Study guide chapter 13

Question 1

FHA

Answer 1

(Florida Housing Administration) does not make loans, they INSURE loans approved by local lenders (originators)

Question 2

FHA Ratios

Answer 2

31% Housing and 43% Total Obligations (pg 229)

Question 3

The process of qualification includes Qualifying for Credit

Answer 3

The process of qualifica on includes Qualifying for Credit (willingness), qualifying
Income (ability) and Qualifying the Property (Collateral) Pg 227
NOT: QUALIFYING THE NEIGHBORHOOD based on racial or economic conditions

Question 4

VA Loans:

Answer 4

Guaranteed by Veterans Administra on- VA loans are only for owner occupied properties, originated by VA Approved lenders (pg 231)

Question 5

DO VA loans require Down payment when the borrower qualifies?

Answer 5

VA Loan could require NO Down payment if borrower qualifies and has no
mortgage insurance.

Question 6

when does a private lender require PMI?

Answer 6

A private lender Will require a borrower to pay PMI (Private Mortgage Insurance)
if financing over 80% of the purchase Price. (pg 235)

Question 7

Changing the Discount Rate

Answer 7

Changing the Discount Rate is the least effective tool used by the FED to affect
the money supply. (pg 241)

Question 8

Main Secondary Lenders:

Answer 8

Fannie Mae/Freddie Mac and Ginnie Mae (244-245)

Question 9

What is the major source of long-term financing for shopping centers and other non-residential properties?

Answer 9

The major source of long-term financing for shopping centers and other non-residential properties is Life insurance Companies. (pg 246)

Question 10

Real Estate Settlement Procedures Act (RESPA):

Answer 10

A federal law that requires that
borrowers be informed of all settlement costs involved in the purchase of a home when funds are obtained from a federally regulated lender. The lender must provide the Loan Estimate disclosure no later that 3 days following the loan application (pg 248). Note:
Servicing Disclosure Statement is NOT part of RESPA

Question 11

Equal Credit Opportunity Act (ECOA):

Answer 11

The act that requires lenders to judge loan
applicants on the basis of credit rating, income, expenses, and assets without regard to their age, race, religion, sex, marital status, or nationality. (pg 248)

Question 12

Triggering term- TILA

Answer 12

Any advertisement that uses numbers (Interest rate as low as 4%, Only $10,000 down payment, Mortgage payments as low as $1200)
Assumable Mortgage is NOT a triggering Term only ads with numbers According
to the Truth in Lending Act (TILA) a lender must disclose any change in the terms of
financing, which includes interest rate, amount of payments…etc. (pg 249)