Unit 13: Government Involvement in Real Estate Financing

Question 1

By law, FHA loans cannot charge __________ _________.

Answer 1

prepayment penalties.

Question 2

The Federal Reserve System (Fed) consists of 12 _______ _______ ________ _____.

Answer 2

federal reserve district banks

Question 3

The Fed regulates the ____ of _____ and ________ _____.

Answer 3

flow of money and interest rates

Question 4

The primary mortgage market consists of lenders that ________ mortgage loans

Answer 4

Originate

Question 5

In the secondary mortgage market, loans are ______ and ____ after being ______.

Answer 5

bought and sold, funded

Question 6

Fannie Mae has shareholders but is under the conservatorship of the _______ _______ _______ ______ (FHFA)

Answer 6

Federal Housing Finance Agency

Question 7

FHFA creates mortgage-backed securities using pool of mortgages as ____________, ___, and __ loans.

Answer 7

conventional, FHA, and VA loans

Question 8

Freddie Mac has shareholders and is under the conservatorship of ____.

Answer 8

FHFA

Question 9

Freddie Mac has authority to ________ mortgages, ____ them, and use them as ________ for _____.

Answer 9

purchase, pool, security for bonds.

Question 10

Ginnie Mae (Government National Mortgage Association) is entirely a ________ ________, a division of ___.

Answer 10

government agency, HUD

Question 11

GNMA is organized as a ________ but without ________ ________.

Answer 11

corporation, corporate stock

Question 12

GNMA administers ________-________ programs, and guarantees ________-________ securities using ___ and ___ loans as collateral.

Answer 12

special-assistance, mortgage-backed, FHA and VA

Question 13

___________ loans are the most secure loans

Answer 13

Conventional

Question 14

The _____-__-______ (___) is often lowest for conventional loans—traditionally ___%—but the LTV may be as high as ___%.

Answer 14

loan-to-value ratio (LTV), 80%, 100%.

Question 15

Conventional loans meet all the requirements of the secondary market, set by Fannie Mae and Freddie Mac, for ________ loans.

Answer 15

conforming

Question 16

__________ loans (jumbo loans) must be retained in the lender’s investment portfolio.

Answer 16

Nonconforming

Question 17

________ ________ ________ (____) may be required for LTVs higher than 80%,that is, down payments of less than 20%.

Answer 17

Private mortgage insurance (PMI)

Question 18

Federal law requires PMI to automatically terminate if the borrower has accumulated ___ ______ in the home (based on ________ ______ or original ________ ______, whichever is less) and is current on ________ ________.

Answer 18

22% equity, purchase price, appraised value, mortgage payments.

Question 19

Fannie Mae and Freddie Mac have extended the ________ ________ option to all loans that are in good standing and have had no ________ ________ added to the ________ ______.

Answer 19

automatic termination, additional financing, original loan

Question 20

FHA is part of ____

Answer 20

HUD

Question 21

FHA does not _____ loans but ______ loans made by an ___-________ lending institution.

Answer 21

make, insures, FHA-approved

Question 22

The FHA mortgage insurance premium (MIP) has an __-_____ fee along with ______ installments.

Answer 22

up-front, monthly

Question 23

__-________ loans are backed by the U.S. Department of Veterans Affairs and are available to eligible _______ and _______.

Answer 23

VA-Guaranteed, veterans and spouses.

Question 24

The Farm Service Agency (FSA), formerly ______ ____ _________ (____), is part of the Department of Agriculture

Answer 24

Farmers Home Administration (FmHA)

Question 25

The Farm Service Agency (FSA) has programs to help families purchase or operate ______ _____, including the ______ ______ and _______ _________ Service (RHCDS) and the ______ ______ System.

Answer 25

family farms, Rural Housing and Community Development, Farm Credit

Question 26

A _______ loan includes all personal property and appliances as well as real estate.

Answer 26

package

Question 27

A _______ loan covers more than one parcel or lot

Answer 27

blanket

Question 28

A ______ ______ clause allows a borrower to pay off part of a loan to remove the liens from one parcel or lot at a time.

Answer 28

partial release

Question 29

An _____-____ loan secures the ______ loan to the borrower and ______ _________ made by the lender to the borrower.

Answer 29

open-end, current, future advances

Question 30

_________ loans are used to finance construction of property improvements.

Answer 30

Construction

Question 31

A sale-and-leaseback arrangement can be used to finance _____ ________ or _________ properties.

Answer 31

large commercial or industrial

Question 32

A home equity loan (home equity line of credit or HELOC) is ______ to the original lien.

Answer 32

junior

Question 33

The _____ __ ________ ___ (____) is implemented by Regulation Z and enforced by the _________ _________ ________ _________.

Answer 33

Truth in Lending Act (TILA), Consumer Financial Protection Bureau

Question 34

TILA requires that, when a loan is secured by a residence, the lender must inform the borrower of the _____ _____ of obtaining credit and the borrower has a three-business-day _____ of _________.

Answer 34

true cost, right of rescission

Question 35

Pursuant to TILA, ________ is strictly regulated, using ________ terms to mandate what must be disclosed, and there are _____ and ________ penalties for violations.

Answer 35

advertising, triggering, civil and criminal

Question 36

The Equal Credit Opportunity Act (ECOA) prohibits discrimination in granting or arranging credit on the basis of ____, _____, ________, ________ ______, ___, _______ ______, ___ (as long as the applicant is not a minor), or receipt of public assistance.

Answer 36

race, color, religion, national origin, sex, marital status, age

Question 37

The Fair Credit Reporting Act (FCRA) requires that reasons for a loan application rejection be provided to the applicant within __ ____ and that the applicant be given the right to a free copy of any ______ ______ that was considered in the ____ ___________ process.

Answer 37

30 days, credit report, loan application

Question 38

The ________ ____________ ___ (___) requires financial institutions to help meet the need for affordable housing in their communities.

Answer 38

Community Reinvestment Act (CRA)

Question 39

The ____ ______ __________ __________ ___ (RESPA) covers costs related to the closing of a residential transaction.

Answer 39

Real Estate Settlement Procedures Act (RESPA)

Question 40

_________ ____________ (loan processing) programs provide loan approvals quickly and include Fannie Mae's _______ ___________ and Freddie Mac's ____ __________. A ______ _____ may be used as part of a loan application evaluation process.

Answer 40

Automated underwriting, Desktop Underwriter,Loan Prospector, credit score

Question 41

What is an example of a buydown arrangement?

Answer 41

A builder brings down a purchaser's interest rate for two years by paying the lender advance interest.

Question 42

The document that sets forth the maximum loan guarantee to which a veteran is entitled is the ___________ of ___________. The veteran must still _______ for the loan.

Answer 42

certificate of eligibility, qualify