Texas Real Estate Finance Practice Exam - Key Terms Definitions

Texas Real Estate Finance Practice Exam - Key Terms & Definitions Flashcards What type of clause prohibits the repayment of a mortgage ahead of schedule?Lock-In Clause What is one of the primary purposes of the secondary mortgage market?Cycle back money to primary lenders.The Consumer Financial Protection Bureau (CFPB) requires the use of the Closing Disclosure (CD) for which types of transactions?Residential transactions financed by a federally-related loan What was the first law to prohibit discrimination in housing based on race?The Civil Rights Act of 1866 How is the payoff of a construction loan normally accomplished?with a takeout loan Why do lenders collect reserve funds at the property closing?To be sure money will be available for tax and insurance payments Which of the following statements is FALSE about a life estate?the most complete form of ownership Sam Frank is a retired Army officer who wants to purchase a new home using a VA loan. In 2000, Sam used his VA guarantee of $36,000 when he purchased his current home. Based on the VA's maximum guarantee of $104,250 and his partial eligibility, how much of a loan can Sam get with no money down?

273,000

The most common type of loan offer that buyers receive

from banks is called:

A firm commitment.A borrower's payment history can make up to this percent

of their credit score:

35% Under which type of loan does the portion of payment that is applied to principal increase regularly over time?growing equity When a tenant wrongfully remains without the landlord's consent after the expiration of the lease what is the best description of the situation?Estate at sufferance What is ECOA?A law prohibiting lending discrimination In Texas, what is the maximum late payment penalty allowed?no restrictions Which of the following would probably not be a use of a junior loan?purchase of property through the VA What is a disadvantage of a graduated-payment loan?This plan could result in negative amortization.What percent of the REIT's assets must be made up of cash, real estate, mortgage notes, or government securities?75

Which of these is not used by lenders to estimate an applicant's ability to fulfill a loan obligation?Income ratioLoan-to-value ratioDebt ratioHousing plus debt ratio Loan-to-value ratio What Act, in 1974, added sex to the list of prohibited discriminations under the Fair Housing Act?Housing and Community Development Act Which of the following groups of people would be eligible for the Homes for Texas Heroes program?Public Security Officers Which of the following statements is FALSE? non-institutional lenders are not subject to usury law.What does the term "mixed-use development" mean? More than one use for a single building In Texas, nationally-chartered banks are licensed by which agency?The Comptroller of the Currency Mary is getting a $120,000 loan at 6.5 percent and will pay

• discount points. What will the effective interest rate be?

.06875

What is the term used for an agreement between the borrower and a permanent lender relative to future delivery of a takeout loan upon completion of construction?take-out commitment What is the minimum pool size for manufactured homes under Ginnie Mae II MBS?

$350,000

Commercial banks participate in real estate finance though all but which of the following methods?secondary mortgage market What is the most important aspect of a credit report?It shows the borrower's attitude about handling credit and debt.What kind of lien is a real estate loan? Specific, voluntary Which of the following statements is not true about a note?a note must be tied to a mortgage to be legal What is a leasehold mortgage called that is based mostly upon a well-known tenant's financial strength?credit loan What is the requirement to be classified as a long-lived asset?Property held for longer than 12 months.What is the term used to describe a loan that is not government-backed?conventional Which statement about syndication is FALSE? Most investors belonging to syndicates invest a lot of their own money.In 1988, two categories of protected classes were added to those protected classes already covered under the Fair Housing Act for a total of seven federally-protected classes.Which of the following classes were added?Familial Status and Handicapped Banks can act as mortgage brokers for which of the following?

• Life insurance companiesb. Real estate investment or

mortgage trustsc. Banksd. All of the above All of the following are common ways for a buyer to get assurance that a title is good except which?Abstract of titleDeedCertificate of authenticityTitle insurance Certificate of authenticity In Texas, what is the minimum number of physical offices a licensed mortgage company must have operational?1 What is the main advantage of a single-family home investment over other real estate investments?liquidity

Alex bought a property valued at $850,000 which has an annual net operating income of $102,500. What is the capitalization rate?.12 The Texas agency that ensures that the banks, savings institutions, consumer credit grantors, and other regulated entities chartered or licensed under state law operate as

sound and responsible institutions is called:

Finance Commission of Texas Which is true about the amount of closing costs that the seller is permitted to pay with a VA loan?The seller can pay up to 100% of closing costs.Which of these statements is TRUE about financing large apartment complexes?As the size of the building increases, the loan ratio is generally reduced.

