Unit 9: Government Loan Programs and Fair Housing

Question 0

Federal Housing Administration

Answer 0

• Provides it’s own mortgage default insurance.
• mortgage insurance premium (MIP) =insures entire loan balance and paid by borrower. May be paid monthly.
• finances 1-4 family residences
• interest rates set by lenders
• must be owner occupied
• no prepayment penalty
• loans are always assumable (w/ lender approval)

Question 1

Private Mortgage Insurance (PMI)

Answer 1

Covers lenders risk when loaning above 80%

Question 2

Veterans Administration (VA) guaranteed loan program

Answer 2

• guarantees lenders against losses on loans to eligible veterans
• no pre payment penalty
• veteran must occupy home
• can finance 100%- will lend 4x entitlement
• property must meet minimum construction standards
• loans are assumable

Question 3

2 certificates that VA loans require

Answer 3

Certificate of eligibility

Certificate of reasonable value (CRV) - appraisal

Question 4

Federal reserve

Answer 4

Regulates supply of money and interest rates in US

Question 5

Mortgage Markets

Answer 5

Primary: where Loans are originated

Secondary: where loans are bought and sold

Question 6

FNMA (Fannie Mae)

Federal National Mortgage Assoc

Answer 6

Gov owned

Buys all types of mortgages

Question 7

GNMA (Governmental National Mortgage Association)- Ginnie Mae

Answer 7

Agency within HUD

FHA and VA mortgages pass thru the secondary marker

Question 8

FHLMC (federal home loan mortgage corporation) -Freddie Mac

Answer 8

Government owned

Mainly buys conventional mortgages from savings and loan associations and commercial banks , but can purchase all types

Question 9

Conforming loan

Answer 9

Meets standards of Fannie Mae and Ginnie Mae and can be readily fold on secondary market

Question 10

Non Conforming Loan

Answer 10

Jumbo loan, larger then Fannie Mae standards. More difficult to sell on secondary market

Question 11

Subprime Loans

Answer 11

Higher rate charged bc borrower is a higher risk

• flexible rate loans
• higher fees charged by mortgage brokers

Question 12

Predatory lending

Answer 12

Unfair or illegal lending

Targeted elderly, minorities, less educated.

Question 13

Truth in Lending Act

Answer 13

Primate informed use of consumer credit by requiring advanced disclosure of loan terms and conditions

Requires 3 day right of rescission

Question 14

Four primary disclosures of lenders

Answer 14

1) APR
2) Finance charges
3) Total number and amount of all payments
4) Total amount financed

Question 15

APR

Answer 15

Aldo known as effective rate

Expresses relationship of total finance charge and interest to amount financed

Question 16

Advertising requirements

Answer 16

Asking price and APR are the only specific finance terms allowed in an advertisement w/o triggering full disclosure requirement

General statements (low down payment, property taxes, or HOA dues) ok

Question 17

RESPA vs a Truth in Lending

Answer 17

RESPA =All costs

Truth in Lending= Lender costs

Question 18

Fair Credit Reporting Act

Answer 18

Sets standards on how credit bureaus handle consumer credit inf

Question 19

Civil rights act of 1866

Answer 19

Prohibits discrimination in sales or rental of all property

Question 20

Federal Fair Housing Act/Civil Rights Act of 1968

Answer 20

Protected classifications in the sale and rental of residential property

F -familial status 
R -race 
E -(equal)
S -sex
H -Handicap

C -color
O -(opportunity)
R -religion
N -national origin

Question 21

Steering

Answer 21

Channeling potential buyers to or away from particular areas as a means of discrimination

Question 22

Blockbusting

Answer 22

Also called panic peddling. Suggesting owners should sell bc a particular ethnic background has moved in

Question 23

Redlining

Answer 23

Refusing to offer or limiting loan ps in certain areas bc of crime rate or ethnic backgrounds of residents

Question 24

Disability (per FHA and ADA)

Answer 24

An impairment that substantially limits one or more of a person's major life activities Landlords must allow disabled tenants to make changes to units at tenants own cost

Question 25

Stigmatized Property

Answer 25

Deemed undesirable bc of activities that I cured there (suicide, murder, gang activity,HIV) etc

Question 26

NC does not require disclosure of

Answer 26

1) death or crimes 2) haunted house 3) sexual offender in neighborhood 4) mold 5) AIDS

Question 27

Megan's Law

Answer 27

Requires registration of sex offenders

Question 28

Equal Credit Opportunity Act (ECOA)

Answer 28

Makes consumer credit available w/ fairness and impartiality Protected Classes: Race, color, religion, national origin, sex, marital status, age

Question 29

Americans with Disabilities Act

Answer 29

Intended to ensure equal a fess to public accommodations for disabled persons

Question 30

Requires 3 day right of rescission for buyer

Answer 30

Home improvement loan Home equity loan