NY “Helping Clients Understand Real Estate Financing” Questions only (no answers)
Answers will be revealed with proper subscription

1) Mortgage brokers
a. act as intermediaries between borrowers and lenders.
b. originate and service mortgage loans.
c. provide funding for mortgage loans.
d. underwrite mortgage loans.
2) An example of a servicing activity for which a servicing fee may be charged is
a. collecting monthly mortgage payments.
b. increasing interest rates charged to borrowers.
c. purchasing mortgages on the secondary market.
d. setting reserve requirements and discount rates.

NY Helping Clients Understand Real Estate Financing

3) Mortgage bankers typically make loans in the
a. money market.
b. primary market.
c. secondary market.
d. stock market.
4) Which is NOT a function or benefit of the secondary markets?
a. moderate effects of local real estate cycles
b. provide lenders with money to make more loans
c. serve as a depository for consumer assets
d. standardize underwriting guidelines
5) To sell loans to Fannie Mae, the primary market lender must
a. allow the secondary agencies to audit its books.
b. be a federal government-affiliated lender.
c. be willing to suffer significant discounting losses.
d. follow the underwriting guidelines of the secondary market agencies.
6) The Federal Reserve is responsible for
a. determining levels of taxation.
b. regulating the flow of money.
c. regulating real estate markets.
d. setting the interest rate.
7) Which entity is responsible for determining the amount of assets banks must keep on hand as reserve funds, thereby affecting interest rates on mortgage loans?
a. Department of Housing and Urban Development (HUD)
b. Department of the Treasury
c. Federal Housing Administration (FHA)
d. Federal Reserve
8) Which act created the Federal Reserve System and established a federal charter for banks that permitted them to make real estate loans?
a. Federal Reserve Act of 1913
b. Financial Rights Act of 1964
c. Fair Financing Act of 1927
d. Federal Bank Charter Act of 1945
9) Large-scale disintermediation can ______ the mortgage money supply and cause interest rates to ______.
a. decrease / lower
b. decrease / rise
c. increase / lower
d. increase / rise
10) Which statement about Fannie Mae is FALSE?
a. It is a government-sponsored enterprise.
b. It is the largest secondary market participant.
c. It is a privately-held corporation.
d. It purchases FHA-insured loans.
11) With a trust deed, who is considered the beneficiary?
a. borrower
b. independent third party
c. lender
d. witness
12) What clause gives a lender the right to declare the entire loan balance due immediately because of borrower default or for violation of other contract provisions?
a. acceleration clause
b. alienation clause
c. defeasance clause
d. prepayment clause
13) The type of note that is tied to upward and downward movement of a selected index is called a(n) _____________ note.
a. adjustable rate
b. fully amortized installment
c. installment
d. straight
14) Under a land contract, the vendor (seller)
a. holds equitable title.
b. holds legal title as security.
c. holds a mortgage lien as security.
d. is a holder in due course.
15) Lisa took out a 30-year mortgage loan and paid it off in 20 years. After she made her last payment, the lender most likely
a. asked the trustee to return the deed to her.
b. issued her a satisfaction of lien.
c. returned the mortgage stamped “paid in full.”
d. tore up her promissory note.
16) Cathy has a mortgage with an alienation clause. She deeds her property to her brother John and he assumes her mortgage. The alienation clause does NOT give the lender the right to
a. call for the entire loan balance to be paid off at the transfer.
b. charge an assumption fee.
c. charge a higher rate of interest.
d. refuse to let Cathy give away the property.
17) Of these, which is a form of seller financing?
a. land contract
b. mortgage
c. promissory note
d. trust deed
18) Which document is evidence of debt that shows who owes what to whom?
a. deed
b. mortgage
c. promissory note
d. purchase agreement
19) If a borrower wants to pay more toward principal every month to reduce the total amount of interest he pays, what mortgage clause should he be MOST concerned about?
a. acceleration clause
b. alienation clause
c. prepayment clause
d. subordination clause
20) Which instrument is NOT a security instrument?
a. land contract
b. mortgage
c. promissory note
d. trust deed
21) The borrower who pledges property to a lender as collateral is referred to as the
a. beneficiary.
b. mortgagee.
c. mortgagor.
d. trustee.
22) When a trust deed is used as a security instrument, the borrower is referred to as the
a. beneficiary.
b. holder.
c. trustee.
d. trustor.
