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Test Flashcards

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1
Q

The process of creating a new mortgage loan, including all steps taken by a lender to attract and qualify a borrower.

A

Origination activities

Example: Mortgage Broker

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2
Q

typically functions as a middleman between the borrower and the lender, negotiating, selling, or arranging loans to be delivered to larger investors.

A

Mortgage Banker

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3
Q

The detailed process of evaluating a borrowers loan application to determine the risk involved for the lender.

A

Underwriting

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4
Q

OCC

Charters, regulates, and supervises all national banks and federal savings associations as well as federal branches and agencies of foreign banks. The OCC is an independent bureau of the U.S. Department of the Treasury, whose mission is to ensure that national banks and federal savings associations operate safely and soundly, provide fair access to financial services, treat customers fairly, and comply with applicable laws and regulations.

A

Office of the comptroller of currency

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5
Q

FDIC

Preserves and promotes public confidence in the U.S. financial systems by insuring deposits in banks and thrift institutions for up to $250,000, by identifying, monitoring and addressing risks to the deposit insurance funds, and by limiting the effect on the economy and the financial system when a bank or thrift institution fails.

A

The Federal Deposit Insurance Company

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6
Q

H.U.D

A

The Department of Housing and Urban Development

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7
Q

A program administered by HUD to help communities with economic development, job opportunities and housing rehabilitation.

A

Community Development Block Grants (CDBG)

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8
Q

A program administered by HUD that provides block grants to develop and support affordable housing for low-income residents.

A

HOME investment Partnerships program

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9
Q

Federal Fair Housing statutes prohibit housing discrimination based on race, color, national origin, sex, religion, families with children, and disabilities.

A

7 Protected Classes

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10
Q

What must all residential mortgage loan originators be registered with?

A

The National Mortgage Licensing System and Registry NMLSR

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11
Q

What did the Dodd-Frank Act establish?

A

The Consumer Financial Protection Bureau (CFPB)

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12
Q

A federal law that was passed to endure that banks would serve the needs of the community in which they were chartered to do business. It prohibits Redlining

A

Community Reinvestment Act - CRA

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13
Q

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

A

Red Lining

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14
Q

Certain terms used in advertising that require a disclosure.

  1. The amount of a down payment (expressed either a percentage or a dollar amount) in a “credit sale” transaction.
  2. The amount of any payment (expressed as either a percentage or dollar amount).
  3. The number of payments or the period of repayment.
  4. The amount of any finance charge.
A

Trigger Terms

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15
Q

If an ad for closed-end credit uses a triggering term, Regulation Z requires it also ,use include the following information:

A
  • The amount or percentage of the down-payment
  • THE TERMS OF REPAYMENT
  • The “annual percentage rate” using that term or the abbreviation “APR”. If the annual percentage rate may be increased after the consumption of the credit transaction, that fact also must be stated.
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16
Q

An agency responsible for affordable housing, housing related and community service programs, and the regulation of the states manufactured housing industry.

A

The Texas Department of Housing and Community Affairs. TDHCA

The mission of the Department is to serve the states extremely low to moderate-income populations.

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17
Q

A program that is available for all types of loans: FHA, VA, CONVENTIONAL…eligibility is for veterans, military members, and their spouses. The difference is that the loan is sold to the Texas Veterans Land Board, as opposed to a secondary market purchaser such as Fannie Mae, Freddie Mac. The primary benefit to the veterans is that the rate on the VLB loan is often up to one percent below the prevailing market rates.

A

Texas Veterans Land Board VLB

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18
Q

A program to aid Texas Veterans in purchasing a home with a competitive low interest loan with little to no down payment. Veterans, military members, their spouses, and surviving spouses, may receive up to $424,100 on a fixed rate loan for 15, 20, 25, or 30 year terms

A

Veterans Housing Assistance Program VHAP

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19
Q

An act that insures all consumer throughout the nation are provided with more helpful information about the cost of the mortgage settlement charges caused by certain abusive practices.

This is applicable to all Federally related mortgage loans for 1-4 family homes as well as manufactures homes. Residential Only

A

Real Estate Settlement Procedures Act - RESPA

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20
Q

On November 20th, 2013, the Consumer Financial Protection Bureau released the 1888 page final RESPA-TILA Integrated Disclosures Rule. The final rule mandates the use of two disclosures, the three-page LOAN ESTIMATE (LE), which REPLACED the GOOD FAITH ESTIMATE (GFE) and the initial TRUTH IN LENDING DISCLOSURE, and the five-page CLOSING DISCLOSURE which replaced the HUD-1 and final TRUTH IN LENDING DISCLOSURE.

A

The Loan Estimate (LE) replaced the Good Faith Estimate.

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21
Q

This Form Replaced the HUD-1, which was designed by HUD and Respa. It also replaces the revised Truth in Lending disclosure designed by the Board under TILA

A

The Closing Disclosure (CD)

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22
Q

Mortgage Loans were funded from the deposits on hand, and the loans were most often retained by the lender in their investment portfolio. These lenders where known as _____.

A

Portfolio Lenders

23
Q

What does the secondary market exist for and what is it designed to provide?

