2023 Champions Real Estate Finance Exam with Answers (186 Solved Questions)

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Champions Real Estate Finance Exam 2023Loan-to-Value Ratio (LTV) - ANSWERThe percentage of the lesser of the appraisedvalue or sales price that the lender will lend.ex: If a borrower is approved for an 80% loan, it means that the lender will loan up to80% of the sales price or appraised value, whichever is lower.Package Mortgage - ANSWERIncludes both real and personal property ( fixtures andfurnishings)Blanket Mortgage - ANSWERCovers more than one piece of property.Wraparound Mortgage - ANSWERMethod of financing which preserves the low,existing interest rate on the original note.Open-End Mortgage - ANSWERPermits additional borrowing on the same note. Thisis sometimes called a credit card mortgage or a home equity line of credit - HELOC.Budget Mortgage - ANSWERThe monthly house payment includes principal, interest,taxes and insurance (known as PITI)Collateral -Dependent Loans - ANSWERA hard money loan is a specific type ofasset-based financing in which a borrower receives funds secured by the value of aparcel of real estate.Character - ANSWERIs a measure of the willingness of a borrower to make on-timepayments. Credit character is revealed in the borrower's credit report.Capacity - ANSWERIs a measure of the borrower's ability to repay the debt, and isdemonstrated through current earnings and job stability.Capital - ANSWERIs the sum of all assets that the borrower has accumulated.Collateral - ANSWERIs something of value that can be pledged as security forrepayment.Yield - ANSWERIs the return that the investor recieves over the life of the loan. (Alsoknown as profit)Originator - ANSWERThe process of creating a new mortgage loan, including all stepstaken by a lender to attract and qualify a borrower.Mortgage Broker - ANSWERTypically functions as a middleman between the borrowerand the lender, negotiating, selling or arranging loans to be delivered to larger investors.

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At one time originated up to 80% of all mortgage loans. (Back on the rise)Mortgage Banker - ANSWEREntities which provide their own funds for the purpose ofproviding mortgage financing, as opposed to commercial banks/savings associations.(Held, or "Warehoused")Correspondent Lender - ANSWERUsually smaller in scale than mortgage bankers orbrokers, these lenders typically extend loans with their own funds, at their own risk.Processing - ANSWEROnce application is complete the file moves into this phase.Underwriting - ANSWERThe detailed process of evaluating a borrower's loanapplication to determine the risk involved for the lender.Closing - ANSWERThe consummation of a real estate transaction in which allappropriate documents are signed and the proceeds of the mortgage loan are thendisbursed by the lender.Servicing - ANSWERIncludes collecting monthly payments, maintaining records ofpayments and balances, collecting and paying taxes and insurance ( and managingescrow and impound funds) remitting funds to the note holder, and following up ondelinquencies.Supply and Demand - ANSWERan economic concept that states that the price of agood rises and falls depending on how many people want it and depending on howmuch of the good is available.Funding - ANSWERThe process of transferring funds to a title or escrow company fordisbursementThe Safe Act - ANSWERDesigned to enhance consumer protection and reduce fraud.(Key component of HERA)M1 - ANSWERIs defined as the sum of currency held by the public and transactiondeposits at depository institutions.M2 - ANSWERIs defined as M1 plus saving deposits, small-denomination timedeposits (those issued in amounts of less than $100,000) and retail money marketmutual funds shares.Fiat Money - ANSWERIs currency that is not backed by any precious metals at all.Monetary Policy - ANSWERIs the maintenance of a stable money supply that providesfor growth in the economy while keeping inflation in. The federal reserves is responsiblefor this policy in the United States.Fiscal Policy - ANSWERFederal Government spending. Approved by Congress. At the

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treasury level, funds can be raised to pay for government spending by raising taxes andincreasing borrowing.Federal Reserve (The Fed) - ANSWERis the central bank of the United StatesMonetary inflation - ANSWERWhen there is an excess of money supply in the market.Demand-pull inflation - ANSWERWhen there is more money in the market and lessgoods for sale.Cost-push inflation - ANSWEROccurs when the cost of production and offeringservices increase, thereby causing manufacturers and tradespeople/vendors to rais theirprices accordingly.Discount rate - ANSWERThe interest rate charged member banks that borrow fromthe Federal Reserve SystemsFederal Funds Rate - ANSWERIs the rate that the Federal reserve charges banks forunsecured loans, most of which are for a very short term.Trouble Asset Relief Program (TARP) - ANSWERWas created to restore the nationsfinancial stability and restart economic growth.United State Mint - ANSWERCreated by Congress in 1972 and became part of theDepartment of the Treasury in 1873. The primary mission is to serve the Americanpeople by manufacturing, distributing, and circulating precious metal coins, collectingcoins and national medals. Also entrusted with providing security over assets.The Federal Deposit Insurance Corporation (FDIC) - ANSWERAn agency created in1933 to insure individuals' bank accounts, protecting people against losses due to bankfailures (Insures deposits only)The Federal Home Loan Bank (FHLB) System - ANSWERA system of regional banksfrom which local lending institutions everywhere in America borrow funds to financehousing, economic development, infrastructure and jobs.The Federal Housing Administration (FHA) - ANSWERProvides mortgage insuranceon loans made by blank- approved lenders throughout the US and its territories. Insuresmortgages on single-family and multifamily homes including manufactured homes andhospitals. It is the largest insurer of mortgages in the world, insuring over 34 millionproperties since its inception in 1934.FHA mortgage insurance - ANSWERProvides lenders with protection against lossesas the result of homeowners defaulting on their mortgage loans.Community Development Block Grants (CDBG) - ANSWERTo help communities with

