Lesson 9

Question 1

Which of the following BEST describes a reduction certificate?

Answer 1

It shows the balance due on a mortgage.

Question 2

A mortgage insurance premium (MIP) is associated with what type of loan?

Answer 2

FHA

Question 3

A defeasance clause in a mortgage provides for:

Answer 3

The lien to be released by payment of the note

Question 4

An advantage of FHA financing to a buyer is:

Answer 4

That the property must meet minimum property requirements.

Question 5

A VA owner may do which?

Answer 5

Sell to a non-veteran who may assume the VA loan

Question 6

What kind of loan provides that a borrower is restored his or her loan eligibility benefits when the loan is paid off?

Answer 6

VA Loan

Question 7

Increasing the points asked for a loan in the absence of any economic change should have what effect on the loan?

Answer 7

Reduce the interest

Question 8

What is the benefit of having FHA insurance?

Answer 8

It pays for any needed corrective measures not revealed by FHA appraisal

Question 9

A conventional guaranteed mortgage is a mortgage that is:

Answer 9

Insured by a private mortgage insurance company

Question 10

A lender is able to decide if a loan to be made is eligible for FHA insurance. This ability of the lender is known as

Answer 10

Direct endorsement.

Question 11

Funds for Federal Housing Administration (FHA) loans are usually provided by:

Answer 11

Approved Lenders

Question 12

None of the following is true about Fannie Mae EXCEPT:

Answer 12

It Purchases mortgages

Question 13

All of the following are true about nonconventional loans EXCEPT:

Answer 13

FHA loans for nonowner occupants are assumable in the first 24 months without lender approval

Question 14

A borrower obtains a home improvement loan secured by her house that is neither insured nor guaranteed by a government agency. She has obtained which type of loan?

Answer 14

Conventional

Question 15

What type of mortgage may permit a builder to obtain the release of lots, one at a time, as they are developed?

Answer 15

Blanket mortgage

Question 16

Under Regulation Z, the borrower, except in the case of a purchase money mortgage to buy or construct a home, has a right of rescission of:

Answer 16

Three business days.

Question 17

Only one of the following is not included in the “finance charge” under Regulation Z:

Answer 17

Attorney’s fees

Question 18

The provisions of the Truth in Lending Act (Regulation Z) require all of the following to be disclosed to a residential buyer EXCEPT:

Answer 18

The real estate brokerage commission

Question 19

A home is purchased using a fixed-rate, fully amortized mortgage loan. Which statement regarding this mortgage is TRUE?

Answer 19

Each mortgage payment amount is the same

Question 20

Which of the following is exempt from the right of rescission under the Truth-in-Lending Act?

Answer 20

A conventional first purchase-money mortgage on the borrower’s principal dwelling

Question 21

The Truth-in-Lending Act prohibits which of the following?

Answer 21

Advertising only the percentage of down payment

Question 22

The Federal Reserve System regulates the money supply in which of the following ways?

Answer 22

Buying securities, changing the discount rate, and controlling banking reserves

Question 23

Which law requires that all advertising that references mortgage financing terms contain certain disclosures?

Answer 23

Truth in Lending Act (Regulation Z)

Question 24

A Bridge Loan:

Answer 24

Is used to finance purchase of a new home until old home is sold

Question 25

What is NOT required in the Truth-in-Lending disclosure statement?

Answer 25

Amount of interest per installment

Question 26

A VA loan may be granted for the purchase of a one-family to four-family dwelling if the:

Answer 26

Veteran occupies one of the units

Question 27

All of the following are requirements of the Real Estate Settlement Procedures Act EXCEPT that the lender:

Answer 27

Collect three months’ reserves for tax and insurance

Question 28

Under a Department of Veterans Affairs loan, a veteran can:

Answer 28

Require a veteran buyer to agree in the sale contract to assume the loan and substitute his or her VA eligibility

Question 29

Regulation Z provides a right of rescission

Answer 29

That expires three business days after the date of consummation of the transaction. or the date on which the lender makes material disclosures, whichever is later

Question 30

The Federal Equal Credit Opportunity Act allows lenders to discriminate against potential borrowers on the basis of:

Answer 30

Amount of income

Question 31

The Equal Credit Opportunity Act makes it illegal for lenders to refuse credit or discriminate because an applicant is:

Answer 31

A single woman

Question 32

Which type of loan has its interest rate based on some type of index?

Answer 32

Adjustabe-rate Mortgage

Question 33

The amount a lender will loan is generally based on the:

Answer 33

Appraised value for loan purposes or the sales price, whichever is lower

Question 34

Lenders are required to give a bon fide estimate of settlement costs within 3 days of loan application under:

Answer 34

RESPA

Question 35

RESPA forms must be used in all of the following loans EXCEPT:

Answer 35

Seller Financing

Question 36

A conventional guaranteed mortgage is a mortgage that is:

Answer 36

Insured by a private mortgage insurance company

Question 37

All of the following appear in a promissory note EXCEPT:

Answer 37

Purchase price of property