A

The secondary market exists for the purchase and sale of existing mortgages to investors. It is designed to provide greater LIQUIDITY to the residential real estate market by providing for a steady supply of funds from investors.

24
Q

Fannie Mae

A

The Federal National Mortgage Association

25
Q

Freddie Mac

A

The Federal Home Loan Mortgage Corporation

26
Q

Ginnie Mae

A

The Government National Mortgage Association

27
Q

The forms used to originate a loan in the secondary market must conform to Fannie Mae or Freddie Mac requirements. Fannie Mae and Freddie Mac have published standardized forms for loan applications, appraisal, and processing, among others .

A

Yep

28
Q

A loan that is originated to adhere to the three major requirement areas for secondary loans is called a

A

Conforming Loan.

Lenders prefer to originate conforming loans because they know with certainty that they have a ready buyer when they are packaged for sale in the secondary market.

29
Q

________ ____ is a federally chartered corporation established as the Federal Home Loan Mortgage Corporation (FHLMC) in 1970 to purchase mortgages in the secondary market

A

Freddie Mac

30
Q

The market where borrowers and mortgage lenders come together to create and negotiate terms of a mortgage transaction is called the _______.

A

Primary Market

Where you go to purchase loans.

31
Q

A loan retained by the bank and not sold to the secondary market is called a _____.

A

Portfolio Loan

32
Q

______ are fed, as with banks and credit unions, by client deposits.

A

Pensions

33
Q

An investment vehicle created by congress in 1960. The goal of the legislation was an effort to make it possible for small investors to invest in larger commercial properties by purchasing shares in the organization that owns the real estate.

A

Real Estate Investment Trust. (REIT)

Two Forms of REIT:
Equity &
Mortgage

34
Q

Sources of Income for Real Estate Mortgage Trusts. (REMTs)

A
  • Interest
  • Origination frees; and
  • Gain from buying and selling mortgages.
35
Q

Bonds may be categorized by:

A
  • THeir method of repayment
  • redemption
  • the intended use of the funds raised in a bond sale.
36
Q

Advantages of Municipal (Muni) Bonds:

A

TAX FREE

37
Q

A claim, lien, charge, or liability attached to and binding real property is a ______.

A

Encumbrance

38
Q

A right given by law to certain creditors to have debts paid out of the property of a defulting debtor, usually through a court sale.

A

Lien

39
Q

In a mortgage, the borrower is known as the ____.

A

Mortgagor

40
Q

In a mortgage, the lender is known as the _____.

A

Mortgagee

41
Q

Also known as a REAL ESTATE LIEN NOTE, is the borrowers’ unconditional promise to repay and includes the amount borrowed, payment amount, due date, and rate of interest. The note is not generally recorded.

A

Promissory Note. - A promise to pay

42
Q

If the borrower fails to repay the note, the mortgage allows the lender to ______ the property.

This is the legal procedure whereby the secured property may be sold to satisfy the unpaid promissory note.

A

Foreclosure

Any excess money leftover from the forced sale is given to the debtor.

43
Q

________ features title retention by lender, not executed until final payment made and deed is delivered. Also known as LAND CONTRACT, INSTALLMENT CONTRACT, and REAL ESTATE CONTRACT,

A

Contract for deed.

44
Q

A second mortgage (or second deed of trust) is an instrument subordinate to the primary mortgage. These ________ are typically used to generate funds for the borrower.

A

Subordinate Instruments

45
Q

A clause that gives the borrower the ability to replace the primary instrument with another without affecting the subordinate instruments position.

EXAMPLE : The refinance of an existing first lien note on a property with a second mortgage. The refinance would not change the priority of the liens, even though the refinance first mortgage would be dated after the recording of the second.

A

Lifting Clause

46
Q

SUB PRIME = BAD CREDIT

A

More than two-thirds of sub-prime loans have prepayment penalties, compared to less than 2% of conventional prime loans.

47
Q

Reserves the right of the lender to call the note (declare the entire balance due) if the borrower sells the property without repaying the loan. This clause is designed to prevent a purchaser from assuming the loan without the consent of the lender. This clause is also known as the Due-On Sale Clause

A

Alienation Clause

48
Q

A clause in which a holder of a mortgage permits a subsequent mortgage to take priority. Subordination is the act of yielding. This clause provides that if a prior mortgage is renewed, the junior mortgage will continue in its subordinate position and will not automatically become a higher or first mortgage.

A

Subordination Clause

49
Q

This clause is used to limit the borrowers personal liability in the event of a default on a loan. This clause, when included, clearly states that the liability of the borrower is limited to the property in question, protecting the borrower’s other real and personal property from becoming collateral in the event of default.

A

Exculpatory Clause

50
Q

A clause that allows the lender to raise the existing interest rate. Although an escalation clause is usually used in an adjustable-rate mortgage, it can be used to overcome an alienation clause. The lender will permit a loan assumption at an increased interest rate.

A

Escalation Clause

51
Q

Points are percentage points based on the loan amount.

1Point=1% of the loan amount.

A

Yep

52
Q

A loan where you are paying down the principle and interest with every payment

A

Amortized

53
Q

A mortgage with a fixed tax rate

A

Fixed-rate mortgage

Real Estate Finance (1 decks)

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