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Which of the following statements is NOT correct?

  1. A Cal Vet loan is a guaranteed loan.

  2. A conventional loan is not backed by any governmental agency.

  3. An FHA loan is an insured loan.

  4. A VA loan is a guaranteed loan.

The correct answer is: A Cal Vet loan is a guaranteed loan.

In the context of the California Real Estate practice, it is essential to understand the nature of different loan programs. A Cal Vet loan actually does function as a guaranteed loan rather than a traditional loan program. This is because it is designed to assist veterans in purchasing homes, with state backing providing guarantees that facilitate access to favorable mortgage terms. A conventional loan indeed fits the definition of not being backed by any governmental agency; these loans are typically issued by private lenders and do not carry federal guarantees like FHA or VA loans. The Federal Housing Administration (FHA) provides insurance on FHA loans, thus providing lenders with protection against borrower defaults. Similarly, VA loans are guaranteed by the Department of Veterans Affairs, offering veterans robust options for home financing with lower down payments and favorable terms. Recognizing the characteristics of these loans is critical in real estate transactions, lending practices, and when advising clients.