Deck 8: Part I: Real Estate Lenders

Question 1

A type of financing instrument in which the owner (vendor) retains the legal title until the buyer (vendee) fulfills the terms of the purchase contract:
(a) lease contract
(b) installment sales contract
(c) wraparound contract
(d) junior lien contract

Answer 1

B

Question 2

The three major credit reporting agencies are:
(a) Experian, TRW, and Equifax.
(b) Experian, Equifax, and TransUnion.
(c) TRW, Equifax, and FICO.
(d) Equifax, Experian, and Franklin.

Answer 2

B

Question 3

In an installment sales contract, title to the property is held by the
(a) grantee
(b) vendee
(c) trustee
(d) lender

Answer 3

D

Question 4

An enforceable due-on-sale clause is correctly called a/an:
(a) acceleration clause
(b) alienation clause
(c) wraparound clause
(d) prepay clause

Question 5

The major source for junior loans (2nds, 3rds, etc.) is:
(a) FHA
(b) Cal-Vet
(c) private parties
(d) savings and loan associations

Question 6

The CalHFA program:
(a) is a secondary mortgage market
(b) is designed to help first time homebuyers
(c) is used as a last resort by lenders to make loans to borrowers with less than perfect credit
(d) charges the least amount of money in closing costs as compared to any other program

Question 7

Under the Real Property Loan Law, the maximum amount a borrower can pay for closing costs, excluding commission, regardless of the size of the loan, is:
(a) 5%
(b) $390
(c) $700
(d) $900

Question 8

A mortgage broker negotiated a loan for $10,000, secured by a second trust deed to be paid in 30 monthly payments. The maximum commission the broker is permitted to charge is:
(a) $195
(b) $390
(c) $700
(d) $1,000

Question 9

A straight note differs from an installment note
(a) a straight note contains no interest payment
(b) an installment note will contain a reduction in principal
(c) a straight note will contain a reduction in principal
(d) an installment note is "interest only"

Question 10

The ultimate source of all loan funds is:
(a) taxes
(b) government spending
(c) transfer payments
(d) savings

Question 11

The maximum FHA insured loan under the 203b program for a condo with an acquisition cost of $150,000 is:
(a) $150,000
(b) $145,725
(c) $144,750
(d) $144,275

Question 12

Under the Trustee's Sale procedure, after a Notice of Default has been recorded, a borrower has how long to reinstate by making up past payments, penalties, late charges, and trustee expenses?
(a) 5 days prior to trustee's sale date
(b) 90 days
(c) 3 months
(d) 1 year

Question 13

Traditionally, the total monthly expenses should not exceed____ to ____of the borrower's gross monthly income.
(a) 33%-38%
(b) 33%-36%
(c) 28%-30%
(d) 25%-30%

Question 14

Sylvia wants to purchase a home. She is recently divorced and is receiving alimony for the next ten years in addition to child support for her three year old son. She has been in her present job for five years. What sources of income can she include in her loan application?
(a) Her salary from her job and alimony.
(b) Her salary from her job only.
(c) Her salary from her job and child support.
(d) Her salary from her job, alimony, and child support.

Question 15

Real Estate Investment Trusts (also known as REIT):
(a) were created to encourage small investors to invest in real estate transactions with other small investors
(b) operate in the second trust deed market
(c) are usually a two year loan
(d) invest in savings banks

Question 16

Which of the following is an institutional lender?
(a) credit union
(b) mortgage company
(c) life insurance company
(d) pension fund

Question 17

A real estate promissory note that reads "$100,000 principal payable interest only monthly at a rate of 10%" is what type of promissory note?
(a) straight
(b) installment
(c) principal and interest
(d) accommodation

Question 18

A Seller's Financial Disclosure Statement must be signed by the:
(a) buyer
(b) seller
(c) broker
(d) all of the above

Question 19

A real estate promissory note reads "$887.50 per month for 239 payments, then a final monthly payment of $3,011.19." This is an example of a/an:
(a) alienation payment
(b) prepayment
(c) balloon payment
(d) amortized payment

