Deck 12: Sources of Financing

Question 1

To whom can a borrower turn for a direct loan for the financing of a single-family dwelling?

A) Federal Housing Administration
B) Mortgage broker
C) Insurance company
D) Savings and loan institutions

Answer 1

D
A borrower can turn to a savings and loan institution for a direct loan for the financing of a single-family dwelling.

Question 2

Most mortgage brokers generally

A) lend their own funds.
B) use money provided by other investors.
C) service the loans they make.
D) only make loans on large properties.

Answer 2

B
Most mortgage brokers generally use money provided by other investors.

Question 3

Commercial banks are most likely to deal heavily in

A) house boat loans.
B) mobile home purchase loans.
C) construction loans.
D) residential home loans.

Answer 3

C
Commercial banks are most likely to deal heavily in construction loans.

Question 4

Which of the following is most likely to specialize in large, commercial participation loans?

A) Mortgage banks
B) Savings and loans
C) Farmers home loan association
D) Life insurance companies

Question 5

All of the following offer secondary mortgage market programs EXCEPT

A) FNMA.
B) FDIC.
C) FHLMC.
D) GNMA.

Question 6

Which of the following specializes in making loans and reselling them?

A) FNMA
B) Mortgage brokers
C) Mortgage bankers
D) VA

Question 7

A lender who continues to collect mortgage payments even after selling the loan is said to be

A) originating loans.
B) laundering money.
C) servicing the loan.
D) discounting the loan.

Question 8

One of the primary reasons for the decline in loan demand at savings and loan institutions appears to be

A) deregulation of the lending industry.
B) the poor location of many of the branch offices.
C) the high interest rates being charged by commercial banks.
D) poor supervision by regulating agencies.

Question 9

Lenders who could be described as investing a major portion of their assets in long-term real estate loans, preferring not to service their own loans, and favoring large commercial properties would be

A) commercial banks.
B) savings and loans.
C) mutual savings banks.
D) life insurance companies.

Question 10

An investor can invest in mortgages by purchasing all EXCEPT

A) Ginnie Mae pass-through certificates.
B) Freddie Mac participation certificates.
C) junior mortgages.
D) municipal bonds.

Question 11

With regard to real estate loans, life insurance companies tend to favor

A) single family houses.
B) interim construction loans.
C) large commercial buildings.
D) not being involved in real estate.

Question 12

One may find financing for a single family dwelling at all of the following EXCEPT

A) savings and loans.
B) commercial banks.
C) insurance companies.
D) mortgage bankers.

Question 13

Which of the following sources provides the most home mortgage money in the United States?

A) Mutual savings banks
B) Commercial banks
C) Credit unions
D) Mortgage companies

Question 14

Commercial banks are most likely to deal heavily in

A) interim loans.
B) 40-year residential loans.
C) home improvement loans.
D) VA loans.

Question 15

Which of the following are designed to prevent disintermediation?

A) Adjustable rate mortgages
B) Secondary mortgage markets
C) Pass-through certificates
D) Certificates of deposit

Question 16

A primary mortgage lender is one who

A) lends to FNMA, FHLMC and GNMA.
B) pools, insures, guarantees and sells first mortgage loans.
C) lends to borrowers, services the loans and perhaps sells the instruments to another.
D) lends only for first mortgages and deeds of trust.

Question 17

The secondary mortgage market is an area of activity in which

A) a borrower may get loans if the primary market cannot accommodate them.
B) second mortgages are made.
C) existing mortgages are bought, sold and discounted.
D) foreclosed properties are bought and sold.

Question 18

From whom would a borrower obtain a VA or FHA loan?

A) Approved mortgage lender
B) VA or FHA
C) Insurance companies
D) Sale of bonds

Question 19

Which of the following specializes in bringing lenders and borrowers together without lending their own money?

A) Insurance companies
B) Mortgage bankers
C) Mortgage brokers
D) Commercial banks

Question 20

Which of the following supplies money to finance home loans?

