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Florida Real Estate > Section 13 > Flashcards

Section 13 Flashcards

1
Q

Loan not guaranteed or insured by the government

A

conventional mortgage

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2
Q

loan backed by the government, such as Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA) loans

A

Non-conventional mortgage

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3
Q

covers any of the 20 percent not put down by the borrower in case of default on a conventional mortgage.

A

Private mortgage insurance or PMI

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4
Q

Loans are made in the

A

primary mortgage market

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5
Q

Loans are sold in the

A

secondary market

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6
Q

the maximum percentage of debt to income that is allowed as a standard of measurement to qualify for a loan

A

Total Obligation Ratio (TOR)

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7
Q

To qualify for a conforming conventional mortgage, a borrower cannot exceed maximum total monthly obligation ratio of .

A

36%

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8
Q

TOR =

A

Total Monthly Obligations (including PITI + PMI)
÷
Monthly Gross Income

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9
Q

negotiable between the buyer and the lender

A

Interest rates

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10
Q

the central banking authority of the government.

A

The Federal Reserve System (the Fed)

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11
Q

established to provide a safer and more stable monetary system and to influence the availability and cost of money and credit

A

The Federal Reserve System (the Fed)

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12
Q

The Fed conducts monetary policy through:

A

Open-market operations
Discount rate
Reserve requirements.

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13
Q

features a Due-on-sale clause

A

Conventional mortgage

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14
Q

do not include a due-on-sale clause and are therefore assumable

A

VA and FHA loans

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15
Q

have a combined principal and interest payment that remains the same

A

Amortized mortgages

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16
Q

As more and more payments are made, the balance of the mortgage is

A

killed

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17
Q

consistently charges the same interest rate

A

fixed rate mortgage

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18
Q

Mortgages may be offered with an adjustable rate known as an

A

ARM

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19
Q

Index + Margin =

A

Full Indexed Rate

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20
Q

Many ARMs start with a low rate known as a

A

teaser rate

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21
Q

A partially amortized mortgage has a payment schedule that will leave a large balance to be paid at the end of the loan period called a

A

balloon payment

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22
Q

loans against equity and may be taken as one amount.

A

Home equity loans

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23
Q

line of credit using home equity as collatoral

A

Home equity line of credit (HELOC)

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24
Q

insures the mortgages protecting the lender from losses should the homeowner default

A

FHA

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25
Q

A down payment of at least ___ of the purchase price is required to secure an FHA loan

A

3.5%

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26
Q

dictate the maximum purchase price a home may be to qualify under an FHA mortgage

A

FHA loan limits

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27
Q

The cost of the FHA loan which acts as insurance to lenders is passed on to the borrower as:

A

Upfront Mortgage Insurance Premium (UFMIP)

Mortgage Insurance Premium (MIP)

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28
Q

FHA borrowers must meet TOR of up to ___

A

43%

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29
Q

FHA borrowers must meet a Housing Expense Ratio (HER) of ___

A

31%

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30
Q

HER =

A

Monthly housing expenses (PITI and MIP)
÷
monthly gross income

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31
Q

Sellers are allowed to pay up to ___ of the sales price towards the buyer’s closing costs for FHA loans

A

6%

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32
Q

the standard FHA loan used for the purchase of single-family homes

A

Section 203(b)

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33
Q

provides a component for rehabilitation and repair of single family properties

A

Section 203(k) FHA program

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34
Q

FHA loans may be made for condominium purchases if the condominium is included on the

A

FHA Approved Condominium Projects list

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35
Q

FHA loans may be either a fixed rate or

A

FHA ARM

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36
Q

FHA loans may be either an FHA ARM or

A

fixed rate

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37
Q

offer a partial guarantee to lenders

A

Veteran’s Administration (VA) loan

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38
Q

Designed to provide home ownership for Service members, Veterans, and eligible surviving spouses.

