Question 1

After the recent financial crisis Fannie Mae and Freddie Mac were put into conservatorship and the new government agency that has responsibility for their oversight is:&#10;A) Federal Reserve Bank&#10;B) The Office of Federal Housing Enterprise Oversight&#10;C) Federal Housing Finance Agency&#10;D) Department of Housing and Urban Development

Accepted Answer

The Federal Housing Finance Agency (FHFA) was established in 2008 under the Housing and Economic Recovery Act following the financial crisis of 2008. It serves as the new government agency responsible for the oversight of Fannie Mae and Freddie Mac, which were put into conservatorship at that time. The FHFA is an independent regulatory agency that supervises and regulates Fannie Mae, Freddie Mac, and the Federal Home Loan Banks. Therefore, the best choice is C.

Question 2

As used in mortgage lending, the term &#34;collateral&#34; means&#10;A) Something of value pledged as security for a loan&#10;B) The purpose for which a mortgage loan is made&#10;C) A valuable asset&#10;D) Associated with but of secondary importance.

Accepted Answer

Collateral in mortgage lending refers to something of value that is pledged by the borrower to the lender as security for a loan. The collateral is used by the lender to ensure that in case the borrower defaults on the loan, the lender can recover its investment by selling the pledged asset. Common examples of collateral used in mortgage lending include real estate, vehicles, and investments.

Question 3

The need to have a borrower sign both a mortgage and a promissory note is necessary as these two documents are:&#10;A) Both collateral instruments&#10;B) Considered interlinked documents&#10;C) Must both be recorded to have a perfected interest&#10;D) None of the above

Accepted Answer

The mortgage and promissory note are considered interlinked documents, with the mortgage providing the security interest in the property and the promissory note outlining the borrower's promise to repay the loan. While both documents relate to the loan, they serve different purposes and are not considered collateral instruments. It is not necessary for both to be recorded to have a perfected interest, as the mortgage is typically recorded to establish priority over other creditors.

Question 4

The allodial system of land ownership that forms the basis of ownership in the United States is best described as the&#10;A) Right to occupy and use land owned by a superior&#10;B) Right of a democratic government to control how land is used&#10;C) Ownership of land is free and absolute subject only to governmental and voluntary restrictions&#10;D) Origin and development of community property laws.

Accepted Answer

The allodial system of land ownership in the United States means that individuals can privately own land and have free and absolute control over their property, subject only to governmental and voluntary restrictions. This is in contrast to other systems where ownership may be tied to a superior, such as feudalism, or where the government has greater control over land usage. Community property laws are a separate legal concept related to the ownership of assets acquired by spouses during the course of a marriage.

Question 5

When a lender who's primary aim is to pool mortgages to resell or commit them to a Mortgage Back Security and then service the mortgages uses a funding vehicle called a:&#10;A) REMIC&#10;B) Mortgage Conduit&#10;C) Ginnie Mae&#10;D) Warehouse Line

Accepted Answer

A mortgage conduit is a funding vehicle used by mortgage lenders who pool mortgages for resale or packaging as mortgage-backed securities. The goal of a mortgage conduit is to allow lenders to free up their own funds for additional lending while still earning revenue from the mortgage payments. REMIC (real estate mortgage investment conduit) is a regulatory regime for the pooling of mortgage loans and issuance of mortgage-backed securities, while Ginnie Mae is a government agency that guarantees mortgage-backed securities issued by federally-sponsored entities. A warehouse line is a type of credit facility that allows a lender to borrow funds from a financial institution to fund a mortgage loan before the loan is sold to a permanent investor. While all of these terms are related to mortgage financing, only mortgage conduit accurately describes the funding vehicle described in the prompt.

Question 6

A &#34;negotiable instrument&#34; is one that can be&#10;A) Adjusted by negotiation between parties involved&#10;B) Sold to others&#10;C) Changed only at periodic intervals&#10;D) An agreement to negotiate with another

Accepted Answer

Negotiable instruments, such as checks, promissory notes, and bills of exchange, can be transferred from one party to another. When a negotiable instrument is transferred, the holder in due course acquires the right to collect the amount due.

Question 7

A word that has the legal meaning of a borrower remaining in possession of property pledged as security for a loan is&#10;A) Possession&#10;B) Collateral&#10;C) Security&#10;D) Hypothecate

Accepted Answer

The word that has the legal meaning of a borrower remaining in possession of property pledged as security for a loan is "hypothecate". In this case, the borrower pledges the property as collateral for the loan, but retains possession of it. Hypothecation is often used in mortgage loans, where the property serves as security for the loan, but the borrower continues to live in and use the property.

Question 8

Of the following, the more precise description of a share of stock is&#10;A) An indication of an obligation&#10;B) A form of unsecured debt&#10;C) An evidence of ownership&#10;D) A kind of security

Accepted Answer

A share of stock is an evidence of ownership in a corporation, representing a portion of the company's equity. It does not indicate an obligation, form of debt, or type of security in the same way.

Question 9

Of the following, the more precise description of a share of stock is:&#10;A) An indication of an obligation.&#10;B) A form of unsecured debt.&#10;C) An evidence of ownership&#10;D) A kind of security.

Accepted Answer

A share of stock represents ownership in a company, giving the shareholder certain rights and privileges, such as the right to vote at shareholder meetings and receive dividends. It is not an indication of an obligation or a form of debt, but rather a type of security that represents ownership.

Question 10

In mortgage lending, the best description of a loan discount is&#10;A) A cost of borrowed money&#10;B) A lower price for a mortgage loan&#10;C) A method of lowering an interest rate&#10;D) An extra fee for services rendered

Accepted Answer

The answer of In mortgage lending, the best description of...

Question 11

To create a legally valid security interest, a business must ensure that the interest is:&#10;A) Perfected&#10;B) Debated&#10;C) United&#10;D) Detached&#10;E) Exposed

Accepted Answer

The answer of To create a legally valid security interest,...

Question 12

Which of the following is most descriptive of the primary market?&#10;A) The loan origination market&#10;B) Trading in second mortgages&#10;C) The buying and selling of mortgage loans&#10;D) The market created by Fannie Mae and Freddie Mac

Accepted Answer

The answer of Which of the following is most descriptive...

Question 13

Bonds are sold in the financial market by corporations for the purpose of&#10;A) raising equity cash&#10;B) Borrowing money&#10;C) Providing additional brokerage fees&#10;D) Generating greater income

Accepted Answer

The answer of Bonds are sold in the financial market...

Question 14

As used in business, a &#34;security&#34; is&#10;A) A safety measure&#10;B) A blanket&#10;C) A certificate representing an investment&#10;D) A limited form of protection

Accepted Answer

The answer of As used in business, a &#34;security&#34; is&#10;A)...

Deck 1: History and Background