AYPO REAL ESTATE UPDATED EXAMINATION SET
QUESTIONS AND SOLUTIONS GUARANTEE A+
✔✔The Economy - ✔✔Economic indicators such as the GDP, employment data,
manufacturing activity, the prices of goods, etc. all will have an impact on the availability
of mortgage funds and the consumer's ability to access them
✔✔Government Policies/Subsidies - ✔✔Some of the more common policies present in
our daily economic management toolkit, such as tax credits, deductions and subsidies
can be enough to inject a little life back into an otherwise sluggish market.
Ex.Other times, such as during the 2008 crash, more substantive interventions are
called for. In this instance, bailout programs, like the Home Affordable Refinance
Program (HARP) and the Home Affordable Modification Program (HAMP) were
designed to specifically address the crisis at that time
✔✔Impact of the Economy - ✔✔Real estate, as much as any commodity or investment,
is subject to the health of the general economy. Although the real estate market does
not run completely parallel to the overall economy, it is heavily influenced by the
availability of capital to fund the purchase of real estate.
✔✔Financial Markets - ✔✔The financial market can be described as any or all of
multiple marketplaces where trading of securities takes place. These include equities,
bonds, currencies and derivatives.
✔✔Stock Markets - ✔✔Stock markets, such as the New York Stock Exchange, provide
investors with a place to buy and sell shares in publicly traded companies.
✔✔Bond Markets - ✔✔A bond is an investment vehicle where an investor loans money
to a specified entity. The bond generally has a predetermined duration and interest rate,
and can be sold by both the private and public sectors to fund their projects and
initiatives.
✔✔Money Market - ✔✔The money market is the section of the financial market where
highly liquid financial instruments with very short maturity periods are traded. That
means that the "instruments" are easily convertible into cash (cash being the most liquid
of all) and reach their maturity in value generally in less than a year, sometimes in much
shorter terms.
✔✔Forex Market - ✔✔Currencies are traded in the forex market (foreign exchange), the
largest market in the world, where an average trading value exceeding $1.9 trillion takes
place every day. Forex market trading involves all of the currencies in the world. Any
individual, business, or government authority may participate in this market.
,✔✔OTC Market - ✔✔The term "over-the-counter" refers to stocks traded either on the
over-the-counter bulletin board (OTCBB) or the "pink sheets," but not traded on any of
the stock markets. OTCBB and pink sheet companies are far less regulated than those
on a stock exchange, with the majority traded this way being penny stocks or from much
smaller companies.
✔✔Capital Markets - ✔✔A capital market is a market in which individuals and
institutions trade financial securities. Organizations and institutions in the public and
private sectors also can sell securities on the capital markets to raise funds for their
other endeavors.
✔✔Primary Markets - ✔✔Primary markets are where securities are created and initially
exchanged. In a primary market, investment products are purchased directly from the
financial institutions that originate them. An example of a primary market exchange
would be the purchase of a company's stock during an initial public offering (IPO).
Ex: If financing for a real estate transaction is acquired through the primary market, it
means that the loan is acquired directly from a financial institution such as a bank.
✔✔Secondary Markets - ✔✔Secondary markets are where investment products (mainly
securities) are exchanged between investors. The stock market and stock exchanges
are principal elements of the secondary capital markets.The secondary market is where
the bulk of exchange trading occurs each day.
✔✔Information Resources - ✔✔Financial markets can fluctuate day-to-day or may be
exhibiting signs of a trend, positive or negative, foretelling near-term or long-term
change.
