What does D.U.S.T. stand for? - correct answer Demand, Utility, Scarcity, Transferability
the percentage of value or sales price that a lender is
... [Show More] willing to finance - correct answer Loan to Value Ratio (LTV)
the value of a property is equal to the sum of the contributory value of each of its component parts. - correct answer principle of contribution
the forces acting on a parcel of land are always affecting the value of the land - correct answer PRINCIPLE OF CHANGE
the legal use that gives the greatest return in money and/or amenities. - correct answer HIGHEST AND BEST USE
the purchase price is affected by the expectation of future appeal and benefits. - correct answer PRINCIPLE OF ANTICIPATION
value is maximized when there is a reasonable degree of homogeneity, or sameness, in a neighborhood. - correct answer principle of conformity
reduction in value of property from causes such as deterioration or obsolescence. - correct answer Depreciation
1. Physical deterioration
2. functional obsolesce
3. external obsolesce - correct answer Types of depreciation
the loss in a property's value due to daily wear and tear. - correct answer Physical deterioration
The legal procedure under which property
may be sold to satisfy an unpaid promissory
note - correct answer Foreclosure
the value of a commodity is influenced by the cost of acquiring a substitute or comparable item. - correct answer principle of substitution
appraisal - correct answer someones opinion of value.
The actual age of the property in years. - correct answer Chronological Age
The appraiser's estimate of the age of the house based upon its ongoing maintenance and upgrades. - correct answer Effective Age
TYPES OF APPRAISAL REVIEWS - correct answer 1. Desk Review
2. Field Review
to improve property when the value added by the improvement exceeds cost of the improvement. - correct answer PRINCIPLE OF INCREASING AND DECREASING RETURNS
demand for real estate is great and the supply is short, prices in the marketplace go up. - correct answer PRINCIPLE OF SUPPLY AND DEMAND
The presence of lower-priced properties in the area will cause a decline in the value of the subject property - correct answer PRINCIPLE OF REGRESSION
The absence of competition will cause prices to increase in the marketplace - correct answer PRINCIPLE OF COMPETITION
Acronym for Characteristics of Value - correct answer D.U.S.T.
The price a willing seller will sell for and the price a willing buyer will pay. - correct answer Market value
Most common misunderstood appraisal concept? - correct answer Market Value
Does price equal value? - correct answer No, many factors go into determining the market value of a property.
Ad valorem - correct answer according to value
What are taxes based on? - correct answer Assessed Value
Appraiser must follow what? - correct answer Uniform Standards of Professional Appraisal Practice (USPAP).
URAR is commonly referred as - correct answer 1004
Uniform Residential Appraisal Report (URAR) is known as - correct answer Fannie Mae 1004 or Freddie Mac form 70
Standards that have been established by the Appraisal Standards Board of the Appraisal Foundation - correct answer USPAP
Value - correct answer Does not always equal price
If a type of property in a market area is too abundant, it has reduced value - correct answer Scarcity
Many lenders, especially when dealing with high-LTV loans, will order this type of appraisal - correct answer Field Review
3 approaches to value are - correct answer 1. Sales Comparison Approach
2. Cost Approach
3. Income Approach
appraiser focuses on recent sales in determining the value of the subject - correct answer SALES COMPARISON APPROACH
How many comparison sales will and appraiser gather? - correct answer Minimum of 3. some lenders require 4
The degree to which a comparable is adjusted in 2 ways - correct answer 1. Net adjustment
2. gross adjustment
the absolute adjustments made to the comparable, considering those that are positive and negative - correct answer Net Adjustments -
the sum of all adjustments, whether or not they are positive or negative - correct answer Gross Adjustments
the market value of the property considers how much a new structure of this size and type would currently cost to build. - correct answer COST APPROACH
loss in desirability of the style, layout, or function of an element of a property over time. - correct answer Functional obsolescence
to the loss in value of a property caused by factors outside of the property itself - correct answer External obsolescence
Process of estimating the value of an income-producing property by capitalization of the annual net income. - correct answer INCOME APPROACH
Gross Rent Multiplier formula - correct answer GRM = Sales Price ÷ Monthly Rent
Value = Income ÷ Return - correct answer Income Capitalization Formula
What is the final step in the appraisal process? - correct answer Reconciliation
What is the percentage of value or sales price that a lender is willing to finance? - correct answer loan-to-value ratio (LTV)
How many hours of education required for Appraiser Trainee? - correct answer 75 hours
How many appraiser trainee's can one person sponsor at one time? - correct answer No more than 3
How many Continuing Ed hours are need to renew Appraisar Trainee? - correct answer 28 hours, 7 hours must be USPAP
How many education hours to be considered a Licensed Appraiser? - correct answer 150 hours
How many hours does a Licensed Appraiser must have that are acceptable and verified? - correct answer 2,000 hours over 12 months
How many hours does a Certified residential Appraiser must have that are acceptable and verified? - correct answer 2,500 hours over 24 months
How many education hours to be considered a Certified Residential Appraiser? - correct answer 200 hours
How many hours does a Certified General Appraiser must have that are acceptable and verified? - correct answer 3,000 hours over 20 months.
