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Champions Real Estate Finance Exam/188 Answered Questions
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Champions Real Estate FinanceExam/188 Answered Questions
Loan-to-Value Ratio (LTV) - -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 - -Includes both real and personal property ( fixtures
and furnishings)
-Blanket Mortgage - -Covers more than one piece of property.
-Wraparound Mortgage - -Method of financing which preserves the low,
existing interest rate on the original note.
-Open-End Mortgage - -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 - -The monthly house payment includes principal,
interest, taxes and insurance (known as PITI)
-Collateral -Dependent Loans - -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 - -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 - -Is a measure of the borrower's ability to repay the debt, and is
demonstrated through current earnings and job stability.
-Capital - -Is the sum of all assets that the borrower has accumulated.
-Collateral - -Is something of value that can be pledged as security for
repayment.
-Yield - -Is the return that the investor recieves over the life of the loan.
(Also known as profit)
-Originator - -The process of creating a new mortgage loan, including all
steps taken by a lender to attract and qualify a borrower.
, -Mortgage Broker - -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 - -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 - -Usually smaller in scale than mortgage bankers or
brokers, these lenders typically extend loans with their own funds, at their
own risk.
-Processing - -Once application is complete the file moves into this phase.
-Underwriting - -The detailed process of evaluating a borrower's loan
application to determine the risk involved for the lender.
-Closing - -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 - -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 - -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 - -The process of transferring funds to a title or escrow company
for disbursement
-The Safe Act - -Designed to enhance consumer protection and reduce
fraud. (Key component of HERA)
-M1 - -Is defined as the sum of currency held by the public and transaction
deposits at depository institutions.
-M2 - -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 - -Is currency that is not backed by any precious metals at all.
, -Monetary Policy - -Is the maintenance of a stable money supply that
provides for growth in the economy while keeping inflation in. The federal
reserves is responsible for this policy in the United States.
-Fiscal Policy - -Federal Government spending. Approved by Congress. At
the treasury level, funds can be raised to pay for government spending by
raising taxes and increasing borrowing.
-Federal Reserve (The Fed) - -is the central bank of the United States
-Monetary inflation - -When there is an excess of money supply in the
market.
-Demand-pull inflation - -When there is more money in the market and less
goods for sale.
-Cost-push inflation - -Occurs when the cost of production and offering
services increase, thereby causing manufacturers and tradespeople/vendors
to rais their prices accordingly.
-Discount rate - -The interest rate charged member banks that borrow from
the Federal Reserve Systems
-Federal Funds Rate - -Is the rate that the Federal reserve charges banks for
unsecured loans, most of which are for a very short term.
-Trouble Asset Relief Program (TARP) - -Was created to restore the nations
financial stability and restart economic growth.
-United State Mint - -Created by Congress in 1972 and became part of the
Department of the Treasury in 1873. The primary mission is to serve the
American people by manufacturing, distributing, and circulating precious
metal coins, collecting coins and national medals. Also entrusted with
providing security over assets.
-The Federal Deposit Insurance Corporation (FDIC) - -An agency created in
1933 to insure individuals' bank accounts, protecting people against losses
due to bank failures (Insures deposits only)
-The Federal Home Loan Bank (FHLB) System - -A system of regional banks
from which local lending institutions everywhere in America borrow funds to
finance housing, economic development, infrastructure and jobs.
-The Federal Housing Administration (FHA) - -Provides mortgage insurance
on loans made by blank- approved lenders throughout the US and its
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