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Washington Real Estate AMP Questions and Answers
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Chapter 1 - โโLoans Which is not correct regarding the reserve amount? A) the amount of money the Federal Reserve requires lenders to hold in reserve B) reserve amounts may be used by the lender C) reserves must remain in a special account D) reserves are regulated by the Federal Reserve - โโB) reserve amounts may be used by the lender Feedback: Correct: The reserve account helps keep the economy stable by controlling the money supply. Bob noticed that there was a lien recorded against his property at the County Auditor's Office. More than likely the lien is a: A) a license issued by Bob for the neighbor to use a foot path B) a restrictive covenant recorded by the subdivision C) the mortgage that he signed for with his lender D) an easement in gross required by his local utility - โโC) the mortgage that he signed for with his lender
Feedback: Correct: A lien is a monetary requirement recorded against property. This would be a mortgage. License and an easement would be a "use" interest. What is the major difference between a mortgage banker and a mortgage broker? A) the mortgage broker originates loans and the mortgage banker finds the best deal program for their customers B) the mortgage broker finds the best debt program for their buying customers and brings borrowers and lenders together. The mortgage banker originates loans and puts them into packaged programs and sells the packages in the open market. - โโB) the mortgage broker finds the best debt program for their buying customers and brings borrowers and lenders together. The mortgage banker originates loans and puts them into packaged programs and sells the packages in the open market. Feedback: Correct: The mortgage banker originates the loan and puts them in a packages for the open market. Their buyers include Fannie Mae and Freddie Mac as well as Wall Street firms. The mortgage broker keeps informed of the lending industry. They bring borrowers and lenders together by putting together individual mortgage programs. In return they receive a percentage commission based on the percentage of the money borrowed. When working with a lender for a loan, which of the following would be the unique application requirement of a credit union? A) the applicant would need to obtain a "paid for" credit report B) the applicant would have to purchase a title policy on behalf of the lender C) the applicant wouldn't need a cosigner
Correct: Selling bonds takes money out of the economy. An oversupply of money can cause inflation. Tom is upset because he heard he has a non-conventional loan. He can't understand why because he is working with a lender. Which of the following answers is probably the case? A) Tom's credit rating is lower than normal and he has to pay a higher interest rate B) the involved lender is not Federally insured C) Tom obtained a VA loan because of his service in the Army D) the lender is requiring Tom to pay taxes and insurance premium on a monthly basis - โโC) Tom obtained a VA loan because of his service in the Army Feedback: Correct: A nonconventional loan is one that is insured or guaranteed by the Federal government. Tom's VA loan guarantees the lender that a loss will not occur if Tom defaults on payment. In establishing a deed of trust/trust deed as a lien against property, the lender would be which of the following? A) the third-party trustee handling payments on behalf of the owner B) the beneficiary of the trust deed C) the trustor who is responsible for payments D) all the above - โโB) the beneficiary of the trust deed Feedback:
Correct: With a trust deed lien, a third-party trustee is the go-between the owner/trustor and the lender/beneficiary. The lender is the beneficiary receiving payments from the trustee. Tom pays the trustee and the trustee pays the beneficiary/lender. The type of funds that looks to invest in fixed interest mortgages and relatively safe investments are: A) credit union loans B) pension funds C) high yield stocks D) none of these - โโB) pension funds Feedback: Correct: Pension funds look for investments that are reasonably safe for their pension participants. Which of the following lender specializes in long term, single-family home loans as well as non- conventional loans? A) commercial banks B) savings and loans C) mutual savings banks D) insurance companies - โโB) savings and loans Feedback: Correct: Savings and Loans issue both conventional and non-conventional loans.
