Units 1 - 5 Flashcards
A 45-year-old bachelor has lived in his present home for three years and is planning to sell it. The Taxpayer Relief Act of 1997 provides that he
Answer Choices:
A. Will be exempt from capital gains tax on profit up to $250,000
B. Will be exempt from capital gains tax on profit up to $500,000
C. Is not exempt from capital gains because he has not lived there for five years
D. Is not exempt from capital gains because he must be at least 55 years old
Correct Answer: A. Will be exempt from capital gains tax on profit up to $250,000
Which of the following is NOT a primary market financial institution?
Answer Choices:
A. Commercial bank
B. Savings association
C. Credit union
D. Ginnie Mae
Correct Answer: D. Ginnie Mae
All of the following government programs have the potential to lower a homeowner’s monthly mortgage payment EXCEPT
Answer Choices:
A. The Making Home Affordable program
B. The Home Affordable Modification Program
C. The Dodd-Frank Act
D. The Home Affordable Refinance Program
Correct Answer: C. The Dodd-Frank Act
Long-term cycles in real estate generally run from
Answer Choices:
A. 3 to 5 years
B. 5 to 10 years
C. 10 to 15 years
D. 15 to 20 years
Correct Answer: C. 10 to 15 years
Which of the following would have the LEAST effect on local real estate values?
Answer Choices:
A. Change in zoning to permit higher density
B. New legislation requiring environmental impact studies
C. Decline in the New York Stock Exchange
D. Stricter building codes in that area
Correct Answer: C. Decline in the New York Stock Exchange
All of the following may be used as collateral for a loan EXCEPT
Answer Choices:
A. Tenant’s leasehold rights
B. Lender’s receivable mortgage rights
C. Farmer’s unharvested crops
D. Unsecured personal property
Correct Answer: D. Unsecured personal property
Double-digit interest rates in the 1980s led to all of the following EXCEPT
Answer Choices:
A. Eliminating many participants in the real estate market
B. Creating broad range of creative financing tools
C. Encouraging participation financing between lenders and borrowers
D. Reducing capital gains tax rate
Correct Answer: D. Reducing capital gains tax rate
As a result of the tightened required qualifying standards because of the financial crisis, the predominant lender for low-income mortgage loans is
Answer Choices:
A. Fannie Mae
B. Freddie Mac
C. The Federal Housing Administration (FHA)
D. The Department of Veterans Affairs (VA)
Correct Answer: C. The Federal Housing Administration (FHA)
All of the following are factors that affect the cycles of real estate EXCEPT
Answer Choices:
A. The supply of money for financing
B. Population growth
C. Changes in federal income tax structure
D. The gross national debt
Correct Answer: D. The gross national debt
The focus of lenders shifted in the 1990s to
Answer Choices:
A. Jumbo loans
B. Adjustable-rate mortgages
C. Refinancing existing mortgage loans
D. Variable-payment loans
Correct Answer: C. Refinancing existing mortgage loans
The responsibility for supervising the thrifts has been transferred from the Office of Thrift Supervision to the
Answer Choices:
A. Office of the Comptroller of the Currency (OCC)
B. Federal Deposit Insurance Corporation (FDIC)
C. Federal Home Loan Banks (FHLBs)
D. Federal Housing Administration (FHA)
Correct Answer: A. Office of the Comptroller of the Currency (OCC)
Money can be viewed as all of the following EXCEPT
Answer Choices:
A. A medium of exchange
B. Storehouse of purchasing power
C. Standard of value
D. Measure of personal worth
Correct Answer: D. Measure of personal worth
The purchase and sale of government securities traded on the open market by the Fed is regulated by the
Answer Choices:
A. Office of Thrift Supervision
B. Federal Open-Market Committee (FOMC)
C. Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA)
D. U.S. Treasury Department
Correct Answer: B. Federal Open-Market Committee (FOMC)
A man has an account with a national commercial bank. His account of $98,000 is insured by what insurance fund?
Answer Choices:
A. Federal Deposit Insurance Corporation (FDIC)
B. Fannie Mae
C. Ginnie Mae
D. The Fed
Correct Answer: A. Federal Deposit Insurance Corporation (FDIC)
Nationally chartered commercial banks must join the Federal Reserve System and are required to do all of the following EXCEPT
Answer Choices:
A. Purchase capital stock in a Federal Reserve district bank
B. Maintain required monetary reserves
C. Clear all checks through the system
D. Sell mortgage-backed securities to the Fed
Correct Answer: D. Sell mortgage-backed securities to the Fed
Member banks often borrow on a short-term basis from each other without requiring collateral. The interest charged is called the
Answer Choices:
A. Prime rate
B. Discount rate
C. Federal funds rate
D. Open-market rate
Correct Answer: C. Federal funds rate
The Federal Home Loan Bank System was patterned after the
Answer Choices:
A. Federal Reserve System
B. Farm Credit System
C. Office of Thrift Supervision
D. Federal Deposit Insurance Corporation (FDIC)
Correct Answer: A. Federal Reserve System
Which of the following statements would NOT trigger Regulation Z, requiring full disclosure of all aspects of the financing involved?