23) Geoff’s mortgage loan in the amount of $50,000 at a rate of 12% has been granted for a period of 30 years, with monthly payments due of $514.31. What is the principal portion of his first monthly payment?
a. $14.31
b. $17.14
c. $19.45
d. $61.72
24) Dave and Sara are having a new baby and are buying a home. Sara will be working full-time at her law firm for the next five years while Dave stays home with the baby and finishes school. In six years, both plan to be full-time at the law firm. Which type of mortgage would offer them the best monthly payment plan and tax advantages?
a. equity participation mortgage
b. graduated payment mortgage
c. reverse equity mortgage
d. shared appreciation mortgage
25) When a borrower may be given a monthly check instead of paying a monthly payment this is known as what type of mortgage?
a. blanket mortgage.
b. graduated payment mortgage.
c. interest-only mortgage.
d. reverse mortgage.
26) With an ARM, the index is added to the ______ to determine the _________.
a. APR / cost of funds
b. home value / amount borrowed
c. margin / interest rate charged
d. qualifying ratio / maximum monthly mortgage payment
27) Marian has an adjustable-rate mortgage loan that has an initial interest rate of 4%. The margin on the loan is 2%. If the index is 5% in the second year, what is the interest rate charged to Marian?
a. 4%
b. 5%
c. 6%
d. 7%
28) Which term BEST describes the type of loan where a seller finances all or part of the sale of property for the buyer?
a. conforming loan
b. purchase money mortgage
c. subject to financing
d. take-out loan
29) According to the terms of Paul’s adjustable-rate mortgage (ARM), his interest rate may be adjusted every year based on a standard index but his payment adjustment option guarantees his payments will remain the same for five years. If interest rates go up, the risk of this option for Paul is
a. minimized because everything remains the same for five years.
b. that default will likely occur.
c. that the margin may also be adjusted up and down.
d. that negative amortization may occur.
30) The balance on Lois’s loan is $42,000. Of her monthly payment, $297.50 is applied to interest. What is the interest rate on the loan?
a. 5.8%
b. 8.5%
c. 14.1%
d. 20.6%
31) When is a borrower more likely to consider an adjustable-rate mortgage (ARM)?
a. when interest rates are high
b. when interest rates are low
c. when they have a large down payment
d. when they have no down payment
32) When a loan balance for an adjustable-rate mortgage grows because of deferred interest when payments are not covering the interest portion of the loan, this is known as
a. full amortization.
b. margin.
c. mortgage payment cap.
d. negative amortization.
33) The term “takeout loan” is most closely associated with
a. adjustable-rate mortgages.
b. construction loans.
c. loan assumption.
d. seller financing.
34) A home developer has an existing mortgage for the purchase of land. If the new lender of a second construction mortgage wants to ensure that the second construction mortgage takes priority over the existing first mortgage, what type of clause must be contained in the construction mortgage?
a. acceleration clause
b. defeasance clause
c. power of sale clause
d. subordination agreement
35) HUD regulations prohibit __________________ in FHA loans.
a. fixed interest rates
b. full amortization
c. loan assumptions
d. prepayment penalties
36) Jared buys depressed properties and then sells them for an inflated price without making any improvements to the property. This type of scheme is known as
a. creative financing.
b. illegal flipping.
c. predatory lending.
d. straw borrowing.
37) Interest rates for Federal Housing Administration mortgages are determined by
a. Congress.
b. the FHA.
c. the government.
d. the market.
38) Please determine which statement about VA-guaranteed loans is FALSE.
a. A 3.5% minimum down payment is required.
b. The property must be owner-occupied.
c. There is no maximum loan amount.
d. There is no private mortgage insurance required.
39) XYZ Mortgages makes a loan to Jill, even though she is unlikely to be able to repay it, anticipating that they’ll eventually foreclose on the property and get Jill’s equity. This is an example of
a. predatory lending.
b. prime lending.
c. secondary lending.
d. subprime lending.
40) Each of these borrowers is getting a conventional loan. Who will NOT be required to pay PMI?
a. Kevin, who is borrowing $85,000 to purchase a house for $100,000
b. Lori, who is borrowing $150,000 to purchase a house for $200,000
c. Maurice, who is borrowing $205,000 to purchase a house for $250,000
d. Paul, who is borrowing $350,000 to purchase a house for $420,000.