Potential Sources of information:
-Uniform Residential Loan Application
-Verification of Deposit
Request for Verification of Employment
-Uniform Residential Appraisal Report
-Loan Estimate Form
-The Closing Disclosure
-Know Before You Owe mortgage disclosure rule
Real Estate Finance Tx:
-Texas Department of Housing and Community Affairs (TDHCA)
-Texas State Affordable Housing Corporation (TSAHC)
-HUD State Program Page (All 50 States) - Texas
-Rental assistance
-Home buying and ownership programs
-Advice on buying a home, renting, default, foreclosure avoidance, credit issues or
reverse mortgages
-Assistance to the homeless
,-Bankrate.com (for example private lenders)
-Private lenders Link (for example private lenders)
TREC 1-4 residential contract
General Economic Resources:
-New York Stock Exchange
NASDAQ
-American Stock Exchange
-Standard & Poor's / Dow Jones
.AnnualCreditReport.com
-Experian
-Transunion and Equifax
✔✔Birth of Commodities - ✔✔the barter system was relatively primitive and insufficient
because it still required the ability to obtain something that someone else needed in
exchange for what you needed. If you need lumber or a horseshoe, a beaver pelt or
cocoa bean isn't going to cut it.- Exchange of money was needed
✔✔The Federal Reserve System - ✔✔The Federal Reserve System (the Federal
Reserve or "the Fed") is the central banking system for the United States. Established in
1913 as a reaction to a series of panics and financial crises of the early 20th century,
the Fed was created to provide a remedy for panic situations where multiple banks are
faced with large numbers of their customers attempting to withdraw their money at once
(a "run on the bank").
✔✔Why is 'the Fed' important to a real estate licensee? - ✔✔the Fed regulates the flow
of money into the economy, real estate buyers and sellers, and therefore licensees, are
directly affected. The mission of the Fed is to address questions such as:
Are buyers able to access resources like mortgages?
Will there be a healthy pool of buyers if a seller needs to move and sell their house or
will they have to take whatever low ball offer comes in?
✔✔Goal of the Federal Reserve System - ✔✔The stated goal of the federal reserve
system now is to "promote maximum employment, stable prices, and moderate long-
term interest rates."
✔✔Structure of The Fed - ✔✔The Fed is made up of a central board of governors
located in Washington D.C. and a network of regional federal reserve banks.
✔✔Federal Reserve Board (FRB) -Make up - ✔✔seven 14-year term presidential
appointees (confirmed by the Senate). The FRB is headed by a chair and vice-chair,
also Presidential appointees, who serve four-year terms.
, ✔✔FRB Administers: - ✔✔FRB oversees the 12 regional Federal Reserve banks which,
along with 25 associated branches, supervise private banks in each region.
✔✔Federal Open Market Committee (FOMC)- Make up and Responsibility - ✔✔-The
FRB and five reserve bank presidents
-orchestrating national monetary policy.
✔✔Creation of FOMC - ✔✔Revisions to the Federal Reserve Act in 1933 and 1935 that
together created the modern-day Federal Open Market Committee (FOMC).
✔✔The Depository Institutions Deregulation and Monetary Control Act of 1980
(Monetary Control Act - ✔✔Introduced an even greater degree of coordination among
Reserve Banks with respect to the pricing of financial services offered to depository
institutions.
✔✔The U.S. Approach to Central Banking - ✔✔The framers of the Federal Reserve Act
purposely rejected the concept of a single central bank. Instead, they provided for a
central banking "system" with three salient features:
(1) a central governing Board
(2) a decentralized operating structure of 12 Reserve Banks, and (3) a combination of
public and private characteristics.
✔✔Why was the federal reserve established? - ✔✔Federal Reserve was established to
serve the public interest.
✔✔three key entities in the Federal Reserve System - ✔✔-the Board of Governors
-the Federal Reserve Banks (Reserve Banks), -the Federal Open Market Committee
(FOMC).
DIRECTLY ACCOUNTABLE TO CONGRESS
✔✔Who makes the decisions for the Federal Reserve? - ✔✔While the Federal Reserve
has frequent communication with executive branch and congressional officials, its
decisions are made independently.
✔✔The Three Key Federal Reserve Entities - ✔✔Federal Reserve Board of Governors
(Board of Governors),
the Federal Reserve Banks (Reserve Banks), - Federal Open Market Committee
(FOMC)
✔✔The Board of Governors - ✔✔The seven members of the Board of Governors of the
Federal Reserve System are nominated by the President and confirmed by the Senate.