A) Fannie Mae
B) FHA
C) VA
D) Savings and loans

Question 21

Participation Certificates (PCs)are instruments used by

A) GNMA.
B) FNMA.
C) FHLMC.
D) Farmer Mac.

Question 22

The basic role of the GNMA is to

A) resupply capital to primary lenders by guaranteeing repayment of pools of mortgage loans.
B) insure loans made by primary government lenders.
C) sell mortgage pools to money market funds.
D) facilitate the resale of mortgage loans by marketing participation certificates.

Question 23

Fannie Mae buys and sells all mortgages EXCEPT

A) FHA loans.
B) VA loans.
C) conventional loans.
D) chattel mortgages.

Question 24

Computerized Loan Origination (CLO)programs are available to

A) mortgage brokers.
B) real estate brokers.
C) attorneys.
D) all of the above.

Question 25

Life insurance companies do no get involved in real estate loans.

Question 26

FHLMC was formed primarily to provide a secondary market for

A) savings and loans.
B) commercial banks.
C) mortgage companies.
D) insurance companies.

Question 27

Mortgage companies tend to lend their own money and retain the loans in their portfolio.

Question 28

Commercial banks tend to favor long term residential lending.

Question 29

Municipal bonds that provide a source of mortgage money for home buyers pay interest that is tax-free from federal income taxes.

Question 30

Other lenders providing mortgage money might include

A) pension and trust funds.
B) credit unions.
C) commercial finance companies.
D) all of the above.

Question 31

The term "usury" in the field of real estate lending means charging an interest rate over and above

A) the legal limit.
B) the prime rate.
C) 10%.
D) 20%.

Question 32

Computerized Loan Origination is limited to regulated lenders.

Question 33

Deregulation of the lending industry had little or no effect on savings and loan institutions.

Question 34

The entity that purchases the most loans in the secondary market is

A) FNMA.
B) FHLMC.
C) HUD.
D) GNMA.

Question 35

A quasi-governmental agency, which was originally established to create a secondary mortgage market for FHA loans, is

A) FNMA.
B) GNMA.
C) FHLMC.
D) HUD.

Question 36

Freddie Mac was originally formed to provide a secondary mortgage market facility for the

A) Federal National Mortgage Association.
B) Government National Mortgage Association.
C) Federal Home Loan Bank Board.
D) Mortgage Guaranty Insurance Corporation.

Question 37

Pension funds and trust funds offer money for real estate loans.

Question 38

Mortgage brokers do not lend their own money but simply put lender and borrower together.

Question 39

The money used by the secondary market to purchase loans comes from deposits in institutions.

Question 40

The primary market is typically divided into two markets: those markets regulated by the federal government and those not regulated by the federal government.

Question 41

_________________________ loans provide a "piece of the action" for insurance companies as well as more inflation protection than a fixed rate of interest.

Question 42

Automated underwriting systems have dramatically overhauled the mortgage loan underwriting process.

Question 43

Most loans contain a due-on-sale clause which is also called a call clause or a(n)____________________ clause.

Question 44

_________________________ results when depositors take money out of their savings accounts and invest directly in government securities, corporate bonds, and money market funds.

Question 45

GNMA buys loans from primary market loan originators.

Question 46

____________________ certificates allow a mortgage originator to deliver to Freddie Mac either whole mortgages or part interest in a pool of whole mortgages.

Question 47

Both fiat money and real savings represent unconsumed labor and materials.

Question 48

Loan contracts sometimes call for a ____________________ penalty in return for giving the borrower the right to repay the loan early.

Question 49

Mortgage ____________________ do not lend their own money but simply put lender and borrower together.

Question 50

Both fiat money and real savings represent ____________________ labor and materials.

Question 51

Farmer Mac was created to provide a secondary market for farm loans.

Question 52

Freddie Mac's Loan ____________________ program made available on the Internet overhauled the entire loan underwriting system.

Question 53

Usury laws are established by the federal statutes.

Question 54

Freddie Mac buys loans only from savings and loan institutions.

Question 55

GNMA will guarantee all loan types.