41) Darlene is getting an FHA-insured loan to purchase a house. The purchase price is $278,000, and she’s paying the minimum 3.5% down. She will have to pay an upfront mortgage insurance premium of $4,865, which will be financed as part of the loan. What is the loan-to-value on this loan?
a. 93.5%
b. 94.75%
c. 96.5%
d. 98.25%
42) The seller accepts a buyer’s offer of $161,500 to buy a home. The appraisal of the property comes in at $163,000. If the lender requires an LTV of 80%, how much is the lender willing to lend?
a. $129,200
b. $130,400
c. $145,350
d. $146,700
43) What is the required down payment if the purchase price is $268,000 and the lender will approve a loan-to-value ratio of 80%?
a. $5,440
b. $8,000
c. $2,1440
d. $53,600
44) A buyer is paying $200,000 for a house. He makes a $30,000 down payment, gets a first mortgage for $160,000, and a second mortgage to cover the balance. What is his CLTV?
a. 80%
b. 85%
c. 90%
d. 95%
45) Private mortgage insurance is NOT required for a conventional loan when
a. a buyer makes less than a 20% down payment on a loan.
b. interest rates are high.
c. interest rates are low.
d. the loan has been paid down to 78% or less of the property’s current value.
46) Lester’s stable monthly income is $6,800. Every month, he pays a $485 car payment, a $200 revolving credit payment, and $1,500 in alimony. Using ratios of 31% and 43%, what is the maximum monthly mortgage payment he would qualify for on an FHA-insured mortgage loan?
a. $739
b. $1,763
c. $1,972
d. $2,108
47) Luther makes an offer of $105,000 on a house that was appraised for $112,000. If the seller accepts his offer, what is the minimum down payment to get an FHA-insured loan?
a. $3,675
b. $3,920
c. $5,250
d. $5,600
48) Which borrower is eligible for a VA-guaranteed loan?
a. a borrower whose income is at or below 80% of the county’s median income level
b. a borrower who cannot qualify for an FHA-insured loan
c. a remarried spouse of a veteran who died on active duty
d. a veteran who has been issued a certificate of eligibility
49) The qualifying requirements for an FHA-insured loan are a ____ housing expense ratio and a ____ debt-to-income ratio.
a. 28% / 36%
b. 31% / 41%
c. 31% / 43%
d. 36% / 43%
50) April used another appraiser’s license number and signature on an inflated appraisal report without that appraiser’s knowledge. This fraudulent scheme is known as a(n)
a. air loan.
b. illegal flip.
c. stolen identity.
d. straw buyer.
51) What is an advantage of a VA loan?
a. An appraisal is not required.
b. A down payment is not required.
c. Interest rates are at least 1/2% lower than on a conventional loan.
d. PMI is required only for loans exceeding 95% LTV.
52) The buyer has a $32,300 cash down payment. The sales price of the property is $161,500, so the buyer is looking at a mortgage of $129,200. If the property appraisal came in, instead, at $159,500, what would be the loan-to-value ratio (LTV) for this transaction?
a. 78%
b. 80%
c. 81%
d. 90%
53) A disadvantage of a 15-year loan versus a 30-year loan is that
a. the down payment required is usually lower.
b. the monthly payments are usually higher.
c. the total of repayments made over the life of the loan is lower.
d. there is a greater tax deduction for overall interest paid.
54) A buyer can make a maximum cash down payment of $30,000. The sale price of the property is $160,000, so the buyer wants to borrow $130,000. The property was appraised at $158,000, and the lender requires an 80% loan-to-value ratio. What is the loan-to-value ratio (LTV) for this transaction?
a. 78%
b. 80%
c. 82%
d. 90%
55) Which situation does NOT involve a straw buyer?
a. Ann revises her payroll documentation so she can qualify for a loan to buy her dream house.
b. Bob uses his twin brother’s Social Security number and credit information to apply for a loan.
c. Dave agrees to secure a loan under his name, even though only his sister with bad credit will live in the house.
d. Tina tells Rob, who is facing foreclosure, that if he deeds the property to her, she will refinance as her primary residence but he will be the sole occupant.
56) A primary factor in committing mortgage fraud schemes is
a. borrowing monies for the transactions.
b. collusion among parties.
c. financing loans through the primary market.
d. utilizing companies that manage bank repossessed properties.
57) Which situation is LEAST LIKELY to be an example of predatory lending?
a. ABC Mortgage Co. offers a high interest rate loan to Mark, who is coming out of bankruptcy.
b. Dave shows up at closing and finds that the lender has changed the terms of the loan.
c. Frank paid off his mortgage loan early with lottery winnings and the lender charged a $12,000 prepayment penalty.
d. Marge was 12 days late paying her mortgage and the lender raised the interest rate 1/4%.
