Exam (elaborations)
Champions Real Estate Finance: Q/A
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Champions Real Estate Finance: Q/A
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Champions Real Estate Finance: Q/AResidential Mortgages have two categories Correct Ans - Conventional
Loans & Government Loans
Portfolio Loans Correct Ans - Loans not sold in secondary market
Conventional Conforming Loans Correct Ans - Loans purchased in the
secondary market that meet Fannie Mae & Freddie Mac standards
Four C's of Creditworthiness Correct Ans - Character, Capacity, Capital,
& Collatareal
Character Correct Ans - A measure of the willingness of borrower to
make on-time payment
Capacity Correct Ans - A measure of borrowers ability to repay debt &
is demonstrated through current earnings & job stability
Capital Correct Ans - The sum of all assets that the borrower has
accumulated
Collateral Correct Ans - something of value that can be pledged as
security for repayment of the loan
Yield Correct Ans - The return the investor recieves over the life of the
loan
Discount Points Correct Ans - The Yield of a loan is determined by the
rate of interest charged on a loan and the ______________ charged by the lender
at closing.
One-Point Discount Correct Ans - A ___________________ is one percent of
the loan amount and is an up front payment of interest paid by borrowers to
reduce the interest rate on a loan.
Par Loan Correct Ans - A loan with no discount points
,Origination Correct Ans - The process of creating a new mortgage loan
Underwriting Correct Ans - Process of evaluating a borrowers loan
application to determine risk involved for lender
Closing Correct Ans - The consummation of a real estate transaction;
in which all documents are signed & process of mortgage loan are disbursed
by lender
Funding Correct Ans - Process of transferring funds to title & escrow
company for disbursement
Mortgage Banker Correct Ans - Uses his money or line of credit to fund
loans when the final closing conditions have been satisfied.
Servicing Correct Ans - 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.
Servicing Charge Correct Ans - The ________________________ is added to
the interest rate the borrower pays for the loan; so it's indistinguishable to the
average borrower.
Net Basis Correct Ans - Means that it does not include a servicing fee
"wholesale rates"
Employment Market Correct Ans - The single most important
determinant of value in residential real estate is the size of the
____________________________.
2008 Correct Ans - The Housing & Economic Recovery Act went into
effect in _______________________.
Housing and Economic Recovery Act of 2008 (HERA) Correct Ans -
Law designed to assist in recovery of America's residential housing market
from modernization of the Federal Housing Administration to foreclosure
prevention & enhancing consumer protections.
, The Safe Act Correct Ans - The ____________________ is a key component of
HERA.
The Safe ACT Correct Ans - designed to enhance consumer protection
& reduce fraud by encouraging states to establish minimum standards for
licensing & registration of fraud.
The Safe ACT Correct Ans - Encourages states to establish minimum
standards for licensing & registration of state licensing mortgage loan
originators & maintain a nationwide mortgage licensing system & registry for
Residential Mortgage Industry
1934 Correct Ans - FHA was created in _____________________.
Who funds FHA? Correct Ans - The FHA funds itself.
Monetary Policy Correct Ans - Insures deposits in banks & thrift
institutions
Fiscal Policy Correct Ans - Relates to Federal Government spending
Open Market Operations Correct Ans - Buying or selling government
securities by Federal Reserve
Discount Rate Correct Ans - Set by board of directors of the Federal
Reserve Banks subject to approval by Board of Governors
Federal Deposit Insurance Corporation (FDIC) Correct Ans - Insures
deposits in banks & thrift institutions
M1 Correct Ans - Sum of currency held by public & transaction
deposits at depository institutions.
M2 Correct Ans - defined as M1 plus savings deposits, small
denomination time deposits (issued in amounts of less than $100,000 & retail
money market mutual fund shares)
Fiat Money Correct Ans - currency not backed up by precious metals
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