Question 56

The cost of mortgage loan borrowing is dependent on the cost of money to the lender, reserves for default, loan servicing costs, and available investment alternatives.

Question 57

The ____________________ market is where lenders originate loans by making funds available to borrowers.

Question 58

FNMA was organized by the federal government to buy FHA mortgage loans from lenders.

Question 59

There is no limit to the cost of a home under the Farmer Mac program.

Question 60

____________________ are sometimes a source of cash loans for real estate, with the bulk of these loans between relatives or friends.

Question 61

Choose the one most appropriate answer for each.
a.alienation clause
k.Ginnie Mae
b.automated underwriting systems
l.mortgage broker
c.computerized loan origination
m.mortgage company
d.disintermediation
n.mortgage-backed securities
e.due-on-sale clause
o.municipal bonds
f.Fannie Mae
p.participation certificates
g.Farmer Mac
q.prepayment penalty
h.Fiat money
r.primary market
i.FIRREA
s.secondary mortgage market
j.Freddie Mac
t.usury
a lending industry nickname for the Federal National Mortgage Association

Question 62

Choose the one most appropriate answer for each.
a.alienation clause
k.Ginnie Mae
b.automated underwriting systems
l.mortgage broker
c.computerized loan origination
m.mortgage company
d.disintermediation
n.mortgage-backed securities
e.due-on-sale clause
o.municipal bonds
f.Fannie Mae
p.participation certificates
g.Farmer Mac
q.prepayment penalty
h.Fiat money
r.primary market
i.FIRREA
s.secondary mortgage market
j.Freddie Mac
t.usury
government created money;also called "printing press money"

Question 63

Choose the one most appropriate answer for each.
a.alienation clause
k.Ginnie Mae
b.automated underwriting systems
l.mortgage broker
c.computerized loan origination
m.mortgage company
d.disintermediation
n.mortgage-backed securities
e.due-on-sale clause
o.municipal bonds
f.Fannie Mae
p.participation certificates
g.Farmer Mac
q.prepayment penalty
h.Fiat money
r.primary market
i.FIRREA
s.secondary mortgage market
j.Freddie Mac
t.usury
requires immediate repayment of a loan if ownership transfers;also called a due-on-sale clause

Question 64

Choose the one most appropriate answer for each.
a.alienation clause
k.Ginnie Mae
b.automated underwriting systems
l.mortgage broker
c.computerized loan origination
m.mortgage company
d.disintermediation
n.mortgage-backed securities
e.due-on-sale clause
o.municipal bonds
f.Fannie Mae
p.participation certificates
g.Farmer Mac
q.prepayment penalty
h.Fiat money
r.primary market
i.FIRREA
s.secondary mortgage market
j.Freddie Mac
t.usury
a real estate industry nickname for the Federal Home Loan Mortgage Corporation

Question 65

Choose the one most appropriate answer for each.
a.alienation clause
k.Ginnie Mae
b.automated underwriting systems
l.mortgage broker
c.computerized loan origination
m.mortgage company
d.disintermediation
n.mortgage-backed securities
e.due-on-sale clause
o.municipal bonds
f.Fannie Mae
p.participation certificates
g.Farmer Mac
q.prepayment penalty
h.Fiat money
r.primary market
i.FIRREA
s.secondary mortgage market
j.Freddie Mac
t.usury
a law signed in 1989 which provided a sweeping revision of the regulatory authorities governing savings and loans

Question 66

Choose the one most appropriate answer for each.
a.alienation clause
k.Ginnie Mae
b.automated underwriting systems
l.mortgage broker
c.computerized loan origination
m.mortgage company
d.disintermediation
n.mortgage-backed securities
e.due-on-sale clause
o.municipal bonds
f.Fannie Mae
p.participation certificates
g.Farmer Mac
q.prepayment penalty
h.Fiat money
r.primary market
i.FIRREA
s.secondary mortgage market
j.Freddie Mac
t.usury
securities issued, backed by the mortgages securing the loans and the full faith of the federal government