58) What type of loan considers residual income in addition to total debt service ratio when qualifying borrowers?
a. conventional loan
b. Fannie Mae conforming loan
c. FHA-insured loan
d. VA-guaranteed loan
59) George, a creative mortgage broker, devised fictional borrowers and properties and then set up custodial accounts for escrow payments. He even went as far as to create an office setting with others posing as an employer and an appraiser to give the appearance of a legitimate business. George is knowingly committing a scam known as
a. an air loan.
b. flipping.
c. identity theft.
d. silent second.
60) Eric, the buyer of a property, borrowed the down payment from the seller through the issuance of a second mortgage, but the lender believed Eric invested his own money for the down payment. This fraudulent scheme is recognized as a(n)
a. air loan.
b. double loan.
c. second loan.
d. silent second.
61) The simple process of asking prospective clients general questions about income, expenses, and debts is known as
a. credit reporting.
b. pre-approval.
c. pre-qualification.
d. underwriting
62) How many business days after a borrower submits a loan application must the lender disclose the APR?
a. 2 days
b. 3 days
c. 5 days
d. 10 days
63) Which statement about pre-approval of a buyer is TRUE?
a. Pre-approval can improve a buyer’s negotiating position.
b. Pre-approval is not binding on the lender.
c. Pre-approval may be performed by a real estate licensee.
d. Pre-approval must be performed before showing any properties.
64) Under Regulation Z, which advertisement would require full disclosure of credit terms?
a. “Affordable rates available”
b. “Assume loan at 8% interest”
c. “Low down payment”
d. “Terms to please everyone”
65) What factor is given the LEAST consideration when evaluating a mortgage loan application?
a. amount of income
b. credit history
c. debt
d. source of income
66) What law regulates settlement and closing procedures and practices?
a. CRA
b. ECOA
c. RESPA
d. TILA
67) As the lender’s underwriters evaluate the borrower’s loan application to decide whether to make the loan, they may NOT consider the borrower’s
a. employment history.
b. field of employment and its economic viability.
c. history of making payments on past obligations.
d. receipt of public assistance.
68) How many days after a prospective borrower submits a completed loan application must the lender provide a credit decision?
a. 15 days
b. 20 days
c. 30 days
d. 45 days
69) Johanna wants to get a loan to buy a house. When evaluating her credit obligations, which would LEAST LIKELY be considered as debt?
a. car loan payment with 15 payments left
b. cell phone service payment
c. child support payments
d. credit card payments
70) When qualifying for a conventional mortgage loan, which would be LEAST LIKELY to count as allowable income?
a. annual bonuses
b. occasional overtime
c. retirement income
d. salary
71) Abe’s stable monthly income is $3,500. Every month he pays a $250 car payment, a $100 student loan payment, and a $50 gym membership. What is the maximum monthly mortgage payment including PITI that he would qualify for on a conventional loan (assume a payment-to-income ratio of 28% and a debt-to-income ratio of 36%)?
a. $1,260
b. $980
c. $910
d. $860
72) To calculate the maximum monthly payment including PITI allowable for an FHA-insured loan using the payment-to-income ratio, you would take the stable monthly income and multiply by
a. 28%.
b. 31%.
c. 36%.
d. 41%.
73) Which property would NOT be subject to the disclosure requirements of the RESPA?
a. condominium unit in a high-rise building
b. farmhouse on a 10-acre lot
c. four-unit apartment building
d. single-family home bought for cash
74) Which document is NOT required by RESPA to be given to consumers within three business days of a loan application?
a. Closing Disclosure
b. Loan Estimate
c. Mortgage Servicing Disclosure Statement
d. Your Home Loan Toolkit
75) The annual percentage rate (APR) is also referred to as
a. the effective rate of interest.
b. equity.
c. the escrow account.
d. the nominal rate of interest.
76) With a monthly income of $6,000 and recurring monthly debts of $800, what is the maximum mortgage amount including PITI that your buyer client Kent could get for a conventional loan, factoring in the debt-to-income ratio?
a. $1,360
b. $1,630
c. $1,680
d. $1,860
77) Nicole has a stable gross monthly income of $5,400; her monthly bills include a car payment of $420 with seven payments left and a student loan payment of $220. What is the maximum mortgage payment including PITI she would qualify for under both ratios if she is getting a conventional loan?
a. $1,304
b. $1,512
c. $1,724
d. $1,944
78) Blake has a stable monthly income of $3,200 and recurring monthly debts of $370. What is the maximum mortgage amount including PITI that he could get for a conventional loan?
a. $782
b. $896
c. $928
d. $1,152
79) Debts that are considered as part of a borrower’s obligations when qualifying for a loan include
a. car payments.
b. life insurance premiums.
c. membership fees.
d. utility payments.
