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Terms in this set (150)
An "Acceleration" clause most nearly means
to speed up payment of an overdue debt.
The term, PITI refers to the parts of a mortgage loan payment, which of the following correctly describes PITI,
Principal, Interest, Taxes, and Insurance.
When a mortgage is paid off, what clause allows the lender to release the mortgage rights and issue a satisfaction piece?
If prioritizing loans as when recording, a second mortgage or deed of trust is referred to as
a junior mortgage.
Typically, a mortgage loan monthly payment consists of PITI, (P) the amount borrowed from the lender is called
Of the following parties to a mortgage, whose interest is benefitted by an acceleration clause?
An agreement to waive prior rights in favor of another is called
Which is true about a promissory note?
It is the primary evidence of a loan
A buyer assumes the mortgage. How is the seller relieved of the liability?
A mortgage clause used in refinancing the first mortgage which allows the second mortgage to take the first place is called
Foreclosure would terminate which of the following?
Equitable redemption rights
Ronald defaulted on his home mortgage loan payments; therefore, the lender obtained a court order to foreclose on the property. At the foreclosure sale, Ronald's house sold for only $29,000 and the unpaid balance of his loan is $40,000. What must the lender do to recover the $11,000 Ronald still owes?
Seek a deficiency judgment
If the amount realized at a Sheriff's sale upon a delinquent mortgage is more than the indebtedness, the excess belongs to
Which would be first in priority?
The buyer was required to pay $4,000 in discount points. The loan balance was $80,000. How many points did the lender require?
A lender charges discount points on a loan to
improve the lender's yield.
If a borrower purchases a property for $200,000, and borrows $160,000 he/she is said to have a LTV ratio of?
The interest on a real estate mortgage loan is what type of interest?
The loan amount is $70,000, and the monthly principal and interest payment will be $479.00 a month for 30 years. How much interest will be paid over the term of the loan?
A buyer got a 30 year loan with a loan balance of $65,000 with an interest rate of 10% and a factor of 8.78. What will be the borrowers monthly P & I payment?
Remember for purposes of determining the new loan balance, you will not have to know how to determine the
In Step 3 what do you subtract from the monthly payment amount to solve for the monthly principal?
Current monthly interest
Determine the monthly interest on a loan with a balance of $168,300, a monthly payment of $1,356.80, and an interest rate of 7.75%?
A homeowner has a mortgage balance of $149,570.75. If the interest rate on the loan is 9.5% and the monthly payment is $1,303.55 what will be the mortgage balance after the next two payments?
A mortgage has a balance of $70,000 at 11.5% interest for a period of 25 years. The monthly P & I payment is $711.53, what is the interest charge for the second monthly payment?
What is the balance on an amortized loan of $340,000 after the first payment if the interest rate is 6% with a monthly P&I payment of $2,028?
A type of long term permanent financing for residential construction or large construction projects, that replaces the construction loan is called a (an)
A type of loan where interest and principal are paid on an equal basis until the final payment, which is larger, is called a Balloon Loan or
partially amortized loan.
A type of mortgage which allows the lender to increase the outstanding balance of a loan up to the original amount of the loan in order to advance additional funds is called an
An Adjustable Rate Mortgage (ARM) contains an escalator clause that allows the interest to adjust over the loan term. How often the loan rate may be changed is determined by the
The purchaser of real estate by deed or the buyer under a contract for deed is called the
With an Adjustable-rate Loan the interest rate fluctuates and is usually tied to an index. The interest rate for any given period is the indexed rate plus the
A loan on real estate, that includes fixtures, and appliances used extensively in the sale of condominiums is a (an)
A real estate loan where a homeowner receives monthly payments based on accumulated equity rather than a lump sum and is repaid upon the death of the owner or sale of the property is a (an)
reverse annuity mortgage.
A final payment of a mortgage loan that is considerably larger than the other monthly payments because the loan was not fully amortized is called a
A type of payment plan where a buyer pays interest only and the final payment is principal at the end of the loan period.
