Finance 2.0 Flashcards

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1
Q

How many Federal Reserve Districts are there?

A

12

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2
Q

what does the federal Open Market Committee do

A

Carries out open market operations

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3
Q

a “contractionary monetary policy” of the Federal Reserve does what…

A

reduces reserve requirements

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4
Q

The rate of interest charged by the Fed to member banks is called the:

A

Federal Funds rate

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5
Q

The minimum number of hours of mandatory pre-license education for MLOs is:

A

20

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6
Q

Who has the power of currency issue?

A

The Federal Reserve

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7
Q

The Truth in Lending Law is supervised by the

A

Consumer Financial Protection Bureau (CFPB)

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8
Q

When prices begin to fall and production tapers off, the period is called

A

buyer’s market

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9
Q

a loss of savings deposits to high yielding competitive investments is referred to as:

A

disintermediation

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10
Q

A real estate cycle refers to the real estate market’s reaction to the forces of:

A

supply and demand

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11
Q

Predatory loan practice include:

A

Fraud, usury, and deception

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12
Q

The role of FNMA (Fannie Mae) was further expanded in 1970 with the passage of the

A

Emergency Home Finance Act

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13
Q

When the government is forced to borrow money, making less money available for construction and home loans, it is called

A

deficit spending

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14
Q

The primary lending market is made up of

A

local lending institutions such as commercial banks and mortgage companies

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15
Q

In a seller’s Market:

A

demand exceeds expectation

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16
Q

the four phases of the business cycle are:

A

peak, recession, bottom, recovery

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17
Q

Credit unions were first set up in

A

1970

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18
Q

Private, noninsured investment accounts are called

A

money market funds

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19
Q

Banks who supply capital for business ventures and construction activities on a short-term basis are called

A

commercial banks

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20
Q

A loan held by a lender rather than sold into the secondary market is referred to as a

A

portfolio loan

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21
Q

what do Mortgage bankers/mortgage companies usually do:

A

originate, service, and sell loans

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22
Q

what purpose does FIRREA hold:

A

protects the federal deposit insurance funds

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23
Q

A loan can often be seasoned

A

in 6-12 months

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24
Q

A short term revolving credit used by mortgage bankers is called a

A

warehouse line of credit

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25
Q

a loan where the lender assumes a percentage of ownership is called

A

a participation loan

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26
Q

indirect lenders include:

A

Pension Funds and insurance companies

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27
Q

What would be considered securities:

A

loans, stocks, and limited partnerships

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28
Q

An entity that can issue CMO securities without double income taxation is called a

A

REMIC

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29
Q

What entity was created to help resolve the crisis created by the widespread collapse of the savings and loan industry

A

FICO

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30
Q

Private mortgage insurance is required on all loans that exceed what percentage of the value of the property

A

80%

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31
Q

When an investor has an “undivided interest” in the mortgage pool it is commonly referred to as a:

A

pass-through security

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32
Q

FAMC is also referred to as

A

Farmer Mac

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33
Q

Which agency is responsible for the regulation of the FNMA, FHLMC, and the federal home loan bank system

A

FHFA

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34
Q

The FHFA refers to

A

Federal Housing Finance Agency

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35
Q

obsolete information that must be removed from a consumers credit line file can include bankruptcy over____ years prior

A

10 years old

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36
Q

The first piece of legislation passed by congress after the Civil War that provided for equal property rights for all citizens was:

A

the Civil Rights Act of 1866

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37
Q

A creditor who fails to comply with the equal credit opportunity act shall be civilly liable for punitive damages for an individual applicant for up to

A

$10,000

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38
Q

A mortgage fraud scheme where the down payment is actually borrowed as a second mortgage by the seller but never documented the purchase agreement is called a:

A

silent second

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39
Q

redlining is the refusal to make loans:

A

on properties in certain neighborhoods

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40
Q

A high-cost mortgage does not include:

A

APR test or a PER test

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41
Q

A scheme in which a recently acquired property is resold for a considerable profit with an artificially inflated value, often as a result of collusion with an appraiser, is called:

A

Property Flipping

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42
Q

The Civil rights act of 1866:

A

applies only to purchase or sale of property

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43
Q

When applying for a loan, lender give borrowers a “loan estimate form” within

A

3 days

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44
Q

Which agency is responsible for the regulation and examination of all institutions in the Farm Credit System?

