RE Finance II

Question 1

What does FHA require the buyer to deposit into the escrow account?

Answer 1

• Tax payment
• Insurance Payment
• MIP payment

Question 2

How long is a Certificate of Reasonable Value (CRV) valid for on an existing property?

Answer 2

6 months

Question 3

FHA and VA loans differ from conventional loans in what important way?

Answer 3

FHA and VA do not loan funds directly:
- FHA insures loans
- VA guarantees loans
**but the loans themselves are made by approved, qualified lenders.

Question 4

The Federal Housing Administration (FHA), Department of Veterans Affairs (DVA/VA), and the Texas Veterans Land Board (VLB) all offer what type of loans?

Answer 4

Government-backed loans

Question 5

An approved VA appraiser must issue what type of document that shows the value of the property to be equal to or greater than the sales price?

Answer 5

Certificate of Reasonable Value (CRV)

Question 6

Ginnie Mae, Fannie Mae and Freddie Mac assemble loans into a pool of mortgages, then issue a security backed by these mortgages. This type of security is called what?

Answer 6

Participating certificate
-or-
Guaranteed mortgage certificate

Question 7

Why was Farmer Mac created?

Answer 7

To establish a secondary market for agricultural real estate / rural housing mortgage loans.

And to increase the availability of long-term credit at steady interest rates to American farmers, ranchers and rural homeowners.

Question 8

What does the abbreviation APR stand for?

Answer 8

Annual percentage rate

Question 9

The Community Reinvestment Act was passed by Congress in 1977 to do what?

Answer 9

Prevent redlining

Question 10

Revealing source of credit info, obtaining authorization to seek credit info, and keeping all credit info confidential for the consumer are requirements of lenders by what act?

Answer 10

Fair Credit Reporting Act

Question 11

What does ECOA prohibit?

(Equal Credit Opportunity Act)

Answer 11

Discrimination against applicants

(on the basis of race, color, religion, national origin, sex, etc)

Question 12

When lenders provide loans to unqualified homebuyers this type of loan is called what?

Answer 12

Sub-prime

Question 13

What transfers ownership interest in a property from one party to another?

Answer 13

Conveyance

Question 14

A lender could require a higher down payment from the unqualified buyer because of the type of neighborhood in which the property is located. What is that process called?

Answer 14

Redlining

Question 15

Basing an unaffordable loan on the applicant’s assets rather than their ability to repay the loan is an example of what?

Answer 15

Predatory lending

Question 16

Mortgage fraud affects whom?

Answer 16

A lender

Question 17

Intentionally making a materially false or misleading written statement to obtain a mortgage loan is a violation of Texas Penal Code and is punishable by what?

Answer 17

A prison term of 2 to 99 years and a fine not to exceed $10,000

Question 18

What is the major problem with balloon payments?

Answer 18

The borrower has to come up with a large sum of money at the end of the term

Question 19

When was The Federal Housing Administration (FHA) established and for what purpose?

Answer 19

An Administration established in 1934 to stimulate the housing market in the United States.

Question 20

Department of Veteran’s Affairs (DVA)

Answer 20

Department for care of military veterans.

Post World War II, the DVA offered opportunities for veterans to purchase a home with no money down. Also called the Veterans Administration (VA).

Question 21

Certificate of Reasonable Value (CRV)

Answer 21

Certificate issued by an approved VA appraiser showing the value of the property to be equal to or greater than the sales price.

Question 22

When and for what purpose was the Rural Housing Service (RHS) created?

Answer 22

Created in 1994 to meet rural housing and community development needs.

Question 23

When/Why was the Texas Veterans Land Board’s (VLB) Veterans Housing Assistance Program created?

Answer 23

Created in 1983 to assist Texas veterans in purchasing a home with a low-interest rate loan with little or no money down.

Question 24

Texas Veterans Home Improvement Program (VHIP)

Answer 24

Introduced to provide below-market interest rate loans to qualified TX veterans for home repairs and improvements to their existing homes.

Question 25

Texas Department of Housing and Community Affairs (TDHCA)

Answer 25

Offers mortgage loan funds / down payment assistance to eligible first-time Texas homebuyers of all professions.

Question 26

What is “My First Texas Home” ?

Answer 26

A Taxable Mortgage Program for first time home buyers which offers better (low interest) mortgage loans with down payment/closing cost assistance of 5% of the mortgage loan.

Question 27

What is “My Choice Texas Home” ?

Answer 27

A Taxable Mortgage Program available to anyone offering mortgage loans at 30-year, fixed interest rates with down payment/closing cost assistance.

Question 28

Secondary mortgage market:

Answer 28

Market for banks to repackage and sell mortgages as securities to institutional investors.

Question 29

Ginnie Mae

Answer 29

A wholly owned corporation within the Department of Housing and Urban Development (HUD), established in 1968 was to promote homeownership. They create and operate a mortgage-backed security program for the Federal Housing Administration and Veterans Administration mortgages.