A full term is fourteen years. One term begins every two years, on February 1 of even-
numbered years. A member who serves a full term may not be reappointed. A member
QUESTIONS AND SOLUTIONS GUARANTEE A+
✔✔The Economy - ✔✔Economic indicators such as the GDP, employment data,
manufacturing activity, the prices of goods, etc. all will have an impact on the availability
of mortgage funds and the consumer's ability to access them
✔✔Government Policies/Subsidies - ✔✔Some of the more common policies present in
our daily economic management toolkit, such as tax credits, deductions and subsidies
can be enough to inject a little life back into an otherwise sluggish market.
Ex.Other times, such as during the 2008 crash, more substantive interventions are
called for. In this instance, bailout programs, like the Home Affordable Refinance
Program (HARP) and the Home Affordable Modification Program (HAMP) were
designed to specifically address the crisis at that time
✔✔Impact of the Economy - ✔✔Real estate, as much as any commodity or investment,
is subject to the health of the general economy. Although the real estate market does
not run completely parallel to the overall economy, it is heavily influenced by the
availability of capital to fund the purchase of real estate.
✔✔Financial Markets - ✔✔The financial market can be described as any or all of
multiple marketplaces where trading of securities takes place. These include equities,
bonds, currencies and derivatives.
✔✔Stock Markets - ✔✔Stock markets, such as the New York Stock Exchange, provide
investors with a place to buy and sell shares in publicly traded companies.
✔✔Bond Markets - ✔✔A bond is an investment vehicle where an investor loans money
to a specified entity. The bond generally has a predetermined duration and interest rate,
and can be sold by both the private and public sectors to fund their projects and
initiatives.
✔✔Money Market - ✔✔The money market is the section of the financial market where
highly liquid financial instruments with very short maturity periods are traded. That
means that the "instruments" are easily convertible into cash (cash being the most liquid
of all) and reach their maturity in value generally in less than a year, sometimes in much
shorter terms.
✔✔Forex Market - ✔✔Currencies are traded in the forex market (foreign exchange), the
largest market in the world, where an average trading value exceeding $1.9 trillion takes
place every day. Forex market trading involves all of the currencies in the world. Any
individual, business, or government authority may participate in this market.
,✔✔OTC Market - ✔✔The term "over-the-counter" refers to stocks traded either on the
over-the-counter bulletin board (OTCBB) or the "pink sheets," but not traded on any of
the stock markets. OTCBB and pink sheet companies are far less regulated than those
on a stock exchange, with the majority traded this way being penny stocks or from much
smaller companies.
✔✔Capital Markets - ✔✔A capital market is a market in which individuals and
institutions trade financial securities. Organizations and institutions in the public and
private sectors also can sell securities on the capital markets to raise funds for their
other endeavors.
✔✔Primary Markets - ✔✔Primary markets are where securities are created and initially
exchanged. In a primary market, investment products are purchased directly from the
financial institutions that originate them. An example of a primary market exchange
would be the purchase of a company's stock during an initial public offering (IPO).
Ex: If financing for a real estate transaction is acquired through the primary market, it
means that the loan is acquired directly from a financial institution such as a bank.
✔✔Secondary Markets - ✔✔Secondary markets are where investment products (mainly
securities) are exchanged between investors. The stock market and stock exchanges
are principal elements of the secondary capital markets.The secondary market is where
the bulk of exchange trading occurs each day.
✔✔Information Resources - ✔✔Financial markets can fluctuate day-to-day or may be
exhibiting signs of a trend, positive or negative, foretelling near-term or long-term
change.
