REAL ESTATE FINANCE AYPO
QUESTIONS AND ACCURATE
ANSWERS
HUD's Public Housing Program ANSW✅✅Public housing was created to provide safe and
reasonable rental housing for low-income families, the elderly, and persons with disabilities. Public
housing can be anything from a single family home to Highrise apartments for elderly families.
HUD administers Federal aid to local housing agencies (HAs) ANSW✅✅HAs manage the housing
for low-income residents in an effort to keep rents affordable. In addition, HUD provides technical
and professional assistance in planning, developing and managing these developments.
HA's Eligibility ANSW✅✅Gross annual income
Classification of eligibility (elderly, a person with a disability, or as a family)
Citizenship status (U.S. citizen or eligible immigrant status)
FHA-Insured Loans ANSW✅✅To qualify for the FHA protection, any loans must meet certain
requirements established by the FHA. The insurance protection ensures that lenders are at a lesser
level of risk because the FHA will pay a claim to the lender in the event of a homeowner's default.
FHA lending llmits ANSW✅✅The FHA lending limit is the maximum loan amount that the FHA will
insure. These loan limits are calculated and updated annually on a state-by-state basis. From there,
they are broken down by county or region. The loan limits are also influenced by Fannie Mae and
Freddie Mac conventional loan limits and factors such as the type of home (e.g., single-family or
duplex).
FHA General Qualifications and Requirements ANSW✅✅-have a steady employment history or
have worked for the same employer for two years.
-hold a valid Social Security number
-be a lawful resident of the U.S.
-be old enough to sign a mortgage in their home state
-have a housing expense ratio (costs of homeownership as compared to gross monthly income) of
less than 31%
,-however, if the lender can provide suitable justification, a borrower can be approved with a housing
expense ratio as high as 46.99%
Total-debt-to-Income Ratio <43%
FHA in event of bankrupcy ANSW✅✅In the event of a prior bankruptcy, the borrower must have
been out of bankruptcy for a minimum of two years and have reestablished good credit. Exceptions
can be made if:
the borrower has not been in bankruptcy for one year
there are extenuating circumstances beyond the borrower's control, and
the borrower has responsibly managed their money.
In the event of a prior foreclosure, the borrower usually must be three years beyond the foreclosure
and have reestablished good credit. It is possible for an exception to be made if there were
extenuating circumstances and the borrower has improved their credit.
The FHA categorizes properties into four groups. ANSW✅✅IN-Insurable
IE-Insurable with escrow
UN-Uninsurable
UK-203(k) eligible
IN-Insurable ANSW✅✅IN properties are those that have passed all repairs. These properties are
eligible for FHA loans with no limitations.
IE-Insurable with escrow ANSW✅✅IE properties are those that fail the FHA inspection but would
pass with minor repairs. If these repairs are estimated to be less than $5,000, then the FHA can issue
a loan with a repair escrow. The total FHA loan is given for the property price and the cost of repairs.
The cost of repairs are put into an escrow account which the lender controls. As the owner makes
repairs, the lender will inspect the repairs and, if sufficient, distribute funds from the escrow to
reimburse the owner. After 90 days, any money which is left in the escrow account is applied toward
reducing the principal of the loan.
UN-Uninsurable ANSW✅✅UN properties are those which need an extensive amount of repairs.
The FHA will not insure loans for these properties. Buyers would need to arrange a cash purchase or
find alternative sources of financing.
,UK-203(k) eligible ANSW✅✅UK properties are more rare. For properties which are listed UN, the
buyer may attempt to obtain a 203(k) loan. The standard FHA loan is a 203(b) loan. The 203(k) loan is
only available for owner-occupied properties, i.e., the owner cannot purchase the property for
investment or renting purposes. The repairs must exceed $5,000 (or else it would qualify as an IE
property), but the total value must be within the FHA mortgage limit. The total value is determined
by taking the lesser of the current value plus the cost of repairs, and 110% of the expected value
after repairs.
FHA Lending Limits ANSW✅✅For borrowers with credit scores above 580, the required down
payment on this kind of loan is normally 3.5% of the value of the property.
Duration of MIP ANSW✅✅The rules on how long MIP must be paid apply to most FHA single-
family programs. Title I loans and Home Equity Conversion Mortgages are exempt
The following are other single-family loan programs available through the FHA:
ANSW✅✅Adjustable Rate Mortgages
Condominium Mortgages
Cooperative Mortgages
Disaster Victims Mortgages
Emergency Home Loan Program
Energy-Efficiency Mortgages
Graduated Payment Mortgages
Growing Equity Mortgages
Home Equity Conversion Mortgages
Manufactured Home Loans (Title I)
FHA Power Saver Mortgages
Rehabilitation Mortgage
Urban Renewal
Multi-Family Loan Programs ANSW✅✅Rental Housing
Rental housing for Urban Renewal and Concentrated Development Areas
Cooperative Units
Manufactured Home Parks
Single Room Occupancy (SRO) Projects
, Two-Year Operating Loss Loans
Purchase or Refinancing of Multifamily Housing Projects
Rental Housing for the Elderly
Housing Finance Agency Risk Sharing Program
Community Reinvestment Act (CRA) ANSW✅✅The Community Reinvestment Act (CRA), enacted
by Congress in 1977 (12 U.S.C. 2901), was adopted to encourage insured depository institutions
(IDIs) to help meet the credit needs of the communities in which they operate.
CRA: The Examination Process ANSW✅✅Outstanding
Satisfactory
Needs to improve
Substantial non-compliance
CRA Required Posting ANSW✅✅Under the Community Reinvestment Act, federally-supervised
financial institutions are required to post notice in each of their branches that the public is entitled
to certain information about the their operations and performance. Other requisites for IDIs to meet
their CRA obligations include:
Having a public file also available for the community to review that contains information about the
institution's CRA performance
Providing the public access to timely and accurate CRA information about the financial institution
Providing the public the opportunity to comment on an IDI's performance under the CRA and on any
application submitted to the federal bank regulatory changes
TILA-RESPA ANSW✅✅Truth in Lending Act (TILA), 1968, and the Real Estate Settlement
Procedures Act (RESPA), 1974, dealing with home mortgage loan disclosures were merged into the
TILA-RESPA Integrated Disclosures (TRID) law in reforms implemented in October 2015. This was one
of the most significant of recent changes to home-lending laws.
the Loan Estimate ANSW✅✅is designed to provide disclosures that will be helpful to consumers
in understanding the key features, costs, and risks of the mortgage for which they are applying. This
form will be provided to consumers within three business days after they submit a loan application.
the Closing Disclosure ANSW✅✅is designed to provide disclosures that will be helpful to
consumers in understanding all of the costs of the transaction. This form will be provided to
consumers three business days before they close on the loan.
QUESTIONS AND ACCURATE
ANSWERS
HUD's Public Housing Program ANSW✅✅Public housing was created to provide safe and
reasonable rental housing for low-income families, the elderly, and persons with disabilities. Public
housing can be anything from a single family home to Highrise apartments for elderly families.
HUD administers Federal aid to local housing agencies (HAs) ANSW✅✅HAs manage the housing
for low-income residents in an effort to keep rents affordable. In addition, HUD provides technical
and professional assistance in planning, developing and managing these developments.
HA's Eligibility ANSW✅✅Gross annual income
Classification of eligibility (elderly, a person with a disability, or as a family)
Citizenship status (U.S. citizen or eligible immigrant status)
FHA-Insured Loans ANSW✅✅To qualify for the FHA protection, any loans must meet certain
requirements established by the FHA. The insurance protection ensures that lenders are at a lesser
level of risk because the FHA will pay a claim to the lender in the event of a homeowner's default.
FHA lending llmits ANSW✅✅The FHA lending limit is the maximum loan amount that the FHA will
insure. These loan limits are calculated and updated annually on a state-by-state basis. From there,
they are broken down by county or region. The loan limits are also influenced by Fannie Mae and
Freddie Mac conventional loan limits and factors such as the type of home (e.g., single-family or
duplex).
FHA General Qualifications and Requirements ANSW✅✅-have a steady employment history or
have worked for the same employer for two years.
-hold a valid Social Security number
-be a lawful resident of the U.S.
-be old enough to sign a mortgage in their home state
-have a housing expense ratio (costs of homeownership as compared to gross monthly income) of
less than 31%
,-however, if the lender can provide suitable justification, a borrower can be approved with a housing
expense ratio as high as 46.99%
Total-debt-to-Income Ratio <43%
FHA in event of bankrupcy ANSW✅✅In the event of a prior bankruptcy, the borrower must have
been out of bankruptcy for a minimum of two years and have reestablished good credit. Exceptions
can be made if:
the borrower has not been in bankruptcy for one year
there are extenuating circumstances beyond the borrower's control, and
the borrower has responsibly managed their money.
In the event of a prior foreclosure, the borrower usually must be three years beyond the foreclosure
and have reestablished good credit. It is possible for an exception to be made if there were
extenuating circumstances and the borrower has improved their credit.
The FHA categorizes properties into four groups. ANSW✅✅IN-Insurable
IE-Insurable with escrow
UN-Uninsurable
UK-203(k) eligible
IN-Insurable ANSW✅✅IN properties are those that have passed all repairs. These properties are
eligible for FHA loans with no limitations.
IE-Insurable with escrow ANSW✅✅IE properties are those that fail the FHA inspection but would
pass with minor repairs. If these repairs are estimated to be less than $5,000, then the FHA can issue
a loan with a repair escrow. The total FHA loan is given for the property price and the cost of repairs.
The cost of repairs are put into an escrow account which the lender controls. As the owner makes
repairs, the lender will inspect the repairs and, if sufficient, distribute funds from the escrow to
reimburse the owner. After 90 days, any money which is left in the escrow account is applied toward
reducing the principal of the loan.
UN-Uninsurable ANSW✅✅UN properties are those which need an extensive amount of repairs.
The FHA will not insure loans for these properties. Buyers would need to arrange a cash purchase or
find alternative sources of financing.
,UK-203(k) eligible ANSW✅✅UK properties are more rare. For properties which are listed UN, the
buyer may attempt to obtain a 203(k) loan. The standard FHA loan is a 203(b) loan. The 203(k) loan is
only available for owner-occupied properties, i.e., the owner cannot purchase the property for
investment or renting purposes. The repairs must exceed $5,000 (or else it would qualify as an IE
property), but the total value must be within the FHA mortgage limit. The total value is determined
by taking the lesser of the current value plus the cost of repairs, and 110% of the expected value
after repairs.
FHA Lending Limits ANSW✅✅For borrowers with credit scores above 580, the required down
payment on this kind of loan is normally 3.5% of the value of the property.
Duration of MIP ANSW✅✅The rules on how long MIP must be paid apply to most FHA single-
family programs. Title I loans and Home Equity Conversion Mortgages are exempt
The following are other single-family loan programs available through the FHA:
ANSW✅✅Adjustable Rate Mortgages
Condominium Mortgages
Cooperative Mortgages
Disaster Victims Mortgages
Emergency Home Loan Program
Energy-Efficiency Mortgages
Graduated Payment Mortgages
Growing Equity Mortgages
Home Equity Conversion Mortgages
Manufactured Home Loans (Title I)
FHA Power Saver Mortgages
Rehabilitation Mortgage
Urban Renewal
Multi-Family Loan Programs ANSW✅✅Rental Housing
Rental housing for Urban Renewal and Concentrated Development Areas
Cooperative Units
Manufactured Home Parks
Single Room Occupancy (SRO) Projects
, Two-Year Operating Loss Loans
Purchase or Refinancing of Multifamily Housing Projects
Rental Housing for the Elderly
Housing Finance Agency Risk Sharing Program
Community Reinvestment Act (CRA) ANSW✅✅The Community Reinvestment Act (CRA), enacted
by Congress in 1977 (12 U.S.C. 2901), was adopted to encourage insured depository institutions
(IDIs) to help meet the credit needs of the communities in which they operate.
CRA: The Examination Process ANSW✅✅Outstanding
Satisfactory
Needs to improve
Substantial non-compliance
CRA Required Posting ANSW✅✅Under the Community Reinvestment Act, federally-supervised
financial institutions are required to post notice in each of their branches that the public is entitled
to certain information about the their operations and performance. Other requisites for IDIs to meet
their CRA obligations include:
Having a public file also available for the community to review that contains information about the
institution's CRA performance
Providing the public access to timely and accurate CRA information about the financial institution
Providing the public the opportunity to comment on an IDI's performance under the CRA and on any
application submitted to the federal bank regulatory changes
TILA-RESPA ANSW✅✅Truth in Lending Act (TILA), 1968, and the Real Estate Settlement
Procedures Act (RESPA), 1974, dealing with home mortgage loan disclosures were merged into the
TILA-RESPA Integrated Disclosures (TRID) law in reforms implemented in October 2015. This was one
of the most significant of recent changes to home-lending laws.
the Loan Estimate ANSW✅✅is designed to provide disclosures that will be helpful to consumers
in understanding the key features, costs, and risks of the mortgage for which they are applying. This
form will be provided to consumers within three business days after they submit a loan application.
the Closing Disclosure ANSW✅✅is designed to provide disclosures that will be helpful to
consumers in understanding all of the costs of the transaction. This form will be provided to
consumers three business days before they close on the loan.