A mortgage requires monthly payments of $852.10 for 15 years and a final payment of $29,800. This type of loan is called a (an)
balloon or a partially amortized loan.
When a real estate loan uses both real and personal property as collateral for the loan it is called a (an)
A Budget Mortgage is a loan, which has a payment composed of the following?
Principal, interest, taxes and insurance
A developer would most likely obtain which of the following types of mortgage on a new subdivision?
What can the VA require a veteran do when obtaining a loan?
Make the veteran automatically assume liability for the loan
If a Veteran wanted to buy a $60,000 house in a city with a population of 100,000 people, which of the following loans could he NOT apply for?
The basic difference between an FHA and a VA loan is
The FHA insures loans, the VA guarantees them.
A veteran desired a loan to buy a 200 acre residence. There are no VA lenders in the area. Which could happen?
The VA could loan the money themselves.
Conventional mortgage loans are
not guaranteed or insured by any government agency.
For a veteran to obtain a VA loan, the VA must issue a certificate of
When you obtain an FHA loan, what generally happens?
An FHA appraiser must appraise the property
Private mortgage insurance is associated with
Rural Economic and Community Development (RECD) loans are either made
directly by RECD or made by a private lender with RECD guaranteeing a certain percentage.
A veteran had a VA loan using his full entitlement. He allows another veteran to assume the loan without VA approval. Could he immediately get another VA loan?
No, because he is still liable for the loan.
On a government backed loan, which of the following would be permitted concerning pre-payment penalties?
Prepayment penalties are not allowed, under any circumstances, on VA or FHA loans.
What is the purpose of FHA?
To act as an insurance company of first mortgages
A Buyer has demonstrated the financial capacity and creditworthiness required to afford the asking price by providing the lender with all of the following, except
an appraisal equal to or higher than the contract price.
Transfer taxes are generally paid by the
Protection to an owner of property against losses sustained as a result of a defective title to real estate can be accomplished by
Many states charge what is called a transfer tax when the property is conveyed by one of the following means
When underwriting a mortgage loan a lender considers all of the following, except
credit worthiness of the seller.
The recorded history of matters that affect the title to a specific parcel of real estate, such as ownership, encumbrances and liens, usually beginning with the original recorded source of the title is called the
chain of title.
Under which of the following would one MOST likely see an estoppel certificate?
A lender sells a loan and the new mortgagee wants to know the existing balance
Prior to closing, a final walkthrough of the property should be performed to ensure that everything has remained as stated in the sales contract. The walkthrough is generally completed by the
Assets include all of the following, except
revolving and installment loan accounts.
A settlement agent could be
all of the above.
A qualified buyer is one who has demonstrated the financial capacity and credit worthiness required to afford the asking price. In qualifying a buyer the lender looks at these factors?
Income, net worth and credit history
Settlement is another name for closing and
brings the real estate transaction to completion.
A written pledge by a lender to lend a certain amount of money to a qualified borrower on a particular piece of real estate for a specified time under specific terms is a
The legal doctrine by which a person is prevented from asserting rights or facts that are inconsistent with a previous position or representation made by act, conduct or silence is known as
Which of the following is considered a part of the secondary mortgage market?
Federal Home Loan Mortgage Corporation (FHLMC)
All of the following were originally established to buy and sell mortgages in order to stimulate mortgage lending, except
Maggie Mae (MGIC).
An increase in the availability of money would lead to which effects?
Interest rates would go down
A mortgage in which the lender participates in the income of the mortgaged property beyond a fixed return is called
A commercial bank would usually make all of the following loans EXCEPT,
a pension fund loan.
All of the following are sources for obtaining a residential mortgage for the purchase of a single-family residence, except
S&Ls are now regulated by the Federal Housing Finance Board (FHFB) and deposits are insured by the
Deposit Insurance Fund for at least $250,000.
As a group, the three secondary mortgage market participants; Fannie Mae, Ginnie Mae and Freddie Mac
provide an outlet for primary lenders to sell their mortgage loans.