A

FCA

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45
Q

The total amount of interest a borrower will pay over the loan term as a percentage of the loan amount is referred to a:

A

TIP (total interest paid)

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46
Q

The right of rescission applies to

A

one-to-four-unit owner occupied residential property

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47
Q

Where in the closing disclosure forms can you find the Loan Calculations such as total payments, finance charge and amount financed?

A

Page 5

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48
Q

The act that requires lenders, mortgage brokers or servicers of home loans to provide borrowers with the pertinent and timely disclosure of the nature and costs of the real estate settlement process is known as the:

A

Real Estate Settlement Procedure Act (RESPA)

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49
Q

How many day prior to consummation can a revised loan estimate generally be provided to the borrower?

A

No later than 7 days prior to the consummation

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50
Q

According to Regulation Z, “triggers” include:

A

Downpayment amount, interest rate, and number and dollar amount of payments

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51
Q

The requirement that all pertinent information about a property or a loan be provided to enable a consumer to make informed choices is referred to as:

A

disclosure

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52
Q

What is the Truth in Lending Act often referred to as?

A

Regulation Z

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53
Q

The effective yield on a loan is referred to as:

A

the annual percentage rate (APR)

54
Q

In a promissory note, the borrower is called the

A

maker

55
Q

A creditor is given the right to have the security property sold to satisfy the debt if the debtor fails to pay the debt according to the term of the agreement. This is done with a:

A

security instrument

56
Q

A subordination clause is most often used for:

A

construction loans

57
Q

In a foreclosure, a judge’s order is called an:

A

order of execution

58
Q

A clause in a finance instrument that limits a borrower’s right to transfer the property without the lenders permission is called a(n):

A

alienation clause

59
Q

a “declaration of Default is prepared by:

A

the lender

60
Q

In the event of a default, a creditor or seller may declare the entire outstanding balance immediately due and payable with a(n):

A

acceleration clause

61
Q

Negotiable instruments are promissory notes that are:

A

freely transferable

62
Q

a “due-on-sale” clause in a loan allows

A

the lender to declare the entire loan balance due immediately

63
Q

An out-of-court sale or auction initiated at the direction of a beneficiary is called a

A

trustee’s sale

64
Q

FICO score generally range from

A

300-850

65
Q

In a loan application a borrower’s assets include all of the following:

A

child support payments, automobiles, savings accounts

66
Q

the first step in obtaining a real estate loan is:

A

to fill out the loan application

67
Q

Discrimination in the loan process is prohibited by the

A

Equal Credit Opportunity Act

68
Q

All of the following are factors that comprise a credit score:

A

new credit, amounts owed, payment history

69
Q

In the loan application process the borrower pays up front for a

A

preliminary title report, credit report, and property appraisal.

70
Q

A borrower must provide which kind of information when applying for a loan?

A

Financial and personal

71
Q

Bankruptcies must be reported on the application if they have occurred within the past

A

7 years

72
Q

As mandated by the new TRID rule, the final Truth-in-lending statement and uniform settlement statement were integrated and replaced by the:

A

Closing disclosure

73
Q

A third-party opinion of the value of a property is called:

A

an appraisal report

74
Q

Private mortgage insurance protects the

A

lender

75
Q

a loan that provides for repayment with an agrees period by mean of the regular level payments is called

A

amortized loan

76
Q

Another term used to describe private mortgage insurance is

A

mortgage insurance premium

77
Q

If a buyer does not have enough month for a 20% down payment for a conventional loan some options include

A

a. a down payment of 10% with a conventional loan up to 75% and the seller carrying a second mortgage
b. a 90% conventional loan with a 10% down payment

78
Q

A loan origination fee is normally paid by the

A

buyer

79
Q

a fixed-rate mortgage

A

remains at the same rate for the life of the loan

80
Q

a 5-year call provision means

A

a large balloon payment is due in 5 years

81
Q

What is an advantage of having a 15 year mortgage?

A
  1. Saving thousands of dollars because of lower payments 2. Home ownership in half the time. 3. Lower fixed interest rates
82
Q

Borrowers seeking conventional loans with a larger LTV than the traditional ratio are required to

A

obtain private mortgage insurance

83
Q

a private mortgage insurer usually requires how many month’s mortgage in reserve?

