texas real estate principles 2; unit 3 exam tough questions Flashcards
New construction under the VHAP program requirements must include Environmental Protection Agency’s (EPA) guidelines for (blank) qualified homes.
No clue, come back
What is a charge incurred for the use of money?
I think its interest, double check
what is the most common security instrument in Texas?
I think a deed of trust; double check
What is the FHA?
Federal Housing Administration
Like the FHA, the Department of Veteran Affairs does not;
No idea; come back
Which of the following activities is not associated with a mortgage company or mortgage banker?
No idea; come back
What is the primary purpose of a promissory note?
No idea; come back; I think it’s to serve as evidence of the debt
The process of pooling and repackaging cash flow that turns financial assets into securities that are sold to investors is;
no idea; my guess is securitization; come back and double check
What criteria do lenders use to calculate the maximum loan amount?
I think it’s the value of the property and the borrower’s financial condition, I could be wrong; come back and double check
All of the following must be disclosed by lenders in accordance with the Truth-in-Lending Act, except;
I think the correct answer is the lender’s annual net profit, double check.
the relative cost of credit expressed as a yearly rate is the;
I think its APR or annual percentage rate, double check.
What is the initial equity a borrower has in the property?
I think its the down payment; double check
Under the TRID rule, the integrated mortgage disclosure forms are the;
Loan Estimate and Closing Disclosure
The (blank) generally requires that both a Loan Estimate and Closing Disclosure be provided for most closed-end consumer mortgage loans.
TRID Rule
the (blank) integrated mortgage loan disclosures required by TILA, and RESPA and other disclosures required by Congress into two disclosure forms.
the TRID Rule
Also known as “Know Before You Owe” rules because they address information or mortgages, credit and fees that consumers should read and understand before they make an offer on a house and consent to monthly loan payments.
TRID rules; a series of guidelines enforced by the CFPB or Consumer Financial Protection Bureau
the (blank) protects you against inaccurate and unfair credit billing and credit card practices.
Truth in Lending Act or TILA
The (Blank) of 1968 is a United States federal law designed to promote the informed use of consumer credit, by requiring disclosures about its terms and cost to standardize the manner in which costs associated with borrowing are calculated and disclosed.
TILA or Truth in Lending Act
the (blank) was a law passed by the United States Congress in 1974 and codified as Title 12, Chapter 27 of the United States Code, 12 U.S.C
RESPA; Real Estate Settlement Procedures Act
the (blank) provides consumers with improved disclosures of settlement costs and to reduce the cost of closing by the elimination of referral fees and kickbacks
RESPA; Real Estate Settlement Procedures Act
Under the TRID rule, the integrated mortgage disclosure forms are the (blank) and (blank);
I think it’s the Loan Estimate and Closing Disclosure; double check
a (blank) is a government-insured 100% purchase loan for properties in rural areas.
No idea: come back, I guessed USDA loan. I do think it is USDA Loan confidently though;
a (blank) home loan from the (blank) program also known as the (blank) Rural Development Guaranteed Housing Loan Program, is a mortgage loan offered to rural property owners by the United States Department of Agriculture, Rural Development.
USDA
a VA loan is a mortgage loan in the United States guaranteed by the United States Department of (blank)
Veteran Affairs; a VA loan
mortgage insurance backed mortgage loan that is provided by an (blank) approved lender
US Federal Housing Administration; FHA
(blank) mortgage insurance protects lenders against losses.
Federal Housing Administration;
Which of the following is not true regarding government-sponsored enterprises (GSEs)?
- They were created by the US Congress; 2. They are financial service corporations; 3. They increase the availability of credit; 4. They only benefit the financial sector
I think its 4. They only benefit the financial sector, double check and edit.
What is a GSE or Government Sponsored Enterprise?
a government-sponsored enterprise is a type of financial services corporation created by the United States Congress.
What are some examples of GSEs?
Fannie Mae, Freddie Mac, and the Federal Home Loan Banks (FHLBs) are GSEs that help bring capital to the housing markets.
