Chapter 13: Types of Mortgages and Sources of Finance

Question 1

The FHA does not make loans. Instead, it ______ loans.

Answer 1

insures

Question 2

FHA section ______ is the original program for insuring loans.

Answer 2

203(b)

Question 3

FHA loans are underwritten in _____ increments.

Answer 3

$50

Question 4

UFMIP (______) is paid at the time of closing, but may be financed.

Answer 4

up-front mortgage premium

Question 5

An FHA insured mortgage must include the right to _______ without penalty.

Answer 5

prepay

Question 6

A _______ mortgage is one in which the payments in the first few years are lower than necessary to repay the loan, which results in negative amortization.

Answer 6

graduated payment

Question 7

true/false: FHA loans may be used to finance condominiums.

Answer 7

true

Question 8

In order to receive a VA loan, a ______ is obtained from the VA.

Answer 8

certificate of eligibility

Question 9

FHA loans _____ have a maximum loan amount and _____ require a downpayment.

Answer 9

does

does

Question 10

A VA loan _____ have a maximum loan amount, and _____ require a downpayment.

Answer 10

does not

does not

Question 11

PMI (Private Mortgage Insurance) is required when the LTV ration exceeds ______.

Answer 11

80%

Question 12

If a balance is due at the end of a loan term, it’s called a _____.

Answer 12

balloon payment

Question 13

In an ARM, the _______ is a percentage added to the index rate to cover the lender’s overhead and provide a profit.

Answer 13

margin

Question 14

The date when interest rates can change in an ARM is the _______.

Answer 14

rate adjustment date

Question 15

The amount of time between rate adjustment dates is the ______.

Answer 15

rate adjustment period

Question 16

Most ARMs have both a _____ cap and a _____ cap.

Answer 16

payment

lifetime

Question 17

Construction loans are paid in ______ at specific stages of development.

Answer 17

draws

Question 18

A _______ is a mortgage obtained from the seller.

Answer 18

PMM

Question 19

A ______ mortgage is interest-only payments.

Answer 19

term

Question 20

A ______ mortgage includes both real and personal property as security for the loan repayment.

Answer 20

package

Question 21

_______ is the term used to describe the flow of deposits into lending institutions.

Answer 21

Intermediation

Question 22

_____ occurs when depositors bypass traditional depository institutions or withdraw money.

Answer 22

Disintermediation

Question 23

_________ is the most abrupt tool the FED has for regulating money.

Answer 23

Reserve requirement

Question 24

The _______ is the least effective of the FED’s tools to regulate money.

Answer 24

discount rate

Question 25

_______ is the most effective method tool the FED has for controlling the flow of money.

Answer 25

Open market operations

Question 26

______ are financial institutions which originate loans.

Answer 26

Mortgage bankers

Question 27

_____ do not make loans. Instead, they arrange loans by matching up lenders with lendees.

Answer 27

Mortgage brokers

Question 28

Regarding Savings Associations, time deposits are another word for ______ accounts and NOW accounts are ______ accounts.

Answer 28

savings

checking

Question 29

The ______ regulates federal savings associations.

Answer 29

Office of Thrift Supervision (OTS)

Question 30

The ______ isures savings associations’ depositors up to $250,000.

Answer 30

Savings Association Insurance Fund (SAIF)

Question 31

______ are the largest source of funds for financing commercial projects and apartment complexes.

Answer 31

Life insurance companies

Question 32

The ______ mortgage market provides liquidity to the lending banks.

Answer 32

secondary

Question 33

______ is primarily engaged in purchasing federally-subsidised residential mortgages originated by local lenders.

Answer 33

GNMA