Ch 13 - Types of mortgages and sources of financing Flashcards Preview

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Flashcards in Ch 13 - Types of mortgages and sources of financing Deck (20)
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1

True or false, to qualify for a reverse annuity mortgage a homeowner must be 62 years old or older and have a significant amount of equity built up in their house.

True

2

True or false, all savings associations are insured by the national credit union administration.

False

All savings associations are insured by the FDIC up to $250,000 per depositor per account.

3

True or false, negative amortization arises when the payment made by the borrower is less then the interest due and the difference is added to the loan balance.

True

4

True or false, the real estate settlement procedures act (RESPA) requires that prospective buyers get a special information booklet within three business days of submitting a loan application information on closing costs to be given to loan applicant.

True

5

True or false, straw buyers are people who consent to the use of their names and personal details by companies or people who will obtain mortgage loans but do not intend to live in the homes. This is considered mortgage fraud and is illegal.

True

6

True or false, with an Amortized Mortgage, as the loan is paid off, the amount applied to the principal decreases in the amount applied to the interest increases.

False

With an amortized mortgage, as the loan is paid off, the amount applied to the principal increases and the amount applied to the interest decreases

7

True or false, a conventional loan is a mortgage loan that is not guaranteed or insured by the government.

True

8

True or false, because an applicant needs to be able to prove that they can pay a mortgage payment for the entire life of a loan, lenders are allowed to factor in someone’s age when approving or denying them for a loan.

False

The equal credit opportunity act (ECOA) prohibits discrimination in loan underwriting on the basis of sex, marital status, race, religion, age, or national origin. Plus it prohibits discriminatory treatment of income from alimony, child support, public assistance, or part time employment. And it prohibits inquiry about, or consideration of, child bearing plans or potential for childbearing.

9

True or false, disintermediation is the normal flow of money into financial institutions from the public in the form of deposits.

False

Intermediation is the normal flow of money into financial institutions from the public in the form of deposits. Disintermediation occurs when depositors take their money out of financial institutions because they can earn more money in other investments.

10

True or false, the Federal Reserve system was established to provide a safer and more stable monetary system and to influence the availability and cost of money and credit.

True

11

Geoff want to buy a home with a conventional mortgage. The total PITI on the home he wants to buy will total $1500. He is already paying $1000 in other long-term debt obligations. Geoff’s gross monthly income is $4200. Which of the following statements is true?

Geoff doesn’t qualify for a conventional loan because his TOR is above 36%

Geoff qualifies for a conventional loan

Geoff doesn’t qualify for a conventional loan because his HER is 36%

Geoff qualifies for the loan because his TOR is 24%

Geoff doesn’t qualify for a conventional loan because his TOR is above 36%

Total monthly obligations/Monthly gross income = TOR

Total monthly obligations = $2500/$4200 = .5952 or 60%. TOR cannot exceed 36%: doesn’t qualify for a conventional loan. HER doesn’t apply to conventional mortgages

12

Which statement is false regarding the government national mortgage market association (GNMA)?

GNMA is part of the primary mortgage market

GNMA is a wholly owned government corporation under HUD

The mortgage back securities program provided by GNMA are pass-through securities as GNMA acting as a guarantor of the securities rather than the actual purchase or or creator of the securities.

GNMA provides the full faith and credit guarantee of the US government.

GNMA is part of the primary mortgage market

13

The truth in lending act disclosure requirements considers which of the following statements to be a triggering term?

25% down
Pay weekly
Terms to fit your budget
5% below our standard rate

25% down

14

Which of the following statements are false regarding the real estate settlement procedures act (RESPA)?

Giving a kickback in exchange for referring a settlement service business to another person is prohibited

Kickbacks are said to harm consumers by driving down the cost of transactions

Mortgage brokers can only pay other mortgage brokers a referral fee

Real estate license he can only pay other real estate license he is a referral fee

Kickbacks are said to harm consumers by driving down the cost of transactions.

15

An increase in the discount rate:

Results in less lending and reduces money supply

Is actually the least effective way to influence the interest rate charged with real estate loans

Is one of three ways for the Federal Reserve to conduct monetary policy

All of the above

All of the above

16

Which statement is true regarding FHA loans?

The interest rate charged is set by the government

The interest rate charged is negotiable as part of the free-flowing market

The interest rate charged is not part of the open money market

Buyers cannot negotiate the interest rate for FHA loans

The interest rate charged is negotiable as part of the free-flowing market

17

Which of the following statements are false regarding Fannie Mae?

It is a government owned agency

It is the secondary market for VA, FHA and conventional loans

It issues mortgage back securities to investors

It is the largest single private mortgage purchaser

It is a government owned agency

18

Which statement does not apply to VA entitlements?

It is possible to use up only part of entitlement.

The amount that is used up is equal to the amount that is being guaranteed by an existing VA loan

A loan commitment states the amount of entitlement available to the veteran

The unused entitlement is still available

A loan commitment states the amount of entitlement available to the veteran

19

Borrower Kathy has a starting balance of $150,000 at the beginning of January. She is being charged at 3.25% interest. Her total monthly payment for combine principal and interest is $640.50. How much of the first payment is the principal?

$234.25

$150,000 X .0325 = $4875/12 (months) = $406.25 Paid toward interest; $640.50 -$406.25 equals $234.25

20

Which mortgage pro vision makes a loan not assumable?

A habendum clause
A defeasance clause
Due on sale clause
An assumption clause

Due on sale clause