Champions Real Estate Finance Updated Actual Questions And Correct Answers

CHAMPIONS REAL ESTATE FINANCE UPDATED ACTUAL
QUESTIONS AND CORRECT ANSWERS

Question:
1. Loan-to-Value Ratio (LTV)
Answer:
The percentage of the lesser of the appraised value or sales price that the lender will lend.
ex: If a borrower is approved for an 80% loan, it means that the lender will loan up to 80% of the sales
price or appraised value, whichever is lower.

Question:
2. Package Mortgage
Answer:
Includes both real and personal property ( fixtures and furnishings)

Question:
3. Blanket Mortgage
Answer:
Covers more than one piece of property.

Question:
4. Wraparound Mortgage
Answer:
Method of financing which preserves the low, existing interest rate on the original note.

Question:
5. Open-End Mortgage
Answer:
Permits additional borrowing on the same note. This is sometimes called a credit card mortgage or a home
equity line of credit - HELOC.

Question:
6. Budget Mortgage
Answer:
The monthly house payment includes principal, interest, taxes and insurance (known as PITI)

Question:
7. Collateral -Dependent Loans
Answer:
A hard money loan is a specific type of asset-based financing in which a borrower receives funds secured
by the value of a parcel of real estate.

Question:
8. Character

,Answer:
Is a measure of the willingness of a borrower to make on-time payments. Credit character is revealed in the
borrower's credit report.

Question:
9. Capacity
Answer:
Is a measure of the borrower's ability to repay the debt, and is demonstrated through current earnings and
job stability.

Question:
10. Capital
Answer:
Is the sum of all assets that the borrower has accumulated.

Question:
11. Collateral
Answer:
Is something of value that can be pledged as security for repayment.

Question:
12. Yield
Answer:
Is the return that the investor recieves over the life of the loan. (Also known as profit)

Question:
13. Originator
Answer:
The process of creating a new mortgage loan, including all steps taken by a lender to attract and qualify a
borrower.

Question:
14. Mortgage Broker
Answer:
Typically functions as a middleman between the borrower and the lender, negotiating, selling or arranging
loans to be delivered to larger investors. At one time originated up to 80% of all mortgage loans. (Back on
the rise)

Question:
15. Mortgage Banker
Answer:
Entities which provide their own funds for the purpose of providing mortgage financing, as opposed to
commercial banks/savings associations. (Held, or "Warehoused")

Question:
16. Correspondent Lender

, Answer:
Usually smaller in scale than mortgage bankers or brokers, these lenders typically extend loans with their
own funds, at their own risk.

Question:
17. Processing
Answer:
Once application is complete the file moves into this phase.

Question:
18. Underwriting
Answer:
The detailed process of evaluating a borrower's loan application to determine the risk involved for the
lender.

Question:
19. Closing
Answer:
The consummation of a real estate transaction in which all appropriate documents are signed and the
proceeds of the mortgage loan are then disbursed by the lender.

Question:
20. Servicing
Answer:
Includes collecting monthly payments, maintaining records of payments and balances, collecting and
paying taxes and insurance ( and managing escrow and impound funds) remitting funds to the note holder,
and following up on delinquencies.

Question:
21. Supply and Demand
Answer:
an economic concept that states that the price of a good rises and falls depending on how many people
want it and depending on how much of the good is available.

Question:
22. Funding
Answer:
The process of transferring funds to a title or escrow company for disbursement

Question:
23. The Safe Act
Answer:
Designed to enhance consumer protection and reduce fraud. (Key component of HERA)

Question:
24. M1