A

VA program

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39
Q

must be as Owner-Occupied

A

VA purchases

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40
Q

To qualify for a VA loan, the borrower must meet TOR requirements of up to ___

A

41%

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41
Q

VA does not set a limit for the purchase price; however, the value of the home must be verified through a

A

Certificate of Reasonable Value

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42
Q

VA has established loan guarantee limits. This provision limits the purchase price that can be bought without a

A

down payment

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43
Q

The amount that the VA will guarantee is referred to as

A

Entitlement

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44
Q

The test for the amount of eligible Entitlement is based on ___ of the home’s value.

A

25%

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45
Q

charged to a VA borrower as a percentage of the loan amount and can be financed into the loan or paid at closing

A

funding fee

46
Q

VA Lenders may charge discount points. Loan origination fee of up to ___ of the loan may also be
charged.

A

1%

47
Q

Should a seller agree to contribute to a VA Program buyer’s closing costs, the amount of contribution is limited to ___

A

4%

48
Q

Included in VA loans, which allows the loan to be paid off early

A

Prepayment Clause

49
Q

Not included in VA loans, so VA loans may be assumed

A

due-on-sale clause

50
Q

Mortgage lenders are in business to

A

loan money

51
Q

conduct loan origination activities by acting as an intermediary brokering mortgage loans between borrowers and lenders

A

Mortgage brokers

52
Q

created minimum standards for licensing and registering mortgage loan originators

A

The Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) of 2008

53
Q

The SAFE ACT requires all MLO’s to register with the

A

Nationwide Mortgage Licensing System (NMLS)

54
Q

State Bond loans provide eligible borrowers a below market interest rate to purchase a home as a first-time home buyer and are issued by the state

A

Housing Finance Agency (HFA)

55
Q

are personal property of the lender and bought and sold as chattel

A

Mortgages

56
Q

Loans are pooled together and traded as

A

mortgage-backed securities

57
Q

A non-conforming loan fails to conform to

A

government sponsored enterprises (GSE) guidelines

58
Q

hold loans in the bank’s portfolio of assets

A

Portfolio lenders

59
Q

a privately-owned corporation, sponsored and under conservatorship of the federal government.

A

Fannie Mae

60
Q

buys and sells conventional, FHA, and VA mortgages in the secondary market.

A

Fannie Mae

61
Q

functions by issuing mortgage-back securities to investors

A

Fannie Mae

62
Q

the largest single private mortgage purchaser

A

Fannie Mae

63
Q

a GSE that guarantees loan payments in the secondary mortgage market

A

Ginnie Mae

64
Q

a government wholly owned corporation under HUD

A

Ginnie Mae

65
Q

acts as a payment passthrough entity for FHA and VA mortgages with “full faith and credit guarantee” for investors that all payments including interest are made in full and on time

A

Ginnie Mae

66
Q

came under conservatorship of the Federal

Government in 2008

A

Freddie Mac

67
Q

a publicly traded GSE that purchases conventional loans in the secondary mortgage market

A

Freddie Mac

68
Q

pools mortgages and sells them as a mortgage-backed security to investors.

A

Freddie Mac

69
Q

Designed to expand the secondary market by purchasing conventional loans made by savings associations

A

Freddie Mac

70
Q

Acting as a direct mortgage lender, they have the authority to underwrite their own loans funded by their investors.

A

correspondent lenders

71
Q

specialized mortgage brokers offering loans funded by private money investors.

A

Hard money lenders

72
Q

a common type of mortgage fraud

A

straw borrower

73
Q

involves having someone act as the borrower when the real purpose of the loan is for someone else’s use

A

straw borrower

74
Q

prone to fraudulent applications and therefore are now illegal

A

No document loans

75
Q

include inflated appraisal reports and significant sales price adjustments not supported by market data.

A

Mortgage fraud red flags

76
Q

prohibits discrimination in loan underwriting based on sex, marital status, race, religion, age, or national origin, income from alimony, child support, public assistance, or part-time employment.

