CHAMPIONS SCHOOL (TEXAS REALTOR) - TEST
PREP
RMLO - Answers - Residential Mortgage Loan Originator
Riparian Rights - Answers - Unrestricted rights granted to owners of land located along
the course of a river or stream.
Littoral Rights - Answers - Unrestricted rights granted to owners whose land borders
oceans and large, navigable lakes that have a tide.
Fannie Mae (FNMA) 1938 - Answers - The Federal National Mortgage Association,
which is a congressionally chartered, shareholder-owned company that is the nation's
largest supplier of home mortgage funds. For a discussion of the roles of Fannie Mae,
Freddie Mac (FHLMC), and Ginnie Mae (GNMA), see the Library.
Freddie Mac (Federal Home Loan Mortgage Corporation) 1970 - Answers - A
government-sponsored enterprise established to purchase primarily conventional
mortgage loans in the secondary mortgage market.
Ginnie Mae (GNMA) 1968 - Answers - Government National Mortgage Association
(GNMA) was established in order to buy special assistance mortgages carrying below
market interest rates. GNMA is a government agency under HUD and deals only in VA
and FHA mortgages. (See Pass Through Securities.)
PITI - Answers - An abbreviation which means "Principal, Interest, Taxes and
Insurance." In residential financing, it is common for the monthly mortgage to include
these four payments.
Amortization - Answers - A method for computing equal periodic payments for an
installment loan.
Residential Mortgage Loan Originator (RMLO) - Answers - A person who accepts a
residential mortgage loan application from a borrower, and negotiates or offers
mortgage terms.
VA Loan - Answers - A loan from Veterans Affairs; insures loans to people who have
served in the military, with no down payment required
Real Estate Owned (REO) - Answers - Property acquired by a lending institution
through foreclosure and held in inventory.
,Private Mortgage Insurance (PMI) - Answers - Insurance provided by a private carrier
that protects a lender against a loss in the event of a foreclosure and deficiency. For
high LTV loans when less than 20% is put down.
Real Estate Investment Trust (REIT) - Answers - Trust ownership of real estate by a
group of individuals who purchase certificates of ownership in the trust, which in turn
invests the money in real property and distributes the profits back to the investors free
of corporate income tax.
Texas Department of Housing and Community Affairs (TDHCA) - Answers - Agency
responsible for affordable housing, housing related and community service programs,
and the regulation of the state's manufactured housing industry.
OLDCAR - Answers - The Fiduciary Duty owed to a principal (seller) by the Agent
(broker) obedience, loyalty, disclosure, confidentiality, accountability, reasonable use of
(skill, training, experience, competency)
Emblements - Answers - Refers to crops which require annual planting.
Encrouchment - Answers - Intrusion onto property by improvement to an adjoining
property
FHA - Answers - The Federal Housing Administration gave both the construction
industry and homeowners a boost by insuring bank loans for building new houses and
repairing old ones
RESPA (Real Estate Settlement Procedures Act) - Answers - Law requiring full
disclosure of closing costs to buyer and seller.
Redlining - Answers - A process by which banks draw lines on a map and refuse to lend
money to purchase or improve property within the boundaries.
Periodic Tenancy - Answers - A lease, which has the original terms automatically
renewed for successive periods, until proper notice to terminate is given by either the
landlord or tenant. Month to month rental.
Tenancy at Sufferance - Answers - A tenancy which is created when one is in wrongful
possession of realty, even though the original possession may have been legal.
TREC - Answers - Texas Real Estate Commission
Equal Credit Opportunity Act (ECOA) - Answers - The federal law that prohibits
discrimination in the extension of credit because of race, color, religion, national origin,
sex, age, or marital status. Passed in 1974.
,Lead-Based Paint Hazard Reduction Act - Answers - Persons selling or leasing
residential housing constructed before 1978 must disclose the presence of known lead-
based paint and provide purchasers or tenants with any relevant records or reports.
Mortgage Insurance Premium (MIP) - Answers - The FHA insurance that is a
percentage of the loan amount that the borrower is charged as a premium.
x - Answers - x
Federal Deposit Insurance Corporation (FDIC) - Answers - A United States government
corporation created by the Glass-Steagall Act of 1933. It provides deposit insurance,
which guarantees the safety of deposits in member banks, currently up to $250,000 per
depositor per bank.
Adjustable Rate Mortgage (ARM) - Answers - A loan characterized by a fluctuating
interest rate, usually one tied to a bank or savings and loan association cost-of-funds
index.
Adjustment Period - Answers - The number of initial years in which an ARM remains
fixed before the interest rate is allowed to be adjusted.
Blanket Mortgage - Answers - A mortgage which covers more than one piece of real
estate. Often used by a developer in the financing of undeveloped lots. Contains a
partial release clause.
Partial Release Clause - Answers - A part of a mortgage, which provides for the release
of part of the property (used as security in the loan) upon payment of a certain amount
of the mortgage. Blanket mortgage.
