Quiz Unit 8 - Financing Real Estate

Q9. The repayment of a loan in equal installments that includes both interest and principal reduction is referred to as A. a hard money loan. B. a straight loan. C. an amortized loan. D. a mortgage loan.

C. an amortized loan. In an amortized loan, payment is by installments that include both interest and principal. Page 231

Q7. The cost of using money BEST describes A. an open market. B. a free market. C. interest. D. credit.

C. interest. A purchaser of real estate who defers part or all of the purchase price uses some form of credit. When the purchaser receives credit from the seller, the cost of that credit is usually the rate of interest charged to the purchaser. Page 208

Q4. Which of the following is NOT an institutional lender? A. insurance company. B. thrift. C. mortgage company. D. savings and loan.

C. mortgage company. In California, a mortgage company is a mortgage banker licensed by the California Department of Business Oversight and subject to the California Residential Mortgage Lending Act. Page 234

Q5. TRID consolidates disclosures required to be made to consumers under the Truth in Lending Act and A. California Residential Mortgage Lending Act. B. California Finance Lenders Law. C. Fair Credit Reporting Act. D. Real Estate Settlement Procedures Act.

D. Real Estate Settlement Procedures Act. The TILA-RESPA Integrated Disclosure Rule (TRID) consolidates four disclosures required under the Truth In Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA). Page 237

Q6. A provision that gives the lender the right to demand full payment of a mortgage upon a sale of the property is A. a notice-of-sale B. a partition clause. C. an escalator clause. D. a due-on-sale clause.

D. a due-on-sale clause. A due-on-sale clause is an acceleration clause in real estate financing instrument granting the lender the right to demand full payment of the remaining indebtedness upon a sale of the property. Pages 245-246

Q3. Real estate loans generally include a promissory note and a A. security instrument. B. settlement statement. C. purchase contract. D. grant deed.

A. security instrument. Real estate loans in California generally are made using two instruments. The promissory note is the borrower's promise to pay the amount borrowed and is evidence of the debt. The security instrument, typically a deed of trust, transfers title to the real estate to a third party until the loan is repaid. Page 213

Q1. An instrument by which property is hypothecated to secure the payment of a debt or obligation is known as A. an encroachment. B. a mortgage. C. a sheriff's deed. D. a reconveyance deed.

B. a mortgage. The security instrument by which real estate serves as assurance that a debt will be repaid usually is referred to as a mortgage, even when it is a deed of trust. page 219

Q10. Money is the medium exchange as well as a measure of A. investment potential. B. value. C. credit. D. instrinsic worth.

B. value. Money is the medium exchange as well as a measure of value. In exchange for our work efforts, we earn income in the form of money. Page 208

Q2. The federal agency that insures savings accounts is the A. FHLMC. B. FHA. C. FDIC. D. FNMA.

C. FDIC. The Federal Deposit Insurance Corporation (FDIC) was created by Congress in 1933 to insure individual accounts in participating banks and (as of 1989) savings and associations, up to $250,000 per depositor, per insured bank, for each ownership category. Pages 210-211

Q8. The security instrument of choice in California is the A. grant deed. B. mortgage. C. quitclaim deed. D. deed of trust.

D. deed of trust. The deed of trust is the preferred security instrument in California. Page 221