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50 Cards in this Set
- Front
- Back
- 3rd side (hint)
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When using a deed of trust in a real estate loan, which of the following would be named as the beneficiary? |
d. lender |
a. seller b. buyer c. title company d. lender |
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Discount points charged by the lender on a loan are computed as a percentage of the |
a. loan amount |
a. loan amount b. closing costs c. sales price d. down payment |
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The Federal housing Administration (FHA) has developed several loan programs designed to |
a. insure housing loans |
a. insure housing loans b. provide funding for housing loans c. guarantee housing loans d. buy and sell housing loans |
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Lenders are required to disclose the total cost of borrowing under |
b. Regulation Z |
a. ECO b. Regulation Z c. FHA d. RESPA |
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If the borrower defaults, a mortgage clause that allows the lender to require that all the loan payments be due immediately is called a(n) |
a. acceleration clause |
a. acceleration clause b. due-on-sale clause c. alienation clause d. defeasance clause |
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A buyer purchased a house for $260,000 and obtained an 80 percent loan at 6% with 1.5 points. How much will the buyer have to pay for the points charged by the lender? |
b. $3,120 |
a. $780 b. $3,120 c. $3,900 d. $15,600 |
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Wraparound mortgages are second (junior) mortgages on the property and include |
b. the original loan plus an additional loan amount |
a. real and personal property as security for the loan. b. the original loan plus an additional loan amount. c. interest-only payments d. several parcels of land. |
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Tom purchased a new house for $230,000. He made a down payment of $25,000 and obtained a $205,000 mortgage loan. The builder of Tom's house paid the lender a fee to reduce Tom's loan rate by 3% for the first year and 2% for the second year. This type of loan arrangement is a |
a. buydown mortgage |
a. buydown mortgage b. wraparound mortgage c. package mortgage d. blanket mortgage |
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The purpose of the alienation clause in a mortgage is to |
a. prevent the loan from being assumed |
a. prevent the loan from being assumed b. prevent the loan from being sold c. allow for interest rate changes to be made d. allow negative amortization to accrue |
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The defeasance clause in a mortgage |
d. cancels the mortgage when the loan is repaid |
a. prevents the loan from being assumed b. prevents the loan from being sold c. allows for interest rate changes to be made d. cancels the mortgage when the loan is repaid |
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A purchaser obtains a fixed-rate loan to finance a home. Which of the following characteristics is true of this loan? |
b. the amount of interest to be paid is predetermined |
a. the loan cannot be sold in the secondary market b. the amount of interest to be paid is predetermined c. the monthly payment amount will fluctuate each month d. the loan's interest rate will change according to an index |
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Fannie Mae performs which of the following? |
b. buys and sells mortgage loans |
a. originates loans to homebuyers b. buys and sells mortgage loans c. guarantees VA loans d. insures FHA loans |
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The FHA is part of |
c. the Department of Housing and Urban Development (HUD) |
a. Fannie Mae b. Freddie Mac c. the Department of Housing and Urban Development (HUD) d. the Federal reserve System (Fed) |
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A buyer purchased a property for $200000. The buyer makes a down payment of $10,000, finances $180,000 with a new loan, and asks the seller to take back a second mortgage for the balance. the second mortgage is called a(n) |
a. purchase money mortgage |
a. purchase money mortgage b. installment sales mortgage c. blanket mortgage d. bridge loan |
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Fran purchased her house for cash 30 years ago. Today, Fran receives a monthly check from the bank that supplements her pension income. Fran most likely has obtained a(n) |
b. reverse equity mortgage |
a. graduated payment mortgage b. reverse equity mortgage c. adjustable rate mortgage d. blanket mortgage |
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In a loan that requires periodic payments that do not fully amortize the loan balance by the final payment, what term best describes the final payment? |
c. balloon |
a. variable b. acceleration c. balloon d. graduated |
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The party that gives a deed of reconveyance when a real estate loan is repaid is the |
c. trustee |
a. mortgagor b. trustor c. trustee d. mortgagee |
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A developer received a loan that covers five parcels of real estate and provides for the release of the mortgage lien on each parcel when certain payments are made on the loan. This loan arrangement type is called a |
c. blanket loan |
a. package loan b. purchase money loan c. blanket loan d. wraparound loan |
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The type of activity a mortgage broker usually performs is |
c. matching borrowers and lenders |
a. making loans from its own funds b. servicing mortgage loans c. matching borrowers and lenders d. selling mortgage backed securities |
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The mortgagor's right to regain property following a mortgage foreclosure is known as the right of |
a. redemption |
a. redemption b. alienation c. satisfaction of mortgage d. mortgage acceleratoin |
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Borrowers seeking FHA loans should go to |
d. a qualified lending institution |
a. the Federal Reserve Bank b. the Department of Housing and Urban Development (HUD) c. the Federal Housing Administration (FHA) d. a qualified lending institution |
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Liquidation of a loan through periodic payments that include principal and interest is called |
c. amortization |
a. alienation b. redemption c. amortization d. acceleration |
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To comply with advertising requirements under the Truth in Lending Act, an ad should state |
c. 9% annual percentage rate |
a. 9% annual interest b. 9% interest c. 9% annual percentage rate d. 9% compounded interest |
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An individual's right to inspect her file at a credit bureau is included in |
d. the Fair Credit Reporting Act |
a. the truth in Lending Act b. the Equal Credit Opportunity Act c. Regulation Z d. the Fair Credit Reporting Act |
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If a borrower fails to make the loan payments when due, the lender can demand immediate payment of the entire balance under the |
a. acceleration clause |
a. acceleration clause b. alienation clause c. prepayment clause d. defeasance clause |
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A borrower's house may be used as collateral for a loan while the borrower continues to occupy the property through the process of |
