Real Estate Finance Exam 1 Questions & Answers 2024/2025

Real Estate Finance Exam 1 Questions & Answers 2024/2025 The sequence of the five-step financing process is generally Funding/Closing, Servicing - ANSWER-Application, Analysis/Processing, Qualifying/Underwriting, Funding/Closing, Servicing The Federal Reserve System consists of __ reserve districts, and __ board members. - ANSWER-12/7 interest-bearing savings accounts represent - ANSWER-time deposits... another name for a "take-out" loan is; - ANSWER-permanent financing or long-term the financial turmoil in the mid 2000's was NOT fueled by a. years of greed throughout the finance system b. relaxation of loan qualifying requirements c. a reliance on ever-increasing home values d. the creation of more stringent loan qualifying requirements - ANSWER-D) the creation of more stringent loan qualifying requirements which of the following characterizes lending policies of life insurance companies; a. preference for very large projects b. short payback terms c. high discount points and fee structure d. construction loans preferred over take-out loans - ANSWER-A) preference for very large projects Disintermediation is best described as - ANSWER-a sudden flow of funds from thrift institutions into the general money the principal purpose of the Depository Institutions and Monetary Control Act was to; - ANSWER-phase out restrictions on interest rates that lenders may pay depositors The agency responsible for chartering and overseeing the operations of national banks and bank holding companies is the; - ANSWER-A The trade association that consists of the major investors and lenders in the mortgage banking fields is the; - ANSWER-A Unlike institutional lenders, private lenders; a. are highly regulated b. are subject to California's usury statutes c. applies uniform lending policies and practices d. makes only second trust deed loans - ANSWER-B) are subject to California's usury statutes a purchase money loan is best illustrated by; - ANSWER-seller carrying back a first trust deed. Lending characteristics of private lenders include; a. high degree of sophistication in loan decisions b. making primarily first trust deed loans c. charging relatively low interest rates d. short-term repayment schedules - ANSWER-D) short-term repayment schedules an association of two or more parties who combine their financial resources for achieving specific investment objectives is best illustrated by a; a. real estate investment trust b. syndication c. general partnership d. limited partnership - ANSWER-B) syndication All of the following statements regarding the discount rate are true except; a. the higher the discount rate charged the higher the interest rate charged to the borrower b. the discount rate is the charge for overnight borrowing from the Fed. c. any change in the discount rate immediately affects long term mortgage rated d. the lower the discount rates the greater likelihood is of lower borrowing rated by consumers - ANSWER-C) any change in the discount rate immediately affects long term mortgage rated which of the following receive their capital primarily from gifts, and are a good source for sale-leaseback financing a. state-chartered credit unions b. labor unions c. endowment funds d. estate funds - ANSWER-C) endowment funds alternative mortgage instruments (AIMs) are financing vehicles that a. are universally standardized b. offers an alternative to fixed-rate instruments c. call for level payments throughout the life of the loan d. call for 30-year repayment schedules - ANSWER-B) offer an alternative to fixed-rate instruments The principal objective of AMIs is to; a. transfers the risk of rising interest rates from borrower to lender b. transfers the risk of rising interest rates from lender to borrower c. overcome loss of purchasing power through inflation d. assures a steady flow of funds in gyrating capital markets - ANSWER-B) transfer the risk of rising interest rates from lender to borrower Regarding a negative amortization loan, which statement is untrue; a. initial payments are not sufficient to satisfy interest payment requirements b. initial payments are adequate to satisfy principal and interest payment requirements c. the outstanding loan balance generally grows larger d. recasting usually occurs after the loan balance reaches 120% of the original debt - ANSWER-D) recasting usually occurs after the loan balance reaches 120% of the original debt Regulation Z of the Truth-in-Lending law requires lenders who offer ARM loans to disclose to borrowers; a. what index is being used b. how rates and margins interact c. payment adjustment periods d. all of the above - ANSWER-D) all of the above: -what index is being used -payment adjustment periods -how rates and margins interact The causes for mortgage interest rate changes include; a. inflation b. supply and demand factors c. federal reserve actions d. all of the foregoing is true - ANSWER-B) supply and demand factors where a loan contains negative amortization; a. monthly payments decrease over time b. equity actually shrinks during the initial years c. the original term of loan is extended d. deferred interest is deducted from principal - ANSWER-B? the following statement is true regarding straight notes versus installment notes; a. the straight note is an interest only note b. the straight note is fully amortized c. the installment note is an interest only note d. none of the above are true - ANSWER-A) straight not is an interest only note the chief benefit to the use of a reverse annuity mortgage is the recipient's ability to; a. leave property free and clear out heirs b. converts one's equity in a home into a rental property c. exchanges the property's value into a lifetime annuity Continues...