The borrower is also called the:Mortgagor

Before an option is exercised, which of these costs will the optionee incur?Option fee Which of the following statements is not true? Noninstitutional lenders can make FHA and VA loans.Which statement is not true about the Farm Credit System?FCS banks lend money from their deposits The general legal rate of interest in Texas that is used on personal loans and in many consumer transactions has

been set at:

6% RESPA applies to which of these?First mortgage on a single-family home The entity holding title to a property during the term of a deed of trust is called what?trustee How many Farm Loan Banks were established by the Federal Farm Loan Act of 1916?12 What are the steps in the sales comparison approach to estimating value?Choose appropriate comparable properties, adjust the comparables for the differences and estimate the value.Who is responsible for ordering the preliminary title report?escrow officer The Texas Veterans Land Board (VLB) administers which of the following programs.Veterans Housing Assistance Program Bill bought a property for $270,000. The value of the building on the property is $220,000. If the building has an economic life of 50 years, what is the depreciated value of the building after 5 years?

198,000

Which Act ushered in the Farm Credit System (FCS)?The Federal Farm Loan Act The act of pooling and investing the money of many people

is called:

Intermediation Which of these is not a reason lenders in many states prefer to make residential loans using the deed of trust?It can be used to secure only one note Which of the following lease options would be the least favorable to the tenant?tenant relocation Which type of security guarantees mortgage-backed bonds that are secured by eligible agricultural mortgage loans?AgVantage Bonds A REMICcan be a corporation, trust, association, or partnership.A right or interest in a property held by one who is not the

legal owner of the property is known as:

An encumbrance

Which Texas agency licenses, regulates, and examines the trust- and insurance-funded prepaid funeral contract sellers?Texas department of banking Mary's mortgage is to be paid in full on 4/30/2040. This date is known as The maturity date.Jim Smith wants to purchase a vacation home and have it double as an investment. What is the maximum amount of time per year that Jim and his family can stay in the home and still be able to take the depreciation?14 days What is the established specific usury cap for consumers in Texas?No established cap.Sam purchased an apartment building in April 2005. His initial tax basis on the building is $395,250. What is his monthly depreciation allowance?

$1,197.73395,250/27.5/12 = 1,197.73

With which kind of lease does the tenant not know the actual change in the rent amount in advance?indexed Which Board is responsible to license, certify, and regulate real estate appraisers in Texas under state and federal laws?Texas Appraiser Licensing and Certification Board

(TALCB)

Which of the following is not a HUD responsibility?FDIC Which agency manages the debt of the federal government?United States Treasury Greta has four children. As of 2016, what is the maximum combined amount she can give each year to all of her children without having to pay a gift tax?$60K Which type of property is most benefited by the income capitalization approach to estimating value?apartment building Which of the following are banks prohibited from doing with high-cost mortgages?Issue a prepayment penaltyImplement a balloon paymentIssue a late fee of more than 4%All of the above All of the above The Tax Reform Act of 1986 established an entity that can issue multiclass securities. What is this entity called?

REMIC Fannie Mae and Freddie Mac are able to replenish their own funds by doing what?Selling mortgage-backed securities Texas has the following restrictions on the amount that can

be charged for late fees:

Texas has no restrictions on late fees What is the maximum annual amount a single taxpayer can give to a person without incurring a gift tax liability?

15,000

the cost recovery period for land improvements is how long?15 years Under Fannie Mae Guidelines,any loan made that has a loan-to-value ratio of more than 80 percent must carry private mortgage insurance.Which of the following statements is not true about a deed of trust?The statute of limitations might bar action on a note with a deed of trust that has power of sale.