REE3043 Exam 2 Chapter 9

Assume that an individual puts $10,000 into a savings account that pays 3% interest compounded monthly with the intent to withdraw the balance in 5 years to buy a car. If he does not make any further deposits over this period, how much will the individual be able to put towards his purchase? A. $10,125.63 B. $11,592.74 C. $11,616.17 D. $58,916.03

$11,616.17

Suppose that a tenant is interested in renting out a two-bedroom apartment for $1000 a month for the next year. While the tenant requires rent to be paid at the beginning of the month, he will not be depositing the rental check into a local savings account until the end of each month. If the annual interest that the tenant can earn on this account is 5% and interest is compounded monthly, how much will the tenant have in his savings account at the end of the year? A. $12,278.86 B. $12,613.94 C. $13,330.02 D. $15,917.13

$12,278.86

Assume that a piece of land is currently value at $50,000. If this piece of land is expected to appreciate at an annual rate of 5% per year for the next 20 years, how much will the land be worth 20 years from now? A. $100,898.99 B. $112,633.09 C. $123,860.81 D. $132,664.89

$132,664.89

Given the following information on a fixed-rate loan, determine the maximum amount that the lender will be willing to provide to the borrower. Loan Term: 30 years, Monthly Payment: $800, Interest Rate: 6%. A. $6,707 B. $9,295.15 C. $13,333 D. $133,433

$133,433

Suppose an investor deposits $2500 in an interest-bearing account at her local bank. The account pays 2.5% interest compounded annually. If the investor plans on withdrawing the original principal plus accumulated interested at the end of 7 years, what is the total amount that she should expect to receive assuming interest rates do not change? A. $2,971.71 B. $2,974.89 C. $3,532.43 D. $11,920.93

$2,971.71

Given the following information on an interest-only mortgage, calculate the monthly mortgage payment. Loan amount: $56,000, Term: 15 years, Interest Rate: 7.5%. A. $169.13 B. $350 C. $519.13 D. $4,200

$350

Certain closing costs will be prorated to account for the period of time during which the seller occupied the house. If a transaction is scheduled to close on May 17, 136 days into a 365-day year, calculate the amount that the buyer will be credited if the particular closing cost in question is estimated to be $1000 for the entire year. A. $182.19 B. $372.60 C. $624.66 D. $1000

$372.60

Assuming that an investor requires a 10% annual yield over the next 12 years, how much would she be willing to pay for the right to receive $20,000 at the end of year 12? A. $6,053.91 B. $6,372.62 C. $62,768.57 D. $136,273.84

$6,372.62

Given the following information, calculate the balloon payment for a partially amortized mortgage. Loan amount: $84,000, Term to maturity: 7 years, Amortization Term: 30 years, Interest rate: 4.5%, Monthly Payment: $425.62. A. $9,458 B. $30,620 C. $73,103 D. $84,000

$73,103

Most real estate loans have a definite term to maturity, stated in years. The majority of home loans will typically have a term to maturity between

15 - 30 years

Most real estate loans have a definite term to maturity, stated in years. The majority of home loans will typically have a term to maturity between: A. 1-5 years B. 5-7 years C. 7-15 years D. 15-30 years

15-30 years

While a variety of loan terms are available in a lender's mortgage menu, the most common loan term on a level-payment mortgage is: A. 7 years B. 15 years C. 30 years D. 40 years

30 years

In ascertaining whether a borrower has the ability to pay off his loan over time, a mortgage bank may rely on calculating a total debt ratio as part of its underwriting process. Utilizing the following information, calculate the total debt ratio. Principle and interest: $635, Tax and insurance: $125, Car lease: $350, Gross monthly income: $2,500 A. 25.4% B. 30.4% C. 44.4% D. 53.2%

44.4%

Given the following information, calculate the lender's yield. Loan amount: $166,950, Term: 30 years, Interest rate: 8 %, Payment: $1,225.00, Discount points: 2. A. 7.7% B. 8.0% C. 8.2 % D. 10.0 %

8.2 %

The most internationally oriented index rate for adjustable rate mortgages is:

A LIBOR rate

A partially amortizing loan always will have

A balloon payment

Even after a property goes into foreclosure, it is still possible for the borrower to reclaim the property as long as he or she produces the outstanding mortgage balance and all foreclosure costs incurred to that point. In a state such as Georgia, this right only extends to the date of the foreclosure sale. When this occurs, this right is more commonly referred to as A) equity of redemption. B) statutory redemption. C) strategic default. D) substantive default.

A) equity of redemption.

With most standard home loans, the lender can hold the borrower personally liable in the event of a default. Such loans are commonly referred to as A) recourse loans. B) nonrecourse loans. C) conforming loans. D) nonconforming loans.

A) recourse loans.

In certain states, such as the state of Georgia, there is a temporary transfer of title to the lender at the time the mortgage loan is made. The borrower then would obtain the rights to the title once the loan has been repaid. These states are referred to as A) title theory states. B) lien theory states. C) conforming states. D) nonconforming states.

A) title theory states.

A special contract in which the borrower pledges the mortgaged property as security to the lender is commonly referred to as the: A. Mortgage (Deed of Trust) B. Listing Contract C. Note D. Assignment of Mortgage

A. Mortgage (Deed of Trust)

In certain states, such as the state of Georgia, there is a temporary transfer of title to the lender at the time the mortgage loan is made. The borrower then would obtain the rights to the title once the loan has been repaid. These states are referred to as: A. Title theory states B. Lien theory states C. Conforming states D. Nonconforming states

A. Title theory states

Assume that an individual has just lost his job and has been consistently late paying his bills. The bank recognizes deterioration in the individual's credit score and has notified him that he must pay his home equity line of credit in full. The mortgage clause that makes this possible is known as the: A. demand clause B. insurance clause  C. escrow clause D. exculpatory clause

A. demand clause

With most standard home loans, the lender can hold the borrower personally liable in the event of a default. Such loans are commonly referred to as: A. recourse loans B. nonrecourse loans C. conforming loans D. nonconforming loans

A. recourse loans

Ways that a lender may respond to a defaulted loan without resorting to foreclosure include all of the following except:

Accelerate the debt

If the lender in a standard first mortgage wishes to foreclose cost effectively, it is crucial to have which clause in the mortgage:

Acceleration clause

In a mortgage loan, the borrower always creates two documents: a note and a mortgage. Which of the following pieces of information is provided in the *mortgage?*

An unambiguous description of the property that is being pledged as collateral for the loan.

Required by the Truth-in-Lending Act, the annual percentage rate (APR) is reported by the lender to the borrower on virtually all U.S. home mortgage loans. The APR accounts for all of the following EXCEPT: A. All finance charges in connection with the loan, such as discount points, origination fees, and underwriting fees. B. All compensation to the originating brokers if one was used by the borrower. C. Any prepayment of principal to be made on the loan. D. Premiums for required forms of insurance.

Any prepayment of principal to be made on the loan.

Known popularly by its section in the Federal Bankruptcy Code, which of the following types of bankruptcy is the traditional form of bankruptcy wherein the court simply liquidates the assets of the debtor and distributes the proceeds to creditors in proportion to their share of total claims? A) Chapter 1 bankruptcy B) Chapter 7 bankruptcy C) Chapter 11 bankruptcy D) Chapter 13 bankruptcy

B

Known popularly by its section in the Federal Bankruptcy Code, which of the following types of bankruptcy is the traditional form of bankruptcy wherein the court simply liquidates the assets of the debtor and distributes the proceeds to creditors in proportion to their share of total claims? A) Chapter 1 bankruptcy B) Chapter 7 bankruptcy C) Chapter 11 bankruptcy D) Chapter 13 bankruptcy

B) Chapter 7 bankruptcy

In a mortgage loan, the borrower always creates two documents: a note and a mortgage. Which of the following pieces of information is provided in the mortgage? A) whether the borrower has the right to prepay the principal during the term of the loan, and any prepayment penalties that would be incurred as a result B) an unambiguous description of the property that is being pledged as collateral for the loan C) how the interest rate is to be computed D) whether the borrower is released from liability for fulfillment of the contract

B) an unambiguous description of the property that is being pledged as collateral for the loan

In certain states, such as the state of Florida, the transfer of title to the lender does not occur until the borrower defaults. These states are referred to as A) title theory states. B) lien theory states. C) conforming states. D) nonconforming states.

B) lien theory states.

In addition to numerous congressional acts that focus more on national regulation, laws have been created that affect the practice of home mortgage lending at a community or neighborhood level. For example, laws have been enacted to prevent lenders from avoiding certain neighborhoods without regard to the merits of the individual loan applications, a practice more commonly referred to as A) rescinding. B) redlining. C) assuming. D) holdout.

B) redlining.

Even after a property goes into foreclosure, it is still possible for the borrower to reclaim the property as long as he or she produces the outstanding mortgage balance and all foreclosure costs incurred to that point. In a state such as Florida, this right may even extend beyond the date of the foreclosure sale. When this occurs, this right is more commonly referred to as A) equity of redemption. B) statutory redemption. C) strategic default. D) substantive default.

B) statutory redemption.

Most adjustable rate mortgage (ARM) loans have been marketed with a temporarily reduced interest rate commonly referred to as a A) rate cap. B) teaser rate. C) payment cap. D) prepayment rate.

B) teaser rate.

The difference between judicial foreclosure and power of sale in the treatment of defaulted mortgages can be significant. All of the following statements regarding power of sale are true except A) the power of sale treatment is faster than judicial foreclosure. B) the foreclosed property is typically sold through a public auction administered by the court. C) it is less costly for power of sale to be employed than judicial foreclosure. D) typically, lenders must give proper legal notice to the borrower, advertise the sale property, and allow a required passage of time before the sale.

B) the foreclosed property is typically sold through a public auction administered by the court.

Even after a property goes into foreclosure, it is still possible for the borrower to reclaim the property as long as they produce the outstanding mortgage balance and all foreclosure costs incurred to that point. In a state such as Florida, this right may even extend beyond the date of the foreclosure sale. When this occurs, this right is more commonly referred to as: A. Equity of redemption B. Statutory redemption C. Strategic default D. Substantive default

B. Statutory redemption

The difference between judicial foreclosure and power of sale in the treatment of defaulted mortgages can be significant. All of the following statements regarding power of sale are true EXCEPT: A. The power of sale treatment is faster than judicial foreclosure B. The foreclosed property is typically sold through a public auction administered by the court. C. It is less costly for power of sale to be employed than judicial foreclosure. D. Typically, lenders must give proper legal notice to the borrower, advertise the sale property, and allow a required passage of time before the sale.

B. The foreclosed property is typically sold through a public auction administered by the court.

Congress has enacted a number of regulations that have established criteria for evaluating home loan applicants and mandating disclosures in the origination of home loans. Which of the following congressional acts requires important disclosures concerning the cost of consumer credit, including the computation of the annual percentage rate (APR)? A. Equal Credit Opportunity Act (ECOA) B. Truth-in-Lending Act (TILA) C. Real Estate Settlement Procedures Act (RESPA) D. Home Ownership and Equity Protection Act (HOEPA)

B. Truth-in-Lending Act (TILA)

When a buyer acquires a property having an existing mortgage loan, a decision must be made as to whether or not the subsequent owner of the property can preserve the loan. If the buyer does not add his or her signature to the note, the buyer does not take on any personal liability. In this case, the buyer is said to: A. assume the old loan B. purchase the property subject to the existing loan C. obtain the property through the use of a contract for deed. D. foreclose on the property

B. purchase the property subject to the existing loan

In addition to numerous congressional acts that focus more on national regulation, laws have been created that affect the practice of home mortgage lending at a community or neighborhood level. For example, laws have been enacted to prevent lenders from avoiding certain neighborhoods without regard to the merits of the individual loan applications, a practice more commonly referred to as: A. rescinding B. redlining C. assuming D. holdout

B. redlining

A common risk that frequently interferes with a lender's efforts to work out a defaulted loan through either nonforeclosure means or foreclosure is:

Bankruptcy

Since the seller often has utilized the property for a portion of the year in which the transaction is being made, certain costs associated with the property will be prorated at the closing. All of the following items are subject to being prorated EXCEPT: A. Broker commission B. Prepaid rent C. Property tax D. Mortgage interest

Broker commission

Added to the index of the adjustable rate is a margin, which is the lender's markup. For standard adjustable rate mortgage (ARM) loans, the average industry margin has been stable at approximately A) 75 basis points. B) 175 basis points. C) 275 basis points. D) 375 basis points.

C) 275 basis points.

The risk of bankruptcy tends to travel with the risk of foreclosure since both can result from financial distress. Known popularly by its section in the Federal Bankruptcy Code, which of the following types of bankruptcy is a court-supervised workout for a troubled business? A) Chapter 1 bankruptcy B) Chapter 7 bankruptcy C) Chapter 11 bankruptcy D) Chapter 13 bankruptcy

C) Chapter 11 bankruptcy

A significant number of mortgage loans use adjustable interest rates, in which the interest rate of the loan is tied to an index rate that fluctuates over time. For income-producing property, the most common index rate is the A) one-year U.S. Treasury constant maturity rate. B) prime rate. C) London Interbank Offered Rate (LIBOR). D) cost-of-funds index.

C) London Interbank Offered Rate (LIBOR).

When a borrower defaults on the payment requirements of a loan, there are several options that the lender has at its disposal. When the lender allows the borrower simply to convey the property to the lender rather than pursuing a court supervised process of terminating all of the borrower's claims of ownership of the property, this is commonly referred to as: A. Bankruptcy B. Foreclosure C. Deed in lieu of foreclosure D. Equity right of redemption

C. Deed in lieu of foreclosure

For most mortgage loans on commercial real estate, the right of prepayment is constrained through a prepayment penalty. Which of the following types of prepayment penalties requires a borrower to provide the lender with some combination of U.S. Treasury securities that will serve to replace the cash flows of the loan being paid off? A. Yield-maintenance prepayment penalties B. Prepayment lockout C. Defeasance prepayment penalty D. Curtailment penalty

C. Defeasance prepayment penalty

Because the mortgage conveys a complex claim for a long period of time, clauses are included in anticipation of possible future complications. Which of the following clauses requires a borrower to make monthly deposits into an account in order to pay obligations such as property taxes, community association fees, or causality insurance premiums? A. Demand clause B. Insurance clause C. Escrow clause D. Exculpatory clause

C. Escrow clause

Foreclosure is considered the ultimate recourse of the lender because it allows the lender to bring about sale of the property to recover the outstanding indebtedness. All of the following statements regarding foreclosure are true EXCEPT: A. Foreclosure is a costly process for all parties involved. B. Only those claimants who are properly notified and engaged in the foreclosure suit can lose their claims to the property. C. When a lender forecloses on a property, it extinguishes all superior liens, bringing about a free and clear sale of the property. . D. The net recovery by a lender from a foreclosed loan seldom exceeds 80 percent of the outstanding loan balance and commonly is much less than this amount.

C. When a lender forecloses on a property, it extinguishes all superior liens, bringing about a free and clear sale of the property. .

From a home mortgage lender's perspective, which statement is true about the effect of bankruptcy upon foreclosure

Chapter 7 bankruptcy is the most "lender friendly" form

To finance property where either the borrower, the property, or both fail to qualify for the standard mortgage financing, a common non-mortgage solution is through the

Contract for deed

Certain mortgage loans contain a due-on-sale clause, which gives the lender the right to terminate the loan at sale of the property. Which of the following types of loans is the most likely to contain a due-on-sale clause?

Conventional home loan

Considered the most common type of home loan, which of the following refers to any standard home loan that is not insured or guaranteed by an agency of the U.S. government? A. Conventional home loan B. Federal Housing Administration loan C. Veterans Affairs loan D. Section 203 loan

Conventional home loan

Violations of the requirements of a note that do not disrupt the payments on the loan tend to be viewed as technical defaults. In practice, how many days must a payment be overdue in order for lenders to treat a default as serious (i.e., a substantive default)? A) 1 day B) 60 days C) 30 days D) 90 days

D) 90 Days

If a homeowner in mortgage distress owes more than the value of the home and is unable to make the loan manageable by refinancing or modifying the mortgage, the next recourse often is a short sale of the property. All of the following statements are true regarding a short sale except A) legal costs should be lower with a short sale than with foreclosure. B) a short sale usually enables a better sale price and a faster sale than foreclosure. C) a short sale is less damaging to the borrower's credit than a foreclosure, thereby enabling the borrower to be eligible for another mortgage loan sooner. D) a short sale relieves the seller of any other outstanding obligations on the home, such as owner association fees or a second mortgage.

D) a short sale relieves the seller of any other outstanding obligations on the home, such as owner association fees or a second mortgage.

