Finance

Question 1

GNMA, FNMA, and FHLMC

Answer 1

Ginnie Mae, Federal Fannie Mae, Freddie Mac.

These are known as the secondary mortgage market. They do not lend their own funds but make the funds of others available for residential real estate financing.

Question 2

Portfolio loans

Answer 2

Doesn’t conform, not getting sold to the secondary market.

Conforming loans do get sold to Ginnie Mae Fannie Mae and Freddie Mac.

Question 3

Point

Answer 3

Equals 1% of loan amount. Points buy down the interest rate.

Ex.. Sale price 100k - down payment 20k = 80k loan amount x .01 = 800

Question 4

What are the different kinds of loans?

Answer 4

1. Rural development, RD
2. Maine state housing authority MSHA
3. Federal housing authority FHA
4. Veterans administration VA

Question 5

TILA

Answer 5

Truth in lending act

So the consumer can understand the true cost of borrowing, Congress and acted the truth in lending act.

Question 6

The goal of truth in lending is to help consumers shopping for credit by doing what three things?

Answer 6

1. annual percentage rate APR
2. advertising consumer credit.
3. three day right of rescission

Question 7

RESPA

Answer 7

Real estate settlement procedures act

1. prohibits kickbacks
2. provide consumers w/settlement costs
3. provide consumers with estimate closing cost
4. Require a uniform disclosure form for closings on 1-4 family properties

Question 8

What are kickbacks?

Answer 8

When a loan originator offers a licensee that they will pay a referral fee for every buyer the licensee sends to the loaner. This is illegal.

Question 9

TRID

Answer 9

Trid, real estate settlement procedures act, Integrated, disclosure.

A new system that lenders have to follow.

Question 10

Underwriting loans

Answer 10

When the application is complete, it goes to the lenders underwriting department. This is where they verify that all the representations are true and to see if it’s a conforming loan.

Question 11

PITI

Answer 11

Principal interest taxes and insurance

Should be around 15-20% of the borrows monthly payments

Question 12

FICO

Answer 12

Fair Isaac Corporation

FICO tracks credit scores. Credit scores range from a low 300 to a perfect score of 850.

Question 13

MI

Answer 13

Mortgage insurance

If the buyer is not able to pay 20% down then they are required to get mortgage insurance.

Question 14

ARM

Answer 14

Adjustable rate mortgage

Interest rates that I just overtime. The interest rate is fixed for pick period of years after that, it can be periodically adjusted

Question 15

FHA

Answer 15

Federal housing authority

Mortgage with as little as 3.5% down payment. FHA is insured by the government.

Question 16

FHA 203K program

Answer 16

Permits buyers to finance up to 35,000 into their mortgage to repair improve or upgrade their home.

Question 17

RD

Answer 17

Rural development

A loan for low income customers it will finance up to 100%.

RD can do, direct housing loans and guaranteed housing loans

Question 18

VA

Answer 18

Veterans administration

VA loans are provided by private lenders such as banks and mortgage companies. They are guaranteed and not insured like FHA. Veterans need a certificate of illegibility COE.

No down payment is required

Question 19

Term loan

Answer 19

A loan made for a specific amount of time. Most loans are term loans, they must be paid off by the end of a specific term, 15 years, 20 years, 30 years.

Question 20

Package Loan

Answer 20

A loan that will also pay for personal property such as appliances and furniture. Everything is paid for in one loan, fully furnished.

Question 21

Conventional Insured

Answer 21

When the borrower does not pay 20% more or down there acquired for mortgage insurance. This is still a conventional loan

Question 22

Construction loan

Answer 22

When the buyer closes on a house that has not even started construction yet. The buyer will start paying mortgage payments as the house is being built

Question 23

Conventional loan

Answer 23

Is a loan with at least 20% down for any numbers of years. It may have a six or variable interest rate. It is neither in shored nor guaranteed by the government.

Question 24

HELOC

Answer 24

Home equity line of credit

Homeowners have a second mortgage on their Home, allows them to borrow against the equity in their property and then repay the loan when they have the cash to do so.

Question 25

Junior Mortgage

Answer 25

When a property owner has more than one mortgage on a piece of property. The first loan is considered a senior mortgage and the second loan is a junior mortgage.

Question 26

Amortizing loan

Answer 26

Made up of both principal and interest. All payments for the term of the loan are the same. Most buyers use this type of loan

Question 27

Blanket mortgage

Answer 27

Is used to describe a loan that covers more than one parcel of real estate.

Question 28

Balloon mortgage

Answer 28

The borrower and lender agreed to read payment terms that call for one or more larger payments of principal from time to time

Question 29

Seller financing

Answer 29

Seller acting as the lender, Also called owner financing

Question 30

Installment sale

Answer 30

The buyer makes payments to the seller overtime, and summons, and when all payments have been made the seller gives a deed to the buyer.

Question 31

Promissory note

Answer 31

You borrow money and promise to pay it back, that is a promissory note

Question 32

Civil action

Answer 32

A complaint from the bank for a borrower or not making payments

Question 33

Short sale

Answer 33

When a seller has to bring money to closing because the house closed for less amount they bought it for.

Question 34

APR

Answer 34

Annual percentage rate TILA law requires all lenders to disclose the true cost of the loan as an annual percentage rate or APR.

Question 35

Advertising consumer credit

Answer 35

Truth and lending regulates that if an advertiser is promoting financing then the ad must also include cash price, required down payment, Number amounts and due dates of all payments.

Question 36

Three-day right of rescission

Answer 36

Any homeowner who enters into a transaction that will result in a lien on their phone has three days from the date of signing the papers to design the transaction. This does not apply to your first mortgage. It does apply for homeowners association

Question 37

The loan must meet the conforming standards to be sold into the secondary market, what are those three standards?

Answer 37

1. credit 2. Collateral 3. capacity

Question 38

Collateral

Answer 38

Is the real estate worth what the buyer is paying? Is the title clear? Is there insurance in place to cover all the major risk? This is when the appraisal happens and then needs to be excepted by underwriting. A mortgage loan inspection plan is often done

Question 39

Capacity

Answer 39

Does the buyer has the capacity to repay the loan? What are his income and assets? A loaner will check the buyers credit history, employment history, income, savings, short-term and long-term debts.

Question 40

What are examples of default on the loan?

Answer 40

When the borrower does not live up to his obligations. Such as… – Failure to make payments – Failure to pay taxes – Failure to maintain the property – Lose title to property voluntary or involuntary

Question 41

What are some examples of voluntary passing of title?

Answer 41

– sale – Gift – Exchange with a neighbor

Question 42

What are some examples of involuntary transfer of title that would trigger the acceleration clause?

Answer 42

– Foreclosure of lien, when the borrower has not paid his property taxes. – Foreclosure of mortgage, if the borrower has two mortgages and one is foreclosed. – Eminent domain

Question 43

What are the two mortgage documents?

Answer 43

– promissory note | -mortgage deed

Question 44

Mortgage deed

Answer 44

If borrower cannot repay the loan this document gives the lender the legal right to foreclose or take property away from the borrower and sell it.