A mortgage broker generally offers which of the following services?

A. Handling the escrow procedures.

B. Bringing the borrower and the lender together.

C. Providing credit qualification and evaluation reports.

D. Granting real estate loans using investor funds. 

From which of the following would a borrower MOST LIKELY obtain a conventional first mortgage on a single-family residence?

A. An insurance company.

B. A pension fund.

C. A mortgage broker.

D. A savings association.

A lender will consider certain factors when deciding whether to grant a borrower a mortgage loan. Taking into account which of the following would be a violation of the Equal Credit Opportunity Act (ECOA)?

A. The marital status of the borrower.

B. The credit worthiness of the borrower.

C. The amount of the borrower's income.

D. The ability of the borrower to make the payments.

The Federal Equal Credit Opportunity Act allows lenders to discriminate against potential borrowers on the basis of:

A. race.

B. sex.

C. dependent on public assistance.

D. amount of income. 

A lender is using both a mortgage note and a mortgage when making a loan. What is similar about these documents?

A. Both are non-negotiable instruments.

B. Both are debt-releasing instruments.

C. Both are contracts.

D. Both contain a defeasance clause

Which of the following statements is a feature of mortgage financing?

A. The mortgagor is the borrower.

B. The mortgagee hypothecates the property.

C. The promissory note is the security instrument.

D. The mortgage is the financing instrument.

The charge a borrower pays the lender for use of the money would be BEST described as:

A. simple interest.

B. compound interest.

C. prepaid interest.

D. discounted interest

In a loan that requires payments that do not fully amortize the loan balance by the final payment, what term best describes the final payment?

A. Adjustment.

B. Acceleration.

C. Balloon.

D. Variable

C. Balloon. 

note: balloon payment is a final payment that is at least twice the amount of any other payment. The loan will be considered a partially amortized loan because some of the principal has been paid, with some still owed at the end of the term.

The charge a borrower pays the lender for use of the money would be BEST described as:

A. simple interest.

B. compound interest.

C. prepaid interest.

D. discounted interest.

In a loan that requires payments that do not fully amortize the loan balance by the final payment, what term best describes the final payment?

A. Adjustment.

B. Acceleration.

C. Balloon.

D. Variable

In a loan that requires payments that do not fully amortize the loan balance by the final payment, what term best describes the final payment?

A. Adjustment.

B. Acceleration.

C. Balloon.

D. Variable

A real estate loan payable in periodic installments of interest and principal that are sufficient to pay the principal in full during the term of the loan is called a(n):

A. conventional loan.

B. straight loan.

C. buydown loan.

D. fully amortized loan.

D. fully amortized loan.

note: With a fully amortized loan, or level-payment loan, the lender credits each payment first to the interest due, then to the principal amount of the loan. (p.218)

The pledging of property for a loan without actually giving up possession of the property is referred to as:

A. foreclosure.

B. usury.

C. hypothecation.

D. satisfaction 

C. hypothecation.

note: hypothecation= To pledge property as security for an obligation or loan without giving up possession of it. p.830

Many lenders want assurance that future real estate taxes and property insurance premiums will be paid. The most common way to do this is to require the borrower to:

A. obtain title insurance.

B. sign a note.

C. pay into an impound, trust, or escrow account.

D. submit paid tax receipts.

Which of the following clauses would give the lender the right to have all future installments become immediately due and payable upon default by the borrower?

A. defeasance clause.

B. prepayment penalty clause.

C. subordination clause.

D. acceleration clause. 

D. acceleration clause. 

note: acceleration clause= The clause in a mortgage or deed of trust that can be enforced to make the entire debt due immediately if the borrower defaults on an installment payment or other obligation. 

A lender may want to prevent a future purchaser of the property from being able to assume the seller's loan. For this reason, some lenders include in the note or mortgage a(n):

A. subordination clause.

B. defeasance clause.

C. acceleration clause.

D. alienation clause

An interest rate index would MOST LIKELY be associated with which of the following?

A. Wraparound mortgage.

B. Fixed rate mortgage.

C. Graduated payment mortgage.

D. Adjustable rate mortgage.

D. Adjustable rate mortgage.

note: The adjustable-rate mortgage (ARM) begins at one rate of interest, then fluctuates up or down during the loan term, based on a specified economic indicator. Because the interest rate may change, the mortgagor’s loan payment may change.

