Unit 13

Question 1

A house had a sale price of $240,000. The buyer obtained a loan for $220,000. If the lender charges three points, how much will the buyer pay in points?

Answer 1

$6,600

A house had a sale price of $240,000. The buyer obtained a loan for $220,000. If the lender charges three points, how much will the buyer pay in points? The answer is $6,600.

Question 2

The buyers purchased a residence for $395,000, making a down payment of $79,000 and obtaining a loan for the balance. The loan is

Answer 2

a purchase money mortgage.

Question 3

Which of these makes direct loans to qualified borrowers?

Answer 3

FSA

Question 4

A construction loan usually is

Answer 4

short-term financing.

Question 5

Regulation Z defines a creditor as any person who

Answer 5

extends consumer credit more than 25 times each year (or more than 5 times when dwellings are used as security).

Question 6

On which type of loan can the borrower prepay without penalty?

Answer 6

All of these

Question 7

What does private mortgage insurance cover?

Answer 7

Protects the top 20% to 30% of the loan against borrower default

Question 8

In 1967, a lieutenant in the Air Force served for six months on active duty in Vietnam. In 1998, the veteran was killed in a skiing accident. The veteran’s surviving spouse wishes to use the veteran’s life insurance proceeds to make a down payment on a condominium and finance the remainder of the purchase with a VA-guaranteed loan. Is the surviving spouse entitled to a VA-guaranteed loan?

Answer 8

No, the veteran’s death was not service-related.

Question 9

One way a borrower can obtain a conventional mortgage loan with a lower down payment than 20% of the purchase price is by

Answer 9

obtaining private mortgage insurance.

Question 10

Which of the following is a participant in the primary mortgage market?

Answer 10

Credit Union

Question 11

A mortgage broker is

Answer 11

an intermediary

Question 11

The Equal Credit Opportunity Act prohibits lenders from discriminating against credit applicants on the basis of all of these factors EXCEPT

Answer 11

past credit history

Question 12

The lower the ratio of debt to value,

Answer 12

the higher the down payment made by the borrower.

Question 13

A 16-year-old applied for a conventional loan in order to purchase a condominium. The lender denied the application, citing the applicant’s age as the reason for the denial. Which of these is TRUE?

Answer 13

The lender lawfully denied the application because the applicant was under 18 and therefore was too young to legally sign a contract.

Question 14

A package loan includes

Answer 14

real and personal property.

Question 15

What does PMI stand for?

Answer 15

Private Mortgage Insurance

Question 16

HUD foreclosure sales of FHA-insured homes include an early bidding period for buyers who

Answer 16

intend to be owner-occupants.

Question 17

All of the following are examples of loans to individuals that are affected by the Truth in Lending Act under Regulation Z EXCEPT

Answer 17

Commercial Use

Question 18

The Truth in Lending Act (TILA) provides penalties for noncompliance. A successful class action alleging that a creditor understated the APR and/or finance charge of the involved loans could make the creditor liable for punitive damages of

Answer 18

the lesser of $500,000 or 1% of the creditor’s net worth, plus attorney’s fees and court costs.