©SOPHIABENNETT_2024/2025 EXAM SERIES Monday, September 2, 2024 9:52 AM
Texas Real Estate Finance Exam Study
Guide with Complete Solutions
The _______ market refers to the selling and purchasing of closed real estate mortgage
loans. - Answer✔️✔️-secondary
The secondary market is a national market in which mortgages secured by real estate in
all parts of the United States are ______ ____ _______. - Answer✔️✔️-bought and sold
Secondary market agencies have two main activities: 1) ___ _____ and 2) ______
________ ________ _______. - Answer✔️✔️-buying loans, issuing mortgage backed
securities
__________ exchanges mortgage back securities for a block or pool of mortgages. -
Answer✔️✔️-FNMA (Fannie Mae) Federal National Mortgage Association
_____ is the nation's largest investor in residential mortgages. - Answer✔️✔️-FNMA
One of the primary responsibilities of _____ is to maintain an active secondary money
market for mortgages. - Answer✔️✔️-FNMA
One function of FNMA is selling seasoned mortgages and trust deeds to individual
investors and financial institutions. A ______ ______ is one that has been in existence
for some time and that shows a good record of repayment by the mortgagor (borrower) -
Answer✔️✔️-seasoned mortgage
To be a _____, a company must distribute at least 90 percent of its taxable income to
shareholders annually in the forms of dividends. - Answer✔️✔️-REIT
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, ©SOPHIABENNETT_2024/2025 EXAM SERIES Monday, September 2, 2024 9:52 AM
A REIT must: be structured as a corporation, trust, or association; be managed by a
board of directors or trustees; have transferable shares or transferable certificates of
interest; otherwise be taxable as a domestic corporation; not be a financial institution or
an insurance company; be jointly owned by 100 persons or more; have 95 percent of its
income derived from dividends, interest, and property income; pay dividends of at least
90% of the REIT's taxable income; have no more than 50% of the held by five or fewer
individuals during the last half of each taxable year (5/50 rule); _______ ______ ____
___ _ _ _ __ _ _ _ ; ______ __ ____ ___ __ __ __ __ _ __ _ _ _;_____ _ _ _ _ __ _ _ _
__ _ _ - Answer✔️✔️-have at least 75% or its total assets invested in real estate; derive
at least 75% of its gross income from rents or mortgage interest; have no more than
20% of it's assets invested in taxable RIETs subsidiaries
______ _____ are those loans that meet the loan purchase requirements of both Fannie
Mae and Freddie Mac. - Answer✔️✔️-Conforming loans
The two major purposes of the Federal Reserve System, called the FED for short, are;
______ ____ ___ ___ __ and ____ ___ __ ___ ____ - Answer✔️✔️-supply reserve funds
when needed and control bank and consumer credit.
The _______ _______ drives the mortgage loan interest rate. - Answer✔️✔️-Federal
Reserve
The ______ ______has two primary methods of controlling the flow of money in the
United States. They control the flow of money by their availability to change the reserve
requirements of the banks and/or changing the discount rate charged to banks. -
Answer✔️✔️-Federal Reserve
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, ©SOPHIABENNETT_2024/2025 EXAM SERIES Monday, September 2, 2024 9:52 AM
________ ____ is the rate the Federal Reserve charges its member bank to borrow
money - Answer✔️✔️-Discount rate
_______ _____ must belong and any state banks that wish may join the Federal
Reserve System. - Answer✔️✔️-National banks
_______ _____ _____ _____(___) is a federal agency that insures deposits in
commercial banks up to $250,000 and , along with the Federal Reserve System,
regulates banks and banking procedures. - Answer✔️✔️-Federal Deposit Insurance
Corporation (FDIC)
_____ _____ is the total of all the loans that a financial institution or other lender holds
at a given time. A list, distribution, or grouping of mortgage loans. - Answer✔️✔️-Loan
Portfolio
____ ____ is the sale of a property where the lender agrees to settle for less than the
amount owed on the property - Answer✔️✔️-Short sale
_______: In the Texas Constitution, a principle residence of a family or adult single
person is protected from forced sale for all debt except: property taxes; federal tax liens
of both spouses; a home equity lien.....etc... - Answer✔️✔️-Homestead
____ ____ and ______ _______ are not the same thing. - Answer✔️✔️-Community
property and joint tenancy
_____ ____ put a cap on interest rate. - Answer✔️✔️-Usuary laws
______ is the state law that prohibits the charging of an interest rate in excess of the
legal limit. - Answer✔️✔️-Usury