80) Credit scoring refers to
a. the dollar amount of the loan a lender is willing to make to the borrower.
b. the lender’s decision to approve the loan application.
c. a numeric representation of the borrower’s credit profile.
d. the review of a loan application by the underwriting department.
81) Who would NOT be considered a member of a protected class under the Equal Credit Opportunity Act when applying for a mortgage loan?
a. Amy and John, who have four children
b. Joseph, who is African American
c. Tabitha, whose primary source of income is public assistance
d. Usama, who is a 69-year-old Muslim
82) Jon buys a house for $150,000. He makes a $30,000 down payment and pays three discount points. What is the total cost of the discount points?
a. $1500
b. $3000
c. $3600
d. $4500
83) When qualifying for a conventional loan, stable monthly income could include
a. alimony received (that a borrower chooses to reveal).
b. bonus received for the first time last year.
c. erratic unemployment earnings.
d. income from other family members.
84) Deb offers to buy Stan’s home for $180,000, which he accepts. When she applies for a loan, the loan originator tells her that she can borrow $150,000 at 4.75% for 30 years. She can bring the interest rate down to 4.50% if she wants to pay two points upfront. How much would these points cost her?
a. $1500
b. $1800
c. $3000
d. $3600
85) Kelly’s gross stable monthly income is $3,500. What is the maximum monthly mortgage payment including PITI that she would qualify for using the housing expense ratio of 28% for a conventional loan?
a. $875
b. $980
c. $1,020
d. $1,750
86) Lisa applied for a loan with XYZ Bank on May 1. XYZ Bank must send Lisa a written explanation of their decision by
a. May 10.
b. May 15.
c. May 30.
d. June 4.
87) States in which title is conveyed to the mortgagee are referred to as
a. equitable theory states.
b. intermediary theory states.
c. lien theory states.
d. title theory states.
88) Intermediation occurs when
a. deposits cannot meet the demand for loans.
b. deposits flow into lending institutions.
c. depositors withdraw their savings from depository institutions.
d. the Federal Reserve Board reduces the discount rate.
89) Your buyer, Opal, is a single mother of a toddler. As you’re working with her to determine how much she might be able to afford, which income source should you ignore?
a. Aid to Dependent Children
b. child support payments
c. occasional overtime
d. salary
90) Sharon, a buyer, agrees to pay full price for a home. She doesn’t have the money for a down payment, so she and the seller agree to an undisclosed mortgage that equals the amount of the desired down payment. This mortgage scheme is known as
a. double sold.
b. equity skimming.
c. illegal flipping.
d. silent second.
91) The Federal Reserve raises and lowers
a. the discount rate.
b. loan originator licensure requirements.
c. the prime interest rate.
d. secondary market qualifying standards.
92) Under the protections offered by Equal Credit Opportunity Act, when qualifying a potential borrower, a lender may NOT consider
a. credit rating.
b. job stability.
c. liabilities.
d. marital status.
93) Karen purposely does not tell mortgage lender Jay that she just took out a student loan for her son. The credit report shows neither that loan nor a credit inquiry, and so that debt is not considered when Jay pre-approves her for a larger mortgage than she really should have. Do you think Jay did anything wrong?
a. No, he can’t be held responsible if a customer withholds information that does not show on her credit report
b. Yes, he colluded with the customer to withhold material information
c. Yes, he committed fraud by approving a purposely false application
d. Yes, he committed fraud by not confirming the customer’s debts
94) A loan in which total payments over the life of the loan pay off the entire balance of principal and interest due at the end of the term is referred to as
a. annualized.
b. compounding.
c. diminishing.
d. fully amortizing.
95) What is the clause that allows the lender to sell the property, in the event of default, to pay the debt the borrower owes without going through the courts?
a. due on sale clause
b. partial payment clause
c. power of sale clause
d. prepayment clause
96) Which statement about FHA-insured loans is FALSE?
a. FHA loans have less stringent qualifying standards.
b. FHA loans require low down payments.
c. FHA may impose a penalty on borrowers who pay the loan off early.
d. FHA offers an adjustable rate mortgage.