c. hypothecation |
a. acceleration b. alienation c. hypothecation d. subordination |
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After a borrower's house is foreclosed by the lender, the borrower may regain the property by exercising the right of |
a. redemption |
a. redemption b. quiet enjoyment c. defeasance d. alienation |
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Funds for FHA loans are usually provided by |
c. qualified lenders |
a. the Federal housing Administration b. the Federal Reserve System c. qualified lenders d. the Department of Housing and Urban Development |
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A loan that allows the borrower to obtain additional money at a later time is called a(n) |
a. open-end loan |
a. open-end loan b. blanket loan c. installment loan d. package loan |
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A new mortgage that is subordinate to an existing mortgage and includes the existing mortgage amount plus additional money is called a |
d. wraparound mortgage |
a. blanket mortgage b. purchase money mortgage c. package mortgage d. wraparound mortgage |
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The borrow'ers right to rescind a new consumer loan within three business days is provided by |
d. the Truth in Lending Act |
a. the Equal Credit Opportunity Act. b. RESPA c. the Community Bank Reinvestment Act d. the Truth in Lending Act |
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The Equal Credit Opportunity Act makes it illegal for lenders to refuse credit or discriminate because an applicant |
b. is an unmarried woman |
a. has bad credit history b. is an unmarried woman c. is a single parent who cannot afford the loan payments d. is unemployed with no assets |
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A house is purschased using a fixed-rate, fully amortized mortgage loan. Which of the following statements is true regarding the mortgage |
a. Each payment amount is the same |
a. each payment amount is the same b. a balloon payment will be made at the end of the loan c. the principal amount in each payment is greater than the interest amount d. each payment reduces the principal by the same amount |
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The clause that makes the mortgage void when the loan is repaid is called the |
a. defeasance clause |
a. defeasance clause b. alienation clause c. acceleration clause d. prepayment clause |
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An owner who no longer wants to be primarily responsible for a mortgage should find a buyer willing to |
d. assume the loan |
a. subordinate the loan b. give a wraparound loan c. take the property subject to the loan d. assume the loan |
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Which of the following best describes the secondary market? |
c. where loans are bought and sold after they have been originated |
a. lenders who deal exclusively in second mortgage loans b. the major originator or mortgage loans for single-family residences c. where loans are bought and sold after they have been originated d. the major originator of FHA and VA loans |
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The purchasers of a new home take out a loan that requires them to pay a mortgage insurance premium (MIP). The type of loan the purchasers have is a(n) |
c. FHA loan |
a. conventional loan b. VA loan c. FHA loan d. FNMA loan |
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Which of the following statements is true of VA loans? |
b. They are guaranteed by the government |
a. They are available only to veterans who served in combat. b. They are guaranteed by the government c. They are made only by the VA d. They may never be asssumed |
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A borrower obtains a $100,000 mortgage loan for 30 years at 7.5% interest. If the monthly payments of $902.77 are credited first to interest and then to principal, what will be the balance of the principal after the borrower makes the first loan payment? |
b. $99,722 |
a. $99,772 b. $99,722 c. $99,097 d. $100,000 |
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The clause that gives the lender the right to end the loan if title to the property is transferred is called a(n) |
b. alienation clause |
a. acceleration clause b. alienation clause c. defeasance clause d. graduated clause |
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A lender making a loan with an interest rate of 6% wishes to raise the yield on the loan to 6.5%. If it takes approximately 8 points to raise the yield 1%, how many points must the lender charge. |
c. 4 |
a. 2 b. 3 c. 4 d. 8 |
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All of the following agencies play roles in the secondary market except |
a. Federal Housing Authority |
a. Federal Housing Authority b. Ginnie Mae c. Fannie Mae d. Freddie Mac |
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Which of the following describes the monthly moan payments on an amortized loan? |
d. The interest portion of the payment decreases |
a. the principal portion of the payment decreases b. equal amounts are applied to interest and principal c. there is no change in the portion applied to the principal d. the interest portion of the payment decreases |
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Under the Truth in Lending Act (Regulation Z), which of the following is not a component of the annual percentage rate for a loan? |
d. The broker's commission |
a. the loan interest rate b. the loan origination fee c. discount points d. the broker's commission |
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Which of the following statements regarding VA loans is correct? |
b. VA loans may be up to 100% of the property's appraised value |
a. a VA loan can be used to purchase non owner occupied rental property b. VA loans may be up to 100% of the property's appraised value c. a veteran who has obtained one VA loan may never obtain another d. The lender is not protected because the VA would be reimbursed if the loan defaults |
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The primary purpose of the Truth in Lending Act (Regulation Z) is to |
c. provide the borrower with information on the loan costs |
a. protect the lender against defaulting loans b. establish minimum interest rates c. provide the borrower with information on the loan costs d. prevent discrimination against loan applicants |
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If a lender agrees to make a loan based on an 80% loan-to-value ratio, what is the amount of the loan if the property appraises for $229,000 and the sales price is $235,000? |
c. $183,200 |
a. $47,000 b. $91,300 c. $183,200 d. $188,000 |
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The type of loan that provides for interest only payments to be made is called a(n) |
a. term loan |
a. term loan b. amortized loan c. wraparound loan d. graduated payment loan |
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A homeowner borrowed $240,000, to be repaid in monthly installments of $1,820 at 5.5% percent annual interest. How much of the borrower's first monthly payment was applied to reducing the principal amount of the loan? |
b. $720 |
a. $100 b. $720 c. $1,000 d. $1,120 |
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A borrower has a 6.5%, fixed-rate amortizing loan. If the current loan balance is $176,000, how much interest will the borrower pay in the next loan payment? |
a. $953.33 |
a. $953.33 b. $1,906.66 c. $10,560 d. $11,440 |
