P4-45 Quiz

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Question 1 of 10

1. Question
Government bonds are being used as a source of funds to close. How should they be valued?
- A. At purchase price unless the redemption value can be determined and verified.
- B. At face value regardless of redemption status.
- C. At current market value only.
- D. At redemption value only, even if it cannot be verified.
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Question 2 of 10

2. Question
Stocks are being used for funds to close. What documentation is required to verify their value?
- A. A current statement from the stockbroker or a photocopy of the stock certificate, accompanied by a dated newspaper stock list.
- B. Only the original purchase receipt.
- C. A bank statement showing deposit of funds.
- D. A verbal confirmation from the borrower.
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Question 3 of 10

3. Question
When can trust account funds be used for funds to close?
- A. Only if the trust is irrevocable.
- B. Only if the trustee approves in writing.
- C. If the borrower has access to the funds and it can be verified.
- D. Only if the trust has been established for at least five years.
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Question 4 of 10

4. Question
How is cash-on-hand treated as a source of funds for the down payment or closing costs?
- A. Acceptable if documented by affidavit.
- B. Acceptable for closing costs only.
- C. Acceptable if deposited prior to application.
- D. Cash-on-hand is not an acceptable source of funds for the down payment or closing costs.
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Question 5 of 10

5. Question
A seller will take the borrower’s existing property in trade as part of the down payment. What must be true for trade equity to be acceptable?
- A. The borrower has made a 5% cash down payment and the equity contribution is a true-value consideration.
- B. No separate appraisal is needed if both parties agree on value.
- C. The borrower has at least 3% equity in the traded property.
- D. The seller may accept the property at any value without documentation.
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Question 6 of 10

6. Question
In a rent-with-option-to-purchase situation, when can the portion of rent that exceeds market rent be applied toward the down payment?
- A. If there is a valid rental/purchase agreement, the lease term was at least 12 months, payments for the last 12 months are documented, and the appraiser develops market rents.
- B. If the lease term is at least 6 months.
- C. If the borrower provides proof of any rent paid, regardless of term.
- D. If rent exceeds market rent by any amount, even without a written agreement.
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Question 7 of 10

7. Question
How is sweat equity treated under Fannie Mae and Freddie Mac guidelines?
- A. Allowed by both agencies without restrictions.
- B. Not acceptable with Fannie Mae, but Freddie Mac permits it if the borrower provides a 5% cash investment from their own funds.
- C. Not allowed by either agency.
- D. Allowed by Fannie Mae but not Freddie Mac.
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Question 8 of 10

8. Question
Why may borrowed funds secured by an asset be used for funds to close?
- A. Because they are treated as income.
- B. Because they represent a return of equity.
- C. Because repayment is optional.
- D. Because they do not require documentation.
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Question 9 of 10

9. Question
When may the monthly repayment debt for a loan secured by a financial asset not need to be counted for qualifying?
- A. When the lender obtains a copy of the loan instrument showing the borrower’s financial asset as collateral for the loan.
- B. When the loan term is under 12 months.
- C. When the borrower has reserves equal to the loan amount.
- D. When the collateral asset is still counted as an available asset for verifying funds to close.
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Question 10 of 10

10. Question
If an asset is used as collateral for borrowed funds, how is that asset treated when verifying funds to close?
- A. It may still be counted as an asset if it is liquid.
- B. It is partially counted based on the outstanding loan balance.
- C. It is counted only if the borrower has additional reserves.
- D. The assets used to secure the loan may not be counted as “Assets” for verifying funds to close.
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