97) Which act requires the lender to provide the borrower a reason for rejection of credit in writing within 30 days of a loan application?
a. Community Reinvestment Act
b. Equal Credit Opportunity Act
c. Real Estate Settlement Procedures Act
d. Truth in Lending Act
98) At closing, buyer Steve sees that the lender changed the terms of the loan that they had agreed to, but he felt he had no choice but to go ahead with the loan or lose the chance to buy the house. This could be an example of
a. creative financing.
b. loan flipping.
c. mortgage fraud.
d. predatory lending.
99) Private mortgage insurance (PMI) is required for
a. 80% conventional loans.
b. 90% conventional loans.
c. FHA loans.
d. VA loans.
100) By law, lenders must cancel PMI when the loan-to-value reaches what percent of the property’s original value?
a. 80%
b. 78%
c. 75%
d. 72%
101) Who funds FHA-insured loans?
a. approved lenders
b. Department of Housing and Urban Development
c. Federal Housing Administration
d. Veterans Administration
102) With an adjustable rate mortgage, the _______ is added to the index to determine the _________.
a. APR / cost of funds index
b. home value / amount borrowed
c. margin / interest rate charged
d. qualifying ratio / maximum monthly mortgage payment
103) If Josh Walsh has an annual gross income of $66,000 and monthly debts of $460, how much monthly PITI payment can he qualify for if the lender uses 28/36 qualifying ratios?
a. $1,520
b. $1,540
c. $1,848
d. $1,980
104) To foreclose a mortgage in a lien theory state, the creditor must typically
a. file an attachment in the amount of the debt with the county recorder.
b. notify the debtor of the default, wait 10 days, publish a notice of default in the paper, and then claim forfeiture.
c. notify the trustee of default and foreclose immediately.
d. serve the borrower with a notice to foreclose and then file a foreclosure action with the court.
105) To establish the value of a property for a VA-guaranteed loan, the required documentation is a
a. broker price opinion.
b. certificate of eligibility.
c. certificate of reasonable value.
d. competitive market analysis.
106) If the original balance of the loan was $200,000, what will the balance be after one month if the monthly payment is $1,073.64 P&I with $833.33 applied to interest?
a. $198,926.36
b. $199,166.67
c. $199,759.69
d. $200,000
107) A mortgage clause that permits the lender to call the outstanding balance due and payable should the property be sold by the borrower is a(n)
a. acceleration clause.
b. alienation clause.
c. balloon payment clause.
d. exculpatory clause.
108) What law requires that borrowers be shown how much they are going to pay for credit in terms of an annual percentage rate?
a. Community Reinvestment Act
b. Equal Credit Opportunity Act
c. Fair Credit Reporting Act
d. Truth in Lending Act
109) The type of mortgage that may provide the borrower with a monthly check instead of the borrower paying a monthly payment is known as a(n)
a. blanket mortgage.
b. graduated payment mortgage.
c. interest-only mortgage.
d. reverse mortgage.
110) Ben paid money to his brother Mark to use Mark’s name and good credit history to apply for a mortgage loan. This mortgage scheme is known as a(n)
a. air loan.
b. fictitious identity.
c. silent second.
d. straw buyer.
111) Which of the following does NOT play a role in the secondary market?
a. Federal Home Loan Mortgage Corporation
b. Federal Housing Administration
c. Federal National Mortgage Association
d. Government National Mortgage Association
112) If Bob pays $695.20 for P&I every month for 30 years on his $110,000 loan, how much interest will he pay over the life of the loan?
a. $20,856
b. $110,000
c. $140,272
d. $250,272
113) As mortgage loan originator Sam puts together an ad to attract new customers, what law should he be most concerned about?
a. CRA
b. ECOA
c. RESPA
d. TILA
114) After selling a mortgage in the secondary market, the lender continues collecting and processing payments and keeping records on the loan. This is referred to as
a. loan management.
b. loan origination.
c. loan processing.
d. loan servicing.
115) Secondary mortgage markets can make local real estate markets more stable by
a. moderating the effect of local real estate cycles.
b. raising interest rates charged to borrowers.
c. reducing reserve requirements for lenders.
d. serving as intermediaries between borrowers and lenders.