The index is an economic indicator that is used to adjust the interest rate in the loan. 

When the mortgage debt is completely repaid, the defeasance clause in a mortgage requires the mortgagee to execute which of the following documents?

A. assignment or mortgage.

B. satisfaction of mortgage.

C.subordination agreement.

D. partial release agreement

B. satisfaction of mortgage.

note: By the provisions of the defeasance clause in the financing instrument, the lender is required to execute a satisfaction of mortgage (also known as a release or discharge) 

 A property is appraised for $125,000. The house has a replacement cost of $100,000 and the outstanding loan balance is $65,000. To meet the policy’s coinsurance clause, the owner should carry how much homeowner’s insurance on the property?

A. $125,000.

B. $100,000.

C. $80,000.

D $65,000

If the lender is using a deed of trust/trust deed to secure the loan, the lender is called the:

A. beneficiary.

B. trustee.

C. trustor.

D. mortgagee

A promissory note:

A. may not be executed in connection with a real estate loan.

B. is a non-negotiable instrument of debt.

C. makes the borrower personally liable for the debt.

D. is a guarantee by a government agency. 

A state law that regulates the maximum interest rates that lenders can charge is known as the:

A. truth in lending law.

B. usury law.

C. fair housing law.

D. statute of frauds

B. usury law.

A law that set limits on rates of interest that may be charged is a usury law.

A common feature of an adjustable rate mortgage (ARM) is:

A. the interest rate is fixed for a maximum of five years.

B. there is negative amortization if rates decrease.

C. a rate cap on the amount the interest rate may increase. D. automatic conversion to a fixed-rate-loan.

C. a rate cap on the amount the interest rate may increase.

note: Rate caps limit the amount the interest rate may change. Most ARMs have two types of rate caps—periodic and life-of-the-loan (or aggregate)

The borrower has been making periodic payments of principal and interest on a loan, but the final payment will be larger than the previous installment payments. This is an example of a:

A. partially amortized loan with a balloon payment.

B. fully amortized loan with a balloon payment.

C. FHA loan.

D. straight note with a balloon payment.

When compared with a 30-year payment period, taking out a loan with a 20-year payment period would result in:

A. slower equity buildup.

B. greater impound requirements.

C. lower monthly payments.

D. higher monthly payments.

A prospective buyer needs to borrow money to buy a house. The buyer applies for and obtains a real estate loan from a lender, after signing a note and a mortgage. In this example, the buyer is referred to as the:

A. mortgagor.

B. beneficiary.

C. mortgagee.

D. vendor.

A. mortgagor.

note: The borrower, or mortgagor, receives a loan and in return gives a promissory note and mortgage to the lender, called the mortgagee. (p.213)

The purpose of a mortgage is to:

A. provide security for a loan.

B. convey title of the property to a lender.

C. restrict the borrower’s use of the property.

D. make the borrower personally liable for the debt

A borrower obtained a $7,000 second mortgage loan for 5 years at 6 percent interest per annum. Monthly payments of principal and interest were $50. The final payment included the remaining outstanding principal balance. What type of loan is this?

A. A fully amortized loan.

B. A straight loan.

C. A partially amortized loan.

D. An accelerated loan. 

C. A partially amortized loan.

note: In a partially amortized loan, some of the principal has been paid, with some still owed at the end of the term.

All of the following clauses in a loan agreement enable the lender to demand the entire remaining debt be paid immediately EXCEPT a(n):

A. due-on-sale clause.

B. defeasance clause.

C. acceleration clause.

D. alienation clause.

B. defeasance clause.

note: By the provisions of the defeasance clause in the financing instrument, the lender is required to execute a satisfaction of mortgage (also known as a release or discharge) when the note has been fully paid.