Potential Sources of information:
-Uniform Residential Loan Application
-Verification of Deposit
Request for Verification of Employment
-Uniform Residential Appraisal Report
-Loan Estimate Form
-The Closing Disclosure
-Know Before You Owe mortgage disclosure rule
Real Estate Finance Tx:
-Texas Department of Housing and Community Affairs (TDHCA)
-Texas State Affordable Housing Corporation (TSAHC)
-HUD State Program Page (All 50 States) - Texas
-Rental assistance
-Home buying and ownership programs
-Advice on buying a home, renting, default, foreclosure avoidance, credit issues or
reverse mortgages
-Assistance to the homeless
,-Bankrate.com (for example private lenders)
-Private lenders Link (for example private lenders)
TREC 1-4 residential contract
General Economic Resources:
-New York Stock Exchange
NASDAQ
-American Stock Exchange
-Standard & Poor's / Dow Jones
.AnnualCreditReport.com
-Experian
-Transunion and Equifax
✔✔Birth of Commodities - ✔✔the barter system was relatively primitive and insufficient
because it still required the ability to obtain something that someone else needed in
exchange for what you needed. If you need lumber or a horseshoe, a beaver pelt or
cocoa bean isn't going to cut it.- Exchange of money was needed
✔✔The Federal Reserve System - ✔✔The Federal Reserve System (the Federal
Reserve or "the Fed") is the central banking system for the United States. Established in
1913 as a reaction to a series of panics and financial crises of the early 20th century,
the Fed was created to provide a remedy for panic situations where multiple banks are
faced with large numbers of their customers attempting to withdraw their money at once
(a "run on the bank").
✔✔Why is 'the Fed' important to a real estate licensee? - ✔✔the Fed regulates the flow
of money into the economy, real estate buyers and sellers, and therefore licensees, are
directly affected. The mission of the Fed is to address questions such as:
Are buyers able to access resources like mortgages?
Will there be a healthy pool of buyers if a seller needs to move and sell their house or
will they have to take whatever low ball offer comes in?
✔✔Goal of the Federal Reserve System - ✔✔The stated goal of the federal reserve
system now is to "promote maximum employment, stable prices, and moderate long-
term interest rates."
✔✔Structure of The Fed - ✔✔The Fed is made up of a central board of governors
located in Washington D.C. and a network of regional federal reserve banks.
✔✔Federal Reserve Board (FRB) -Make up - ✔✔seven 14-year term presidential
appointees (confirmed by the Senate). The FRB is headed by a chair and vice-chair,
also Presidential appointees, who serve four-year terms.
, ✔✔FRB Administers: - ✔✔FRB oversees the 12 regional Federal Reserve banks which,
along with 25 associated branches, supervise private banks in each region.
✔✔Federal Open Market Committee (FOMC)- Make up and Responsibility - ✔✔-The
FRB and five reserve bank presidents
-orchestrating national monetary policy.
✔✔Creation of FOMC - ✔✔Revisions to the Federal Reserve Act in 1933 and 1935 that
together created the modern-day Federal Open Market Committee (FOMC).
✔✔The Depository Institutions Deregulation and Monetary Control Act of 1980
(Monetary Control Act - ✔✔Introduced an even greater degree of coordination among
Reserve Banks with respect to the pricing of financial services offered to depository
institutions.
✔✔The U.S. Approach to Central Banking - ✔✔The framers of the Federal Reserve Act
purposely rejected the concept of a single central bank. Instead, they provided for a
central banking "system" with three salient features:
(1) a central governing Board
(2) a decentralized operating structure of 12 Reserve Banks, and (3) a combination of
public and private characteristics.
✔✔Why was the federal reserve established? - ✔✔Federal Reserve was established to
serve the public interest.
✔✔three key entities in the Federal Reserve System - ✔✔-the Board of Governors
-the Federal Reserve Banks (Reserve Banks), -the Federal Open Market Committee
(FOMC).
DIRECTLY ACCOUNTABLE TO CONGRESS
✔✔Who makes the decisions for the Federal Reserve? - ✔✔While the Federal Reserve
has frequent communication with executive branch and congressional officials, its
decisions are made independently.
✔✔The Three Key Federal Reserve Entities - ✔✔Federal Reserve Board of Governors
(Board of Governors),
the Federal Reserve Banks (Reserve Banks), - Federal Open Market Committee
(FOMC)
✔✔The Board of Governors - ✔✔The seven members of the Board of Governors of the
Federal Reserve System are nominated by the President and confirmed by the Senate.
A full term is fourteen years. One term begins every two years, on February 1 of even-
numbered years. A member who serves a full term may not be reappointed. A member