Minimum of 1,500 hours must be non-residential real property
How many education hours to be considered a Certified General Appraiser? - correct answer 300 hours
The appraised value of a property is:
a. The sale price
b. An opinion of value
c. A market analysis
d. The market value of a property - correct answer b. An opinion of value
For tax purposes the _______ is determined by the taxing authority.
a. assessed value
b. appraised value
c. market price
d. investment value - correct answer a. assessed value
In the appraisal report, the property being appraised is referred to as the _______ property.
a. Target property
b. Comparable property
c. Sold property
d. Subject property - correct answer d. Subject property
The principle of ___________ suggests that the value of property is equal to the sum of the contributory value of each of its component parts?
a. Anticipation
b. change
c. substitution
d. contribution - correct answer d. contribution
The market in which borrowers and lenders come together to create and negotiate the terms of a mortgage transaction - correct answer Primary mortgage market
The practice of refusing to provide financing
in a particular location - correct answer Redlining
The process of making a lending decision - correct answer Underwriting
The process of creating a new mortgage loan - correct answer Origination
a pledge of real estate as security for repayment of a debt - correct answer mortgage
The borrower, is known as - correct answer mortgagor.
The lender is known as the - correct answer mortgagee.
The mortgage "package" actually consists of two major documents: - correct answer 1. promissory note,
2. mortgage,
The market in which borrowers and mortgage lenders come together to create and negotiate terms of a mortgage transaction is called the - correct answer primary mortgage market.
A major difference between mortgage companies and regulated lenders is - correct answer mortgage companies rely on commercial banks
Mortgage loan originators can be broken down into three categories - correct answer 1. mortgage bankers,
2. mortgage brokers
3. correspondent lenders
What is Servicing? - correct answer activities include collecting monthly payments, disbursing the funds to pay taxes and property insurance, supervising the loan, preventing delinquencies and coordinating foreclosure activities in the event of a delinquency
a person, corporation or firm, not otherwise in banking, that provides its own funds for mortgage financing as opposed to savings and loan associations or commercial banks that use other people's money (depositors) to originate mortgage loans. - correct answer MORTGAGE BANKERS
provided consumers with assistance securing hard to place or niche sources of mortgage money. - correct answer MORTGAGE BROKERS
The investors assign large blocks of loans into - correct answer loan pools
is someone who processes, underwrites, closes and funds his or her own files in his or her name. - correct answer CORRESPONDENT LENDERS
The process of creating a new mortgage loan, including all steps taken by a lender to attract and qualify a borrower, are considered - correct answer origination activities
detailed process of evaluating a borrower's loan application to determine the risk involved for the lender is defined as - correct answer UNDERWRITING
The consummation of a real estate transaction in which all appropriate documents are signed and the proceeds of the mortgage loan are disbursed by the lender is called - correct answer closing
The process of transferring funds to a title or escrow company for disbursement is called - correct answer funding
includes sending monthly payment statements and 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 - correct answer Servicing
Net basis rates are sometimes identified as the - correct answer "wholesale rate."
Real estate license holders often refer buyers to a number of trusted loan originators, now universally referred to as - correct answer Residential Mortgage Loan Originators (RMLOs)
is designed to enhance consumer protection and reduce fraud. - correct answer The Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act)
was established. The Bureau has the authority to examine and enforce consumer protection regulations for all mortgage-related businesses, large non-bank financial companies, and banks and credit unions with assets greater than $10 billion. - correct answer Consumer Financial Protection Bureau (CFPB)
Responsible for enforcing "federal consumer financial law" - correct answer Consumer Financial Protection Bureau (CFPB)
to ensure that banks would serve the needs of the community in which they were chartered to do business. - correct answer Community Reinvestment Act
ensures that all consumers are given an equal chance to obtain credit. - correct answer Equal Credit Opportunity Act (ECOA),
Equal Credit Opportunity Act prohibits discrimination in any aspect of - correct answer Race
Color
Religion
National Origin
Sex
Martial status
Age
Receipt of income
designed to protect consumers in credit transactions by requiring clear disclosure of key terms of the lending arrangement and all costs. - correct answer Truth In Lending Act (TILA)
exists for the purchase and sale of existing mortgages to investors. - correct answer secondary market
The originator of the loan becomes a - correct answer seller
large investing institutions that deal in the secondary market for mortgage loans are called - correct answer purchasers
is the return on investment that the investor receives over time - correct answer net yield
Fannie Mae and Freddie Mac have jointly developed a series of documents to standardize mortgage loan purchases, and loans prepared on these documents have become known as - correct answer "conforming loans."
established in the United States in 1968 to promote home ownership. - correct answer The Government National Mortgage Association (GNMA)
Does a Pre-Qualification Letter bind a lender to loan money? - correct answer No, it is to give the buyer a price point of what they may be able to afford.
