VA Real Estate Licensing Exam -
National Portion Questions with
Complete Solutions.
Fannie Mae (FNMA) - ANSWER-Government sponsored private corporation that
generates funds for primary lenders by buying and selling FHA, VA and Conventional
Loans.
Minnie Mae (GNMA) - ANSWER-Federal Agency under HUD that operates the federal
subsidy housing loan programs.
Freddie Mac (FHLMC) - ANSWER-Organized to borrow money from pension and trust
funds to purchase mortgages and pool them together and to sell bonds on the open
market with mortgages as security.
Primary Mortgage Market - ANSWER-1. Primer lenders or originators who make
mortgage loans (supply cash) directly to borrowers
2. Activities: Loan origination, loan servicing, conventional loan --> loan originated by
PM without government insurance (FHA) or guarantees authorized by VA Dept. of
Veteran Affairs (greater risk to lenders than government back loans)
--Down payment (20% typical)
--Primary Mortgage Insurance (PMI): typical on loans (LTV) of over 80%
Secondary Mortgage Market - ANSWER-1. Network of institutions that purchase and
sell existing mortgages
2. Two forces led to it's creation:
--Business entities with cash reserves in real estate
--Primary Market financial Institutions in need of cash to originate loans
3. Fannie Mae, Ginnie Mae, Freddie Mac
Federal Housing Administration (FHA) - ANSWER-1. Insures but does NOT originate
loans
2. Debt to Income Ratio: 31% for housing costs, 43% for housing expenses and other
long-term debt
3. FHA borrowers MUST purchase FHA mortgage insurance
4. Criteria more forgiving for credit score than on conventional loan
VA Guaranteed Home Loan (VA Loan) - ANSWER-1. Loan guaranteed by the
department of veteran affairs for eligible veterans that purchase, build or refinance a
house
, 2. Guaranteed by RARELY originates
3. The LENDER (NOT the VA) determines max loan amount and interest rates
Mortgage - ANSWER-1. Between 2 Parties
2. Borrower retains title while lender takes a lien on the property
*A specific loan secured by a voluntary lien on real property, where a property owner
enters into a contract to borrow money and voluntarily agrees to extinguish his rights to
his real property in favor of the lender if he fails to pay the debt according to the terms of
the loan agreement.*
Deed of Trust - ANSWER-1. Between 3 Parties
2. Neutral 3rd party (trustee) holds title until loan is repaid in full
Which of the following is most often included in a mortgage?
1. Seisin
2. Further Assurances
3. Quiet Enjoyment
4. Pay Taxes - ANSWER-4. Pay taxes
APR Calculation - ANSWER-Interest Rate + ALL fees
Truth in Lending Act (TILA) - ANSWER-Federal law with the primary purpose to
promote the meaningful disclosure of consumer credit and lease terms in order to
facilitate choice
Regulation Z - ANSWER-Requires lenders to disclose key loan terms and fees when
advertising and selling services
RESPA - ANSWER-Federal law administered and enforced by the Consumer Financial
Protection Bureau (CFPB), which regulates closing procedures to ensure that lenders
fully inform buyers and sellers of all settlement costs that lenders do not engage in
unfair practices
***Does NOT apply to CASH transactions***
RESPA prevents anyone from giving or accepting a fee, kickback or anything of value in
exchange for referrals of settlement service business involving a federally related
mortgage loan
Cost Approach - ANSWER-Replacement cost - depriciation + land value = Total
Property Value
*usually sets upper limits of value*
Income Approach - ANSWER-Net operating income
------------------------- = Property Value
Capitalization rate
National Portion Questions with
Complete Solutions.
Fannie Mae (FNMA) - ANSWER-Government sponsored private corporation that
generates funds for primary lenders by buying and selling FHA, VA and Conventional
Loans.
Minnie Mae (GNMA) - ANSWER-Federal Agency under HUD that operates the federal
subsidy housing loan programs.
Freddie Mac (FHLMC) - ANSWER-Organized to borrow money from pension and trust
funds to purchase mortgages and pool them together and to sell bonds on the open
market with mortgages as security.
Primary Mortgage Market - ANSWER-1. Primer lenders or originators who make
mortgage loans (supply cash) directly to borrowers
2. Activities: Loan origination, loan servicing, conventional loan --> loan originated by
PM without government insurance (FHA) or guarantees authorized by VA Dept. of
Veteran Affairs (greater risk to lenders than government back loans)
--Down payment (20% typical)
--Primary Mortgage Insurance (PMI): typical on loans (LTV) of over 80%
Secondary Mortgage Market - ANSWER-1. Network of institutions that purchase and
sell existing mortgages
2. Two forces led to it's creation:
--Business entities with cash reserves in real estate
--Primary Market financial Institutions in need of cash to originate loans
3. Fannie Mae, Ginnie Mae, Freddie Mac
Federal Housing Administration (FHA) - ANSWER-1. Insures but does NOT originate
loans
2. Debt to Income Ratio: 31% for housing costs, 43% for housing expenses and other
long-term debt
3. FHA borrowers MUST purchase FHA mortgage insurance
4. Criteria more forgiving for credit score than on conventional loan
VA Guaranteed Home Loan (VA Loan) - ANSWER-1. Loan guaranteed by the
department of veteran affairs for eligible veterans that purchase, build or refinance a
house
, 2. Guaranteed by RARELY originates
3. The LENDER (NOT the VA) determines max loan amount and interest rates
Mortgage - ANSWER-1. Between 2 Parties
2. Borrower retains title while lender takes a lien on the property
*A specific loan secured by a voluntary lien on real property, where a property owner
enters into a contract to borrow money and voluntarily agrees to extinguish his rights to
his real property in favor of the lender if he fails to pay the debt according to the terms of
the loan agreement.*
Deed of Trust - ANSWER-1. Between 3 Parties
2. Neutral 3rd party (trustee) holds title until loan is repaid in full
Which of the following is most often included in a mortgage?
1. Seisin
2. Further Assurances
3. Quiet Enjoyment
4. Pay Taxes - ANSWER-4. Pay taxes
APR Calculation - ANSWER-Interest Rate + ALL fees
Truth in Lending Act (TILA) - ANSWER-Federal law with the primary purpose to
promote the meaningful disclosure of consumer credit and lease terms in order to
facilitate choice
Regulation Z - ANSWER-Requires lenders to disclose key loan terms and fees when
advertising and selling services
RESPA - ANSWER-Federal law administered and enforced by the Consumer Financial
Protection Bureau (CFPB), which regulates closing procedures to ensure that lenders
fully inform buyers and sellers of all settlement costs that lenders do not engage in
unfair practices
***Does NOT apply to CASH transactions***
RESPA prevents anyone from giving or accepting a fee, kickback or anything of value in
exchange for referrals of settlement service business involving a federally related
mortgage loan
Cost Approach - ANSWER-Replacement cost - depriciation + land value = Total
Property Value
*usually sets upper limits of value*
Income Approach - ANSWER-Net operating income
------------------------- = Property Value
Capitalization rate