What regulates GSEs?
the Federal Housing Finance Agency also known as (FHFA) regulates GSEs like Fannie Mae, Freddie Mac, and the Federal Home Loan Banks (FHLBs)
(blank) buys mortgages from lenders and either hold these mortgages in their portfolio or package the loans into mortgage-backed securities (MBS) that may be sold. Lenders use the cash raised by selling mortgages to the GSEs to engage in further lending.
Fannie Mae and Freddie Mac
(blank) buys mortgages from larger, commercial banks
Fannie Mae
(blank) buys mortgages from much smaller banks
Freddie Mac
the primary difference between Freddie Mac and Fannie Mae is (blank)
where they source their mortgages from
Any loan that does not have government insurance or guarantees is a;
- complex loan, 2. simple loan, 3. conventional loan, 4. correlative loan;
I think its a conventional loan, double check and edit.
What is VHAP?
Veteran’s Housing Assistance Program
All of the following are features of the Veteran’s Housing Assistance Program (VHAP) except;
- Texas Veterans can purchase a home with no money down; 2. the home does not have to be the veteran’s primary residence; 3. the veteran must occupy the home within 60 days after closing; 4. Texas veterans can put little money down for financing.
I think its #2, double check and edit.
in a deed of trust, who holds the equitable title?
- the borrower; 2. the lender; 3. the FHA; 4. the VA;
I think its the lender, ill have to double check and edit the final answer.
a legal instrument which is used to create a security interest in real property wherein legal title in real property is transferred to a trustee, which holds it as security for a loan between a borrower and lender.
deed of trust
a (blank) loan is used to assist home buyers who are purchasing a home in need of significant repairs or modifications
FHA 203(k) loan
a (blank) loan is primarily used for move-in ready homes
FHA 203(b) loan
if you make every payment according to the original schedule on your term loan, your loan will be fully paid off by the end of the term.
a fully amortizing loan
what is another name for a fully amortized loan?
a fixed-payment loan
a loan where the balance is still due at the end of the loan term.
a partially amortized loan
the principal amount may or may not have been paid down during the duration of the loan; Also known as a balloon loan.
partially amortized loan
What metric do lenders use to determine a consumers maximum loan amount?
Just a guess, double check and edit here, I believe its the down payment to income ratio (DTI) metric
What is the percentage of the borrower’s gross monthly income that is used to pay his or her monthly debt obligations?
Not sure, my guess is debt to income ratio, will double check and edit.
a home equity line of credit is a hard money loan made against:
I think its the equity in a borrower’s home, will double check and edit.
Which of the following is not an example of secondary financing? 1. Hard money loans from private lenders 2. Home equity loans 3. Swing loans 4. First liens
I think its hard money loan, will double check and edit.
a type of secured loan that’s used to buy hard assets - usually real estate. Instead of relying on the credit worthiness of a borrower, hard money lenders instead weight the merits of the investment that a borrower is looking to fund and use that investment as collateral.
hard money loan
a short-term loan that homebuyers often use in real estate transactions to finance the purchase of a new home before selling their existing home. The borrower takes out the loan against their current home to finance the purchase of a new property.
Swing Loan
a loan secured with real estate as collateral
First Liens
enables the homeowner to borrow money by leveraging the equity in the home, the loan amount is dispersed in one lump sum and paid back in monthly installments.
home equity loan
What must a veteran pay for the first-time use of a VA loan?
Funding fee
a (blank) is a closing cost paid by the borrower directly to the lender to cover their overhead and administrative costs and to make money from your mortgage.
underwriting fee
covers the cost of having a professional appraiser to look at a home and estimate its market value. This and other fees when buying a home should appear on your loan estimate form.
appraisal fee
a one-time payment that the Veteran, service member, or survivor pays on a VA-backed or VA direct home loan. This fee helps lower the cost of the loan for U.S. taxpayers since the VA home loan program doesn’t require down payments or monthly mortgage insurance.