116) William has an adjustable rate mortgage (ARM). It has an initial interest rate of 6% adjusted annually with a 2/5 interest rate cap. If the index goes up dramatically, what is the highest rate that William’s interest rate can reach over the life of the loan?
a. 8%
b. 11%
c. 12%
d. 17%
117) Which term describes the process by which a borrower pledges property as security for a loan without giving up possession of it?
a. defeasance
b. hypothecation
c. redemption
d. subordination
118) Mark has a 30-year fixed rate loan for $165,000. At 4.75% interest, his monthly payment of principal and interest is $860.72. What is the balance of his loan after making his second payment?
a. $164,139.28
b. $164,346.87
c. $164,583.99
d. $164,792.41
119) Which of the following Federal Reserve influences would tend to encourage lending?
a. increasing discount rates
b. increasing reserve requirements
c. lowering reserve requirements
d. maintaining a large federal deficit
120) The document that creates a lien against real property as security for the promise to repay a loan is called a(n)
a. equitable title.
b. mortgage.
c. promissory note.
d. trust deed.
121) The annual percentage rate (APR) is also referred to as the
a. effective rate.
b. escrow rate.
c. nominal rate.
d. note rate.
122) Regulation Z implements what federal lending law?
a. CRA
b. ECOA
c. RESPA
d. TILA
123) Which type of mortgage is NOT insured or guaranteed by the government?
a. conventional mortgage
b. FHA-insured mortgage
c. USDA rural development mortgage
d. VA-guaranteed mortgage
124) Which of these is NOT an example of a security instrument?
a. deed of trust
b. land contract
c. mortgage
d. promissory note
125) The defeasance clause ensures that
a. a mortgage recorded later takes priority over an earlier recorded mortgage.
b. at default, the borrower must assign any rental income over to the lender.
c. upon final payment, the mortgage is satisfied, cancelled, or void, and the title is re-vested from the mortgagee to the mortgagor.
d. upon the sale of the property, the lender may accelerate the debt, change the interest rate, or charge an assumption fee.
126) If a mortgage loan payment consists of interest only, the final payment which includes the full amount borrowed is called a(n)
a. amortized payment.
b. balloon payment.
c. monthly payment.
d. term payment.
127) Of these transactions, which would NOT fall under the provisions of RESPA?
a. April is buying a condominium in a 20-unit building.
b. Brad is buying a three-unit apartment building as an investment.
c. Carla is buying a house she may turn into a bed and breakfast.
d. Dick is buying an old barn to turn into a car wash.
128) A mortgage that includes more than one parcel of land is called a
a. blanket mortgage.
b. package mortgage.
c. purchase money mortgage.
d. wraparound mortgage.
129) The lender usually does not allow the source of a borrower’s down payment to be
a. borrowed funds.
b. a gift from a relative.
c. proceeds from the sale of a house.
d. savings.
130) The loan amount (principal) is $50,000 and the interest rate is 11%. What is the annual interest?
a. $500
b. $550
c. $1,100
d. $5,500
131) A borrower’s stable monthly income is $3,000. He has three monthly debts: $350 car payment, $50 personal loan payment, and $50 credit card payment. What is the maximum monthly mortgage payment he would qualify for on a conventional loan?
a. $390
b. $630
c. $840
d. $1,080
132) Cameron gets a 5-year loan for $22,000 at 8% interest to build a pole barn on the back of his lot. He pays the bank $146.67 every month. At the end of five years, he has a $22,000 balloon payment. What kind of loan does Cameron have?
a. ARM
b. full-amortizing
c. hybrid
d. straight
133) The interest rate of a fixed rate loan
a. fluctuates according to a standard index.
b. is usually lower than the rate for an adjustable rate loan.
c. remains constant for the duration of the loan.
d. starts lower in early years of the loan and increases in later years.
134) The purpose of requiring payment into a mortgage escrow account is to
a. allow the borrower to obtain actual cash from the equity built up in the property.
b. allow the lender to participate in any earnings, income, or profits generated.
c. ensure that enough funds are collected to cover taxes and insurance premiums.
d. include the financing of personal property, such as appliances or furnishings.
135) A borrower is buying a house for $90,000. He provides a down payment of $10,000. If he pays three discount points, what is the total cost of the points?
a. $3,000
b. $2,700
c. $2,400
d. $2,000
136) Construction loans are typically paid out in
a. draws after specific stages of construction have been completed.
b. equal installments during the construction process.
c. full at the beginning of construction.
d. full upon completion of construction.
137) Which elements of a borrower’s monthly mortgage payment are maintained by a lender in an escrow account?
a. principal and interest
b. principal, interest, taxes, and insurance
c. taxes and insurance
d. taxes and interest
138) Mortgage fraud can be committed by
a. appraisers only.
b. borrowers only.
c. lenders and mortgage brokers only.
d. any party to a mortgage loan.
