2023 Champions Real Estate Finance Exam with Answers (186 Solved Questions)
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Champions Real Estate Finance Exam 2023
Loan-to-Value Ratio (LTV) - ANSWER The percentage of the lesser of the appraised
value 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 to
80% of the sales price or appraised value, whichever is lower.
Package Mortgage - ANSWER Includes both real and personal property ( fixtures and
furnishings)
Blanket Mortgage - ANSWER Covers more than one piece of property.
Wraparound Mortgage - ANSWER Method of financing which preserves the low,
existing interest rate on the original note.
Open-End Mortgage - ANSWER Permits additional borrowing on the same note. This
is sometimes called a credit card mortgage or a home equity line of credit - HELOC.
Budget Mortgage - ANSWER The monthly house payment includes principal, interest,
taxes and insurance (known as PITI)
Collateral -Dependent Loans - ANSWER A hard money loan is a specific type of
asset-based financing in which a borrower receives funds secured by the value of a
parcel of real estate.
Character - ANSWER Is a measure of the willingness of a borrower to make on-time
payments. Credit character is revealed in the borrower's credit report.
Capacity - ANSWER Is a measure of the borrower's ability to repay the debt, and is
demonstrated through current earnings and job stability.
Capital - ANSWER Is the sum of all assets that the borrower has accumulated.
Collateral - ANSWER Is something of value that can be pledged as security for
repayment.
Yield - ANSWER Is the return that the investor recieves over the life of the loan. (Also
known as profit)
Originator - ANSWER The process of creating a new mortgage loan, including all steps
taken by a lender to attract and qualify a borrower.
Mortgage Broker - ANSWER Typically functions as a middleman between the borrower
and the lender, negotiating, selling or arranging loans to be delivered to larger investors.
Loan-to-Value Ratio (LTV) - ANSWER The percentage of the lesser of the appraised
value 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 to
80% of the sales price or appraised value, whichever is lower.
Package Mortgage - ANSWER Includes both real and personal property ( fixtures and
furnishings)
Blanket Mortgage - ANSWER Covers more than one piece of property.
Wraparound Mortgage - ANSWER Method of financing which preserves the low,
existing interest rate on the original note.
Open-End Mortgage - ANSWER Permits additional borrowing on the same note. This
is sometimes called a credit card mortgage or a home equity line of credit - HELOC.
Budget Mortgage - ANSWER The monthly house payment includes principal, interest,
taxes and insurance (known as PITI)
Collateral -Dependent Loans - ANSWER A hard money loan is a specific type of
asset-based financing in which a borrower receives funds secured by the value of a
parcel of real estate.
Character - ANSWER Is a measure of the willingness of a borrower to make on-time
payments. Credit character is revealed in the borrower's credit report.
Capacity - ANSWER Is a measure of the borrower's ability to repay the debt, and is
demonstrated through current earnings and job stability.
Capital - ANSWER Is the sum of all assets that the borrower has accumulated.
Collateral - ANSWER Is something of value that can be pledged as security for
repayment.
Yield - ANSWER Is the return that the investor recieves over the life of the loan. (Also
known as profit)
Originator - ANSWER The process of creating a new mortgage loan, including all steps
taken by a lender to attract and qualify a borrower.
Mortgage Broker - ANSWER Typically functions as a middleman between the borrower
and the lender, negotiating, selling or arranging loans to be delivered to larger investors.
At one time originated up to 80% of all mortgage loans. (Back on the rise)
Mortgage Banker - ANSWER Entities which provide their own funds for the purpose of
providing mortgage financing, as opposed to commercial banks/savings associations.
(Held, or "Warehoused")
Correspondent Lender - ANSWER Usually smaller in scale than mortgage bankers or
brokers, these lenders typically extend loans with their own funds, at their own risk.
Processing - ANSWER Once application is complete the file moves into this phase.
Underwriting - ANSWER The detailed process of evaluating a borrower's loan
application to determine the risk involved for the lender.
Closing - ANSWER The consummation of a real estate transaction in which all
appropriate documents are signed and the proceeds of the mortgage loan are then
disbursed by the lender.
Servicing - ANSWER Includes 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.
Supply and Demand - ANSWER an economic concept that states that the price of a
good rises and falls depending on how many people want it and depending on how
much of the good is available.
Funding - ANSWER The process of transferring funds to a title or escrow company for
disbursement
The Safe Act - ANSWER Designed to enhance consumer protection and reduce fraud.
