Champions Real Estate Finance Exam
2025 || Questions & Answers (Graded A+)
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)
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")
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.
Processing - ANSWER - Once application is complete the file moves into this phase.
Underwriting - ANSWER - The detailed process of evaluating a borrower's loan
application to determine the risk involved for the lender.
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.
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.
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.
Funding - ANSWER - The process of transferring funds to a title or escrow company for
disbursement
The Safe Act - ANSWER - Designed to enhance consumer protection and reduce fraud.
(Key component of HERA)
M1 - ANSWER - Is defined as the sum of currency held by the public and transaction
deposits at depository institutions.
M2 - ANSWER - Is defined as M1 plus saving deposits, small-denomination time
deposits (those issued in amounts of less than $100,000) and retail money market
mutual funds shares.
, Fiat Money - ANSWER - Is currency that is not backed by any precious metals at all.
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.
Package Mortgage - ANSWER - Includes both real and personal property ( fixtures and
furnishings)
Blanket Mortgage - ANSWER - Covers more than one piece of property.
Wraparound Mortgage - ANSWER - Method of financing which preserves the low,
existing interest rate on the original note.
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.
Budget Mortgage - ANSWER - The monthly house payment includes principal, interest,
taxes and insurance (known as PITI)
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.
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.
Capacity - ANSWER - Is a measure of the borrower's ability to repay the debt, and is
demonstrated through current earnings and job stability.
Capital - ANSWER - Is the sum of all assets that the borrower has accumulated.
Collateral - ANSWER - Is something of value that can be pledged as security for
repayment.
Yield - ANSWER - Is the return that the investor recieves over the life of the loan. (Also
known as profit)
Originator - ANSWER - The process of creating a new mortgage loan, including all
steps taken by a lender to attract and qualify a borrower.
2025 || Questions & Answers (Graded A+)
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)
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")
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.
Processing - ANSWER - Once application is complete the file moves into this phase.
Underwriting - ANSWER - The detailed process of evaluating a borrower's loan
application to determine the risk involved for the lender.
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.
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.
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.
Funding - ANSWER - The process of transferring funds to a title or escrow company for
disbursement
The Safe Act - ANSWER - Designed to enhance consumer protection and reduce fraud.
(Key component of HERA)
M1 - ANSWER - Is defined as the sum of currency held by the public and transaction
deposits at depository institutions.
M2 - ANSWER - Is defined as M1 plus saving deposits, small-denomination time
deposits (those issued in amounts of less than $100,000) and retail money market
mutual funds shares.
, Fiat Money - ANSWER - Is currency that is not backed by any precious metals at all.
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.
Package Mortgage - ANSWER - Includes both real and personal property ( fixtures and
furnishings)
Blanket Mortgage - ANSWER - Covers more than one piece of property.
Wraparound Mortgage - ANSWER - Method of financing which preserves the low,
existing interest rate on the original note.
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.
Budget Mortgage - ANSWER - The monthly house payment includes principal, interest,
taxes and insurance (known as PITI)
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.
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.
Capacity - ANSWER - Is a measure of the borrower's ability to repay the debt, and is
demonstrated through current earnings and job stability.
Capital - ANSWER - Is the sum of all assets that the borrower has accumulated.
Collateral - ANSWER - Is something of value that can be pledged as security for
repayment.
Yield - ANSWER - Is the return that the investor recieves over the life of the loan. (Also
known as profit)
Originator - ANSWER - The process of creating a new mortgage loan, including all
steps taken by a lender to attract and qualify a borrower.