Your client desires to purchase a house but needs financing. Which of the following lenders would you not suggest to your client? A) savings and loan association B) conventional bank C) life insurance company D) mutual savings bank - โโC) life insurance company Feedback: Correct: Life insurance companies does not offer loans for individual houses. They finance long- term commercial loans for buildings and major apartment complexes. All the other listed lenders would be open to establishing a loan for your client to buy the house. Which WOULD NOT be a feature of the RECD? A) negotiates loans for rural residents B) negotiate loans for farming costs C) negotiating loans for farm equipment D) negotiating loans for property in cities - โโD) negotiating loans for property in cities Feedback: Correct: The RECD also known as the Federal Farm Loan program works with people in rural areas for the purchase of property, farming costs, and farm equipment.
Which of the following is owned by its depositories? A) commercial banks B) savings and loans C) mutual savings banks D) insurance companies - โโC) mutual savings banks Feedback: Correct: AMP emphasizes that Mutual Savings banks are state chartered and that these lenders are primarly located in New Yorks and New England. They mostly deal with FHA insured loans and VA guaranteed loans. Mary is slightly confused when looking in the yellow pages regarding mortgage loans. Some ads say mortgage broker and some ads say mortgage banker. She wants to know what the difference is between these. A) A mortgage banker will provide her with a loan and then sell the loan to another lender B) a mortgage broker will negotiate with various lenders to find the best deal for Mary's needs C) both are correct D) neither is correct - โโC) both are correct Feedback: Correct: A mortgage banker will set up a loan utilizing the banker's financing package and then sell the loan to another lender in the secondary market. A mortgage broker represents Mary in negotiations to establish a loan with several different lenders.
B) are only available through public lenders - โโA) are based on the income of the borrower Feedback: Correct: Usually the loans are orginated through a private lender. If lenders are not available the agency is allowed to make loans directly. The interest rates are based on the income of the borrower. Which of the following economic powers is not enjoyed by the Federal Reserve? A) regulating credit reports for consumers B) determining how much money is to be printed for circulation C) controlling the discount rate that lenders can obtain money from the Federal government D) raising and lowering the amount of money banks must hold in reserve - โโA) regulating credit reports for consumers Feedback: Correct: Credit reports on consumer loans is not a power of the Federal Reserve. Controlling the amount of money put out into the economy, the discount rate for lenders, and reserve requirements are the powers that it enjoys. Chapter 2 - โโMortgages One of the major problems associated with the buyer assuming the seller's mortgage is which of the following? A) the buyer immediately becomes totally responsible for the seller's mortgage
B) the seller is secondarily responsible for the buyer's assumption C) the buyer needs to take the assumed loan to Freddie Mac D) the seller must continue to make the mortgage payments - โโB) the seller is secondarily responsible for the buyer's assumption Feedback: Correct: With an assumption, the buyer who assumes the loan is primarily responsible, but the seller is still secondarily responsible if the buyer defaults. When a buyer applies for a loan, which of the following acts requires notification of all fees and charges: A) Fair Housing Act B) VA assigned loans C) the Truth and Lending Act/Regulation Z D) Federal Trade Act - โโC) the Truth and Lending Act/Regulation Z Feedback: Correct: the truth and lending act/regulations Z requires all specific charges and fees to be shown to all applicants. The fair housing act pertains to discrimination regarding sales or lease of residential property. Which is a correct statement regarding MBS? A) they are loans purchased by secondary markets, packaged, and then sold to investors
Feedback: Correct: The acceleration clause pertains to loans that are in default. If the default situation meets the standards specified in the loan document, the lender can accelerate the promissory note to be paid in full or face foreclosure. When a veteran applies for GI loan, the appraiser utilized by the lender will issue which of the following? A) certificate of reasonable value B) the VA guaranteed amount C) the required down payment amount D) the excess liability amount - โโA) certificate of reasonable value Feedback: Correct: An appraiser approved by the VA will offer an opinion of value to the Veteran's Administration. This is known in the lending industry as a certificate of reasonable value. With a Land Sales Contract the buyer receives what until the loan is paid off? A) Deed of Reconveyance B) Equitable Title C) Purchase Money Mortgage D) Trust Deed - โโB) Equitable Title