The two biggest money lenders of residential real estate mortgages are
savings and loans and banks.
The Federal Reserve controls lenders by
telling lenders what percentage of their assets they can loan.
The primary distinction/s between the primary and secondary mortgage market is?
The secondary market is fundamentally a holding or warehousing process.
All of the following purchase mortgages from savings and loans in the secondary market EXCEPT the
Federal Housing Administration.
The Federal Reserve controls the money supply by
requiring how much of a bank's assets have to be on reserve.
Which of the following secondary market organizations is a quasi-government corporation?
Fannie Mae (FNMA)
The Federal National Mortgage Association (FNMA) sells seasoned mortgages and deeds of trust to individual investors and financial institutions. A seasoned mortgage is one that has been
in existence for some time and has a good record of repayment by the mortgagor.
The Truth in Lending laws apply to the financing of
single family residences.
Real estate can be a poor investment if
the investor needs ready cash.
Which agency administers RESPA?
Consumer Financial Protection Bureau (CFPB)
In terms of stating mortgage rate interest, the standardized rate required by the Truth in Lending Act to facilitate comparison loan shopping is called the
annual percentage rate.
Purchasing an investment property , like an apartment complex may be more rewarding if the investor has the required
The Equal Credit Opportunity Act prohibits lenders from discriminating against consumers in the granting of credit based on the following protected classes;
race, color, religion, national origin, sex, marital status, age or dependency on public assistance.
A settlement agent must provide the seller with the Closing Disclosure
at consummation of the mortgage.
A standardized yardstick expressing the true annual cost of borrowing is expressed as the "APR" and includes
the contract interest rate and points.
Regulation Z is not concerned with
the loan to value ratio
An advantage of real estate investment is tax savings, the capital gain exclusion on a principal residence excludes the gain up to
$250,000 per individual (up to $500,000 for a couple).
Which of the following mortgage closing transactions require compliance under TRID rules?
Truth In Lending applies to all of the following, except
As with most investments, there is a high degree of risk in buying and selling investment real estate because
market conditions are changing all the time.
Under the ECOA, a lender can base lending decisions on all of an individual's information, except
Real estate is generally a good investment because it
keeps up with inflation trends.
The two major sections of the Truth In Lending law, includes
advertising and Annual Percentage Rate (A.P.R.).
RESPA requires lenders to provide a HUD "Guide to Settlement" booklet and a Good Faith Estimate (GFE) of all costs related to settlement to borrowers within
3 days of loan application.
A primary purpose of the Truth in Lending Act is to
make loan cost information readily available to consumer borrowers.
The Truth-in-Lending Act applies to which of the following?
An advertisement for a house for sale by a broker which discloses financing terms.
The Real Estate Settlement Procedures Act and Regulation Z
are separate acts dealing with separate financing issues.
The following real estate financing statements all contain trigger terms under Regulation Z of the Truth in Lending Act, except
"Great assumable low interest rate loan".
Which of the following laws require(s) that finance charges be stated as an annual percentage rate (APR)?
Truth in Lending Act, Regulation Z
Under the ECOA, a lender can base lending decisions on all of an individual's information, except
Unsophisticated investors should seek
A mortgage broker _____________????
is a lender.
A buyer wanted to use a promissory note for consideration on the purchase of a property. Can he do this
Yes, this is acceptable as long as the seller agrees.
A borrower bought a $74,000 house with no down payment. The loan was probably ______________
a VA loan.
In most states, by paying the debt after a foreclosure sale, the mortgagor has the right to regain the property. What is this right called
Statutory right of redemption
Effective October 1, 2015, the real estate industry has new requirements as specified in the
TILA/RESPA Integrated Disclosure (TRID) Rule.
Under an FHA graduated payment mortgage, which of the following fluctuates over the term of the loan
RESPA would prohibit which of the following acts????
On an 8% straight term loan of $6,071 the borrower paid total interest of $1,700. How long did he have the loan
A standardized yardstick expressing the true annual cost of borrowing is expressed as a/an
All of the following are true of conventional loans except what?
