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CA SALESPERSON EXAM PREP EDGE » Summer 2021 » Financing Exam

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Question #1

Sylvia is a single mother living in a small town surrounded by ranch and farm land. She would like to buy a house there, but her income level and her status as an independent contractor makes it hard for her to qualify for a conventional loan. What government program might provide her with a direct loan to purchase a home?

A. Small Town America Residential Loan Program

B. USDA Rural Development Single Family Housing Program

C. Farmer Mac Direct Loan Program

D. Farm Credit Administration Rural Loan Program

Question #2

Which statement describes a conforming loan?

A. A loan that requires a larger-than-usual, one-time payment at the end of the term

B. A loan to buy a high-priced or luxury home

C. A loan that meets certain criteria that are accepted by Fannie Mae and Freddie Mac

D. A loan that fails to meet the criteria set forth by Fannie Mae and Freddie Mac

Question #3

To find a factor on an amortization chart, you need to know the length of the loan and the ______.

A. Interest rate

B. Origination fee

C. Sales price

D. Loan amount

Question #4

Millie and Jerry are purchasing a home using their VA loan benefit. The sales price is $320,000, with 100% financing. Assuming that Jerry has a typical level of entitlement, how much of their loan does the VA guarantee?

A. $80,000

B. $320,000

C. $104,250

D. $36,000

Question #5

Identify the entity or entities responsible for setting conforming loan limits.

A. Federal Reserve

B. Federal Home Financing Agency

C. Federal Housing Administration

D. Fannie Mae and Freddie Mac

Question #6

What's the name of the calculation that looks at a borrower’s monthly housing obligation—including principal, interest, taxes, and insurance, as well as any homeowners or condo association fees—as a percentage of their monthly gross income?

A. Housing ratio

B. Loan-to-value ratio

C. Total debt

D. Payment debt

Question #7

______ make homeownership available for many who otherwise could not qualify for a mortgage loan.

A. Speculators

B. Subprime lenders

C. Predatory lenders

D. Foreign lenders

Question #8

With a VA loan, the certificate of reasonable value is used to ______.

A. Negotiate with sellers when the buyer wants a lower sale price

B. Determine the value of the loan that the VA will guarantee

C. Restore entitlement for a veteran who has used the VA loan before

D. Determine the amount of entitlement the veteran borrower has available

Question #9

Which calculation looks at all recurring (or installment) debt—such as monthly mortgage, car, credit, and loan payments—as a percentage of the borrower’s monthly gross income?

A. Loan-to-value ratio

B. Housing ratio

C. Total debt ratio

D. Payment ratio

Question #10

Borrowers obtaining a VA loan aren’t required to have a down payment. However, they are required to pay _______.

A. A funding fee

B. VA tax

C. Guarantee Insurance

D. Mortgage Insurance

Question #11

One of these actions is considered an MLO activity. Which one?

A. Presenting a revised loan offer to the consumer after they requested a lower rate

B. Explaining the steps the consumer needs to take to obtain a loan offer

C. Scheduling the loan closing

D. Informing a consumer of the loan rates that are publicly available

Question #12

Tom, the seller, is helping the buyer with financing. Tom will give this mortgage to the buyer, and the money will go toward the down payment. What kind of mortgage is this?

A. Reverse mortgage

B. Package mortgage

C. Wraparound mortgage

D. Purchase money mortgage

Question #13

Iris is planning to purchase her first home. Based on what you know about the nature of real estate finance in our country, which approach is she most likely to use?

A. Obtaining a loan to purchase the home

B. Paying cash for the purchase

C. Receiving the property as a gift from the state

D. Squatting in the home until legal possession of the home can be claimed

Question #14

Rachel loves convenience. As you can imagine, she was thrilled when she was able to finance her mortgage through the same institution where she deposits her payroll checks. Which of these most likely financed Rachel’s mortgage?

A. Mortgage broker

B. Investment group

C. Insurance company

D. Savings and loan

Question #15

The Real Estate Settlement Procedures Act protects consumers by _______.

A. Requiring that settlement companies provide an attorney to represent the borrower's interests, at no cost to the borrower, as part of a residential real estate transaction involving credit

B. Eliminating illegal kickbacks and referral fees among settlement service providers and requiring lender disclosures as part of a residential real estate transaction involving credit

C. Requiring all settlement service providers to restrict their fees to only those types and amounts that Regulation X allows

D. Prohibiting settlement service providers-including real estate professionals-from discriminating during a residential real estate transaction

Question #16

The mortgage and the deed of trust are ______ that pledge property as collateral for a loan.

A. Title documents

B. Amortization plans

C. Security instruments

D. Promissory notes

Question #17

Maggie has a neighbor, Jim, who is facing foreclosure. She likes Jim and wants to help him out, so they agree to do a "subject to" purchase. What does this mean?

A. Maggie will purchase the home at the foreclosure auction and rent it to Jim at a reduced rate.

B. Maggie will sign an agreement with the lender to assume liability for Jim's loan.

C. Maggie will take over Jim's loan payments without telling his lender she's doing so.

D. Maggie will co-sign a second mortgage with Jim so that he'll have the funds to pay off the first mortgage.

Question #18

Scott is an MLO. Arthur, his assistant, does not have an MLO endorsement. Which of these activities must be performed by Scott?

A. Presenting a loan offer to a consumer for acceptance

B. Contacting a consumer to obtain tax returns or payroll receipts to verify loan application information

C. Receiving a loan application through the mail and forwarding it, without review

D. Explaining the steps the consumer needs to take to obtain a loan offer

Question #19

Loans made to high-risk borrowers, at higher interest rates and with higher fees, are ______.

A. Highly qualified loans

B. Subprime loans

C. Secondary loans

D. Prime loans

Question #20

According to the PMI Act of 1998, at what percentage of equity position does personal mortgage insurance automatically cancel for homeowners?

A. 22%

B. 25%

C. 20%

D. 21%

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