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Texas Real Estate Exam > Real Estate Finance 1 > Flashcards

Real Estate Finance 1 Flashcards

1
Q

Sending monthly payment statements and collecting monthly payments, maintaining payment records and following up on delinquencies.

A

Servicing

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2
Q

The process of creating a new mortgage loan.

A

Origination

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3
Q

The process of collecting information about a borrower in order to build a loan file that will be used to make an underwriting decision.

A

Loan processing

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4
Q

The process of transferring funds to a title or escrow company for disbursement.

A

Funding

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5
Q

The process of evaluating a borrower’s loan application to determine the risk involved for the lender

A

Underwriting

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6
Q

Congress created the Federal Housing Administration in…

A

1934

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7
Q

____ are usually small lenders who have the necessary funds to extend loans at their own risk.

A

Correspondent lenders

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8
Q

Credit reports are ordered from all three major national credit reporting agencies: Experian, Equifax and _____.

A

TransUnion

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9
Q

Net basis rates are sometimes identified as the _____, and do not include servicing fees.

A

Wholesale rate

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10
Q

The monetary policies of the ____ affect interest rates and the availability of funds.

A

Federal Reserve

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11
Q

Relates to federal government spending…

A

Fiscal policy

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12
Q

Insures deposits in banks and thrift institution…

A

Federal Deposit Insurance Corporation

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13
Q

Set by the board of directors of the Federal Reserve Banks, subject to approval by the Board of Governors..

A

Discount Rate

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14
Q

Policy that deals with interest rates and the supply of money in the US economy.

A

Monetary policy

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15
Q

Buying or selling government securities by the Federal Reserve

A

Open-market operations

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16
Q

____ is defined as the sum of currency held by the public and transaction deposits at depository institutions.

A

M1

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17
Q

At the treasury level, funds can be raised to pay for government spending by increasing borrowing and ____.

A

Raising taxes

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18
Q

The ____ is the central banking system of the United States.

A

The Federal Reserve

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19
Q

The Fed uses three primary monetary policy tools to influence the cost and availability of credit, open-market operations, the discount rate and ____.

A

Reserve requirements

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20
Q

The ____ charters, regulates and supervises all national banks and federal savings associations.

A

OCC

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21
Q

The ____ was created by Congress in 1792 and became part of the Department of the Treasury in 1873.

A

United States Mint

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22
Q

The FDIC insurance limit for deposits is…

A

$250,000

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23
Q

There are____ Federal Home Loan Banks in the United States.

A

Twelve

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24
Q

Responsible for the chartering, regulation and supervision of Texas’ thrift industry.

A

SML

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25
Q

The industry term for residential loan originators, as mandated by the SAFE Act.

A

RMLO

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26
Q

Designed to enhance consumer protection and reduce fraud.

A

SAFE Act

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27
Q

The practice of refusing to provide financing in a particular area because of location.

A

Redlining

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28
Q

Responsible for the regulation of the Texas manufactured housing industry

A

TDHCA

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29
Q

The Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law in 2010, established the ____.

A

Consumer Financial Protection Bureau

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30
Q

Real estate transactions regulated by the Office of Consumer Credit Commissioner include…

A
  • Home equity loans
  • Home improvement loans
  • Secondary mortgages
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31
Q

The Community Reinvestment Act, enacted in ____, ensures that banks serve the needs of the community in which they were chartered.

A

1977

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32
Q

The Real Estate Settlement Procedures Act is implemented by ____.

A

Regulation X

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33
Q

Which of the following transactions is exempt from RESPA?

A

Temporary loans

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34
Q

Under the ____, the use of certain terms in an advertisement trigger the need for full disclosure of lending terms.

A

Truth in Lending Act

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35
Q

The Texas Veterans Land Board Land Loan Program requires a minimum down payment of…

A

5%

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36
Q

The Farm Service Agency, a sub agency of the ____, makes various loans available to those unable to obtain mortgage credit from other, more conventional sources.

A

U.S. Department of Agriculture

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37
Q

Income eligibility for the ____ is capped at 115% of the median income of the area in which the property is located.

A

USDA Rural Housing Program

38
Q

Periodic payment amounts such as principal & interst, and ____ must be disclosed in the Projected Payments section of the Loan Estimate form.

A

Mortgage insurance

39
Q

The Services You Can Shop For section of the Loan Estimate form includes items such as ____.

A

Survey fee

40
Q

According to the Closing Disclosure, prep AIDS are items to be paid by the consumer in advance of the first scheduled payment of the loan, and include homeowner’s insurance premiums, mortgage insurance premiums, prepaid interest, property taxes, and a maximum of ____ additional items.

A

3

41
Q

Holds mortgages in trust for the benefit of investors

A

REMIC

42
Q

Return on an investment

A

Yield

43
Q

Encompasses the purchase and sale of existing mortgages to investors

A

Secondary mortgage market

44
Q

The act of moving funds from one investment arena to another

A

Disintermediation

45
Q

Uses forms created and issued in an effort to standardize mortgage loan purchases

A

conforming loan

46
Q

Established in 1968, ____ operates a mortgage-backed securities program designed to facilitate the flow of capital into the housing industry.