_____ _____ are created to protect the borrower. - Answer✔️✔️-Usuary laws
Page | 3
Texas Real Estate Finance Exam Study
Guide with Complete Solutions
The _______ market refers to the selling and purchasing of closed real estate mortgage
loans. - Answer✔️✔️-secondary
The secondary market is a national market in which mortgages secured by real estate in
all parts of the United States are ______ ____ _______. - Answer✔️✔️-bought and sold
Secondary market agencies have two main activities: 1) ___ _____ and 2) ______
________ ________ _______. - Answer✔️✔️-buying loans, issuing mortgage backed
securities
__________ exchanges mortgage back securities for a block or pool of mortgages. -
Answer✔️✔️-FNMA (Fannie Mae) Federal National Mortgage Association
_____ is the nation's largest investor in residential mortgages. - Answer✔️✔️-FNMA
One of the primary responsibilities of _____ is to maintain an active secondary money
market for mortgages. - Answer✔️✔️-FNMA
One function of FNMA is selling seasoned mortgages and trust deeds to individual
investors and financial institutions. A ______ ______ is one that has been in existence
for some time and that shows a good record of repayment by the mortgagor (borrower) -
Answer✔️✔️-seasoned mortgage
To be a _____, a company must distribute at least 90 percent of its taxable income to
shareholders annually in the forms of dividends. - Answer✔️✔️-REIT
Page | 1
, ©SOPHIABENNETT_2024/2025 EXAM SERIES Monday, September 2, 2024 9:52 AM
A REIT must: be structured as a corporation, trust, or association; be managed by a
board of directors or trustees; have transferable shares or transferable certificates of
interest; otherwise be taxable as a domestic corporation; not be a financial institution or
an insurance company; be jointly owned by 100 persons or more; have 95 percent of its
income derived from dividends, interest, and property income; pay dividends of at least
90% of the REIT's taxable income; have no more than 50% of the held by five or fewer
individuals during the last half of each taxable year (5/50 rule); _______ ______ ____
___ _ _ _ __ _ _ _ ; ______ __ ____ ___ __ __ __ __ _ __ _ _ _;_____ _ _ _ _ __ _ _ _
__ _ _ - Answer✔️✔️-have at least 75% or its total assets invested in real estate; derive
at least 75% of its gross income from rents or mortgage interest; have no more than
20% of it's assets invested in taxable RIETs subsidiaries
______ _____ are those loans that meet the loan purchase requirements of both Fannie
Mae and Freddie Mac. - Answer✔️✔️-Conforming loans
The two major purposes of the Federal Reserve System, called the FED for short, are;
______ ____ ___ ___ __ and ____ ___ __ ___ ____ - Answer✔️✔️-supply reserve funds
when needed and control bank and consumer credit.
The _______ _______ drives the mortgage loan interest rate. - Answer✔️✔️-Federal
Reserve
The ______ ______has two primary methods of controlling the flow of money in the
United States. They control the flow of money by their availability to change the reserve
requirements of the banks and/or changing the discount rate charged to banks. -
Answer✔️✔️-Federal Reserve
Page | 2
, ©SOPHIABENNETT_2024/2025 EXAM SERIES Monday, September 2, 2024 9:52 AM
________ ____ is the rate the Federal Reserve charges its member bank to borrow
money - Answer✔️✔️-Discount rate
_______ _____ must belong and any state banks that wish may join the Federal
Reserve System. - Answer✔️✔️-National banks
_______ _____ _____ _____(___) is a federal agency that insures deposits in
commercial banks up to $250,000 and , along with the Federal Reserve System,
regulates banks and banking procedures. - Answer✔️✔️-Federal Deposit Insurance
Corporation (FDIC)
_____ _____ is the total of all the loans that a financial institution or other lender holds
at a given time. A list, distribution, or grouping of mortgage loans. - Answer✔️✔️-Loan
Portfolio
____ ____ is the sale of a property where the lender agrees to settle for less than the
amount owed on the property - Answer✔️✔️-Short sale
_______: In the Texas Constitution, a principle residence of a family or adult single
person is protected from forced sale for all debt except: property taxes; federal tax liens
of both spouses; a home equity lien.....etc... - Answer✔️✔️-Homestead
____ ____ and ______ _______ are not the same thing. - Answer✔️✔️-Community
property and joint tenancy
_____ ____ put a cap on interest rate. - Answer✔️✔️-Usuary laws
______ is the state law that prohibits the charging of an interest rate in excess of the
legal limit. - Answer✔️✔️-Usury
_____ _____ are created to protect the borrower. - Answer✔️✔️-Usuary laws
Page | 3