Feedback: Correct: In a Land Sales Contract the owner/seller finances the purchase and retains title to the property. The buyer has an Equitable Title until the loan is paid off and then the owner will issue a Deed of Reconveyance. Which is NOT a correct statement regarding FHA loans? A) prepayment penalties are allowed if the lender pays off the loan early B) discount points are not allowed to bring the interest rate down C) minimum down payment may be provided by a loan D) none of these are correct - โโD) none of these are correct Feedback: Correct: FHA has rules regarding the loan. Some of these are MIP is charged, the interest rate may by negotiable through discount points, there are no prepayment penalties, and if the buyer meets FHA guidelines the loan may be assumable. The obligee is the: A) buyer B) promisor C) promisee D) the borrower - โโC) promisee Feedback:
A veteran sells her house to a non-veteran who assumes the loan. The non-veteran defaults on the loan. Who would be liable? A) the lender B) the buyer C) the seller D) the government - โโC) the seller Feedback: Correct: The original vet will be liable if the new buyer defaults. The Trust Deed lien and the Land Sales Contract lien when paid in full allows the purchaser to receive: A) Deed of Reconveyance B) Promissory Note C) Equitable Title D) Mortgage - โโA) Deed of Reconveyance Feedback: Correct: When paid off, the buyer receives a Deed of Reconveyance and the buyer becomes the title owner.
The financial market is made of primary and secondary intermediaries that trade debt instruments. Which of the following is not a financial intermediary lender? A) Ginny Mae B) life insurance companies C) HUD D) credit union - โโC) HUD Feedback: Correct: HUD does not issue or trade debt instruments. HUD is a Federal agency that regulates discrimination laws and develops programs for urban development. The other answers are financial intermediaries or lenders. If a buyer wished to obtain an FHA loan, where would the buyer submit an application? A) Federal Housing Administration Office B) Federal Home Loan Mortgage Corporation C) FHA approved lender/mortgagee D) Federal Mortgage Insurance Company - โโC) FHA approved lender/mortgagee Feedback: Correct: A loan applicant would apply for a loan through a lender/mortgagee. The lender/mortgagee would write up the FDA loan application. If approved, the FHA would insure the lenders loan.
A) Charlie will only hold equitable title in the condominium B) the developer will hold title until Charlie pays off the contract C) Charlie's status is that of a tenant D) once the contract is paid off the developer must issue a deed of reconveyance - โโC) Charlie's status is that of a tenant Feedback: Correct: Charlie is more than a tenant in that he is building equity ownership with each monthly payment. He holds an equitable title in the property with the developer holding actual title. The promisor is the: A) obligor B) buyer C) borrower D) all of these - โโD) all of these Feedback: Correct: All of these are terms used to indicate the borrower. Ann is a veteran and made an offer of $200,000 for a house in Stanton. Her offer was accepted and she applied for a VA loan. Unfortunately, the certificate of reasonable value (CRV) came in from the VA approved appraiser at $196,000. Which of the following could Ann do? A) back out of the sales contract and pay the seller $
B) pay the VA $ C) put $4000 down on the deal and utilize a $196,000 loan D) any of these situations could apply - โโC) put $4000 down on the deal and utilize a $196,000 loan Feedback: Correct: Since the VA will only guarantee $196,000 to a lender; the lender will require Ann to put down $4000 on the sale. Ann can only back out of the deal if there was a"subject to clause" regarding financing in the sales contract. What is the name of the government association that purchases VA, FHA, and Rural Development loans from lenders when they need cash or want out of a loan? A) Ginnie Mae B) down payment assistance program C) FHA D) VA - โโA) Ginnie Mae Feedback: Correct: Ginnie Mae is a Federal agency owned by the government and it is a division of the Department of Housing and Ruban Development (HUD). It specializes in high risk programs and issues mortgage-backed guaranteed certificates to investors. Who would qualify for a RAM? A) owner 62 or older
