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32 Cards in this Set
- Front
- Back
Which legal instrument evidences the debt and states the interest rate, term, payment requirement, and other information related to the loan? (a) Promissory note |
Promissory note
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What is the function of a mortgage? (a) It conveys title to real property. |
It secures the repayment of the debt.
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When financing the purchase of real estate, what is the role of the mortgagor? (a) The mortgagor gives a mortgage to a mortgagee. |
The mortgagor gives a mortgage to a mortgagee.
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Which clause in a mortgage requires the lender to acknowledge performance by the borrower? (a) Estoppel |
Defeasance
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In order to qualify for an FHA insured mortgage loan, an applicant's housing expense ratio cannot exceed what percentage? (a) 25% |
31%
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Which statement best describes a short sale? (a) A real estate transaction that closes in under 30 days. |
A settlement agreement where the lender agrees to a sales price that is below the outstanding loan balance. |
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What is the purpose of a receivership clause in a mortgage? (a) It is used to protect the value of property during the foreclosure process. |
It is used to protect the value of property during the foreclosure process.
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Which of the following terms refers to the right of a mortgagor in default to pay all money owed and prevent the sale of the property at foreclosure? (a) Equity of redemption |
Equity of redemption
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What is the primary purpose of discount points? (a) To subsidize the purchase of homes by low-income borrowers. |
To decrease the monthly payment required
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What are the two ratios under which a borrower must qualify in order to receive a FHA insured mortgage loan? (a) Housing expense and monthly gross income ratios |
Housing expense and total monthly obligations ratios
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What process is used by loan underwriters to determine if applicants are satisfactory credit risks? (a) Servicing (b) Brokering (c) Qualifying |
Qualifying
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A borrower is consistently late on their mortgage payments, so the bank exercises its ability to raise the interest rate. Which clause in the mortgage document allows the lender to do this? (a) Default Rate Mortgage Clause |
Escalation Clause
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How was title taken if a seller remained solely liable for the balance of a mortgage loan subsequent to transfer of ownership?
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Subject to
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After all liens have been paid following a foreclosure sale, who do any remaining funds belong to? (a) The sheriff of the county in which the property is located |
The mortgagor
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Which mortgage clause is the borrower's promise to pay the property taxes during the period of the loan? (a) Maintenance |
Tax
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Which of the following would allow a homeowner to exit a foreclosure proceeding by paying any amount due, including fees and interest prior to the completion of the foreclosure process? (a) Statutory right of redemption |
Equity of redemption
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Where would information such as the loan amount, interest rate, term of the loan, and responsible parties be found? (a) Sales contract |
Mortgage
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What is the approximate effective rate of interest (APR) if a mortgage loan is based on an interest rate of 5% per annum, and the lender charges 8 discount points? (a) 4% |
6%
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In a lien theory state such as Florida, title to property is held by whom during the time period that the resident is making monthly mortgage payments? (a) Bank |
Mortgagor
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Two discount points on a 7% loan will increase the effective rate of interest on the loan to approximately what rate? (a) 7 1/8%. |
7 1/4%.
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If a property owner is foreclosed upon, and the foreclosure results in a sale price greater than the amount of the outstanding liens, the excess will likely be paid to which of the following? (a) The court |
The mortgagor
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All of the following disclosures are required by the Real Estate Settlement Procedures Act (RESPA) with the exception of: (a) Servicing Disclosure Statement |
ADA Accesibility Report
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After paying mortgage payments for many years, a homeowner finally pays the last payment. How does the lender extinguish the mortgage lien on the property? (a) The lender would file a Mortgage Revocation on the property. (b) The lender would file a Satisfaction of Mortgage in the county records where the property is located. |
The lender would file a Satisfaction of Mortgage in the county records where the property is located. |
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Which would offer a potential borrower the most favorable interest rate over the life of the loan? (a) 4.0% plus 8 points |
4.0% plus 8 points
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If the loan amount is $850,000.00 and the loan to value ratio is 65%, what is the purchase price of the property? (a) $552,500 |
$1,307,692
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Using the information below, what is the buyer's housing expense ratio? (a) 39% |
30%
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Which clause found in a mortgage would state that the lender could only look to the property itself for satisfaction of the mortgage debt? (a) Granting clause |
Exculpatory clause
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Lenders are required to judge loan applicants on the basis of credit rating, income, expenses and assets, without regard to their age, race, religion, sex, marital status, or nationality. Which Act prohibits this discrimination? (a) Truth-in-Lending Act |
ECOA
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George has applied for a loan with Acme Savings and Loan. His gross monthly income averages $4,100. He has a monthly car payment of $425 and owes a balance on two credit card accounts with payments totaling $75 per month. If approved, his monthly mortgage payment will be $825. What is George's monthly housing expense ratio? What is his total obligations ratio? (a) Housing expense ratio = 20%; Total obligations ratio = 12% |
Housing expense ratio = 20%; Total obligations ratio = 32%
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A borrower has applied for a loan. The purchase price of the property is $280,000. If the borrower has $70,000 as a down payment, what is the loan-to-value ratio? (a) 25% |
75%
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A borrower has applied for a loan. The purchase price of the property is $280,000. The borrower has $70,000 as a down payment. If the lender approves the loan subject to the payment of 2 points and the interest rate on the loan is 9%, what is the amount of the loan discount and what is the effective yield to the lender? (a) Loan discount = $4,200; Effective yield = 9 1/4% |
Loan discount = $4,200; Effective yield = 9 1/4% |
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Which of the following statements regarding a deed of trust is correct? (a) It is only used when the parties trust each other. |
It temporarily conveys title to a third party
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