Answer Choices:
A. 3 percent down payment
B. 7 percent, no points
C. Low down payment requirements
D. Monthly payments of only $600
Correct Answer: C. Low down payment requirements
The federal agencies empowered to control the supply and cost of money include all of the following EXCEPT
Answer Choices:
A. The Federal Reserve
B. The Department of the Treasury
C. The Office of Thrift Supervision
D. The Federal Home Loan Bank
Correct Answer: C. The Office of Thrift Supervision
Basic functions of the Department of the Treasury include all of the following EXCEPT
Answer Choices:
A. Collecting income tax
B. Paying the country’s bills
C. Insuring depositor’s accounts
D. Prosecuting tax evaders
Correct Answer: C. Insuring depositor’s accounts
A lender who refused a loan to an applicant because part of her income was derived from a public assistance program would be in violation of the
Answer Choices:
A. Fair Housing Act
B. Real Estate Settlement Procedures Act
C. Equal Credit Opportunity Act
D. Home Mortgage Disclosure Act
Correct Answer: C. Equal Credit Opportunity Act
A small city in Oklahoma might apply for funding from the U.S. Department of Housing and Urban Development (HUD) for all of the following EXCEPT
Answer Choices:
A. The demolition of uninhabitable buildings in a slum-clearance project
B. The acquisition and rehabilitation of an apartment building to be used for public housing
C. A Community Development Block Grant program to improve water facilities to a depressed area
D. A major renovation of City Hall
Correct Answer: D. A major renovation of City Hall
All mortgage originators must report information relating to the income level, racial characteristics, and gender of mortgage applicants, according to the
Answer Choices:
A. Real Estate Settlement and Procedures Act
B. Equal Credit Opportunity Act
C. Community Reinvestment Act
D. Home Mortgage Disclosure Act
Correct Answer: D. Home Mortgage Disclosure Act
A major slum-clearance and rehabilitation project that is projected to repay the costs of redevelopment through increased property values for the area would generally be financed by
Answer Choices:
A. Industrial revenue bonds
B. General obligation bonds
C. Tax increment financing
D. Mortgage revenue bonds
Correct Answer: C. Tax increment financing
A developer in Mississippi planning to market residential building lots throughout the mid-Atlantic states must submit which of the following to the buyer
Answer Choices:
A. Good-faith estimate of all costs involved
B. Statement of record describing plans for future services to be provided
C. Complete property report
D. Truth-in-lending statement
Correct Answer: C. Complete property report
Because of the cyclical requirements of agricultural lending, consideration must be given to
Answer Choices:
A. The amount of acreage being farmed
B. The value of buildings and livestock
C. Allowing farmer borrowers to pay when they can
D. The cost of seed and fertilizer
Correct Answer: C. Allowing farmer borrowers to pay when they can
At the time of loan application, RESPA requires a lender to provide a prospective borrower with all of the following EXCEPT
Answer Choices:
A. A special booklet with information on real estate settlement services
B. A good-faith estimate of settlement costs, within three days
C. An annual escrow loan statement
D. A mortgage servicing disclosure statement
Correct Answer: C. An annual escrow loan statement
Which of the following is NOT one of the primary activities of HUD
Answer Choices:
A. Overseeing Ginnie Mae
B. Enforcing the Fair Housing Act
C. Regulating thrifts
D. Managing the Indian Housing Act
Correct Answer: C. Regulating thrifts
The Office of Federal Housing Finance Agency (FHFA) is responsible for regulating
Answer Choices:
A. HUD
B. Fannie Mae and Freddie Mac
C. Housing Choice Voucher Program
D. Real Estate Settlement Procedures Act (RESPA) regulations
Correct Answer: B. Fannie Mae and Freddie Mac
Exemptions to the RESPA referral restrictions include all of the following EXCEPT
Answer Choices:
A. Promotional and educational activities
B. City-wide marketing programs
C. Payment for goods provided or service performed
D. Affiliated business arrangements
Correct Answer: B. City-wide marketing programs
When Fannie Mae was reorganized in 1954 to include financing by private investors, mortgage loans could be purchased at
Answer Choices:
A. Par
B. A premium
C. A discount
D. Face value
Correct Answer: C. A discount
Which of the following is NOT one of the national credit repositories most used today to obtain credit scores for prospective borrowers?