A type of financing which was popular because payments were lower due to no principal being paid, is called a(n):

A. amortized loan.

B. balloon loan.

C. package loan.

D. term loan.

D. term loan.

note: term loan or interest-only loan) the borrower makes periodic payments of interest only, followed by the payment of the principal in full at the end of the term. (p.218)

In an adjustable-rate mortgage, the interest rate is tied to an economic indicator called a(n):

A. mortgage factor.

B. discount rate.

C. index.

D. reserve requirement. 

C. index.

note: In adjustable-rate mortgage (ARM): The index is an economic indicator that is used to adjust the interest rate in the loan

A home is purchased using a fixed-rate, fully amortized mortgage loan. Which of the following statements is true regarding this mortgage?

A. A balloon payment will be made at the end of the loan. B. Each mortgage payment amount is the same.

C. Each mortgage payment reduces the principal by the same amount.

D. The principal amount in each payment is greater than the interest amount

B. Each mortgage payment amount is the same.

With a fully amortized loan, or level-payment loan, the lender credits each payment first to the interest due, then to the principal amount of the loan. While each payment remains the same, the portion applied to repayment of the principal grows and the interest due declines as the unpaid balance of the loan is reduced.

If a property sold at a mortgage foreclosure does not sell for an amount sufficient to satisfy the outstanding mortgage debt, the mortgagor may be responsible for:

A. a default judgment.

B. a deficiency judgment.

C. liquidated damages.

D. punitive damages.

B. a deficiency judgment.

note: The foreclosure sale may not produce enough cash to pay the loan balance in full after deducting expenses and accrued unpaid interest. In that case, the mortgagee may be entitled to a personal judgment against the borrower for the unpaid balance

The right a mortgagor has to regain the property by paying the debt after a foreclosure sale is called:

A. equitable right of redemption.

B. statutory right of redemption.

C. satisfaction.

D. hypothecation

B. statutory right of redemption.

note: a defaulting mortgagor may redeem (buy back) the property during a certain period after the sale, the statutory right of redemption (p.213)

A lender is about to take a foreclosure action against a borrower’s property. Which of the following foreclosures would have the least effect on the borrower’s credit rating? A. A judicial foreclosure.

B. A deed in lieu of foreclosure / friendly foreclosure.

C. A power of sale.

D. A certificate of reasonable value (CRV).

If there are any excess proceeds after the foreclosure sale, they are paid to the:

A. sheriff’s office.

B. mortgagee.

C. mortgagor.

D. county. 

A “friendly foreclosure” enables a mortgagor to prevent the mortgagee from taking the property by statutory means. This can be accomplished by use of a(n):

A. deed in lieu of foreclosure.

B. reconveyance deed.

C. assumption.

D. escrow deed.

The mortgagee foreclosed on a property after the borrower defaulted on the loan payments. At the foreclosure sale, however, the house sold for only $129,000. The unpaid balance of the loan at the time of the sale was $140,000. What must the lender do to recover the $11,000 the borrower still owes?

A. Sue for damages.

B. Sue for specific performance.

C. Seek a judgment by default.

D. Seek a deficiency judgment.

 A lender’s interest in a mortgage loan is protected by obtaining additional security from:

A. private mortgage insurance.

B. title insurance.

C. the borrower’s note.

D. impound accounts.

Which of the following allows a mortgagee to proceed to a foreclosure sale without having to go to court first?

A. Waiver of redemption right.

B. Power of sale.

C. Alienation clause.

D. Hypothecation.

Before the foreclosure sale, a borrower who has defaulted on a loan may seek to pay off the debt plus any accrued interest and costs under what right?

A. Equitable redemption.

B. Defeasance.

C. Usury.

D. Statutory redemption

A. Equitable redemption.

equitable right of redemption. If, after default but before the foreclosure sale, the borrower (or any other person who has an interest in the real estate, such as another creditor) pays the lender the amount in default, plus costs, the debt will be reinstated. In some cases, the person who redeems may be required to repay the accelerated loan in full. If some person other than the mortgagor or trustor redeems the real estate, the borrower becomes responsible to that person for the amount of the redemption.

Which of the following loans could have a prepayment penalty?

A. FHA-insured loans.

B. VA-guaranteed loans.

C. Conventional loans.

D. Farm Service Agency loans

C. Conventional loans.

note: conventional loan A loan that requires no federally sponsored insurance or guarantee

Which of the following statements BEST describes private mortgage insurance?