the VA funding fee
a financial institution that obtains its funds mainly through deposits from the public, Also; a financial institution that engages in the business of banking
a depository institution
a mortgage lender’s process of assessing the risk of lending money to you; the bank, credit union, or lender has to determine whether you are likely to be able to pay back the home loan before deciding whether to approve your mortgage application.
underwrite borrowers / underwriting
a depository institution is a financial institution that is legally allowed to:
I think its underwrite borrowers, 1. underwrite borrowers 2. accept deposits 3. offer commercial loans 4. offer business lines of credit
Responsibilities of the Federal Reserve System include all of the following, except:
Not sure, 1. clearing checks 2. printing personal checks for customers 3. electronic payment processing 4. distributing coins and paper money to banks; I think it might be printing personal checks, just a guess, double check and edit.
Which of the following is not allowable in FHA loans?
- prepayment penalty clauses 2. adjustable-rate clauses 3. fixed-rate clauses 4. 30-year term clauses Not sure, double check. I think an adjustable rate clause, not sure though.
a fee that some lenders charge if you pay off all or part of your mortgage early.
prepayment penalty clause
allows a borrower to switch from an adjustable-rate mortgage to a fixed-rate mortgage, a change like this is usually allowed at the end of the first adjustment period, if the conversion clause exists for that particular loan.
adjustable-rate clause /// a conversion clause
a home loan with a fixed interest rate for the entire term of the loan
fixed-rate clause
most liquid portions of the money supply because it contains currency and assets that either are or can be quickly converted into cash.
M1
“near money” cannot be converted to currency as quickly as
M2
“near, near” money cannot be converted to currency as quickly.
M3
to expand funding for mortgages that are insured or guaranteed by other federal agencies. When these mortgages are bundled into securities, (blank) provides a full-faith-and-credit guarantee on these securities, thus lessening the risk for investors and broadening the market for the securities.
Ginnie Mae
All of the following are participants in the secondary mortgage market, except:
- Fannie Mae 2. Freddie Mac 3. Ginnie Mae 4. Sallie Mae I think its Sallie Mae, double check.
private student loans, credit cards, and saving accounts plus financial tools, resources and information - empowers people to do great things.
Sallie Mae
What is a mortgage product that is not a 30-year, fixed-rate mortgage?
- Traditional 2. Nontraditional 3. Conventional 4. Government-backed I dont know, taking a guess here, I think its Nontraditional, double check and edit.
Like the FHA, the Department of Veteran Affairs does not:
Make loans, the VA, much like the FHA, guarantees loans made by an APPROVED INSTITUTIONAL LENDER.
Which of the following activities is not associated with a mortgage company or mortgage banker?
- Originating loans 2. Selling loans 3. Servicing loans 4. Purchasing FHA loans
Mortgage companies and bankers perform all of these activities but they do not purchase loans from the FHA, these mortgage companies and bankers ARE THE LENDERS.
What is the primary purpose of a promissory note?
to serve as evidence of the debt
funds issued by a federal agency to a state agency or institution that are then transferred to other state agencies, units of local government, or other eligible groups per the award eligibility terms.
pass-through funding
the process in which certain types of assets are pooled so that they can be repackaged into interest-bearing securities. The interest and principal payments from the assets are passed through to the purchasers of the securities.
Securitization
any mortgage loan that is not insured or guaranteed by the government (such as under the FHA, VA, or USDA)
conventional loan
in a deed of trust, who holds the equitable title?
in the deed of trust, the borrower (trustor) holds equitable title while paying off the loan.
the right to obtain absolute ownership to property when legal title is held in another’s name.
Equitable title
Secondary financing includes
hard money loans from private lenders, swing loans, home equity loans (HEL), and home equity lines of credit (HELOC)
a financial institution that is legally allowed to accept deposits from consumers. The main types in the United States are commercial banks, thrifts, and credit unions.
a depository institution
Blank and Blank are not allowed in FHA loans. Any qualified resident of the United States may obtain an FHA loan as long as the property will be the borrowers principal residence and is located in the United States.
