REAL ESTATE FINANCE CH 5

A loan that provides for repayment with an agreed period by means of regular level payments is called:

an amortized loan

An opinion of value is called:

an appraisal

Paying points to reduce the amount of interest on a loan is called:

buydown

Qualifying the property involves:

an analysis of the property's features to determine its value to serve as collateral./determining through analysis whether its value can be expected to remain stable over time.

When the buyer and seller are both well informed, under no pressure either to buy or sell, and the property is offered for a reasonable time on the open market, it is said to be:

an arm's length transaction

On the Loan Estimate form, the items shown in the section "Services You Cannot Shop For" must be in alphabetical order and may include:

appraisals/credit reports/government funding fees.

Discount points are paid:

at the closing

When a property has been ordered to be sold by a court of law, the type of deed that will transfer the property is a: a. fee simple deed. b. sheriff's deed. c. judicial deed. d. reversionary deed.

b (p. 107)

A legal document that pledges the property of the borrower to a lender as security for a loan is called: a. a grant deed. b. a mortgage. c. collateral. d. legal title.

b (p. 110)

In a promissory note, the borrower is called the: a. lender. b. maker. c. benefactor. d. seller.

b (p. 121)

Negotiable instruments are promissory notes that are: a. non-negotiable. b. freely transferable. c. easily recordable. d. difficult to transfer.

b (p. 121)

An out-of-court sale or auction initiated at the direction of a beneficiary is called a: a. notice of sale. b. trustee's sale. c. sheriff's sale. d. nonjudicial sale.

b (p. 125)

A payment of principal at the end of a series of smaller periodic mortgage payments that is typically much higher than the previous payments is called a(n): a. final payment b. balloon payment c. escalated payment d. tiered payment

b (p. 13)

A clause in a finance instrument that limits a borrower's right to transfer the property without the lender's permission is called a(n): a. acceleration clause. b. alienation clause. c. prepayment clause. d. none of the above.

b (p. 133)

A loss of savings deposits to higher yielding competitive investments is referred to as: a. deficit savings. b. disintermediation. c. pass-through deposits. d. mediation investing.

b (p. 32)

The study and description of the population of an area is called: a. regentrification. b. demographics. c. psychographics. d. demonstrative study.

b (p. 34)

Personal property that is included with real estate is called: a. pawn. b. chattel. c. legacy. d. all of the above.

b (p. 5)

The highest legal form of property ownership is: a. freehold estate. b. fee simple estate. c. leasehold estate. d. none of the above.

b (p. 7)

Often in times of war, a decree of the state will issue: a. wildcat loans. b. fiat money. c. pledge stocks. d. fiat bonds.

b (p. 8)

A fixed-rate mortgage loan that is set up in a fashion similar to a standard 30-year conventional loan is a:

biweekly loan

A loan origination fee is normally paid by the:

buyer

Real property rights are often referred to as: a. constitutional rights. b. fee simple rights. c. bundle of rights. d. bill of rights.

c (p. 105)

Insurance that is written by a title company to protect the property owner against loss if the title is imperfect is known as: a. warranty insurance. b. liability insurance. c. title insurance. d. homeowner's insurance.

c (p. 106)

Title to real property is transferred from one person to another by use of a legal document called a: a. mortgage. b. recording. c. deed. d. title insurance.

c (p. 106)

The effect of the Garn-St. Germaine Bill was to: a. protect the modern role of the states. b. create an adverse effect of federal regulation. c. transfer a part of the property owner's rights to the lender. d. transfer a part of the buyer's rights to the state.

c (p. 112)

A creditor is given the right to have the security property sold to satisfy the debt if the debtor fails to pay the debt according to the terms of the agreement. This is done with a: a. deed of reconveyance. b. power of sale. c. security instrument. d. title of theory.

c (p. 121)

Prime rate refers to: a. the most popular rate. b. the best rate available with points purchased. c. the bank's lowest rate. d. the bank's highest rate.

c (p. 17)

A fiduciary is: a. a person who is a lawyer. b. a person who is a lender. c. a person who has a financial trust. d. none of the above.

c (p. 3)

When prices begin to fall and production tapers off, the period is called a: a. low economy. b. seller's market. c. buyer's market. d. balanced market.

c (p. 31)

The role of FNMA (Fannie Mae) was further expanded in 1970 with the passage of the: a. Federal National Mortgage Act. b. Urban Development Act. c. Emergency Home Finance Act. d. none of the above.

c (p.39)

A subordination clause is most often used for:

construction loans

The interest rate stated in the promissory note is called the:

coupon rate/nominal rate.