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economic development, job opportunities and housing rehabilitationHOME Investment Partnership Program - ANSWERBlock grants to develop andsupport affordable housing for low-income residents.Rental assistance - ANSWERIn the form of section 8 certificates or vouchers forlow-income households.Ginnie Mae (GNMA) - ANSWERWas established in the U.S in 1968 to promotehomeownership. It is wholly-owned government association that operates amortgage-backed securities program designed to facilitate the flow of capital intohousing industry. Does not issue, sell or buy pass-through mortgage-backed securitiesor purchases mortgages loans. It simply guarantees (insures).Federal Fair Housing Act of 1968 - ANSWERAn act prohibiting discrimination in thesale or rental of housing on the basis of race, color, religion or national origin sex,handicap and familial status.Department of Housing and Urban Development (HUD) - ANSWERA federal cabinetdepartment is active in national housing programs. Its mission is to create strong,sustainable, inclusive communities and quality affordable homes. It prevents housingdiscrimination through public education and enforcement are administered by theAssistant Secretary for Fair Housing and Equal Opportunity (FHEO)NMLSR - ANSWERAll residential mortgage loan originators must now be registeredwith the Nationwide Mortgage Licensing System and Registry.Consumer Financial Protection Bureau (CFPB) - ANSWEREstablished by theDodd-Frank Act. The Bureau has the authority to examine and enforce consumerprotection regulations for all mortgage-related businesses, large non-bank financialcompanies, and banks and credit unions with assets greater than $10 billion.Redlining - ANSWERA practice in which banks refuse to make loans to people living incertain geographic locations.Equal Credit Opportunity Act (ECOA) - ANSWERThe federal law that prohibitsdiscrimination in the extension of credit because of race, color, religion, national origin,sex, age, or marital status. Ensures that all consumers are given an equal chance to

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obtain credit.Truth in Lending Act (TILA) - ANSWERA United States federal law that is designed toprotect consumers in any credit transactions by requiring clear disclosure of key terms oflending arrangments all associated cost.Trigger Terms - ANSWERSpecific credit terms that may not be advertised unless theadvertisement includes other detailed information.The Federal Fair Credit Reporting Act (FCRA) - ANSWERSometimes called the FairCredit Reporting Dispute Act, is a federal law designed to protect consumers againstunfair credit reporting practices and protect and credit privacy. To assure the consumerthat these agencies are fair, accurate and exhibit confidentiality in their credit reportingmethods.U.S. Department of Agriculture (USDA) - ANSWERAlso referred to a "Section 502loan" is insured by the U.S. Department of Agriculture. The program offers 100%financing (no down payment) for qualified borrowers. First time and repeat home buyerscan obtain this loan. The program is for primary residence only; no second homes orinvestor financing is available under this program. The program is for purchases andrefinancing only and cash-out refinances are Not allowed.USDA Farm Loans (FSA) - ANSWERIs an agency of the US Dept of Agriculture. FarmLoan Programs for a farmer or rancher who is unable to obtain credit elsewhere to start,purchase, sustain, or expand a family farm.Office of Consumer Credit Commissioner (OCCC) - ANSWERRegulates the creditindustry and educates consumers and creditors. Agency efforts help produce a fair,lawful and healthy credit environment for social and economic prosperity in Texas.Texas Department of Housing and Community Affairs (TDHCA) - ANSWERIsresponsible for affordable housing, housing related and community service programs,and the regulation of the states manufactured housing industry.

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Texas Veterans Land Board (VLB) - ANSWERa division of the General Land Office ofTexas that administers three programs to assist Texas veterans in purchasing aprincipal residence and/or land and in financing home improvementsRegulation X - ANSWERThe Consumer Financial Protection Bureau's (CFPB)( Blank)which implement the Real Estate Settlement Procedures Act (RESPA) Ensures thatconsumers throughout the nation are provided with more helpful information about thecost of the mortgage settlement and protection from unnecessarily high settlementcharges caused by certain abusive practices.RESPA Section 8 - ANSWERProhibits kickbacks, fee-splitting, and unearned fees.Loan Estimate (LE) - ANSWERForm replaced the GFE form and the initial TILAdisclosures and includes some new disclosures. The form must be provided by themortgage broker or creditor upon receipt of an application. The creditor or broker mustgive the form to the consumer no later than 3 business days after the consumer appliesfor a mortgage loan.Closing Disclosure Delivery Requirement - ANSWERThe TRID rule requires that theconsumer receives the Closing Disclosure no later than 3 business days beforeconsummation.Secondary Market - ANSWERExists for the purchase and sale of existing mortgagesto investors. Designed to provide greater liquidity to the residential real estate market byproviding for a steady supply of funds from investors. Wherein loan originators such asmortgage bankers and brokers can sell their loans and thus recover cash for originatingmore loans.Federal National Mortgage Association (FNMA) - ANSWERPlays a vital role infinancing mortgages and increasing homeownership opportunities in the US. Began in1938 as an agency of the federal government and was created to bring stability to theUS housing market. In 1968, it became a privately owned and managed corporation. US

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