California Real Estate Practice Exam

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Which of the following abbreviations is associated with the FHA?

CPM
MBA
MIP/MMI
NAR

The correct answer is: CPM

The abbreviation that is associated with the FHA (Federal Housing Administration) is MIP, which stands for Mortgage Insurance Premium, sometimes also referred to as MMI (Mutual Mortgage Insurance). This fee is charged to borrowers who utilize FHA loans to help insure the lender against losses in the event that the borrower defaults on the loan. FHA loans are designed to encourage homeownership for those with lower credit scores or limited down payment capability, and the mortgage insurance requirement is a key aspect of this program. The other abbreviations listed do not pertain directly to the functions or operations of the FHA. CPM (Certified Property Manager) relates to property management professionals. MBA (Mortgage Bankers Association) represents the mortgage banking industry, while NAR (National Association of Realtors) focuses on the real estate profession and its standards. These distinctions highlight that MIP is specific to the insurance aspect of FHA-backed loans.