The requirements to qualify are uniformly fixed by state law.
The primary purpose of Truth in Lending is to _____________
control interest rates on behalf of the consumer.
In which of the following markets may a lender sell a loan that a mortgage banker has previously originated?
An owner was selling his own home. Can he advertise the down payment
Yes, because it was his own home
Which of the following is considered a conventional loan?
Commercial bank ARM loan
An increase in the availability of money would lead to which effect?
Interest rates would go down.
If advertised alone, which would be in violation of TRUTH IN LENDING??????
"No down payment required"
A VA loan may be granted for the purchase of a one-family to four-family if
the veteran agrees to live there
If a single parent is applying for a real estate loan, when would the fact have to be revealed that part of the parent's income is from child support?
If the parent was relying on the income for repayment of the loan
The finance charges recorded on the Truth in Lending statements would include all of the following EXCEPT:
Recording fees and title insurance premiums
Which of the following would usually occur in a sale-and-leaseback transaction?
The property is sold on the condition that the new owner lease it back to the seller at the time title passes.
Who is NOT an originator of primary loans?
A mortgage company makes a number of loans to be assembled into one package and sold to permanent investors. This process is an example of interim financing to the mortgage company and is called:
An impound or reserve account MOST benefits whom?
The Loan Estimate must be delivered to an applicant
within three business days of loan application.
An owner advertised "beautiful acreage only $5,000 down, owner will personally finance down payment." Would this be in violation of the Truth in Lending Act?
No, owners are not covered by Reg. Z.
Which of the following describes a mortgage that requires principal and interest payments at regular intervals and calls for the liquidation of the debt by periodic installments until the debt is satisfied?
The lender is not insured or guaranteed against a loss, by reason of the borrower's default in repayment, under which type of loan?
Who is the largest purchaser in the secondary market?
A home improvement company was negotiating with a home owner to add two rooms onto a home. The company agreed to take a second mortgage as long as the homeowner also included the rest of the property in the loan. The company and the homeowner agreed to a price and the company provided the necessary disclosure form on Monday and the homeowner signed the agreement at noon the following day. Assuming that the week had five business days, until what time could the homeowner rescind the loan?
Why would a mortgagee (beneficiary) have an appraisal on the property?
To assure the property value is sufficient to cover the loan
Under Regulation Z, consummation is defined as the time when a consumer
becomes contractually obligated on a credit transaction.
A buyer wants to take out an FHA loan. The broker should refer the buyer directly to
any approved lending institution such as a bank or savings and loan association.
When the lender under a deed of trust required title insurance, who would be the most likely person to pay for it?
A buyer assumes the mortgage. How is the owner relieved of the liability?
The Smiths' purchased a residence for $75,000. They made a down payment of $15,000 and agreed to assume the seller's existing mortgage, which had a current balance of $23,000. The Smiths' financed the remaining $37,000 of the purchase price by executing a second mortgage whereby the seller became a mortgagee. This type of loan is called a
In a repayment of a mortgage loan, which type of interest is used?
The seller under a land contract is called
When the amortized payment of a mortgage remains constant over the period of the loan but leaves an outstanding balance to be paid at the end, this payment is called:
The clause in a trust deed or mortgage which permits the mortgagee to declare the entire unpaid sum due upon a default by a mortgagor is called a(n)
In an installment land contract, what type of title did the seller retain?
Which transaction requires a securities' license?
selling shares in fannie mae
Usury MOST nearly means
The maximum permissible "loan to value ratios" are
based on sale price or appraised value, whichever is lower.
______ is the cost per thousand that is required to create the principal and interest payment necessary to pay off a loan.
A house sold for $42,000. The buyer made a 20% down payment. Monthly interest on the loan was $252. What was the interest rate on the loan?
$42,000 x 0.8 = $33,600
$252 x 12 = $3,024 $3,024 ÷ $33,600 = 0.09 = 9%
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