(Key component of HERA)
M1 - ANSWER Is defined as the sum of currency held by the public and transaction
deposits at depository institutions.
M2 - ANSWER Is defined as M1 plus saving deposits, small-denomination time
deposits (those issued in amounts of less than $100,000) and retail money market
mutual funds shares.
Fiat Money - ANSWER Is currency that is not backed by any precious metals at all.
Monetary Policy - ANSWER Is the maintenance of a stable money supply that provides
for growth in the economy while keeping inflation in. The federal reserves is responsible
for this policy in the United States.
Fiscal Policy - ANSWER Federal Government spending. Approved by Congress. At the
Mortgage Banker - ANSWER Entities which provide their own funds for the purpose of
providing mortgage financing, as opposed to commercial banks/savings associations.
(Held, or "Warehoused")
Correspondent Lender - ANSWER Usually smaller in scale than mortgage bankers or
brokers, these lenders typically extend loans with their own funds, at their own risk.
Processing - ANSWER Once application is complete the file moves into this phase.
Underwriting - ANSWER The detailed process of evaluating a borrower's loan
application to determine the risk involved for the lender.
Closing - ANSWER The consummation of a real estate transaction in which all
appropriate documents are signed and the proceeds of the mortgage loan are then
disbursed by the lender.
Servicing - ANSWER Includes 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.
Supply and Demand - ANSWER an economic concept that states that the price of a
good rises and falls depending on how many people want it and depending on how
much of the good is available.
Funding - ANSWER The process of transferring funds to a title or escrow company for
disbursement
The Safe Act - ANSWER Designed to enhance consumer protection and reduce fraud.
(Key component of HERA)
M1 - ANSWER Is defined as the sum of currency held by the public and transaction
deposits at depository institutions.
M2 - ANSWER Is defined as M1 plus saving deposits, small-denomination time
deposits (those issued in amounts of less than $100,000) and retail money market
mutual funds shares.
Fiat Money - ANSWER Is currency that is not backed by any precious metals at all.
Monetary Policy - ANSWER Is the maintenance of a stable money supply that provides
for growth in the economy while keeping inflation in. The federal reserves is responsible
for this policy in the United States.
Fiscal Policy - ANSWER Federal Government spending. Approved by Congress. At the
treasury level, funds can be raised to pay for government spending by raising taxes and
increasing borrowing.
Federal Reserve (The Fed) - ANSWER is the central bank of the United States
Monetary inflation - ANSWER When there is an excess of money supply in the market.
Demand-pull inflation - ANSWER When there is more money in the market and less
goods for sale.
Cost-push inflation - ANSWER Occurs when the cost of production and offering
services increase, thereby causing manufacturers and tradespeople/vendors to rais their
prices accordingly.
Discount rate - ANSWER The interest rate charged member banks that borrow from
the Federal Reserve Systems
Federal Funds Rate - ANSWER Is the rate that the Federal reserve charges banks for
unsecured loans, most of which are for a very short term.
Trouble Asset Relief Program (TARP) - ANSWER Was created to restore the nations
financial stability and restart economic growth.
United State Mint - ANSWER Created by Congress in 1972 and became part of the
Department of the Treasury in 1873. The primary mission is to serve the American
people by manufacturing, distributing, and circulating precious metal coins, collecting
coins and national medals. Also entrusted with providing security over assets.
The Federal Deposit Insurance Corporation (FDIC) - ANSWER An agency created in
1933 to insure individuals' bank accounts, protecting people against losses due to bank
failures (Insures deposits only)
The Federal Home Loan Bank (FHLB) System - ANSWER A system of regional banks
from which local lending institutions everywhere in America borrow funds to finance
housing, economic development, infrastructure and jobs.
The Federal Housing Administration (FHA) - ANSWER Provides mortgage insurance
on loans made by blank- approved lenders throughout the US and its territories. Insures
mortgages on single-family and multifamily homes including manufactured homes and
hospitals. It is the largest insurer of mortgages in the world, insuring over 34 million
properties since its inception in 1934.
FHA mortgage insurance - ANSWER Provides lenders with protection against losses
as the result of homeowners defaulting on their mortgage loans.
Community Development Block Grants (CDBG) - ANSWER To help communities with
increasing borrowing.
Federal Reserve (The Fed) - ANSWER is the central bank of the United States
Monetary inflation - ANSWER When there is an excess of money supply in the market.
Demand-pull inflation - ANSWER When there is more money in the market and less
goods for sale.