Alienation and prepayment penalty clauses
an agreement between a home buyer and a lender at the closing of a property. It states that the home buyer will repay the loan and that the mortgage lender will hold the legal title to the property until the loan is fully paid. A type of secured real estate transaction that some states use instead of mortgages.
deed of trust
occurs when property reverts to state ownership when an individual dies without a will and without heirs.
Escheat
refers to the power possessed by the state to appropriate property for public use. The owner of any appropriated land is entitled to reasonable compensation, usually defined as the fair market value of the property.
Eminent domain
can be held by two or more people. Making it a form of concurrent ownership as opposed to ownership in severalty (where a person owns a property on their own).
Joint tenancy
When there is no written agreement between the landlord and tenant, the tenancy is a _________. The tenancy may be ended by the unilateral decision of either party.
Tenancy at Will
A _________ specifies the conditions required for the tenant to stay beyond the term of the lease. Usually it states the conditions and terms of the lease that apply as well as any increase in rent during this holdover period.
Holdover clause
The term ________ refers to a contractual agreement where a lessee pays a portion or all of the taxes, insurance fees, and maintenance costs for a property in addition to rent. ________ are commonly used in commercial real estate.
Net lease
_______ are usually net leases with escalation clauses or percentage leases.
Commercial leases
What legislation did Texas adopt to ensure equality and fairness in the landlord-tenant relationship?
The landlord and tenant act
A __________ means the rights to property revert back to the owner following the expiration of a lease.
Reversionary right
Landlords must give prospective tenants of buildings built before 1978 a(n):
Landlords must give prospective tenants of buildings built before 1978 an EPA-approved information pamphlet on identifying and controlling lead-based paint hazards. The booklet is called Protect Your Family from Lead in your Home.
A landlord must provide a prospective tenant with an itemized receipt for:
A non-refundable fee is a fee that will not be returned to the tenant under any circumstance, and this fee cannot legally be called a deposit. The landlord must provide the prospective resident with an itemized receipt for non-refundable fees.
A __________ requires the tenant to reimburse the landlord for a portion of the basic property expenses, such as maintenance, taxes, and insurance.
Net lease
Which of the following is the most common type of lease agreement?
Perhaps the most common type of lease agreement for residential property and storage units is the periodic tenancy. It is also known as a month-to-month agreement or a tenancy from month-to-month, week-to-week, or period-to-period.
Texas law gives a landlord a __________ on a tenant’s non-exempt property for unpaid rent that is due.
Lien
What does a lease need in order for it to be enforceable?
It needs to be dated and include legal consideration or payment.
the leading causes of eviction?
The three leading causes for eviction are: (1) nonpayment of rent, (2) holding over after the lease term has expired, and (3) breaking other terms of the lease agreement.
Texas law states that leases that last longer than a year must be:
Written
A __________ is an on-site leasing office that has color brochures, direct-mail flyers, relief maps of the community, and floor plans.
Rental center
What does a lease need in order for it to be enforceable?
It needs to be dated and include legal consideration or payment
a method of deferring federal income tax liability. It allows an investor to exchange a property for a like-kind property, and defer the gain until the property is sold. A like-kind property is property held for productive use in trade or business or for investment purposes.
1031 Exchange, sometimes called a tax-free exchange
Although, there are many types of investors, they can be classified in three broad categories:
users, pure investors, and developers.
A real estate investment trust (REIT) must pay out at least _____ of its income in dividends to unitholders.
To qualify as a REIT with the IRS, a real estate company must pay out at least 90% of its income in dividends to unitholders.
How many linear feet are in 1 mile?
5280 feet
Sales agent Sally needs to convert square feet to square yards. How should she make the calculation?
To convert square feet to square yards, divide the number of square feet by 9.
How are numbers with decimals subtracted?
By lining up the decimals vertically
All of the following are prorated,
Property taxes, interest on assumed loans, hazard insurance, and rents usually are prorated.
How many square feet in an acre
43560 sq ft
Depth =
Area / width
The process of making a fair distribution of expenses, through settlement, at the close of the sale is called:
Proration
What does the acronym “PITI” stand for?
Principal, interest, taxes, and insurance