A. It protects the lender if the borrower defaults.

B. It is computed on the selling price.

C. It is issued on conventional loans with loan-to-value ratio of 80% or lower.

D. It protects the seller if the borrower defaults. 

What is the function of the Federal Housing Administration?

A. To insure loans on real property made by approved lending institutions.

B. To insure mortgagors' real property against physical hazards.

C. To build government subsidized housing.

D. To lend money to buyers of one-to-four family residences.

An FHA-insured mortgage loan would be obtained from which of the following?

A. The Federal Housing Administration.

B. The Department of Housing and Urban Development.

C. FHA-approved lending institutions.

D. FHA-approved insuring institution

Which of the following loans does NOT require a down payment?

A. A new conventional loan.

B. A VA-Guaranteed loan.

C. A FHA-Insured loan.

D. A blanket loan.

When making a loan, the lender would normally base the loan to value ratio on:

A. the listing price or sale price, whichever is lower.

B. the listing price or sale price, whichever is higher.

C. the appraisal value or sale price, whichever is lower.

D. the appraisal value or sale price, whichever is higher

On a VA loan, the amount of money that protects a lender if an eligible veteran defaults is called the:

A. mortgage insurance.

B. guaranty / entitlement.

C. interest rate.

D. eligibility.

What is the maximum repayment term on a VA loan?

A. 20 years.

B. 25 years.

C. 30 years.

D. 40 years. 

Which of the following is generally CORRECT when obtaining an FHA loan?

A. The buyer can obtain a 2nd mortgage to cover the down payment.

B. FHA will guarantee the loan.

C. The maximum term of the loan is 20 years.

D. The property will be appraised by a government-approved appraiser

Which of the following is generally CORRECT when obtaining an FHA loan?

A. The buyer can obtain a 2nd mortgage to cover the down payment.

B. FHA will guarantee the loan.

C. The maximum term of the loan is 20 years.

D. The property will be appraised by a government-approved appraiser

The type of loan that will most likely have the HIGHEST loan-to-value ratio is a:

A. VA loan.

B. FHA loan.

C. FmHA loan.

D. conventional loan

The amount of a loan expressed as a percentage of the value of the real estate offered as collateral is the:

A. amortization ratio.

B. loan-to-value ratio.

C. debt-to-equity ratio.

D. capital-use-ratio. 

B. loan-to-value ratio.

note:  loan-to-value ratio is the amount of the loan as a percentage of the purchase price of the property.

An eligible veteran made a purchase offer of $180,000 on a home he wants to finance with a VA-guaranteed loan. Four weeks after the offer was accepted, a certificate of reasonable value (CRV) for $177,000 was issued for the property. In this situation, the veteran could do all of the following EXCEPT:

A. withdraw from the transaction without penalty.

B. purchase the property with a $3,000 cash down payment.

C. negotiate with the seller to reduce the price $3,000.

D. insist that the lender loan up to the allowable maximum guarantee. 

Which of the following is true about VA-guaranteed mortgages?

A. Discount points must be paid by the seller.

B. The borrower may have a prepayment penalty clause in the loan.

C. Funding fee amounts are negotiable.

D. The borrower must apply for a certificate of eligibility

If a lender agrees to make a loan based on an 80 percent LTV, what is the amount of the loan if the property appraises for $114,500 and the sales price is $116,900?

A. $83,200

B. $91,300

C. $91,600

D. $92,900

Funds for Federal Housing Administration (FHA) loans are usually provided by:

A. the FHA.

B. the Federal Reserve.

C. qualified lenders.

D. the seller.

 A buyer is taking title to real property “subject to” an existing mortgage. If the buyer defaults on the loan, who is responsible to the lender for payment of the note?

A. Seller.

B. Buyer.

C. Mortgagee.

D. Trustee.

A buyer acquires title to property that has an existing mortgage and agrees to become personally liable for the terms and conditions of the mortgage. This would be an example of a:

A. loan assumption.

B. contract for deed.

C. purchase money mortgage.

D. refinancing.

Which clause in a mortgage makes the loan non-assumable without the lender’s permission?

A. Partial release.

B. Due on sale/alienation.

C. Acceleration.

D. Defeasance

B. Due on sale/alienation.

note: An alienation clause (due-on-sale clause) in a loan document requires full payment on the sale of the property and can prevent future purchasers of the property from assuming ( taking over obligation )the loan.

A buyer would like to assume the seller’s existing loan. Which of the following would give the seller the most protection by releasing the seller from liability on the loan and making the new buyer solely liable?

A. Assignment.

B. Novation agreement.

C. Mortgage release.

D. Estoppel certificate.

A buyer wants to purchase a house as soon as possible and does not want to pay a loan origination fee. Which of the following loans would be BEST for the buyer?

A. VA loan.

B. FHA loan.

C. Loan assumption.

D. Conventional loan. 

 A person who assumes an existing mortgage loan is:

A. not personally liable for the repayment of the debt.

B. not in danger of losing the property by default.

C. personally responsible for paying the principal balance. D. generally released from liability, but not always.

A buyer purchased a home under an agreement that made the buyer personally obligated to continue making payments under the seller’s existing mortgage. If the buyer defaults and the court sale of the property does not satisfy the debt, the buyer will be primarily liable for making up the difference. The buyer has:

A. purchased the home subject to the seller’s mortgage.

B. assumed the seller’s mortgage.

C. benefited from the alienation clause in the seller’s mortgage.

D. benefited from the defeasance clause in the seller’s mortgage

The buyers purchased a residence for $95,000. They made a down payment of $15,000 and agreed to assume the seller’s existing mortgage, which has a current balance of $23,000. The buyers financed the remaining $57,000 of the purchase price by executing a mortgage and note to the seller. This type of loan, by which the seller becomes the mortgagee, is called a:

A. wraparound mortgage.

B. package mortgage.

C. balloon note.

D. purchase-money mortgage.

D. purchase-money mortgage.

note: The seller who finances a sale can also make use of a purchase money mortgage in which the buyer receives title to the property but places a security interest on it—the mortgage—in favor of the seller. The '''

The loan that finances the purchase of a home and is also secured by personal property such as a washer, dryer, and refrigerator is a:

A. blanket mortgage.

B. package mortgage.

C. purchase money mortgage.

D. wraparound mortgage

A developer received a loan that covers five parcels of real estate and provides for the release of the mortgage lien on each parcel when certain payments are made on the loan. This type of loan arrangement is called a:

A. purchase-money loan.

B. blanket loan.

C. package loan. 

D. wraparound loan. 

B. blanket loan.

note: A blanket loan covers more than one parcel or lot. The development lender issues a partial release from the mortgage lien on the entire property for each parcel sold

Which of the following is the best definition of an owner's equity in his or her real property?

A. The market value of property as assessed by a qualified appraiser.

B. The difference between the market value of the property and the amount owed on it.

C. A mortgagor's right to reclaim property before a foreclosure sale is held.

D. The right to equitable redemption in a foreclosure action

A borrower's loan debt has been reduced by payments over a period of time. The borrower has the right to increase the debt to its original amount. This is MOST likely a(n):

A. blanket loan.

B. open-end loan.

C. package loan.

D. wraparound loan.

B. open-end loan.

note: An open-end loan provides a security interest when a note is executed by the borrower to the lender, but also secures any future advances of funds made by the lender to the borrower.

The seller becomes the lessee and the buyer becomes the lessor under which of the following financing arrangements? A. Home equity loan.

B. Wraparound mortgage.

C. Sale and leaseback.

D. Assumption of mortgage

A loan in which regular monthly payments are made by the mortgagee to the mortgagor based on the homeowner's equity is called a(n):

A. growing equity mortgage.

B. reverse-annuity mortgage.

C. home equity loan.

D. open-end loan.

John is selling his property for $225,000. He has a loan balance of $50,000. He has agreed to provide financing to the purchasers in the amount of $200,000 and will continue to make payments on the original loan. This type of loan is called a:

A. package loan.

B. wraparound loan.

C. blanket loan.

D. loan assumption

B. wraparound loan.

note: A method of refinancing in which the new mortgage is placed in a secondary, or subordinate, position; the new mortgage includes both the unpaid principal balance of the first mortgage and whatever additional sums are advanced by the lender. In essence, it is an additional mortgage in which another lender refinances a borrower by lending an amount over the existing first mortgage amount without disturbing the existence of the first mortgage.

Which of the following loans is generally short term or interim financing and bears a higher-than-market interest rate because of the risks assumed by the lender?

A. Package loan.

B. Blanket loan.

C. Construction loan.

D. Open-end loan

C. Construction loan.

note:  aka interim financing, A short-term loan usually made during the construction phase of a building project 

The type of real estate loan that allows the lender to increase the outstanding balance of a loan up to the original sum in the note while advancing additional funds is the:

A. wraparound mortgage.

B. open-end mortgage.

C. growing-equity mortgage.

D. graduated-payment mortgage

B. open-end mortgage.

note: an open-end mortgage is A mortgage loan that is expandable by increments up to a maximum dollar amount, with the full loan being secured by the same original mortgage

An owner’s son starts college soon. She has lived in her home for 10 years. What financing option would be preferable for the owner to obtain funds to pay for her son’s schooling?

A. Participation financing.

B. Open-end loan.

C. Wraparound loan.

D. Home equity loan

D. Home equity loan

note: home equity loan is A loan under which a property owner uses the property as collateral and can then draw funds up to a prearranged amount against the property. 

(p. 829)

A 65-year-old homeowner has owned her house for 30 years. It has fallen into disrepair, but because she lives on a fixed income, she does not have the money to make the needed repairs. She has a considerable amount of equity in the house. What type of loan best suits her needs?

A. Shared appreciation mortgage.

B. A reverse annuity mortgage.

C. A blanket loan.

D. An open-ended loan

B. A reverse annuity mortgage.

note: aka reverse mortgage A reverse mortgage allows a homeowner aged 62 or older to borrow money against the equity built up in the home. The borrowed money may be used for any purpose and the borrower decides if the funds will be paid out in a lump sum, fixed monthly payments, an open line of credit, or another option. The borrower is charged a fixed rate of interest on amounts paid out by the lender, but the lender does not need to be repaid until the property is sold or the borrow defaults (perhaps by failing to maintain the property), moves, or dies

A buyer purchased a new residence for $175,000. The buyer made a down payment of $15,000 and obtained a $160,000 mortgage loan. The builder of the house paid the lender 3 percent of the loan balance for the first year and 2 percent for the second year. This represents a total savings for the buyer of $8,000. What type of mortgage arrangement is this?

A. Wraparound.

B. Package.

C. Blanket.

D. Buydown.

D. Buydown.

note: A buydown is a way to temporarily (or permanently) lower the interest rate on a mortgage or deed of trust loan. 

Under a typical land contract, when does the vendor give the deed to the vendee?

A. When the contract is fulfilled and all payments have been made.

B. At the closing.

C. When the contract for deed is approved by the parties. D. After the first year’s real estate taxes are paid.

In a land contract, the vendee:

A. is not responsible for the real estate taxes on the property.

B. does not pay interest and principal.

C. has possession during the term of the contract.

D. obtains legal title at closing

A charge of three discount points on a $120,000 loan equals:

A. $450.

B. $3,600

C. $4,500

D. $116,400

Discount points on a mortgage are computed as a percentage of the:

A. selling price.

B. amount borrowed.

C. closing costs.

D. down payment.

B. amount borrowed.

note: Discount points are used to increase the lender’s yield (rate of return) on its investment. For example, the interest rate that a lender charges for a loan might be less than the yield an investor demands. To make up the difference, the lender charges the borrower discount points

A borrower negotiated a loan and the lender sends the borrower a monthly check for $600. This BEST describes a: A. package mortgage.

B. blanket loan.

C. reverse mortgage.

D. growing equity mortgage. 

C. reverse mortgage.

note: A reverse mortgage allows a homeowner aged 62 or older to borrow money against the equity built up in the home. T ' he borrowed money may be used for any purpose and the borrower decides if the funds will be paid out in a lump sum, fixed monthly payments, an open line of credit, or another option. The borrower is charged a fixed rate of interest on amounts paid out by the lender, but the lender does not need to be repaid until the property is sold or the borrow defaults (perhaps by failing to maintain the property), moves, or dies.

Which of the following is NOT a participant in the second market?

A. Fannie Mae.

B. Ginnie Mae.

C. FHA.

D. Freddie Mac

Which of the following statements about the Federal National Mortgage Association is INCORRECT?

A. It provides liquidity for the primary market.

B. It provides a secondary market for loans.

C. It makes loans to low income borrowers.

D. It sells bonds and mortgage-backed securities to raise money

C. It makes loans to low income borrowers

note: AKA Fannie Mae, A government-supervised enterprise established to purchase any kind of mortgage loans in the secondary mortgage market from the primary lenders. 

The principal distinction between the primary mortgage market and the secondary mortgage market is in the:

A. insuring versus the guaranteeing of mortgage loans.

B. origination versus the purchase of mortgage loans.

C. use of mortgages versus the use of deeds of trust.

D. use of discount points versus the use of origination fees.

Fannie Mae, Ginnie Mae, and Freddie Mac all:

A. originate residential mortgage loans.

B. purchase existing mortgage loans.

C. insure residential mortgage loans.

D. guarantee existing mortgage loans.

Which of the following deal in secondary market?

A. FHA

B. Fannie Mae.

C. VA.

D. Rural Housing Service (RHS)

B. Fannie Mae.

note:  secondary mortgage market in which loans are bought and sold only after they have been funded (closed).

Freddie Mac:

A. operates mostly in the primary mortgage market.

B. operates mostly in the secondary mortgage market.

C. guarantees payment of Freddie Mac mortgages.

D. buys mostly FHA loans

B. operates mostly in the secondary mortgage market.

note: the primary goal of Freddie Mac is to provide a secondary market for mortgage loans, primarily conventional loans.

Which of the following best describes participants in the secondary market?

A. Lenders who deal exclusively in second mortgages.

B. Institutional investors who buy and sell loans.

C. The major lender of residential mortgages and deeds of trust.

D. Institutional investors who supply money for FHA and VA loans

The primary activity of Freddie Mac is to:

A. guarantee mortgages with the full faith and credit of the federal government.

B. buy and pool blocks of conventional mortgages and sell bonds that use them as security.

C. act in tandem with GNMA to provide special assistance in times of tight money.

D. buy and sell VA and FHA mortgages.

The Truth-In-Lending Law, implemented by Regulation Z, sets forth certain requirements regarding real estate loans to individuals for all of the following purposes EXCEPT loans for:

A. household use.

B. business use.

C. room additions.

D. swimming pools.

The purpose of the Truth-In-Lending Act is to:

A. regulate the annual percentage rate.

B. assure a meaningful disclosure of the true cost of obtaining credit.

C. estimate finder's fees and service charges.

D. regulate finance charges to the consumer.

B. assure a meaningful disclosure of the true cost of obtaining credit.

note: Truth in Lending Law (TILA) requires that credit institutions inform borrowers of the true cost of obtaining credit (p.246)

Regulation Z would apply to:

A. business loans.

B. residential home loans.

C. commercial loans.

D. agricultural loans. 

Under the Truth-In-Lending Act (Regulation Z) the lender must disclose the:

A. legal fees.

B. loan costs.

C. appraisal fees.

D. closing expenses

Under the advertising provisions of Regulation Z, an advertisement is subject to full disclosure requirements if it includes which of the following?

A. "liberal terms."

B. "assumable loan."

C. "20% down payment."

D. "conventional financing available."

Which of the following would be considered a trigger item under Regulation Z?

A. “Low monthly payments.”

B. “FHA financing available.”

C. “A steal at only $175,000.”

D. “Only $10,000 down.”

The provisions of the Truth-in-Lending Act (Regulation Z), do not require which of the following to be disclosed to a residential buyer?

A. Discount points.

B. The real estate brokerage commission.

C. A loan origination fee.

D. The loan interest rate

Which of the following is NOT a characteristic of the annual percentage rate?

A. The relationship of the total finance charge to the total amount financed.

B. It is required under the Federal Truth-in-Lending Act.

C. permits a standard expression of credit costs, which facilitates easy comparison of lenders by borrowers.

D. It discloses only the interest rate

The primary purpose of the Real Estate Settlement Procedures Act (RESPA) is to:

A. regulate settlement costs and set the maximum interest a lender can charge the borrower.

B. provide the borrower with mortgage insurance.

C. ensure buyers and sellers are fully informed of all closing costs related to closing the transaction.

D. standardize real estate settlement procedure to limit the number of non-federally related loans

The Real Estate Settlement Procedures Act (RESPA) would apply to which of the following real estate transactions?

A. A first mortgage loan to purchase a four family residential dwelling.

B. A second mortgage on a single family dwelling.

C. A construction loan on a commercial building.

D. A new loan to purchase a 30-acre far

 The Real Estate Settlement Procedures Act (RESPA) requires the lender to provide the borrower a loan estimate form:

A. within three business days after a loan application is submitted to the lender.

B. at the time of application or within seven business days of the completed application.

C. within three business days prior to closing.

D. within seven business days prior to closing. 

Under RESPA, one requirement pertaining to the closing is that the lender must use a particular closing statement form developed by the Consumer Financial Protection Bureau (CFPB). This form is known as:

A. “Settlement Costs” booklet.

B. Warranty Deed.

C. Closing Disclosure Form.

D. HUD-1 Settlement Statement.

“Kickbacks” are prohibited under the:

A. Truth in Lending Act / Regulation Z.

B. Real Estate Settlement Procedures Act.

C. Equal Credit Opportunity Act.

D. Federal Fair Housing Act.

The Real Estate Settlement Procedures Act (RESPA) applies to the activities of:

A. licensed real estate brokers when selling commercial and industrial properties.

B. licensed securities salespeople when selling limited partnership interests.

C. lenders financing the purchase of residential properties. D. Fannie Mae and Freddie Mac when purchasing residential mortgages

The Real Estate Settlement Procedures Act (RESPA) requires:

A. that the closing of a transaction be held within 90 days of the date of the sales contract.

B. that lenders keep no more than approximately 2 months of escrow payments as a cushion.

C. the lender to disclose the annual percentage rate the borrower will be paying.

D. that lenders follow certain advertising procedures when advertising credit. 

The Real Estate Settlement Procedures Act (RESPA) states all of the following EXCEPT:

A. lenders must provide borrowers with a loan estimate form.

B. a closing disclosure form must be received by the borrower at least three days prior to 

closing.

C. the borrower may cancel the loan transaction within three days after settlement.

D. a special information booklet with information about settlement costs be given to 

applicants

RESPA (The Real Estate Settlement Procedures Act) is a federal statute administered by the:

A. Federal Trade Commission.

B. Department of Housing and Urban Development.

C. Office of the U.S. Attorney General.

D. Department of Veteran Affairs.

An example of a kickback that is prohibited by RESPA is:

A. a fee paid by Broker A to Broker B for referring a buyer to Broker A.

B. a share of the commission paid by Broker A to her salesperson.

C. a fee paid by a surveyor to a broker for referring a property to be surveyed.

D. a flower arrangement that a salesperson sends to the buyer as a housewarming gift.

Which of the following agencies is responsible for implementation of the TILA-RESPA Integrated 

Disclosure Rule?

A. FHA.

B. VA.

C. HUD.

D. CFPB.

Under the TILA-RESPA Integrated Disclosure Rule, which form replaced the HUD-1 Settlement 

Statement and must be provided to the consumer/borrower at least three business days before 

consummation (closing) of the loan?

A. Loan Estimate.

B. Closing Disclosure.

C. IRS Form 1099-S.

D. IRS Form 8300.

Under the TILA-RESPA Integrated Disclosure Rule (TRID), the Loan Estimate form is required to 

be provided to the consumer/borrower no later than how many days after they submit a loan 

application?

A. 3 days.

B. 3 business days.

C. 7 days.

D. 7 business days.

Under the TILA-RESPA Integrated Disclosure (TRID) Rule, the initial Truth-in-Lending Statement 

and Good Faith Estimate were replaced with the:

A. Closing Disclosure.

B. Loan Estimate Form.

C. HUD-1 Settlement Statement.

D. Uniform Settlement Statement.R0120

The financing instrument used in Georgia in lieu of a mortgage is a:

A. security deed / deed to secure debt.

B. promissory note.

C. quit claim deed.

D. warranty deed.

When using a security deed in Georgia, the borrower is the:

A. mortgagor.

B. mortgagee.

C. grantor.

D. grantee