Texas Real Estate Finance Exam Questions
With Revised Answers
The _______ market refers to the selling and purchasing of closed real estate mortgage loans. -
answer✔✔secondary
The secondary market is a national market in which mortgages secured by real estate in all parts
of the United States are ______ ____ _______. - answer✔✔bought and sold
Secondary market agencies have two main activities: 1) ___ _____ and 2) ______ ________
________ _______. - answer✔✔buying loans, issuing mortgage backed securities
__________ exchanges mortgage back securities for a block or pool of mortgages. -
answer✔✔FNMA (Fannie Mae) Federal National Mortgage Association
_____ is the nation's largest investor in residential mortgages. - answer✔✔FNMA
One of the primary responsibilities of _____ is to maintain an active secondary money market
for mortgages. - answer✔✔FNMA
One function of FNMA is selling seasoned mortgages and trust deeds to individual investors and
financial institutions. A ______ ______ is one that has been in existence for some time and that
shows a good record of repayment by the mortgagor (borrower) - answer✔✔seasoned mortgage
To be a _____, a company must distribute at least 90 percent of its taxable income to
shareholders annually in the forms of dividends. - answer✔✔REIT
A REIT must: be structured as a corporation, trust, or association; be managed by a board of
directors or trustees; have transferable shares or transferable certificates of interest; otherwise be
taxable as a domestic corporation; not be a financial institution or an insurance company; be
jointly owned by 100 persons or more; have 95 percent of its income derived from dividends,
interest, and property income; pay dividends of at least 90% of the REIT's taxable income; have
no more than 50% of the held by five or fewer individuals during the last half of each taxable
year (5/50 rule); _______ ______ ____ ___ _ _ _ __ _ _ _ ; ______ __ ____ ___ __ __ __ __ _
__ _ _ _;_____ _ _ _ _ __ _ _ _ __ _ _ - answer✔✔have at least 75% or its total assets invested
in real estate; derive at least 75% of its gross income from rents or mortgage interest; have no
more than 20% of it's assets invested in taxable RIETs subsidiaries
______ _____ are those loans that meet the loan purchase requirements of both Fannie Mae and
Freddie Mac. - answer✔✔Conforming loans
The two major purposes of the Federal Reserve System, called the FED for short, are; ______
____ ___ ___ __ and ____ ___ __ ___ ____ - answer✔✔supply reserve funds when needed and
control bank and consumer credit.
The _______ _______ drives the mortgage loan interest rate. - answer✔✔Federal Reserve
The ______ ______has two primary methods of controlling the flow of money in the United
States. They control the flow of money by their availability to change the reserve requirements of
the banks and/or changing the discount rate charged to banks. - answer✔✔Federal Reserve
________ ____ is the rate the Federal Reserve charges its member bank to borrow money -
answer✔✔Discount rate
_______ _____ must belong and any state banks that wish may join the Federal Reserve System.
- answer✔✔National banks
_______ _____ _____ _____(___) is a federal agency that insures deposits in commercial banks
up to $250,000 and , along with the Federal Reserve System, regulates banks and banking
procedures. - answer✔✔Federal Deposit Insurance Corporation (FDIC)
_____ _____ is the total of all the loans that a financial institution or other lender holds at a
given time. A list, distribution, or grouping of mortgage loans. - answer✔✔Loan Portfolio
____ ____ is the sale of a property where the lender agrees to settle for less than the amount
owed on the property - answer✔✔Short sale
_______: In the Texas Constitution, a principle residence of a family or adult single person is
protected from forced sale for all debt except: property taxes; federal tax liens of both spouses; a
home equity lien.....etc... - answer✔✔Homestead
____ ____ and ______ _______ are not the same thing. - answer✔✔Community property and
joint tenancy
_____ ____ put a cap on interest rate. - answer✔✔Usuary laws
______ is the state law that prohibits the charging of an interest rate in excess of the legal limit. -
answer✔✔Usury
_____ _____ are created to protect the borrower. - answer✔✔Usuary laws
Under the _____ _____ _____ ___(___) licensees can still be held liable if they committed an
unconscionable act, misrepresented a material fact, or failed to disclose information with the
intention of inducing a consumer into a transaction. - answer✔✔Deceptive Trade Practice Act
(DTPA)
The _______ _____ ____ ____(___) states it shall be unlawful for any creditor to discriminate
against any applicant, with respect to any aspect of a credit transaction-- on the basis of race,
color, religion, national origin, sex or marital status, or age (provided the applicant has the
capacity to contract); because all or part of the applicant's income derives from any public
assistance program;etc.. - answer✔✔Equal Credit Opportunity Act (ECOA)
Failure to comply with the Equal Credit Opportunity Act's Regulation B can subject a financial
institution to _______ ___ ___ ___ and ____ ___ _____ __ or ____ ____ - answer✔✔civil
liability for actual and punitive damages in individual or class actions.
_______ is a discriminatory practice by which banks refuse or limit loans and mortgages within
specific geographic areas, especially older or so-called "bad risk" neighborhoods, including
inner-city neighborhoods. also when a lender has refused to make a loan to a potential buyer
because of the location of the property. - answer✔✔Redlining
In 1970, the first ____ ___ _____ ___ was passed. For the first time, this gave each individual
the right to inspect his file, correct any errors and make explanatory statements to supplement the
file. - answer✔✔Fair Credit Reporting Act
The provisions of _____ are for residential properties, not commercial properties. -
answer✔✔RESPA
RESPA restricts or prohibits: kickbacks or fees charged for services not performed during the
closing process; the amount of reserves a lender can require for taxes and insurance in a
mortgage escrow, and _____ ___ ___ ______ __ ___ __ _ - answer✔✔directing consumers
toward a particular title company for a fee
RESPA requires the following items to be disclosed to the buyers: _____ __ ____;____ _____;
___ ___ ____ ___ __ __ __ _ - answer✔✔the settlement costs; the APR; provide the HUD-1
form to the buyers
RESPA requires disclosures among them the ____ __ ____ ____ (___) - answer✔✔Standardized
Good Faith Estimate (GFE)
The _____ ____ ____ carries out the purposes of Regulation Z - answer✔✔Federal Reserve
Board
Because of _______ __credit institutions are required by the federal government to inform
borrowers of the true cost of obtaining credit. - answer✔✔Regulation Z
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