fund® (HHF)

59
Q

Making Home Affordable® (MHA)

A

provided mortgage relief to homeowners to prevent avoidable foreclosures. expired in Dec 2016

60
Q

Hardest Hit Fund® (HHF)

A

was created to provide targeted aid to families in states hit hard by the economic and housing market downturn.

61
Q

Which of the following is NOT a function of the U.S. Treasury Department?

A

While the U.S. Treasury Department has many functions (such as producing coins and currency, borrowing necessary funds to run the federal government, and monitoring for money laundering), it does NOT issue home loans to homebuyers.

62
Q

1933 Banking Act

A

Depression-era federal act that created the Federal Deposit Insurance Corporation

63
Q

Federal Deposit Insurance Corporation (FDIC)

A

Independent agency that provides deposit insurance to depositors in U.S. banks

64
Q

Glass-Steagall Act:

A

Part of the 1933 Banking Act that prevents investment banks from taking deposits and preventing commercial Federal Reserve members banks from various risky behaviors

65
Q

Dodd-Frank

A

Federal Act passed as a result of the housing bubble and financial crisis that resulted in the most significant financial reforms to the American banking system since the post-Great Depression legislation

66
Q

The government agency that was created in 1933 to give confidence to depositors after the bank failures of the 20s and 30s was the ________.

A

FDIC

67
Q

The FDIC is funded by private banks and Congress.

A

False. The FDIC receives no money from Congress. Instead, the FDIC is funded by premiums that banks and thrift institutions pay for deposit insurance coverage and from earnings on investments in U.S. Treasury securities.

Next Page

68
Q

The Dodd-Frank Act restricted the power of the FDIC regarding liquidating insurance companies and other non-bank financial institutions.

A

False. The Dodd-Frank Act gave more power to FDIC, allowing them to better protect consumers from risk.

69
Q

Federal Home Loan Bank Act of 1932

A

Extended $125 million in credit to savings and loan institutions and created the Federal Home Loan Bank System, setting up the twelve regional banks

70
Q

Community Investment Program (CIP)

A

Program operated by each FHLBank that offers below-market-rate loans to members for long-term financing for housing and economic development that benefits low- and moderate-income families and neighborhoods

71
Q

Federal Home Loan Banks are ______, and their members are ______.

A

public institutions and general partners

72
Q

Whose purpose is it to support residential mortgage lending and related community investment?

A

Federal Home Loan Bank

73
Q

What is the purpose of the Federal Home Loan Bank System?

A

The purpose is to support residential mortgage lending and related community investment through its member financial institutions, and to provide access to reliable economical funding, technical assistance and special affordable housing programs.

74
Q

Real Estate Settlement Procedures Act (RESPA)

A

An act designed to protect consumers from predatory lending and educate them about closing and settlement services

75
Q

LDP

A

limited denial of particpation

76
Q

public housing

A

Housing provided for people with low incomes, subsidized by public funds- housing authority is the landlord

77
Q

Subsidized Housing:

A

Government sponsored economic assistance programs aimed at alleviating housing costs and expenses for people with low to moderate incomes- housing authority is not the landlord

78
Q

Ginnie Mae

A

Government National Mortgage Association; a government owned enterprise that promotes homeownership

79
Q

HUD was created with the mission to do all of the following:

A

is to increase homeownership, support community development, and increase access to affordable housing free from discrimination.

80
Q

Housing and Community Development Act of 1974

A

created section 8 program

81
Q

Housing Choice Voucher Program

A

allows a tenant to move from one unit of at least minimum housing quality to another through “tenant-based” rental assistance. It also lets individuals apply their monthly voucher towards the purchase of a home

82
Q

Community Reinvestment Act (CRA)

A

Helps commercial banks and savings associations meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods

83
Q

Truth in Lending Act (TILA)

A

Educates and protects consumers against inaccurate and unfair credit billing and credit card practices by requiring lenders to standardize the way costs associated with borrowing are calculated and disclosed

84
Q

Regulation Z

A

Under TILA, prohibits specific acts and practices in connection with an extension of credit secured by a consumer’s dwelling

85
Q

APR

A

Annual Percentage Rate, a numeric representation of an interest rate

86
Q

Regulation M

A

Prevents manipulation by individuals with an interest in the outcome of an offering, and prohibits activities and conduct that could artificially influence the market for an offered security

87
Q

Volcker Rule

A

Federal regulation prohibiting banks from conducting certain investment activities with their own accounts, also limits their ownership of and relationship with hedge funds and private equity funds, also called covered funds

88
Q

CFPB

A

Consumer Financial Protection Bureau; works to protect consumers from unfair, deceptive, and abusive practices

89
Q

SAFE Act

A

The Safe Mortgage Licensing Act; sets a minimum standard for licensing and registering mortgage loan originators

90
Q

Administrative Procedure Act

A

Governs the way administrative agencies of the federal government may propose and establish regulations

91
Q

MARS

A

Mortgage Assistance Relief Services, makes it illegal to charge upfront fees and requires specific disclosures in ads and when you forward a lender’s offer to a homeowner

92
Q

Regulation Z applies to loans that are __________________________.

A

(1) extended to consumers; (2) offered on a regular basis; (3) either subject to a finance charge or to be paid in four or more installments; (4) used for personal, family, or household purposes; or (5) a closed-end transaction (not open-ended or revolving).

Next Page

93
Q

A federally related loan is one that is directly or indirectly supported by federal regulation, insurance, guarantees, supplements, or assistance.

A

TRUE

Real Estate License (7 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions