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128 Cards in this Set
- Front
- Back
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A "jumbo" loan is also known as a |
nonconforming loan |
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A "teaser rate" is |
the original interest rate on a variable rate mortgage |
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A borrower gets 15 year interest only loan for $100,000 at 5.5%. At the end of the loan term, how much will the borrower owe the lender? |
$100,000. The entire principal must be repaid at the end of the loan term since the borrower paid only interest for 15 years. |
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A borrower is more likely to consider an ARM when interest rates are __. |
high |
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A borrower pays the seller for the right to occupy to property, but the seller retains title until the borrower pays a specified number of payments. This describes a __. |
land contract |
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A borrower's income is considered adequate for a conventional mortgage loan if the proposed payment of principal, interest, taxes, and insurance (PITI) does NOT exceed what percentage of stable monthly income? |
28% |
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A clause in a security instrument that gives the lender the right to demand payment of the entire principal balance if a monthly payment is missed or a mortgage covenant is broken is an; |
Acceleration clause |
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A clause in the note that gives the lender the right to charge the borrower a fee for paying off the loan early is known as; |
prepayment penalty |
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A company who makes, services, buys, or sells mortgage loans and underwrites the loans and borrows the money they lend, is known as a; |
mortgage banker |
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A loan that follows the secondary market criteria set by Fannie Mae/Freddie Mac; |
A conforming loan |
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A customer with good credit and a large down payment applying for a $750,000 mortgage loan on a single family residence would apply for what type of loan? |
nonconforming, $750,000 is above the maximum that a conforming loan or an FHA loan allows. |
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A housing bubble is typically driven by a; |
lack of sufficient supply to meet demand |
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A lender making a secured loan for a real estate purchase is known as the; |
mortgagee |
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RESPA defines income earned by mortgage bankers who use their own funds as a; |
Service Release Premium |
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A limit placed on the number of percentage points an interest rate can be increased or decreased during the term of the loan is the; |
interest rate cap |
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A loan approved but requiring additional items has; |
conditional approval |
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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 called; |
fully amortized |
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A loan that is amortized over 30 years with the balance due in 15 years is known as a; |
balloon mortgage |
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A mortgage broker does NOT service ______ loans. |
mortgage |
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A mortgage loan that has a fixed rate for a predetermined length of time and adjusts for the remaining term of the loan is known as what type of loan? |
Adjustable Rate Mortgage |
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When the payment made on a loan is NOT sufficient to cover the monthly interest due, the result is; |
negative amortization |
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The interest rate the banks charge to preferred customers is known as the; |
prime rate |
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A mortgage loan, typically a second mortgage that has a predetermined maximum loan amount, has a adjustable rate, can be borrowed against and paid off as needed, and has an interest only maximum monthly payment, is; |
HELOC |
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A mortgage that covers more than one parcel of real estate is a; |
blanket mortgage |
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A mortgage that is a reusable loan with a fluctuating balance according to the amount used is known as a; |
Home Equity Line Of Credit (HELOC) |
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A partially amortized mortgage requires a; |
Balloon payment |
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A person who borrows money and gives the mortgage to the lender as security is known as the; |
mortgagor |
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A plan where payment subsidies in early years keep payments low, but payments go up each year until they're high enough to fully amortize the loan, is known as; |
graduated payment buydown |
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A point is |
1% of the loan amount |
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Temporary Buydown |
A popular way to reduce the buyer's payments when interest rates are high. |
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A provision in a mortgage enabling the lender to demand full repayment if the borrower sells the mortgaged property, or partial interest in a mortgaged property, is known as; |
due on sale clause |
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A short-term mortgage in which small periodic payments are made based on regular amortization until the completion of the term, at which time the balance is due as a single lump-sum payment, is known as a; |
balloon payment |
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A Jumbo Loan is also known as a; |
Nonconforming Loan |
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A subordination clause in a mortgage; |
puts the mortgage in first lien position over an earlier recorded mortgage. |
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Occurs when a new mortgage plus an existing mortgage is structured as a single obligation. |
Wraparound Mortgage |
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According to Fannie Mae and Freddie Mac, the ideal debt ratios for a conforming loan are; |
28/36 |
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According to the Interagency Guidance on Nontraditional Mortgage Products, nontraditional mortgage loans may be LEAST risky for borrowers with low ___. |
debt income ratios. |
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An obligation is paid in a series of installments where there is a decrease in the amount applied toward the interest with each payment; |
Fully amortizing loan. |
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An advantage the brokers do NOT have over lenders when qualifying borrowers is that ___. |
brokers make money servicing the loans they originate. Which means they do not. |
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Riskier than a prime loan, less risky than a subprime loan; |
An Alt-A loan |
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An example of seller financing is; |
purchase money mortgage |
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An FHA insured loan is an example of; |
government agency financing |
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An informal meeting during which a lender provides a consumer with information on mortgage loan products, underwriting guidelines, and income qualification is known as; |
pre-qualification |
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An intermediary who earns a commission for bringing together borrowers and lenders is called a mortgage ___. |
broker. |
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Another name for a due on sale clause that gives the lender certain rights when property ownership is transferred is an; |
alienation clause |
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Any document that transfers title, creates a lien, or gives a right to payment would also be known as an; |
instrument |
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At what point does an offer to purchase real estate become a legal and binding contract? |
upon notice and delivery of the final party. |
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Cap in mortgage terms in defined as; |
a provision of an ARM loan that limits how much an interest rate can increase or decrease at each adjustment. |
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Charged to buy down the interest rate on the loan; |
Discount Points |
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FHA is administered by; |
HUD |
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GNMA purchases what type of mortgage loans? |
FHA |
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The difference between subprime loans and conforming loans is subprime loans allow for; |
more risk |
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If a borrower exercises his right to change from an ARM to a fixed rate mortgage one time during the loan term, provided certain conditions are met, he has what type of mortgage? |
Convertible ARM |
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If a customer wants to refinance his first mortgage and leave an existing second mortgage in place, the second lender must sign a; |
subordination agreement |
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In a purchase transaction closing, hypothecation occurs. This is described as; |
using property as collateral without surrendering use or possession of it. |
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In real estate, a formal sealed agreement or contract is described as a; |
covenant |
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In some states, the rights received by a spouse in a real estate purchase by the other spouse are known as; |
dower rights |
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In the event of a default, which debt is normally paid first from the proceeds of the foreclosure sale? |
real estate taxes and associated costs of sale. |
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Index + margin is the formula used to calculate an; |
adjustable rate |
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Items that are NOT real property, such as lawnmowers, automobiles, or farm machinery, that are included in the purchase agreement are known as; |
chattel |
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A jumbo loan is one that exceeds the limits imposed by |
FNMA |
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Once the initial rate has been set for an adjustable rate mortgage ARM, future interest rate adjustments are based on the upward and downward movements of; |
a standard index |
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Par rate is best described as; |
when the broker neither pays discount points nor receives a premium for the rate the broker sells the buyer. |
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The annual percentage rate (APR) as required to be disclosed in a TIL statement is the; |
total cost of borrowing for the actual amount borrowed. |
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The defeasance clause ensures that; |
upon final payment, the mortgage is satisfied, cancelled or void, and the title is re-vested from mortgagee to mortgagor. |
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The document that is evidence the property has been bought back by the owner, within a set time after losing it in a judicial sale after foreclosure action, is a; |
certificate of redemption |
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The interest rate of an adjustable rate loan; |
fluctuates according to a standard predetermined index. |
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The interest rates charged for FHA and VA loans are established by; |
the market |
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The main advantage of a 15 year loan versus a 30 year loan is; |
the total of the repayments or the total paid back to the lender, is less. |
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The main difference between a 30-year conventional loan and a bi-weekly mortgage is; |
payments are monthly instead of scheduled every two weeks. |
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The major advantage to paying off a mortgage loan over a shorter term is a reduction in the; |
total interest costs |
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The one promising to pay a promissory note is the; |
maker |
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The portion of the ARM that CANNOT change and is used to compute the interest rate on a variable rate mortgage is known as the; |
margin |
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The promises between the borrower and the lender outlined in the mortgage document are known as; |
covenants |
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Which is NOT a purpose of an alienation clause; |
protect borrowers from being charged excessive interest rates by lenders, which is not true. |
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The rate that is used to amortize the mortgage loan and determine the monthly loan payments is known as the; |
note rate |
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The right held by a utility, through a grant or court order, to cross the property of an owner is known as; |
easement |
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The right to take and hold or sell the property of a debtor, as security or payment for a debt or duty, is known as; |
a lien |
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The seller in a land contract is known as the; |
vendor |
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The succession of conveyances of the title to real property is known as the; |
chain of title |
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The act of allowing an interest rate and discount points to fluctuate with changes in the market is known as |
float |
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The major buyers in the secondary mortgage market are; |
Fannie Mae and Freddie Mac |
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The total amount needed to complete the purchase of a home is known as the; |
acquisition cost |
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The type of mortgage that covers more than one parcel or lot and is often used for financing subdivision developments is called a; |
blanket mortgage |
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Total cost of financing a loan in percentage terms is the; |
annual percentage rate |
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What calculation is used to determine a point? |
1% of the loan amount |
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What clause gives a lender the right to charge the borrower a penalty for paying off the loan early? |
prepayment clause |
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What do you call a deed that carries guarantees of clear title and the grantor's right to convey? |
warranty deed |
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What do you call a mortgage loan transaction in which the broker actually closes the loan but the funds are supplied by the end lender? |
table funding |
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One of Ginnie Mae's roles in the mortgage industry is to; |
securitize FHA-insured loans- |
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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? |
power of sale clause |
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What is the clause that appears in many blanket and 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? |
partial release clause |
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What is the minimum down payment for a conforming purchase loan? |
5% |
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What loan is most likely to utilize a single closing as a new construction loan? |
construction permanent loan. |
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What loan may allow the borrower to state an income WITHOUT verification based on credit score and LTV? |
Subprime |
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What program was the first to be put in place to allow those with less than a 20% down payment to buy a house? |
FHA |
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What type of institution specializes in savings accounts and savings instruments that typically yield a higher rate of return than other institutions? |
Savings bank |
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What type of lending provider will take a mortgage loan application, process the loan through loan closing, and then service the loan after disbursement? |
Mortgage banker |
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What type of loan commonly requires two closings? |
Construction |
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What type of mortgage allows the lender a share of the earnings, income, or profits generated by the mortgaged real estate. |
equity participation mortgage |
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Where do the funds for FHA loans come from? |
approved lenders |
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What agency is responsible for US monetary policy? |
Federal Reserve Board |
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What can be found in a note? |
terms and repayment provisions |
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Which government agency backs VA loans? |
Department of Veteran's Affairs (VA) |
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Which government agency makes loans when no local lender is available? |
USDA Rural Development |
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Which is an example of a document that can be used to pledge real estate as collateral to secure a promise to repay a debt? |
mortgage |
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The portion of principal and interest due on a loan that is written off when deemed to be uncollectible is known as; |
charge off |
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Which is NOT a type of mortgage? |
bi-monthly |
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Which is TRUE about nonconforming loans? |
They generally cost a homeowner more in fees. |
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Which mortgage requires principal and interest payments at regular intervals until the entire debt is satisfied? |
fully amortized mortgage |
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Which element of an ARM is a statistical report that is generally reliable indicator of the approximate change in the cost of money and may be used to adjust interest rates? |
index |
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Which type of alternative financing is set up as a fixed rate mortgage with payments that increase regularly like an adjustable rate mortgage? |
GEM. Growth Equity Mortgage |
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An HECM reverse mortgage and an adjustable rate mortgage are both examples of; |
nontraditional loans. |
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Who was the first agency in the secondary market? |
Fannie Mae |
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Why are documents recorded with the county government? |
to provide notice of who holds an interest in a piece of property |
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With a $50,000 loan at 8% interest, which would NOT include a balloon payment due at the end of the term? |
amortized over 20 years |
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What is the purpose of the 4506-T? |
confirm tax records as filed with the IRS. |
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The proper way to make form corrections is to ____ them. |
pen and ink |
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With a construction loan, in whose name is the property held? |
the homeowner's |
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The type of survey used to determine if a home is in flood zone when part of the property is located in a flood zone is; |
topographical survey |
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Which shows the perimeter of the lot from a bird's eye view? |
boundary survey |
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The type of survey done to show encroachments is the; |
location survey |
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Zoning rules are created to; |
ensure the safety of the building |
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Mary finally is building that dream home in the country on the 5 acres she has owned for 7 years. Can she use the equity in the land in lieu of cash for a down payment? |
yes, regardless if the land is free and clear, as long as there is equity. |
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Partial payments for progress to the builder are called; |
draws |
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Which of the parties regularly disburse draw requests? |
title company |
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A 10% overage may be calculated as part of the final loan amount determination when underwriting a construction loan to account for; |
cost overruns |
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In a one-time close, how long are borrower documents considered good to allow the conversation to permanent financing without requiring updating, per FNMA? |
120 days |