A Quitclaim Deed: a. contains no warranties. b. relinquishes any interest in a property. c. is often used to remove items from public record. d. all of the above.

d (p. 107)

A deed most often used to transfer real estate to children or other loved ones is called a: a. tax deed. b. deed of trust. c. quitclaim deed. d. gift deed.

d (p. 107)

A declaration of default is prepared by a: a. tenant. b. sheriff. c. borrower. d. lender.

d (p. 125)

In the event of a default, a creditor or seller may declare the entire outstanding balance immediately due and payable with a(n): a. quiet title. b. prepayment clause. c. due-on-sale clause. d. acceleration clause.

d (p. 132)

In alternative financing, "one point" is equal to:

1% of the loan amount

A private mortgage insurer usually requires how many months' mortgage payments in reserve?

2

A borrower who has a 90% LTV ARM loan at 3.5% initial interest with a 2% annual interest rate cap and a 5% lifetime cap must qualify at:

5.5%

When comparing recent sales of like properties, the sale should be recent, within the past:

6 months

ARM mortgage payment caps are usually limited by lenders to an annual increase of:

7.5%

A "due-on-sale" clause in a loan allows: a. the lender to declare the entire loan balance due immediately. b. the lender to declare foreclosure on a property. c. the lender to negotiate new terms on a loan. d. the lender to declare a trustee's sale.

a (p. 133)

A subordination clause is most often used for: a. construction loans. b. refinancing loans. c. loans for open land. d. loans for public buildings.

a (p. 134)

Usury is: a. an interest payment in excess of the legally permitted rate. b. a form of personal property. c. a person who has a financial trust. d. an interest in real estate or real property.

a (p. 5)

An underwriter: a. makes loans based on assessment of risk. b. makes loans based on assessment of net worth. c. denies loans based on FICO scores. d. none of the above.

a (p. 6)

Ownership of the physical land itself is known as: a. real estate. b. leasehold estate. c. leased fee estate. d. reversionary estate.

a (p.105)

A real estate cycle refers to the real estate market's reaction to the forces of: a. supply and demand. b. war and peace. c. give and take. d. deposits and withdrawals.

a (p.27)

When the government is forced to borrow money, making less money available for construction and home loans, it is called: a. deficit spending. b. government spending. c. predatory loan practices. d. disintermediation.

a (p.35)

If a buyer does not have enough money for a 20% down payment for a conventional loan, some options include:

a down payment of 10% with a conventional loan up to 80% and the seller carrying a second mortgage. a 90% conventional loan with a 10% down payment.

A 5-year Call Provision means:

a large balloon payment is due in 5 years

A clause in a finance instrument that limits a borrower's right to transfer the property without the lender's permission is called a(n):

alienation clause

An order to cease and desist is known as a(n):

injunction.

Finance charges include:

interest charges/discount points.mortgage insurance fees.

Ethics differs from law in that ethics:

is what is right

A declaration of default is prepared by a:

lender

Private mortgage insurance protects the:

lender

A "due-on-sale" clause in a loan allows:

lender to declare the entire loan balance due immediately upon transfer of title

Which of the following is an advantage of having a 15-year mortgage?

lower payments Home ownership Lower fixed interest rates

Borrowers seeking conventional loans with a larger LTV than the traditional ratio are required to:

obtain private mortgage insurance.

In a foreclosure, a judge's order is called an:

order of execution

The effective yield on a loan is referred to as:

the annual percentage rate (APR)

A gross rent multiplier helps an appraiser to determine:

the income approach to a property's value

In valuing a property, the most easily understood approach is called:

the market approach

The Loan Estimate form must provide:

the name and address of the creditor. the title "LoanEstimate". a statement of "Save this Loan Estimate to compare with your Closing Disclosure".