A

2

84
Q

The interest rated stated in the promissory note is called

A

the nominal or coupon rate

85
Q

alternative financing programs are popular:

A

during times of high interest rates

86
Q

in alternative financing, “one point” is equal to:

A

1% of the loan amount

87
Q

A borrower who have a 90% LTV ARM loan at 3.5% initial interest with a 2% annual interest rate cap and a 5% lifetime cap must qualify at:

A

5.5%

88
Q

Payment points to reduce the amount of interest on a loan is called a

A

buydown

89
Q

discount points are paid:

A

at the closing

90
Q

A fixed-rate loan that gives the borrower a limited opportunity to reduce the interest rate without paying refinancing costs is called;

A

a reduction option mortgage

91
Q

A fixed-rate mortgage loan that is set up in a fashion similar to a standard 30-year conventional loan is a

A

biweekly loan

92
Q

when minimum monthly payments result in unpaid interest that is added to the loan balance it is called:

A

negation amortization

93
Q

ARM mortgage payment caps are usually limited by lenders to an annual increase of:

A

7.5%

94
Q

A program designed to allow homeowners to finance light repairs or permanent improvements to their homes is know as the

A

FHA title 1 program

95
Q

The FHA Charges a monthly mortgage insurance premium equal to ___% of the loan amount annually on a 30-year loan over 95% LTV

A

1.75%

96
Q

How many days of continuous active service must a current active veteran have to be eligible for VA loan

A

181 days

97
Q

In a VA loan the veteran borrower may pay for:

A

title insurance, recording fees, and credit report fees

98
Q

Which legislative bill provides for VA loan guarantees

A

the G.I. Bill

99
Q

The indemnity obligation means that:

A

veterans must reimburse the U.S. government for any loss on the loan.

100
Q

The FHA only insures…

A

insures loans only

101
Q

The maximum loan origination fee in a VA loan is not:

A

2,5,3%`

102
Q

the format that notifies a lender of a veterans eligibility for a VA loan is called

A

Certificate of Eligibility

103
Q

A distinguishing feature of a land contract is that, until all the payment have been made on the contract, legal title to the property is retained by the

A

sellers

104
Q

when a buyer makes payments into the escrow account and the escrow agent pays the seller’s loan payments out of the account it is called a

A

contract escrow

105
Q

If a lender is estopped, it means that he/she is

A

legally prevented from doing something

106
Q

In a purchase money mortgage, the seller is called the:

A

mortgagee

107
Q

Which type of clause could prevent a loan from being assumed

A

due on sale clause

108
Q

In order for the seller to be relieved of his/her responsibility in a loan he/she must obtain from the lender a(n):

A

release

109
Q

In a wraparound mortgage, the seller receives

A

the benefit of the existing low-interest rate loan.

110
Q

An agreement to keep open the right to purchase or sell property for a predetermined period of time is called

A

an option

111
Q

Something of value given by the optionee to the optionor in return for a commitment to sell the property to the optionee at some time in the future is called

A

consideration

112
Q

The difference between the market value of the property and the sum of selling expenses, mortgages and other liens against property is referred to as

A

equity

113
Q

a loan that meets the requirements of FHMLC is called a(n)

A

investment quality loan

114
Q

the individual who conduct the loan application evaluation process is called a

A

underwriter

115
Q

As a general rule, a borrower should have continuous employment for at least

A

2 years

116
Q

secondary earning take the form of

A

interest on savings, disability payments, bonuses and commissions.

117
Q

Income that can be expected to continue for a substantial period is called

A

durable income

118
Q

According to the FNMA/FHLMC guideline , the maximum total debt service ratio for loans that do not exceed 90% loan-to-value ratio is what percentage of stable monthly income?

A

36%

119
Q

In valuing a property, the most easily understood approach is called

A

the market approach

120
Q

the comparative property sales that appraisers actually use are

A

those properties that have closed escrow

121
Q

A gross rent multiplier helps an appraiser to determine

A

the income approach to a properties values

122
Q

Atypical properties:

A

must be appraised by a Certified Level Appraiser only

123
Q

In California, personas not licensed by CalBRE can still engage in residential real estate lending by operating under the NMLS and the:

A

Department of Business Oversight

124
Q

The maximum amount the real estate recovery fund in California is liable for in an dingle action is

A

$50,000

125
Q

In California, who can deny, suspend, or revoke any licensed issued by the Bureau of Real Estate

A

The Real Estate Commissioner

126
Q

The purpose of licensing is to

A

protect the public

127
Q

In California, real estate licensees who wish to engage in residential real estate loan origination must

A

obtain an endorsement for the NMLS

128
Q

The principle officer of the California Bureau of real estate is the

A

Real Estate Commissioner

129
Q

A mortgage broker is required to provide to a borrower that discloses the maximum costs and expenses associated with obtaining a loan

A

Mortgage loan disclosure statement

130
Q

What does ARM stand for.

A

Adjustable rate mortgage