CHAMPIONS REAL ESTATE FINANCE
EVALUATION TEST QUESTIONS AND ANSWERS
SURE A+
✔✔Federal National Mortgage Association (FNMA) - ✔✔Plays a vital role in financing
mortgages and increasing homeownership opportunities in the US. Began in 1938 as an
agency of the federal government and was created to bring stability to the US housing
market. In 1968, it became a privately owned and managed corporation. US Congress
re-chartered it as a private company. Mandating that it operate with private capital on a
self-sustaining basis to enhance the flow of funds through the secondary market home
buyers.The largest investor in home mortgage today.
✔✔Freddie Mac (FHLMC) - ✔✔Federally chartered corporation. Established in 1970 for
the purpose of purchasing mortgages in the secondary market. Is a stockholder-owned
corporation chartered by Congress to increase the supply of funds that mortgage
lenders, such as commercial banks, mortgage bankers, saving institutions and credit
unions can make available to homeowners and multi-family investors.
✔✔Conservatorship - ✔✔Legal right given to a person to manage the property and
financial affairs of a person deemed incapable of doing that for himself or herself.
✔✔The Housing and Economic Recovery Act (HERA) - ✔✔Enacted on July 30, 2008, is
a major housing law that serves multiple purposes:
The modernization of the Federal Housing Administration (FHA) , foreclosure
prevention, and the enhancement of consumer protections.
The SAFE ACT is a KEY component of HERA :
-it is designed to enhance consumer protection and reduce Fraud by requiring national
minimum standards for mortgage training, including prelicensing education and annual
continuing education
, Way to Remember: in order to be SAFE, you need a HERA! (female version of a hero)
✔✔FHFA (Federal Housing Finance Agency) - ✔✔On September 7, 2008 this agency
placed Fannie Mae and Freddie Mac in Conservatorship. Appoint (blank) as a
conservator or receiver of the GSEs.
✔✔Farmer Mac - ✔✔Is a government-sponsored enterprise with the mission of
providing secondary market for agriculture real estate mortgage loans, rural housing
mortgage loans, and rural utility cooperative loans.
✔✔Front Ratio - ✔✔Is used to qualify a borrower for a loan based upon the proposed
house payment and his or her gross monthly income (GMI). The house payment is the
monthly payment of principal, interest, taxes and insurance (PITI).
✔✔Back Ratio - ✔✔The ratio of the borrowers total recurring monthly debts.
✔✔Conventional Loan - ✔✔Refers to a loan made with real estate as security and
which does not involve government participation in the form of insuring or guaranteeing
the loan.
✔✔Real Estate Mortgage Investment Conduit (REMIC) - ✔✔Allows for the indirect
investment in mortgages through the sale of securities. Purchases "pools" of mortgages
✔✔Primary Mortgage Market - ✔✔The market where borrowers and lenders come
together to create and negotiate terms of a mortgage transaction.
✔✔Commercial Banks - ✔✔Perform a variety of functions, from being a depository
institution to providing lines of credit and loan products to the communities in which they
are charted. Working capital is primarily generated through deposits from clients.
✔✔Credit Unions - ✔✔Not-for-profit banks set up by organizations that exist to serve
their members. Return surplus income to their members in the form of dividends.
✔✔Bonds - ✔✔An instrument of corporate or governmental debt. (An IOU)
✔✔Real Estate Investment Trust (REIT) - ✔✔An investment vehicle created by
congress in 1960. The effort to make it possible for small investors to invest in larger
commercial properties by purchasing shares in the organization that owns the real
estate.
✔✔Lifting Clause - ✔✔A clause which gives the borrower the ability to replace the
primary instrument with another without affecting the subordinate instrument's position.
EVALUATION TEST QUESTIONS AND ANSWERS
SURE A+
✔✔Federal National Mortgage Association (FNMA) - ✔✔Plays a vital role in financing
mortgages and increasing homeownership opportunities in the US. Began in 1938 as an
agency of the federal government and was created to bring stability to the US housing
market. In 1968, it became a privately owned and managed corporation. US Congress
re-chartered it as a private company. Mandating that it operate with private capital on a
self-sustaining basis to enhance the flow of funds through the secondary market home
buyers.The largest investor in home mortgage today.
✔✔Freddie Mac (FHLMC) - ✔✔Federally chartered corporation. Established in 1970 for
the purpose of purchasing mortgages in the secondary market. Is a stockholder-owned
corporation chartered by Congress to increase the supply of funds that mortgage
lenders, such as commercial banks, mortgage bankers, saving institutions and credit
unions can make available to homeowners and multi-family investors.
✔✔Conservatorship - ✔✔Legal right given to a person to manage the property and
financial affairs of a person deemed incapable of doing that for himself or herself.
✔✔The Housing and Economic Recovery Act (HERA) - ✔✔Enacted on July 30, 2008, is
a major housing law that serves multiple purposes:
The modernization of the Federal Housing Administration (FHA) , foreclosure
prevention, and the enhancement of consumer protections.
The SAFE ACT is a KEY component of HERA :
-it is designed to enhance consumer protection and reduce Fraud by requiring national
minimum standards for mortgage training, including prelicensing education and annual
continuing education
, Way to Remember: in order to be SAFE, you need a HERA! (female version of a hero)
✔✔FHFA (Federal Housing Finance Agency) - ✔✔On September 7, 2008 this agency
placed Fannie Mae and Freddie Mac in Conservatorship. Appoint (blank) as a
conservator or receiver of the GSEs.
✔✔Farmer Mac - ✔✔Is a government-sponsored enterprise with the mission of
providing secondary market for agriculture real estate mortgage loans, rural housing
mortgage loans, and rural utility cooperative loans.
✔✔Front Ratio - ✔✔Is used to qualify a borrower for a loan based upon the proposed
house payment and his or her gross monthly income (GMI). The house payment is the
monthly payment of principal, interest, taxes and insurance (PITI).
✔✔Back Ratio - ✔✔The ratio of the borrowers total recurring monthly debts.
✔✔Conventional Loan - ✔✔Refers to a loan made with real estate as security and
which does not involve government participation in the form of insuring or guaranteeing
the loan.
✔✔Real Estate Mortgage Investment Conduit (REMIC) - ✔✔Allows for the indirect
investment in mortgages through the sale of securities. Purchases "pools" of mortgages
✔✔Primary Mortgage Market - ✔✔The market where borrowers and lenders come
together to create and negotiate terms of a mortgage transaction.
✔✔Commercial Banks - ✔✔Perform a variety of functions, from being a depository
institution to providing lines of credit and loan products to the communities in which they
are charted. Working capital is primarily generated through deposits from clients.
✔✔Credit Unions - ✔✔Not-for-profit banks set up by organizations that exist to serve
their members. Return surplus income to their members in the form of dividends.
✔✔Bonds - ✔✔An instrument of corporate or governmental debt. (An IOU)
✔✔Real Estate Investment Trust (REIT) - ✔✔An investment vehicle created by
congress in 1960. The effort to make it possible for small investors to invest in larger
commercial properties by purchasing shares in the organization that owns the real
estate.
✔✔Lifting Clause - ✔✔A clause which gives the borrower the ability to replace the
primary instrument with another without affecting the subordinate instrument's position.