The comparative property sales that appraisers actually use are:

those properties that have closed escrow

The main purpose of the Home Mortgage Disclosure Act is:

to expose incidents of redlining

An out-of-court sale or auction initiated at the direction of a beneficiary is called a:

trustee's sale

The Truth in Lending Law requires: a. borrowers to be honest in their dealings. b. each lender to form a federal open market committee. c. lenders to give borrowers the lowest interest rate. d. lenders to inform borrowers of the total costs of obtaining a loan.

d (p. 18)

The four phases of the business cycle are: a. peak, expansion, bottom, recovery. b. peak, depression, bottom, expansion. c. trough, recession, bottom, recovery. d. peak, recession, bottom, recovery.

d (p. 27)

In a seller's market: a. supply exceeds demand. b. demand exceeds expectations. c. home prices decline. d. none of the above.

d (p. 31)

Predatory loan practices include: a. fraud. b. usury. c. deception. d. all of the above.

d (p. 35)

Strictly enforced zoning and private restrictions:

do much to promote conformity are a major consideration for appraisers

According to Reg. Z, Triggers include:

down payment interest rate. number/ dollar amount of payments.

Alternative financing programs are popular:

during times of high interest rates

A permanent loss of value to a property caused from factors outside the property itself is known as:

economic obsolescence

Negotiable instruments are promissory notes that are:

freely transferable

Good ethics leads to:

happy clients. referrals.more income for you.

In most cases, which type of obsolescence is curable?

Funtional Physical

Usury laws in the United States limit: a. interest rates. b. loan amounts. c. title insurance amounts. d. all of the above.

a (p. 111)

A scheme where the property and borrower are non-existent is referred to as a(n):

Air Loan Fraud Scheme

Lending in the absence of discrimination based on race, sex, color, religion, national ancestry, marital status, or handicap is known as:

Fair Lending

The act that establishes uniform standards for credit reporting and strengthens consumer protection against identity theft is known as the:

Fair and Accurate Credit Transaction Act (FACTA).

The Closing Disclosure Form integrates and replaces the:

HUD-1 form/ Final TILA Disclosure Form

The TRID rule does NOT apply to:

Home Equity Lines of Credit HELOCsreverse mortgages/loans secured by a mobile home.

The act that requires lenders, mortgage brokers, or servicers of home loans to provide borrowers with the pertinent and timely disclosure of the nature and costs of the real estate settlement process is known as the:

Real Estate Settlement Procedures Act (RESPA)

Any person who receives or represents to the public that he or she will for compensation assist an applicant in obtaining a residential mortgage loan is defined as a:

Residential Mortgage Loan Originator

In a foreclosure, a judge's order is called an: a. order of execution. b. order of disposition. c. order of redemption. d. none of the above.

a (p. 128)

A core area containing a substantial population nucleus of 50,000 or more inhabitants is known as a:

Standard Metropolitan Statistical Area

In the event of a default, a creditor or seller may declare the entire outstanding balance immediately due and payable with a(n):

acceleration clause

The degree of risk in a real estate loan: a. can be controlled by qualifying a buyer and a property before a loan is made. b. refers to the likelihood of default by the borrower. c. refers to the ability of the lender to recover loan proceeds through foreclosure. d. all of the above.

d (p. 37)

A bond is a(n) a. tax lien. b. ownership document. c. form of usury. d. debt instrument.

d (p. 8)

The requirement that all pertinent information about a property or a loan be provided to enable a consumer to make informed choices is referred to as:

disclosure

In a promissory note, the borrower is called the:

maker

The intentional misrepresentation or omission of material facts by applicants to improperly influence a mortgage loan lender is is referred to as:

mortgage fraud

Another term used to describe private mortgage insurance is:

mortgage insurance premium

When minimum monthly payments result in unpaid interest that is added to the loan balance, it is called:

negative amortization

How many days prior to consummation can a revised Loan Estimate generally be provided to the borrower?

no later than 7 days prior to consummation.

A fixed-rate loan that gives the borrower a limited opportunity to reduce the interest rate without paying refinancing costs is called:

reduction option mortgage.

A fixed-rate mortgage:

remains at the same rate for the life of the loan.

A creditor is given the right to have the security property sold to satisfy the debt if the debtor fails to pay the debt according to the terms of the agreement. This is done with a:

security instrument