Question 67

Choose the one most appropriate answer for each.
a.alienation clause
k.Ginnie Mae
b.automated underwriting systems
l.mortgage broker
c.computerized loan origination
m.mortgage company
d.disintermediation
n.mortgage-backed securities
e.due-on-sale clause
o.municipal bonds
f.Fannie Mae
p.participation certificates
g.Farmer Mac
q.prepayment penalty
h.Fiat money
r.primary market
i.FIRREA
s.secondary mortgage market
j.Freddie Mac
t.usury
penalty for paying a loan off prior to maturity

Question 68

Choose the one most appropriate answer for each.
a.alienation clause
k.Ginnie Mae
b.automated underwriting systems
l.mortgage broker
c.computerized loan origination
m.mortgage company
d.disintermediation
n.mortgage-backed securities
e.due-on-sale clause
o.municipal bonds
f.Fannie Mae
p.participation certificates
g.Farmer Mac
q.prepayment penalty
h.Fiat money
r.primary market
i.FIRREA
s.secondary mortgage market
j.Freddie Mac
t.usury
the result created when lenders are required to pay high rates of interest for deposits while receiving long-term income from low-interest rate mortgage loans

Question 69

Choose the one most appropriate answer for each.
a.alienation clause
k.Ginnie Mae
b.automated underwriting systems
l.mortgage broker
c.computerized loan origination
m.mortgage company
d.disintermediation
n.mortgage-backed securities
e.due-on-sale clause
o.municipal bonds
f.Fannie Mae
p.participation certificates
g.Farmer Mac
q.prepayment penalty
h.Fiat money
r.primary market
i.FIRREA
s.secondary mortgage market
j.Freddie Mac
t.usury
requires immediate repayment of the loan if ownership transfers, also called an alienation clause

Question 70

Choose the one most appropriate answer for each.
a.alienation clause
k.Ginnie Mae
b.automated underwriting systems
l.mortgage broker
c.computerized loan origination
m.mortgage company
d.disintermediation
n.mortgage-backed securities
e.due-on-sale clause
o.municipal bonds
f.Fannie Mae
p.participation certificates
g.Farmer Mac
q.prepayment penalty
h.Fiat money
r.primary market
i.FIRREA
s.secondary mortgage market
j.Freddie Mac
t.usury
the market in which lenders originate loans and make funds available to borrowers

Question 71

Choose the one most appropriate answer for each.
a.alienation clause
k.Ginnie Mae
b.automated underwriting systems
l.mortgage broker
c.computerized loan origination
m.mortgage company
d.disintermediation
n.mortgage-backed securities
e.due-on-sale clause
o.municipal bonds
f.Fannie Mae
p.participation certificates
g.Farmer Mac
q.prepayment penalty
h.Fiat money
r.primary market
i.FIRREA
s.secondary mortgage market
j.Freddie Mac
t.usury
a market where mortgage loans can be sold to investors

Question 72

Choose the one most appropriate answer for each.
a.alienation clause
k.Ginnie Mae
b.automated underwriting systems
l.mortgage broker
c.computerized loan origination
m.mortgage company
d.disintermediation
n.mortgage-backed securities
e.due-on-sale clause
o.municipal bonds
f.Fannie Mae
p.participation certificates
g.Farmer Mac
q.prepayment penalty
h.Fiat money
r.primary market
i.FIRREA
s.secondary mortgage market
j.Freddie Mac
t.usury
a firm that makes mortgage loans and then sells them to investors

Question 73

Choose the one most appropriate answer for each.
a.alienation clause
k.Ginnie Mae
b.automated underwriting systems
l.mortgage broker
c.computerized loan origination
m.mortgage company
d.disintermediation
n.mortgage-backed securities
e.due-on-sale clause
o.municipal bonds
f.Fannie Mae
p.participation certificates
g.Farmer Mac
q.prepayment penalty
h.Fiat money
r.primary market
i.FIRREA
s.secondary mortgage market
j.Freddie Mac
t.usury
one who brings together borrowers and lenders

