RELU2410 Exam #3 (Ch. 10, 11, 12, 16, 17, 18) Actual real Exam Questions With Correct Detailed Answers.

Which of the following vehicles enable small investors to participate in real estate ventures? - Savings Bonds - Treasury Bills - Open Market Operations - Real Estate Investment Trusts (REITs) - Reserve Requirements - correct answer Real Estate Investment Trusts (REITs) The ______ mortgage market is where borrowers and lenders conduct business. - correct answer Primary The ______ mortgage market is where loans are packaged and purchased as investments. - correct answer Secondary Under the new TILA-RESPA Integrated Rule (TRID), when must the new Closing Disclosure (CD) form be given to the borrower? - correct answer At least 3 days before closing. Which of the following factors do lenders NOT consider when underwriting loans? - Borrower's ability to pay - Borrower's willingness to pay - Condition of the property - Whether or not the property is located in a "risky" part of town - Economic factors and local trends - correct answer Whether or not the property is located in a "risky" part of town (T/F) A person may qualify for a mortgage loan through the Nebraska Investment Finance Authority (NIFA) even if they have no credit history. - correct answer True (T/F) The FHA and VA help consumers by directly lending money to them. - correct answer False Private mortgage insurance (PMI) is used on Conventional Loans when the loan-to-value (LTV) ratio exceeds what threshold? - correct answer 80% Borrowers using FHA loans need to put down a minimum of ___% of the loan amount. - correct answer 3.5% Borrowers using VA loans need to put down a minimum of ___% of the loan amount. - correct answer 0% The institution, Credit Union, is with what mortgage market? - correct answer Primary Mortgage Market The institution, Fannie Mae (Federal National Mortgage Association), is with what mortgage market? - correct answer Secondary Mortgage Market In a default situation, a lender seizes a property through a process known as: - correct answer Foreclosure Lien Theory - correct answer Borrower holds legal title to the property while the debt is being repaid Title Theory - correct answer The lender/trustee holds legal title to the property while the debt is being repaid (T/F) Nebraska is a Title Theory state, whereby a trustee holds legal title to your property until the debt is repaid - correct answer True The process of decreasing a loan's principal balance over time through regular payments is known as: - correct answer Amortization A loan which has a zero ($0) principal balance at the end is: - correct answer Fully Amortized An "IOU" that documents the loan and the repayment schedule is known as: - correct answer Promissory Note A legal instrument which pledges property (collateral) as security for the note is known as a: - correct answer Mortgage Mortgagor - correct answer Buyer Mortgagee - correct answer Lender Acceleration Clause - correct answer Enables lender to call entire loan balance due upon default Alienation Clause - correct answer Lender can call loan due in full upon sale of property Subordination Clause - correct answer makes this lien a lower priority than other loans Prepayment Penalty Clause - correct answer Fee charged if borrower pays off loan early This type of mortgage loan enables the bank to periodically adjust the interest rate. - correct answer Adjustable Rate Mortgage (ARM) This type of mortgage loan is also known as "interest only" or "zero amortized" loan. - correct answer Straight Note Mortgage Which of the following ways are to reduce the amount of interest paid on a loan? - Shorten the loan term (15 vs. 30 years) - Make Bi-weekly Payments (vs. Monthly) - Extend the loan term to 40 years - Pay a little extra each month towards principal - correct answer - Shorten the loan term - Make Bi-Weekly Payments - Pay a little extra each month towards principal (T/F) In a Contract for Deed, the buyer receives title to the property at closing. - correct answer False (T/F) A home equity loan allows home owners to borrow against the equity they have built up in their home. - correct answer True (T/F) The interest on a home equity loan is tax deductible under certain conditions, just like it is on a first mortgage loan. - correct answer True An ABSTRACT on a property: - Is a condensed history of the title - Reveals the chain of title - Guarantees good title to the buyer - Is another term for title insurance - correct answer - Is a condensed history of the title - Reveals the chain of the title A title insurance policy can be issued to: - Protect the lender - Protect the buyer - Protect the insured against future events - Protect the insured against past events - correct answer - Protect the lender - Protect the buyer - Protect the insured against past events Which type of title insurance policy covers the loan amount only? - correct answer Lender Policy Which type of title insurance policy covers the original purchase price of the property? - correct answer Owner Policy Which of the following would be considered "Clouds on Title" if found during a title search? - Unpaid taxes - A recorded mortgage by the seller - An unrecorded mortgage by the seller - Easement discrepancies - A contractor lien on the property - correct answer - Unpaid taxes - An unrecorded mortgage by the seller - Easement discrepancies - A contractor lien on the property (T/F) More pre-paid interest will be required from a buyer when the closing occurs near the end of the month. - correct answer False In Nebraska, who pays for the cost of Title Insurance at closing? - correct answer Buyer & Seller The new Closing Disclosure form must be given to the customer: - correct answer At least 3 days before closing If a seller has already paid $2,400 in property taxes for the year, and closing is scheduled for December 1st, what is the correct pro-ration of taxes on the Closing Disclosure form? - correct answer $200 credit to seller - debit to buyer Which of the following are considered tangible benefits to owning a home? - Property appreciation