What is the acronym for an application to be considered "COMPLETE" - correct answer PENSIL
What does PENSIL stand for? - correct answer Property Address
Estimated Value
Name of the Borrower
Social Security Number
Income
Loan Amount
This is determined by the rate of interest charged on the loan and the discount points charged by the lender at closing. - correct answer The yield
A loan with no discount points is known as a - correct answer "par loan"
What is a "Par Loan?" - correct answer a loan that is made at the current market rate of interest.
is the central banking system of the United States. - correct answer Federal Reserve
The Fed uses three primary monetary policy tools to influence the cost of and availability of credit: - correct answer 1. open market operations,
2. the discount rate, and
3. reserve requirements
The Fed's most flexible and often-used tool of monetary policy is - correct answer open market operations
the FOMC directs the New York Trading Desk to sell government securities, collecting payments from banks by reducing their reserve accounts. - correct answer To tighten money and credit in the economy,
TO SAVE MONEY
is the interest rate a Reserve Bank charges eligible financial institutions to borrow funds on a short-term basis. - correct answer discount rate
discount rate is also know as - correct answer announcement effect
reduces the availability of funds for lending, thereby slowing the economy. - correct answer Raising reserve requirements
increases the availability of funds for lending, thereby accelerating economic activity. - correct answer Lowering reserve requirements
The standard loan application in use is the Uniform Residential Loan Application, better known as - correct answer the Fannie Mae 1003, or just simply a "1003."
Amount of money deposited by a prospective buyer as evidence of good faith. - correct answer Earnest Money Deposit
ensures that consumers throughout the nation are provided with helpful information about the cost of the mortgage settlement process and protection from unnecessarily high settlement charges caused by certain abusive practices. - correct answer Real Estate Settlement Procedures Act (RESPA)
ultimate purpose of this is to protect consumers in their dealings with lenders and creditors and to ensure that consumers are aware of the terms and costs of credit. - correct answer Truth in Lending Act (TILA)
A mortgage loan originator must provide, in a clear and concise form, an estimate of the amount of settlement charges the borrower is likely to pay. - correct answer Loan Estimate (LE)
the Loan Estimate (LE) must be provided no later than - correct answer 3 days after receipt of the written application
What are the penalties for Mortgage Fraud? - correct answer possible prison term and
a fine not to exceed $10,000.
This increases the penalties for a federal conviction for mortgage fraud to
A.) a maximum of 30 years in prison and
B.) a fine of up to $1 million. - correct answer Fraud Enforcement and Recovery Act (FERA)
rate remaining fixed for the entire term of the loan. - correct answer fixed-rate mortgage
the monthly payment includes an amount that is applied first to interest that is due, with the remainder of the loan payment being applied to the outstanding loan balance - correct answer amortizing loan
Jill's loan balance on March 1st was report as $127,380. The regular monthly payment of principal and interest is $836.03, and the rate of interest is 4%.
1.When Jill makes her April 1st payment, how much interest will be due? ______ - correct answer $424.60
1.) 127,380 x .04 = $5,095. 20 (yearly interest)
2.) 5,095.20 divided by 12 = $424.60 (monthly interest)
Jill's loan balance on March 1st was report as $127,380. The regular monthly payment of principal and interest is $836.03, and the rate of interest is 4%.
2.After the April 1st payment has been applied, what will her new loan balance be? ____________________ - correct answer $127,968.57
1.) 836.03 - 424.60 = $411.43 (Principal Paid)
2.) 127,380 - 411.43 = $127,968.57 (new balance)
Mortgage loan in which the interest rate my increase or decrease - correct answer Adjustable Rate Mortgage (ARM)
The period between rate changes in an adjustable rate mortgage is called the - correct answer adjustment period.
is what the lender uses as an instrument for measuring changes in interest rates in an ARM. - correct answer Index
is the world's most widely used benchmark for short-term interest rates. - correct answer London Interbank Offered Rate - LIBOR
The percent added to the index in order to calculate the payment interest rate. - correct answer Margin
is equal to the margin plus the index and is usually to the nearest one-eighth of a percent. - correct answer Fully Indexed Rate
- A lower interest rate is offered by the lender during the first year or more of the loan. - correct answer Discounted Initial Rate (teaser rate)
An ___________________ places a limit on the amount the interest rate can increase or decrease at each adjustment date. - correct answer Interest-rate Caps -
This caps limits how much a payment may increase or decrease in any subsequent adjustment. - correct answer Per Adjustment Cap -
Limits the interest rate increases over the life of the loan. - correct answer Lifetime Cap -
ARMs that offer a fixed-rate period during the first years of the loan usually have an initial rate cap that is higher than the per adjustment cap. - correct answer Initial Adjustment Cap -
What are these: [Show Less]