Answer Choices:
A. FICO
B. Experian
C. Equifax
D. TransUnion
Correct Answer: A. FICO
Freddie Mac is currently
Answer Choices:
A. A government agency
B. Under conservatorship
C. A subsidiary of the Federal Home Loan Bank System
D. A company under control of the Federal Home Loan Bank Board
Correct Answer: B. Under conservatorship
The Federal Housing Finance Agency (FHFA) regulates all of the following EXCEPT
Answer Choices:
A. U.S. Department of Housing and Urban Development (HUD)
B. Fannie Mae
C. Freddie Mac
D. Federal Home Loan Banks
Correct Answer: A. U.S. Department of Housing and Urban Development (HUD)
Which of the following is NOT a well-paired match?
Answer Choices:
A. Fannie Mae and Freddie Mac
B. Federal Housing Administration (FHA) and Department of Veterans Affairs (VA)
C. HUD and Treasury
D. Desktop Underwriter® and Loan Prospector®
Correct Answer: C. HUD and Treasury
A borrower has a credit score of 680. The largest percentage of his credit score is based on
Answer Choices:
A. His payment history
B. The amount he owes
C. The length of his credit history
D. The types of credit cards he uses
Correct Answer: A. His payment history
A jumbo loan is a mortgage loan that
Answer Choices:
A. Covers multiple properties
B. Exceeds $500,000
C. Exceeds the FHA maximum loan limit
D. Exceeds the current Fannie/Freddie maximum loan limit
Correct Answer: D. Exceeds the current Fannie/Freddie maximum loan limit
A package of agricultural loans would MOST likely be purchased by
Answer Choices:
A. Fannie Mae
B. Freddie Mac
C. Farmer Mac
D. Federal Home Loan Bank
Correct Answer: C. Farmer Mac
All of the following are related in some way to Ginnie Mae EXCEPT
Answer Choices:
A. Platinum securities
B. Collateralized mortgage obligation
C. Qualified residential mortgages
D. Pass-through certificates
Correct Answer: C. Qualified residential mortgages
Freddie Mac’s electronic underwriting system, Loan Prospector®, provides the lender with all of the following EXCEPT
Answer Choices:
A. An evaluation of the borrower’s creditworthiness
B. The estimated value of the property
C. An estimate of appropriate pricing depending on the risk
D. Consideration of compensating factors
Correct Answer: D. Consideration of compensating factors
A bank’s trust department would probably agree to provide any of the following services EXCEPT
Answer Choices:
A. Act as executor of a widow’s estate
B. Serve as a guardian for a six-year-old
C. Manage a man’s small individual retirement account (IRA) account
D. Act as trustee for the bond portfolio of the largest business in town
Correct Answer: C. Manage a man’s small individual retirement account (IRA) account
A new federally chartered savings bank will come under the regulation of the
Answer Choices:
A. Federal Home Loan Bank Board
B. Office of the Comptroller of the Currency
C. Federal Reserve System
D. FDIC
Correct Answer: B. Office of the Comptroller of the Currency
A young man joins his local teacher’s credit union. Membership in the credit union will be open to all of the following EXCEPT
Answer Choices:
A. His live-in nanny
B. His son-in-law
C. His grandmother
D. His wife’s boss at the FHA office where she works
Correct Answer: D. His wife’s boss at the FHA office where she works
All bank accounts are insured by the Federal Deposit Insurance Corporation (FDIC) to the amount of
Answer Choices:
A. $50,000
B. $100,000
C. $200,000
D. $250,000
Correct Answer: D. $250,000
The SAFE Act was passed to provide protection for the public from
Answer Choices:
A. Investment trusts
B. Mortgage loan originators
C. Municipal bond brokers
D. Real estate brokers
Correct Answer: B. Mortgage loan originators
Historically, pension fund monies have been invested in
Answer Choices:
A. Home mortgage loans
B. Participation financing of office buildings
C. Government securities and stocks and bonds
D. Mortgage-backed securities
Correct Answer: C. Government securities and stocks and bonds
Savings associations, or thrifts, were first regulated by the
Answer Choices:
A. Federal Reserve
B. Federal Home Loan Bank System
C. Federal National Mortgage Association
D. Federal Deposit Insurance Corporation
Correct Answer: B. Federal Home Loan Bank System
Under the FY2009 Omnibus Appropriations Bill, commercial banks are NOT allowed to perform which of the following services for their customers
Answer Choices:
A. Market annuities
B. Sell title insurance
C. Sell stocks and bonds
D. Act as real estate brokers
Correct Answer: D. Act as real estate brokers
Life insurance and casualty insurance companies are regulated by
Answer Choices:
A. The Federal Reserve
B. The Home Loan Bank Board
C. State laws and regulations
D. Federal laws and regulations
Correct Answer: C. State laws and regulations
Each individual account on deposit with a savings association is insured by the
Answer Choices:
A. Federal Housing Administration (FHA)
B. Office of the Comptroller of the Currency (OCC)
C. Federal Home Loan Bank (FHLB)
D. FDIC
Correct Answer: D. FDIC
