California DRE Salesperson Exam
Financing
This module covers 9% of the California DRE Salesperson exam, about 14 questions. Master deeds of trust, loan types, the secondary market, and key consumer protection laws.
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Financing
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Key concepts
Deed of trust vs. mortgage
Deed of trust = 3 parties (trustor, beneficiary, trustee). Non-judicial foreclosure in California. Mortgage = 2 parties, requires judicial foreclosure.
FHA, VA, and conventional loans
FHA: government-insured, 3.5% down, requires MIP. VA: no down payment, no PMI, veterans only. Conventional: not government-backed, 20% down avoids PMI.
Acceleration and due-on-sale clauses
Acceleration: entire loan due on default. Due-on-sale (alienation clause): loan due when property is sold. Both protect the lender.
LTV and PMI
LTV = loan amount / property value. PMI required on conventional loans above 80% LTV. Cancellable when LTV reaches 80%.
Fannie Mae and Freddie Mac
GSEs that buy conforming loans from lenders, package as mortgage-backed securities, and sell to investors. Provide liquidity to the mortgage market.
RESPA and Regulation Z
RESPA: prohibits kickbacks, requires settlement cost disclosure. Reg Z (TILA): requires APR disclosure, 3-day right of rescission on refinances.
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