Final Exam Pass Flashcards
FHA loans are_______________________ and VA loans are_________________________.
A. Insured by the Federal Housing Administration —– guaranteed by the Department of Veteran Affairs.
B. Backed by conventional banks —– backed by commercial banks
C. Only for people with children —– only for people without children
D. Farm loans —– lake loans
Rationale: The correct answer is A. The Federal National Mortgage Association (FNMA) is commonly known as Fannie Mae. FNMA buys FHA and VA loans.
The expenses, which a lender incurs while processing a mortgage loan application, are recovered from the borrower as: A. Discount points B. An origination fee C. A mortgage insurance premium D. Private mortgage insurance
Rationale: The correct answer is B. The origination fee is charged by the lender for processing the loan. It is the money the lender uses to pay the expenses of the company.
Zoning is enforced by:
A. Building permits
B. Building codes
C. Building inspectors
D. All of the above
Rationale:
The correct answer is D. All of the above. Zoning is enforced by building permits, building codes, and inspectors. These systematic safeguards are in place to protect, the health, safety, and welfare of the public.
Removing the original borrower’s name from the contract and substituting the new buyers name is called:
A. Novation
B. Substitute
C. Covenants
D. Subdividing
Rationale: The correct answer is A. Novation of parties substitutes a new name for the name that was on the contract. A novation of contracts substitutes a new contract for original contract.
The right to redeem the property before a mortgage foreclosure sale is called: A. Equitable redemption B. Buyer redemption C. Statutory redemption D. This is never used in Texas.
Rationale: The correct answer is A. Equitable redemption is used with a foreclosure for mortgage. Statutory redemption is used with a property tax sale. The owner of the property sold at a tax sale can redeem the property from the buyer after the sale.
The Texas Bootstrap Loan Program:
A. Is a self-help housing construction program for very low-income families
B. Is only for persons over 65
C. Must be built completely by the family
D. Is only for homes costing more than $300,000
Rationale: The correct answer is A. The owner-builder must provide at least 65% of the labor necessary to build the home.
The Federal Reserve Bank:
A. Is the most common bank seen in most cities
B. Was created to provide the nation with a more stable monetary and financial system
C. Provides loans to most residential home buyers.
D. Was created in 2013
Rationale: The correct answer is B. The Federal Reserve Bank does not provide banking services to individuals. It provides banking services for banks and credit unions.
A mortgage that includes real estate and personal property is a: A. Reverse mortgage B. Package mortgage C. Blanket mortgage D. Equity mortgage
Rationale: The correct answer is B. An example of this is a buyer finances the house, refrigerator, washer, and dryer on the same loan. It is a package mortgage.
The Federal National Mortgage Association was organized by the federal government in 1938 to buy FHA mortgage loans from lenders. What else is true about FNMA?
A. FNMA is no longer in business.
B. FNMA began purchasing VA loans in 1948.
C. FNMA became FHLMC in 1952.
D FNMA is part of the primary market.
Rationale: The correct answer is B. FNMA was created during the depression of the 1930’s to buy the mortgages that were insured by FHA. FHA was also created in the 1930’s. FNMA began buying VA loans after World War II.
s.
The borrower is:
A. Not required to be notified when the note is sold and the servicing rights are not sold
B. Not required to be notified when the note is sold and the servicing rights are sold
C. Required to arrange for the sale of the servicing rights
D. Not required to allow servicing rights
Rationale: The correct answer is A. The lender is not required to notify the borrower when the note is sold, and the servicing rights are not sold. The borrower is only required to be notified if the servicing rights are sold because the borrower will now be making the payment to a different agency.
The Act passed in 1968 to protect the consumer from land scams is the:
A. Buyers Land Protection Act
B. Interstate Land Sales Full Disclosure Act (ILSFDA or ILSA)
C. Federal Land and Housing Act
D. Texas Public Ownership
Rationale: The correct answer is B. The Interstate Land Sales Full Disclosure Act was passed in 1968. It is administered by the Consumer Financial Protection Bureau (CFPB).
Zoning is enforced by: A. Lenders and appraisers B. Streets and roads C. Building permits and building codes D. Neighbors
Rationale: The correct answer is C. Zoning is one of the government’s rights to privately owned land. Example: The city sets the use of the property by zoning the property as either residential or commercial. Anyone wishing to build in the zoned area must buy a permit and build the building to the city code. The city sends an inspector to inspect the building and make sure the building is built to code and is the building the builder received the permit to build. Zoning is enforced with this pr
The investor may try to keep the \_\_\_\_\_\_\_\_\_\_\_\_\_ high by keeping the expenses on the property low. A. Cash flow B. Rent C. Debit D. HOA
Rationale: The correct answer is A. Cash flow is the movement of money into or out of a business. It also refers to the amount of money left each month after all money has been collected and all expenses have been paid.
Historically, the investor has been allowed deductions on their income tax. Something that could be deducted is: A. Property tax B. Management fees C. Interest on the loan D. All of the above
Rationale: The correct answer is D. The homeowner is allowed to deduct interest on the loan and property tax from their income tax.
In a sublet the original tenant, called the \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_, sublets the property to the new tenant, called the \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_. A. Mortgagee-----mortgagor B. Sublessor---- sublessee C. Sublessee ------sublessor D. Buyer--------seller
Rationale: The correct answer is B. The original (sublessor) is still responsible to the landlord for the lease.
The term that BEST describes a tenant’s interest in the property under a lease is a: A. Life estate B. Reversionary interest C. Remainder interest D. Leasehold estate
Rationale: The correct answer is D. A leasehold estate is a temporary right to property granted by the owner to a tenant thru a lease.
When a property has become uninhabitable and the landlord has refused to repair the property the tenant may file a:
A. Constructive eviction
B. Foreclosure against the owner
C. Judicial eviction
D. The tenant must stay in the property until the lease is up.
Rationale: The correct answer is A. The tenant will appear before a Justice of the Peace and ask to be let out of the lease because the property has become uninhabitable and the landlord has refused to repair the property.
Property managers have a \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ relationship with the property owner. A. Partnership B. Subagency C. Binding D. Fiduciary
Rationale: The correct answer is D. The owner is the property manager’s client and the tenant is the property manager’s customer.