A

Ginnie Mae

47
Q

The Housing and Economic Recovery Act was enacted in ____, and created the Federal Housing Finance Agency (FHFA).

A

2008

48
Q

The secondary mortgage market was designed to provide greater liquidity to the residential real estate market, primarily by ____.

A

The sale of mortgage loans as investments.

49
Q

A ____ lender is one who funds mortgage loans from deposits on hand, retaining the loans long term.

A

Portfolio

50
Q

The two major purchasers of mortgages in the secondary market are:

A

Fannie Mae and Freddie Mac

51
Q

In 2008, Fannie Mae and Freddie Mac were placed into ____ by the Federal Housing Finance Agency.

A

Conservatorship

52
Q

What housing objectives does Fannie Mae address?

A
  • Regional imbalances of available mortgage credit
  • The origination of mortgages for sale
  • The standardization of mortgage loans
53
Q

The Agricultural Credit Act, which established Farmer Mac to facilitate the creation of a secondary market for agricultural mortgage products, was passed in ____ by Congress.

A

1987

54
Q

Investment vehicle created by Congress in 1960

A

REIT

55
Q

An instrument of corporate or governmental debt

A

Bonds

56
Q

Member-owned depository institutions

A

Credit union

57
Q

Someone who processes, underwrites, closes and funds their own files in their name and then sells the loans to other mortgage lenders

A

Correspondent lender

58
Q

Typically specialize as middlemen between borrowers and lenders

A

Mortgage brokers

59
Q

The ____ is where borrowers and mortgage lenders come together to create and negotiate the terms of a mortgage transaction

A

Primary market

60
Q

A(n) ____ is a person, corporation or firm not otherwise in banking that provides its own funds for mortgage financing purposes

A

Mortgage banker

61
Q

Mortgage brokers, at one time, originated up to ____ of all mortgage loans.

A

80%

62
Q

Bonds may be categorized by ____.

A
  • Method of repayment
  • Method of redemption
  • Intended use of funds
63
Q

Many depository institutions participate in the primary mortgage market, including commercial banks, insurance companies and ____.

A

credit unions

64
Q

The money that mortgage companies use to make loans comes from the sale of ____.

A

bonds

65
Q

Typical sources of income for Real Estate Mortgage Trusts (REMTs) are:

A

Origination fees
Interest
Profits from sale/purchase of mortgages

66
Q

Prior to 1980, savings accounts held by lenders accounted for over of residential lending in America.

A

75%

67
Q

Like banks and credit unions, ensign funds are fed by ____.

A

Client deposits

68
Q

Lien Theory State

A

State where mortgage lender has a lien on the property and the borrower has title.

69
Q

Hypothecation

A

Pledging real property as a security for a debt.

70
Q

PMI

A

Private Mortgage Insurance

Private equivalent of FHA insurance

Allows for high LTV and low down payment conventional loans

Insures the lenders risk

71
Q

Beneficiary

A

Lender under a deed of trust

72
Q

CRV

A

VA appraisal

Certificate of Reasonable Value

73
Q

Budget Loan

A

loan where monthly payment includes not only principle and interest but also taxes and insurance

called the PITI payment

74
Q

Package Loan

A

loan secured by real property plus personal property

75
Q

Release Clause

A

clause found in blanket loan

allows sorry to obtain partial releases of specific lots by making required lump sum payments

76
Q

Fixed Rate Amortized Loan

A

loan with equal regular payments of principal and interest until the debt is fully repaid or amortized

77
Q

Fair Credit Reporting Act

A

FCRA

law allowing individuals to inspect credit files, correct errors and attach explanatory statements

78
Q

Acceleration Clause

A

clause in mortgage allowing lender to declare whole amount of principal due and payable in event of default by borrower

79
Q

APR

A

Annual percentage rate

number that tells a borrower total cost of loan

80
Q

PITI

A

principal, interest, tax, insurance

common payment for amortized loans

81
Q

Community Reinvestment Act

A

law requiring lenders to meet the needs of the community in which they are chartered to do business

82
Q

Secondary Market

A

Where lenders go to borrow money

Fannie Mae, Ginnie Mae, Freddie Mac

83
Q

VA

A

Veteran’s Administration

assists vets in the purchase of housing by guaranteeing loans

84
Q

DD 214

A

Veteran’s discharge papers

provided to demonstrate eligibility for a VA loan

85
Q

Down payment Assistance Programs

A

Government and private programs whose stated purpose is to help buyers become homeowners

86
Q

TRID

A

Truth in Lending Act

RESPA Integrated Disclosures

87
Q

Point

A

One percent of the loan

88
Q

Redlining

A

Refusal to lend in a particular area

prohibited by the Community Reinvestment Act

89
Q

Discount Point

A

One percent of the loan that is prepaid interest, tax deductible and results in increased yield for the lender

90
Q

Construction Loan

A

Short term financing with funds advanced periodically during the stages of construction

a term loan

91
Q

Subordination Clause

A

clause allowing a lender to move to or take a lower lien position

92
Q

Equity

A

market value of a property less outstanding debt

Texas Real Estate Exam (19 decks)

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