Cost-push inflation - ANSWER Occurs when the cost of production and offering
services increase, thereby causing manufacturers and tradespeople/vendors to rais their
prices accordingly.
Discount rate - ANSWER The interest rate charged member banks that borrow from
the Federal Reserve Systems
Federal Funds Rate - ANSWER Is the rate that the Federal reserve charges banks for
unsecured loans, most of which are for a very short term.
Trouble Asset Relief Program (TARP) - ANSWER Was created to restore the nations
financial stability and restart economic growth.
United State Mint - ANSWER Created by Congress in 1972 and became part of the
Department of the Treasury in 1873. The primary mission is to serve the American
people by manufacturing, distributing, and circulating precious metal coins, collecting
coins and national medals. Also entrusted with providing security over assets.
The Federal Deposit Insurance Corporation (FDIC) - ANSWER An agency created in
1933 to insure individuals' bank accounts, protecting people against losses due to bank
failures (Insures deposits only)
The Federal Home Loan Bank (FHLB) System - ANSWER A system of regional banks
from which local lending institutions everywhere in America borrow funds to finance
housing, economic development, infrastructure and jobs.
The Federal Housing Administration (FHA) - ANSWER Provides mortgage insurance
on loans made by blank- approved lenders throughout the US and its territories. Insures
mortgages on single-family and multifamily homes including manufactured homes and
hospitals. It is the largest insurer of mortgages in the world, insuring over 34 million
properties since its inception in 1934.
FHA mortgage insurance - ANSWER Provides lenders with protection against losses
as the result of homeowners defaulting on their mortgage loans.
Community Development Block Grants (CDBG) - ANSWER To help communities with
economic development, job opportunities and housing rehabilitation
HOME Investment Partnership Program - ANSWER Block grants to develop and
support affordable housing for low-income residents.
Rental assistance - ANSWER In the form of section 8 certificates or vouchers for
low-income households.
Ginnie Mae (GNMA) - ANSWER Was established in the U.S in 1968 to promote
homeownership. It is wholly-owned government association that operates a
mortgage-backed securities program designed to facilitate the flow of capital into
housing industry. Does not issue, sell or buy pass-through mortgage-backed securities
or purchases mortgages loans. It simply guarantees (insures).
Federal Fair Housing Act of 1968 - ANSWER An act prohibiting discrimination in the
sale 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) - ANSWER A federal cabinet
department is active in national housing programs. Its mission is to create strong,
sustainable, inclusive communities and quality affordable homes. It prevents housing
discrimination through public education and enforcement are administered by the
Assistant Secretary for Fair Housing and Equal Opportunity (FHEO)
NMLSR - ANSWER All residential mortgage loan originators must now be registered
with the Nationwide Mortgage Licensing System and Registry.
Consumer Financial Protection Bureau (CFPB) - ANSWER Established by the
Dodd-Frank Act. 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.
Redlining - ANSWER A practice in which banks refuse to make loans to people living in
certain geographic locations.
Equal Credit Opportunity Act (ECOA) - ANSWER The federal law that prohibits
discrimination 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
HOME Investment Partnership Program - ANSWER Block grants to develop and
support affordable housing for low-income residents.
Rental assistance - ANSWER In the form of section 8 certificates or vouchers for
low-income households.
Ginnie Mae (GNMA) - ANSWER Was established in the U.S in 1968 to promote
homeownership. It is wholly-owned government association that operates a
mortgage-backed securities program designed to facilitate the flow of capital into
housing industry. Does not issue, sell or buy pass-through mortgage-backed securities
or purchases mortgages loans. It simply guarantees (insures).
Federal Fair Housing Act of 1968 - ANSWER An act prohibiting discrimination in the
sale 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) - ANSWER A federal cabinet
department is active in national housing programs. Its mission is to create strong,
sustainable, inclusive communities and quality affordable homes. It prevents housing
discrimination through public education and enforcement are administered by the
Assistant Secretary for Fair Housing and Equal Opportunity (FHEO)
NMLSR - ANSWER All residential mortgage loan originators must now be registered
with the Nationwide Mortgage Licensing System and Registry.
Consumer Financial Protection Bureau (CFPB) - ANSWER Established by the
Dodd-Frank Act. 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.
Redlining - ANSWER A practice in which banks refuse to make loans to people living in
certain geographic locations.
Equal Credit Opportunity Act (ECOA) - ANSWER The federal law that prohibits
discrimination 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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