A

ECOA

77
Q

provides the procedural framework for fair lending regulation

A

ECOA

78
Q

makes it unlawful to inquire about an applicant’s children or plans for children

A

ECOA

79
Q

Title I of the Consumer Credit Protection Act promotes the informed use of consumer credit by requiring disclosures about its terms and costs

A

Truth in Lending Act (TILA)

80
Q

pairs with the Federal Reserve Regulation Z for actual implementation of the act’s provisions

A

Truth in Lending Act (TILA)

81
Q

TILA requires disclosure of loan terms in 4 formats:

A

Finance charge
Total amount financed
Total amount of payments
Annual percentage rate (APR) – Within ⅛ of 1%.

82
Q

Advertisement for mortgages containing trigger terms requires the ad to also include:

A

The amount or percentage of the down payment
The terms of repayment
the APR.

83
Q

Triggering terms are:

A

The amount of the down payment, expressed either as a percentage or as a dollar amount

The amount of any payment expressed either as a percentage or as a dollar amount

the period of repayment (the total time required to repay)

84
Q

The 3-day right of rescission does not apply to home mortgages except as

A

refinances

home equity loans

85
Q

created to control increasing loan costs for consumers caused by companies engaging in undisclosed kickbacks

A

Real Estate Settlement Procedures Act (RESPA)

86
Q

Responsible for administering and enforcing RESPA.

A

The Consumer Financial Bureau (CFPB)

87
Q

consolidated consumer protection agencies under CFPB to simplify oversight and compliance

A

TILA-RESPA Integrated Disclosure Rule (TRID)

88
Q

RESPA requires the borrower be provided a booklet of information regarding closing costs by the financial institution or mortgage broker at the time of a written application or no later than __ business days after application is received

A

3

89
Q

RESPA requires that no later than the ____ business day after the submission of a loan application, the borrower is provided with a Loan Estimate

A

third

90
Q

must be provided to the borrower within 3 business days BEFORE the loan closing.

A

Closing Disclosure form

91
Q

RESPA requires that no later than the third business day after the submission of a loan application, the borrower is provided with a

A

Loan Estimate

92
Q

allows for the interest charged to fluctuate depending upon the terms outlined in the loan

A

adjustable rate mortgage (ARM)

93
Q

The loan balance that is unpaid at the end of the loan has to be made in one large payment

A

balloon payment

94
Q

payments are based on a regular amortization schedule, but divided in half and set up to pay every 2 weeks instead of once a month

A

biweekly mortgage

95
Q

using this strategy, the

mortgage is paid off in 22.6 years instead of 30

A

biweekly mortgage

96
Q

Loans that follow the standards expected in order to be sold in the secondary market are said to be

A

conforming loan

97
Q

occurs when depositors take their money out of financial institutions because they can earn more money in other investments

A

disintermediation

98
Q

when you borrow money using the equity in your home as collateral

A

home equity loan

99
Q

the normal flow of money into financial institutions from the public in the form of deposits

A

intermediation

100
Q

Amortizing a loan over a specified period so that equal payments can be made each payment period

A

level payment plan

101
Q

Limits the amount that the rate increases in total over the life of the loan.

A

lifetime cap

102
Q

The amount the lender adds to the index in order to make the loan profitable

A

margin

103
Q

charged to borrowers at closing as a closing fee. Goes into a fund in case the borrower defaults.

A

UFMIP

104
Q

occurs when someone deliberately falsifies information to obtain mortgage financing that would not have been granted otherwise

A

mortgage fraud

105
Q

a loan that doesn’t conform to guidelines established by government i.e. Fannie Mae or Freddie Mac

A

non conforming loan

106
Q

a mortgage agreement that provides home financing including real property, property improvements and movable equipment.

A

package mortgage

107
Q

set a limit of how much the payment can actually be increased in between terms.

A

payment cap

108
Q

limits the amount of increase that a loan may increase to during one adjustment period (usually a year).

A

periodic cap

109
Q

called seller financing or owner financing, is a home-financing technique in which the buyer borrows from the seller instead of, or in addition to, a bank

A

purchase money mortgage

110
Q

a mortgage for homeowners 62 and older who have a significant amount of equity built up in their house

A

reverse annuity mortgage

111
Q

UFMIP stands for

A

Up-front mortgage insurance premium

Florida Real Estate (20 decks)

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