139) The primary difference between a mortgage banker and mortgage loan originator is a
a. mortgage banker is not paid for services.
b. mortgage banker lends money, and a mortgage loan originator acts as an intermediary.
c. mortgage loan originator lends money and a mortgage banker acts as an intermediary.
d. mortgage loan originator works out of an office
140) What is the clause that appears in many construction mortgages so that the developer or builder can sell off completed homes with clear title before having to pay off the entire amount borrowed?
a. acceleration clause
b. partial release clause
c. prepayment clause
d. subordination clause
141) Lauren falls in love with a house and is desperate to buy it. The asking price is $235,000. She makes an offer of $230,000 and the house appraises for $225,000. If her lender is willing to give her an 80% LTV loan, what is her required down payment if her offer is accepted?
a. $45,000
b. $46,000
c. $47,000
d. $50,000
142) When you use the calculation PITI / Gross Monthly Income when evaluating income, you have just determined what?
a. housing expense ratio
b. loan-to-value
c. net income
d. total debt-to-income
143) Marlene applies for a mortgage loan. Her lender gives her a Loan Estimate and the other required disclosures. What is the soonest her loan could theoretically close?
a. 3 business days after the application is submitted
b. 3 business days after the disclosures are delivered
c. 7 business days after the disclosures are delivered
d. 10 days from when Marlene states her intention to proceed with the loan
144) Who raises and lowers the prime rate?
a. Fannie Mae
b. Federal Reserve
c. FHA
d. individual banks
145) Beth is ready to cash in her retirement and move south. She wants to sell her house to her son and daughter-in-law, who are unlikely to be approved for a new loan. She decides to let them assume her mortgage. If her current mortgage includes a(n) ________________ clause, Beth may be required to pay the balance in full when she transfers title to the kids.
a. acceleration
b. alienation
c. power of sale
d. subordination
146) Temperance has a 20-year, fixed rate mortgage loan with an interest rate of 4.75%. This month, $865 of her payment went to pay for the interest. What was the balance of the loan used to calculate that?
a. $98,610
b. $218,526.31
c. $230,666.66
d. $493,050
147) Of these, which type of loan incorporates an existing loan with a new loan?
a. blanket mortgage
b. package mortgage
c. purchase money mortgage
d. wraparound mortgage
148) The purpose of using PITI to structure mortgage payments is to
a. allow the borrower to obtain actual cash from the equity built up in the property.
b. allow the lender to participate in any earnings, income, or profits generated.
c. ensure that enough funds are collected to cover taxes and insurance premiums.
d. include the financing of personal property, such as appliances or furnishings.
149) Debra is borrowing $160,000 to purchase a home that has an appraised value of $200,000. Which type of conventional loan is she getting?
a. 100% conventional loan
b. 95% conventional loan
c. 90% conventional loan
d. 80% conventional loan
150) What clause cancels the lender’s interest in the property when the loan is repaid?
a. acceleration
b. assumption
c. defeasance
d. partial release
151) Which element of an adjustable rate mortgage determines whether the interest rate goes up or down?
a. cap
b. index
c. margin
d. rate
152) Benedict takes out a loan from XYZ Bank to purchase a vacant lot. He still owes $20,000 on that loan when he applies to ABC Mortgage for a construction mortgage to build a house. ABC will give him the loan if he gets what kind of agreement from XYZ?
a. assumption
b. disbursement
c. subordination
d. subrogation
153) Borrower Brad has applied for a loan and the lender is willing to accept an LTV of 90% on a $180,000 property. How much is the lender willing to lend?
a. $171,000
b. $162,000
c. $153,000
d. $144,000
154) Denver took out a loan to build a vacation home, using his sailboat as collateral. This is a
a. blanket loan.
b. chattel loan.
c. package loan.
d. wraparound loan.
155) Which statement about VA-guaranteed loans is FALSE?
a. Applicants must have a service-connected disability to qualify.
b. Loan approval can be made for discharged veterans only if they have received an honorable discharge.
c. The loan proceeds must be used for the purchase of an owner-occupied residential property.
d. The veteran must have a certificate of eligibility.
156) The parties involved in a trust deed are
a. maker and payee.
b. mortgagor and mortgagee.
c. trustor, beneficiary, and trustee.
d. vendor and vendee.

click here for all Q&A on 1page for easier searching

Recommended Real Estate Schools:

Website Trusted and Protected by: