K
C
LO
CHAMPIONS SCHOOL TEXAS
YC
(REALTOR) TEST PREP
D
QUESTIONS WITH CORRECT
U
ANSWERS ALL VERIFIED BY
ST
AN EXPERT A+ GRADED
(LATEST UPDATE)
,RMLO - ANS Residential Mortgage Loan Originator
Riparian Rights - ANS Unrestricted rights granted to owners of land located along the course
of a river or stream.
Littoral Rights - ANS Unrestricted rights granted to owners whose land borders oceans and
large, navigable lakes that have a tide.
Fannie Mae (FNMA) 1938 - ANS The Federal National Mortgage Association, which is a
congressionally chartered, shareholder-owned company that is the nation's largest supplier of
K
home mortgage funds. For a discussion of the roles of Fannie Mae, Freddie Mac (FHLMC), and
Ginnie Mae (GNMA), see the Library.
C
Freddie Mac (Federal Home Loan Mortgage Corporation) 1970 - ANS A
government-sponsored enterprise established to purchase primarily conventional mortgage
loans in the secondary mortgage market.
LO
Ginnie Mae (GNMA) 1968 - ANS Government National Mortgage Association (GNMA) was
established in order to buy special assistance mortgages carrying below market interest rates.
GNMA is a government agency under HUD and deals only in VA and FHA mortgages. (See
Pass Through Securities.)
YC
OLDCAR - ANS The Fiduciary Duty owed to a principal (seller) by the Agent (broker)
obedience, loyalty, disclosure, confidentiality, accountability, reasonable use of (skill, training,
experience, competency)
Emblements - ANS Refers to crops which require annual planting.
D
Encrouchment - ANS Intrusion onto property by improvement to an adjoining property
U
FHA - ANS The Federal Housing Administration gave both the construction industry and
homeowners a boost by insuring bank loans for building new houses and repairing old ones
ST
RESPA (Real Estate Settlement Procedures Act) - ANS Law requiring full disclosure of
closing costs to buyer and seller.
PITI - ANS An abbreviation which means "Principal, Interest, Taxes and Insurance." In
residential financing, it is common for the monthly mortgage to include these four payments.
Amortization - ANS A method for computing equal periodic payments for an installment loan.
Residential Mortgage Loan Originator (RMLO) - ANS A person who accepts a residential
mortgage loan application from a borrower, and negotiates or offers mortgage terms.
,VA Loan - ANS A loan from Veterans Affairs; insures loans to people who have served in the
military, with no down payment required
Real Estate Owned (REO) - ANS Property acquired by a lending institution through
foreclosure and held in inventory.
Private Mortgage Insurance (PMI) - ANS Insurance provided by a private carrier that protects
a lender against a loss in the event of a foreclosure and deficiency. For high LTV loans when
less than 20% is put down.
K
Real Estate Investment Trust (REIT) - ANS Trust ownership of real estate by a group of
individuals who purchase certificates of ownership in the trust, which in turn invests the money
in real property and distributes the profits back to the investors free of corporate income tax.
C
Texas Department of Housing and Community Affairs (TDHCA) - ANS Agency responsible for
affordable housing, housing related and community service programs, and the regulation of the
LO
state's manufactured housing industry.
Redlining - ANS A process by which banks draw lines on a map and refuse to lend money to
purchase or improve property within the boundaries.
YC
Periodic Tenancy - ANS A lease, which has the original terms automatically renewed for
successive periods, until proper notice to terminate is given by either the landlord or tenant.
Month to month rental.
Tenancy at Sufferance - ANS A tenancy which is created when one is in wrongful possession
of realty, even though the original possession may have been legal.
D
TREC - ANS Texas Real Estate Commission
U
Equal Credit Opportunity Act (ECOA) - ANS The federal law that prohibits discrimination in
the extension of credit because of race, color, religion, national origin, sex, age, or marital
status. Passed in 1974.
ST
Lead-Based Paint Hazard Reduction Act - ANS Persons selling or leasing residential housing
constructed before 1978 must disclose the presence of known lead-based paint and provide
purchasers or tenants with any relevant records or reports.
Mortgage Insurance Premium (MIP) - ANS The FHA insurance that is a percentage of the
loan amount that the borrower is charged as a premium.
x - ANS x
, Federal Deposit Insurance Corporation (FDIC) - ANS A United States government
corporation created by the Glass-Steagall Act of 1933. It provides deposit insurance, which
guarantees the safety of deposits in member banks, currently up to $250,000 per depositor per
bank.
Adjustable Rate Mortgage (ARM) - ANS A loan characterized by a fluctuating interest rate,
usually one tied to a bank or savings and loan association cost-of-funds index.
Adjustment Period - ANS The number of initial years in which an ARM remains fixed before
the interest rate is allowed to be adjusted.
K
Blanket Mortgage - ANS A mortgage which covers more than one piece of real estate. Often
used by a developer in the financing of undeveloped lots. Contains a partial release clause.
C
Partial Release Clause - ANS A part of a mortgage, which provides for the release of part of
the property (used as security in the loan) upon payment of a certain amount of the mortgage.
LO
Blanket mortgage.
Balloon Note - ANS A note calling for periodic payments which are insufficient to fully
amortize the loan, so that a principal sum known as a balloon is due at maturity.
YC
Construction to Permanent - ANS When a buyer wants to purchase a residential property in
need of repair or modernization, the buyer usually has to obtain financing first to purchase the
dwelling, additional financing to do the rehabilitation construction, and a permanent mortgage
when the work is completed to pay off the interim loans with a permanent mortgage. These
loans are commonly referred to as rehabilitation or rehab homes.
D
Hard Money Loan (Collateral Dependent Loan) - ANS Short-term mortgage loans which
require high amounts of borrower equity in the collateral in exchange for limited and/or
expedited underwriting.
U
x - ANS x
ST
Mortgage Insurance - ANS Includes insurance against financial loss by reason of the
nonpayment of principal, interest and other sums agreed to be paid under the terms of any note
or bond or other evidence of indebtedness secured by a mortgage, deed of trust, or other
instrument constituting a lien or charge on real estate. Insures top 20% of loan.
Sub-Prime Loans - ANS Loans that have more risks than are allowed in the conforming
market. Also called B-C Loans or B-C Credit.
Reverse Annuity Mortgage (RAM) - ANS Mortgage in which the lender uses the borrower's
house as collateral to buy an annuity for the borrower from a life insurance company; also called
an equity conversion.