Question 74

Choose the one most appropriate answer for each.
a.alienation clause
k.Ginnie Mae
b.automated underwriting systems
l.mortgage broker
c.computerized loan origination
m.mortgage company
d.disintermediation
n.mortgage-backed securities
e.due-on-sale clause
o.municipal bonds
f.Fannie Mae
p.participation certificates
g.Farmer Mac
q.prepayment penalty
h.Fiat money
r.primary market
i.FIRREA
s.secondary mortgage market
j.Freddie Mac
t.usury
a real estate industry nickname for the Government National Mortgage Association

Question 75

Choose the one most appropriate answer for each.
a.alienation clause
k.Ginnie Mae
b.automated underwriting systems
l.mortgage broker
c.computerized loan origination
m.mortgage company
d.disintermediation
n.mortgage-backed securities
e.due-on-sale clause
o.municipal bonds
f.Fannie Mae
p.participation certificates
g.Farmer Mac
q.prepayment penalty
h.Fiat money
r.primary market
i.FIRREA
s.secondary mortgage market
j.Freddie Mac
t.usury
instruments that pay interest that is tax-free from federal income taxes

Question 76

Choose the one most appropriate answer for each.
a.alienation clause
k.Ginnie Mae
b.automated underwriting systems
l.mortgage broker
c.computerized loan origination
m.mortgage company
d.disintermediation
n.mortgage-backed securities
e.due-on-sale clause
o.municipal bonds
f.Fannie Mae
p.participation certificates
g.Farmer Mac
q.prepayment penalty
h.Fiat money
r.primary market
i.FIRREA
s.secondary mortgage market
j.Freddie Mac
t.usury
originating loans through the use of a networked computer system

Question 77

Choose the one most appropriate answer for each.
a.alienation clause
k.Ginnie Mae
b.automated underwriting systems
l.mortgage broker
c.computerized loan origination
m.mortgage company
d.disintermediation
n.mortgage-backed securities
e.due-on-sale clause
o.municipal bonds
f.Fannie Mae
p.participation certificates
g.Farmer Mac
q.prepayment penalty
h.Fiat money
r.primary market
i.FIRREA
s.secondary mortgage market
j.Freddie Mac
t.usury
a real estate industry nickname for the Federal Agricultural Mortgage Corporation

Question 78

Choose the one most appropriate answer for each.
a.alienation clause
k.Ginnie Mae
b.automated underwriting systems
l.mortgage broker
c.computerized loan origination
m.mortgage company
d.disintermediation
n.mortgage-backed securities
e.due-on-sale clause
o.municipal bonds
f.Fannie Mae
p.participation certificates
g.Farmer Mac
q.prepayment penalty
h.Fiat money
r.primary market
i.FIRREA
s.secondary mortgage market
j.Freddie Mac
t.usury
computerized communication systems for loan approval between a loan originator and an investor

Question 79

Choose the one most appropriate answer for each.
a.alienation clause
k.Ginnie Mae
b.automated underwriting systems
l.mortgage broker
c.computerized loan origination
m.mortgage company
d.disintermediation
n.mortgage-backed securities
e.due-on-sale clause
o.municipal bonds
f.Fannie Mae
p.participation certificates
g.Farmer Mac
q.prepayment penalty
h.Fiat money
r.primary market
i.FIRREA
s.secondary mortgage market
j.Freddie Mac
t.usury
a certificate that represents an undivided interest in a Freddie Mac pool

Question 80

Choose the one most appropriate answer for each.
a.alienation clause
k.Ginnie Mae
b.automated underwriting systems
l.mortgage broker
c.computerized loan origination
m.mortgage company
d.disintermediation
n.mortgage-backed securities
e.due-on-sale clause
o.municipal bonds
f.Fannie Mae
p.participation certificates
g.Farmer Mac
q.prepayment penalty
h.Fiat money
r.primary market
i.FIRREA
s.secondary mortgage market
j.Freddie Mac
t.usury
charging a rate of interest higher than that permitted by law