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Real Estate Finance > Units 1 - 5 > Flashcards

Units 1 - 5 Flashcards

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1
Q

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

A

Correct Answer: A. Will be exempt from capital gains tax on profit up to $250,000

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2
Q

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

A

Correct Answer: D. Ginnie Mae

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3
Q

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

A

Correct Answer: C. The Dodd-Frank Act

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4
Q

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

A

Correct Answer: C. 10 to 15 years

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5
Q

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

A

Correct Answer: C. Decline in the New York Stock Exchange

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6
Q

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

A

Correct Answer: D. Unsecured personal property

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7
Q

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

A

Correct Answer: D. Reducing capital gains tax rate

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8
Q

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)

A

Correct Answer: C. The Federal Housing Administration (FHA)

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9
Q

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

A

Correct Answer: D. The gross national debt

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10
Q

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

A

Correct Answer: C. Refinancing existing mortgage loans

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11
Q

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)

A

Correct Answer: A. Office of the Comptroller of the Currency (OCC)

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12
Q

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

A

Correct Answer: D. Measure of personal worth

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13
Q

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

A

Correct Answer: B. Federal Open-Market Committee (FOMC)

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14
Q

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

A

Correct Answer: A. Federal Deposit Insurance Corporation (FDIC)

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15
Q

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

A

Correct Answer: D. Sell mortgage-backed securities to the Fed

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16
Q

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

A

Correct Answer: C. Federal funds rate

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17
Q

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)

A

Correct Answer: A. Federal Reserve System

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18
Q

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

A

Correct Answer: C. Low down payment requirements

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19
Q

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

A

Correct Answer: C. The Office of Thrift Supervision

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20
Q

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

A

Correct Answer: C. Insuring depositor’s accounts

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20
Q

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

A

Correct Answer: C. Equal Credit Opportunity Act

21
Q

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

A

Correct Answer: D. A major renovation of City Hall

21
Q

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

A

Correct Answer: D. Home Mortgage Disclosure Act

21
Q

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

A

Correct Answer: C. Tax increment financing

22
Q

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

A

Correct Answer: C. Complete property report

23
Q

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

A

Correct Answer: C. Allowing farmer borrowers to pay when they can

24
Q

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

A

Correct Answer: C. An annual escrow loan statement

25
Q

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

A

Correct Answer: C. Regulating thrifts

25
Q

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

A

Correct Answer: B. Fannie Mae and Freddie Mac

26
Q

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

A

Correct Answer: B. City-wide marketing programs

27
Q

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

A

Correct Answer: C. A discount

27
Q

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

A

Correct Answer: A. FICO

28
Q

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

A

Correct Answer: B. Under conservatorship

29
Q

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

A

Correct Answer: A. U.S. Department of Housing and Urban Development (HUD)

30
Q

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®

A

Correct Answer: C. HUD and Treasury

31
Q

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

A

Correct Answer: A. His payment history

32
Q

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

A

Correct Answer: D. Exceeds the current Fannie/Freddie maximum loan limit

32
Q

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

A

Correct Answer: C. Farmer Mac

33
Q

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

A

Correct Answer: C. Qualified residential mortgages

34
Q

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

A

Correct Answer: D. Consideration of compensating factors

35
Q

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

A

Correct Answer: C. Manage a man’s small individual retirement account (IRA) account

36
Q

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

A

Correct Answer: B. Office of the Comptroller of the Currency

37
Q

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

A

Correct Answer: D. His wife’s boss at the FHA office where she works

38
Q

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

A

Correct Answer: D. $250,000

39
Q

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

A

Correct Answer: B. Mortgage loan originators

40
Q

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

A

Correct Answer: C. Government securities and stocks and bonds

40
Q

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

A

Correct Answer: B. Federal Home Loan Bank System

41
Q

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

A

Correct Answer: D. Act as real estate brokers

42
Q

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

A

Correct Answer: C. State laws and regulations

43
Q

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

A

Correct Answer: D. FDIC

Real Estate Finance (1 decks)

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