Question 20

In a normal sale using both a grant deed and a trust deed (deed of trust), the buyer is the:
(a) grantor and trustor
(b) grantor and trustee
(c) grantee and trustee
(d) grantee and trustor

Question 21

A loan made by a lender who intends to keep the loan until paid:
(a) conforming loan
(b) jumbo loan
(c) portfolio loan
(d) domestic loan

Question 22

For qualifying purposes, monthly housing payments include:
(a) principal payments
(b) principal and interest payments
(c) principal, interest, taxes, and insurance
(d) principal, interest, taxes, insurance, homeowner dues, and PMI, if any

Question 23

Insurance companies are one of the major sources for conventional loans. Insurance companies:
(a) generally do not use the services of a loan correspondent
(b) restrict their loans to the immediate area of their home office
(c) loan funds primarily on large commercial properties
(d) have only a minor portion of their money in mortgages

Question 24

The term impound most nearly means:
(a) attachments
(b) points
(c) penalties
(d) reserves

Question 25

Which organization requires a CRV appraisal before approving a loan?
(a) California Department of Veteran's Affairs
(b) Federal Housing Administration
(c) U. S. Department of Veterans Affairs
(d) Federal National Mortgage Association

Question 26

Who does not lend their money, but instead earns a fee for bringing a borrower and lender together?
(a) mortgage banker
(b) mortgage broker
(c) mortgage consultant
(d) mortgage investor

Question 27

Which of the following best defines a purchase money mortgage?
(a) a mortgage providing for additional advances to the mortgagor without the necessity of writing a new mortgage
(b) a single mortgage
(c) a mortgage that includes chattels
(d) a mortgage used to acquire a property

Question 28

Of the following government-backed loans, which usually has the lowest interest rate?
(a) FHA
(b) Cal-Vet
(c) Fannie Mae
(d) VA

Question 29

When a borrower pays mortgage insurance on an FHA loan, this type of insurance:
(a) protects the lender against a shortage in the event of a default
(b) is an expense that is borne entirely by the lender
(c) pays the borrower the loan balance in the event of a fire loss
(d) prevents foreclosure in the event of the trustor's death

Question 30

For gross income purposes, most lenders want the borrower to have at least a:
(a) 1 year work history
(b) 2 year work history
(c) 3 year work history
(d) 4 year work history

Question 31

Which program has the seller deed title to the government?
(a) VA
(b) Cal-Vet
(c) FHA
(d) FNMA

Question 32

Private mortgage insurance (PMI):
(a) makes the payments if the borrower gets disabled
(b) is paid for by the lender
(c) pays the loan off if the borrower dies
(d) insures the lender for the top portion of the loan

Question 33

A secondary mortgage market is where:
(a) existing lenders sell to other lenders and investors
(b) a seller carries a junior trust deed
(c) the supply of funds available for real estate loans is decreased
(d) the Federal Reserve tightens mortgage interest rates

Question 34

A person who buys a note in good faith and obtains superior rights:
(a) negotiable holder
(b) investor holder
(c) holder in due course
(d) holder in present

Question 35

For an REIT to avoid double taxation, it must distribute what percentage of its income each year to the shareholders/investors?
(a) 85%
(b) 90%
(c) 95%
(d) 100%

Question 36

Which of the following are major types of California lenders:
(a) Commercial banks
(b) Savings banks.
(c) Life insurance companies
(d) all of the above.

Question 37

Which of the following types of loans are made only to individuals who are intending to occupy the property as a personal residence?
(a) VA
(b) conventional
(c) purchase money
(d) jumbo

Question 38

The VA will guarantee loans on the following properties:
(a) mobile homes
(b) townhomes
(c) both a and b
(d) none of the above

Question 39

When the Department of Veteran's Affairs "guarantees" a loan, it does so in order to protect the:
(a) lender
(b) veteran
(c) seller
(d) assets of the Federal National Mortgage Association

Question 40

Fannie Mae is the:
(a) Federal Home Loan Mortgage Corporation
(b) Federal National Mortgage Association
(c) Government National Mortgage Association
(d) Federal Deposit Insurance Corporation