Balloon Note - Answers - A note calling for periodic payments which are insufficient to
fully amortize the loan, so that a principal sum known as a balloon is due at maturity.
Construction to Permanent - Answers - When a buyer wants to purchase a residential
property in need of repair or modernization, the buyer usually has to obtain financing
first to purchase the dwelling, additional financing to do the rehabilitation construction,
and a permanent mortgage when the work is completed to pay off the interim loans with
a permanent mortgage. These loans are commonly referred to as rehabilitation or rehab
homes.
Hard Money Loan (Collateral Dependent Loan) - Answers - Short-term mortgage loans
which require high amounts of borrower equity in the collateral in exchange for limited
and/or expedited underwriting.
x - Answers - x
, Mortgage Insurance - Answers - Includes insurance against financial loss by reason of
the nonpayment of principal, interest and other sums agreed to be paid under the terms
of any note or bond or other evidence of indebtedness secured by a mortgage, deed of
trust, or other instrument constituting a lien or charge on real estate. Insures top 20% of
loan.
Sub-Prime Loans - Answers - Loans that have more risks than are allowed in the
conforming market. Also called B-C Loans or B-C Credit.
Reverse Annuity Mortgage (RAM) - Answers - Mortgage in which the lender uses the
borrower's house as collateral to buy an annuity for the borrower from a life insurance
company; also called an equity conversion.
Up Front Mortgage Insurance Premium (UFMIP) - Answers - A one time charge by the
FHA for insuring a loan.
Conventional Mortgage Loan - Answers - Mortgage loans that do not enjoy government
backing in the form of FHA insurance or a Veterans Affairs (VA) guarantee and that is
offered through a commercial bank or mortgage broker.
PMI added for high LTV loans.
USDA Loans - Answers - • Section 502 Loans
• Described under 7 CFR Part 3550 - "Direct Single Family Housing Loans and Grants"
• Covers rural areas
• Made for the purpose of assisting low income borrowers purchase homes in rural
areas
• Can be used to...
• Build a home
• Repair, renovate, or relocate a home
• Purchase a lot/home site
• Prepare a lot/home sit, including water and sewage facilities
• ONLY made for 30 year terms
• No required down payment (100% financing)
• While there is no required down payment, the ability to repay must be documented
• DTI ratio of 29% for housing and 42% for total debt
• Includes a non-refundable 2% funding fee (aka guaranty fee)
Loan-to-Value Ratio (LTV) - Answers - Loan Amount ÷ Sales Price or Appraised Value
(Whichever is less)
Housing and Urban Development (HUD) - Answers - An agency of the federal
government which oversees many federal housing programs.
PREP
RMLO - Answers - Residential Mortgage Loan Originator
Riparian Rights - Answers - Unrestricted rights granted to owners of land located along
the course of a river or stream.
Littoral Rights - Answers - Unrestricted rights granted to owners whose land borders
oceans and large, navigable lakes that have a tide.
Fannie Mae (FNMA) 1938 - Answers - The Federal National Mortgage Association,
which is a congressionally chartered, shareholder-owned company that is the nation's
largest supplier of home mortgage funds. For a discussion of the roles of Fannie Mae,
Freddie Mac (FHLMC), and Ginnie Mae (GNMA), see the Library.
Freddie Mac (Federal Home Loan Mortgage Corporation) 1970 - Answers - A
government-sponsored enterprise established to purchase primarily conventional
mortgage loans in the secondary mortgage market.
Ginnie Mae (GNMA) 1968 - Answers - Government National Mortgage Association
(GNMA) was established in order to buy special assistance mortgages carrying below
market interest rates. GNMA is a government agency under HUD and deals only in VA
and FHA mortgages. (See Pass Through Securities.)
PITI - Answers - An abbreviation which means "Principal, Interest, Taxes and
Insurance." In residential financing, it is common for the monthly mortgage to include
these four payments.
Amortization - Answers - A method for computing equal periodic payments for an
installment loan.
Residential Mortgage Loan Originator (RMLO) - Answers - A person who accepts a
residential mortgage loan application from a borrower, and negotiates or offers
mortgage terms.
VA Loan - Answers - A loan from Veterans Affairs; insures loans to people who have
served in the military, with no down payment required
Real Estate Owned (REO) - Answers - Property acquired by a lending institution
through foreclosure and held in inventory.
,Private Mortgage Insurance (PMI) - Answers - Insurance provided by a private carrier
that protects a lender against a loss in the event of a foreclosure and deficiency. For
high LTV loans when less than 20% is put down.
Real Estate Investment Trust (REIT) - Answers - Trust ownership of real estate by a
group of individuals who purchase certificates of ownership in the trust, which in turn
invests the money in real property and distributes the profits back to the investors free
of corporate income tax.
Texas Department of Housing and Community Affairs (TDHCA) - Answers - Agency
responsible for affordable housing, housing related and community service programs,
and the regulation of the state's manufactured housing industry.
OLDCAR - Answers - The Fiduciary Duty owed to a principal (seller) by the Agent
(broker) obedience, loyalty, disclosure, confidentiality, accountability, reasonable use of
(skill, training, experience, competency)
Emblements - Answers - Refers to crops which require annual planting.
Encrouchment - Answers - Intrusion onto property by improvement to an adjoining
property
FHA - Answers - The Federal Housing Administration gave both the construction
industry and homeowners a boost by insuring bank loans for building new houses and
repairing old ones
RESPA (Real Estate Settlement Procedures Act) - Answers - Law requiring full
disclosure of closing costs to buyer and seller.
Redlining - Answers - A process by which banks draw lines on a map and refuse to lend
money to purchase or improve property within the boundaries.
Periodic Tenancy - Answers - A lease, which has the original terms automatically
renewed for successive periods, until proper notice to terminate is given by either the
landlord or tenant. Month to month rental.
Tenancy at Sufferance - Answers - A tenancy which is created when one is in wrongful
possession of realty, even though the original possession may have been legal.
TREC - Answers - Texas Real Estate Commission
Equal Credit Opportunity Act (ECOA) - Answers - The federal law that prohibits
discrimination in the extension of credit because of race, color, religion, national origin,
sex, age, or marital status. Passed in 1974.
,Lead-Based Paint Hazard Reduction Act - Answers - Persons selling or leasing
residential housing constructed before 1978 must disclose the presence of known lead-
based paint and provide purchasers or tenants with any relevant records or reports.
Mortgage Insurance Premium (MIP) - Answers - The FHA insurance that is a
percentage of the loan amount that the borrower is charged as a premium.
x - Answers - x
Federal Deposit Insurance Corporation (FDIC) - Answers - A United States government
corporation created by the Glass-Steagall Act of 1933. It provides deposit insurance,
which guarantees the safety of deposits in member banks, currently up to $250,000 per
depositor per bank.
Adjustable Rate Mortgage (ARM) - Answers - A loan characterized by a fluctuating
interest rate, usually one tied to a bank or savings and loan association cost-of-funds
index.
Adjustment Period - Answers - The number of initial years in which an ARM remains
fixed before the interest rate is allowed to be adjusted.
Blanket Mortgage - Answers - A mortgage which covers more than one piece of real
estate. Often used by a developer in the financing of undeveloped lots. Contains a
partial release clause.
Partial Release Clause - Answers - A part of a mortgage, which provides for the release
of part of the property (used as security in the loan) upon payment of a certain amount
of the mortgage. Blanket mortgage.
Balloon Note - Answers - A note calling for periodic payments which are insufficient to
fully amortize the loan, so that a principal sum known as a balloon is due at maturity.
Construction to Permanent - Answers - When a buyer wants to purchase a residential
property in need of repair or modernization, the buyer usually has to obtain financing
first to purchase the dwelling, additional financing to do the rehabilitation construction,
and a permanent mortgage when the work is completed to pay off the interim loans with
a permanent mortgage. These loans are commonly referred to as rehabilitation or rehab
homes.
Hard Money Loan (Collateral Dependent Loan) - Answers - Short-term mortgage loans
which require high amounts of borrower equity in the collateral in exchange for limited
and/or expedited underwriting.
x - Answers - x
, Mortgage Insurance - Answers - Includes insurance against financial loss by reason of
the nonpayment of principal, interest and other sums agreed to be paid under the terms
of any note or bond or other evidence of indebtedness secured by a mortgage, deed of
trust, or other instrument constituting a lien or charge on real estate. Insures top 20% of
loan.
Sub-Prime Loans - Answers - Loans that have more risks than are allowed in the
conforming market. Also called B-C Loans or B-C Credit.
Reverse Annuity Mortgage (RAM) - Answers - Mortgage in which the lender uses the
borrower's house as collateral to buy an annuity for the borrower from a life insurance
company; also called an equity conversion.
Up Front Mortgage Insurance Premium (UFMIP) - Answers - A one time charge by the
FHA for insuring a loan.
Conventional Mortgage Loan - Answers - Mortgage loans that do not enjoy government
backing in the form of FHA insurance or a Veterans Affairs (VA) guarantee and that is
offered through a commercial bank or mortgage broker.
PMI added for high LTV loans.
USDA Loans - Answers - • Section 502 Loans
• Described under 7 CFR Part 3550 - "Direct Single Family Housing Loans and Grants"
• Covers rural areas
• Made for the purpose of assisting low income borrowers purchase homes in rural
areas
• Can be used to...
• Build a home
• Repair, renovate, or relocate a home
• Purchase a lot/home site
• Prepare a lot/home sit, including water and sewage facilities
• ONLY made for 30 year terms
• No required down payment (100% financing)
• While there is no required down payment, the ability to repay must be documented
• DTI ratio of 29% for housing and 42% for total debt
• Includes a non-refundable 2% funding fee (aka guaranty fee)
Loan-to-Value Ratio (LTV) - Answers - Loan Amount ÷ Sales Price or Appraised Value
(Whichever is less)
Housing and Urban Development (HUD) - Answers - An agency of the federal
government which oversees many federal housing programs.