Most real estate loans have a definite term to maturity, stated in years. The majority of home loans will typically have a term to maturity between A) one and five years. B) five and seven years. C) seven and fifteen years. D) fifteen and thirty years.

D) fifteen and thirty years.

The ability of homeowners to prepay the principal on their outstanding mortgage balance creates cash flow uncertainty for the lender. As a result, the lender may wish to prohibit prepayment on a mortgage loan for a specified period of time after its origination. This is accomplished through which of the following? A) defeasance B) yield maintenance provision C) demand clause D) lockout provision

D) lockout provision

When a borrower defaults on a mortgage loan, his or her credit record will be adversely affected. While borrowers can recover from this reduction in their credit score, if a default goes into the borrower's records it will remain for A) six months. B) one year. C) five years. D) seven years.

D) seven years.

It is possible to have a secured real estate loan without a mortgage through the use of a contract for deed. In contrast to the standard real estate sale, which of the following events occurs after the closing when dealing with a contract for deed? A) offer B) acceptance C) possession of the property passes to the buyer D) title to the property passes to the buyer

D) title to the property passes to the buyer

Most real estate loans have a definite term to maturity, stated in years. The majority of home loans will typically have a term to maturity between: A. 1-5 years B. 5-7 years C. 7-15 years D. 15-30 years

D. 15-30 years

If a homeowner in mortgage distress owes more than the value of the home, and is unable make the loan manageable by refinancing or modifying the mortgage, the next recourse often is a short sale of the property. All of the following statements are true regarding a short sale EXCEPT: A. Legal costs should be lower with a short sale than with foreclosure B. A short sale usually enables a better sale price and a faster sale than foreclosure C. A short sale is less damaging to the borrower's credit than a foreclosure, thereby enabling the borrower to be eligible for another mortgage loan sooner D. A short sale relieves the seller of any other outstanding obligations on the home, such as owner association fees or a second mortgage.

D. A short sale relieves the seller of any other outstanding obligations on the home, such as owner association fees or a second mortgage.

In an attempt to regulate home mortgage lending after the mortgage crisis of 2007, which of the following acts created an independent oversight agency tasked with the responsibility of overseeing and enforcing Federal consumer financial protection laws, enforcing anti-discrimination laws in consumer finance, restricting unfair, deceptive or abusive acts or practices, receiving consumer complaints, promoting financial education, and watching for emerging financial risks for consumers? A. Equal Credit Opportunity Act (ECOA) B. Truth-in-Lending Act (TILA) C. Real Estate Settlement Procedures Act (RESPA) D. Dodd-Frank Wall Street Reform and Consumer Protection Act

D. Dodd-Frank Wall Street Reform and Consumer Protection Act

It is possible to have a secured real estate loan without a mortgage through the use of a contract for deed. In contrast to the standard real estate sale, which of the following events occurs after the closing when dealing with a contract for deed? A. Offer B. Acceptance C. Possession of the property passes to the buyer D. Title to the property passes to the buyer

D. Title to the property passes to the buyer

In a mortgage agreement, the borrower conveys to the lender a security interest in the mortgage property. The lender, i.e. the individual who receives the mortgage claim, is known as the: A. broker B. mortgagor C. agent D. mortgagee

D. mortgagee

Standard mortgage loans require monthly payments typically composed of two components: interest and principal repayments. When scheduled mortgage payments are insufficient to pay all of the accumulating interest, causing some interest to be added to the outstanding balance after each payment shortfall, the loan is said to be: A. fully amortizing B. partially amortizing C. nonamortizing D. negatively amortizing

D. negatively amortizing

With what type of loan security arrangement is the deed held by a neutral party and returned upon payment of the mortgage in full?

Deed of trust

A lender may reserve the right to require prepayment of a loan at any time they see fit through a(n):

Demand clause

The characteristics of a borrower than can be considered by a lender in a mortgage loan appreciation are limited by the:

Equal Credit Opportunity Act

Which of these points in a mortgage loan would be addressed in the mortgage (possibly in the note as well)

Escrows

Blockbusting, which involves persuading an individual to sell her home by telling her that minority groups are moving into the neighborhood, is one form of discrimination in housing that is prohibited by which of the following acts of Congress? A. Riegle Community Development and Regulatory Improvement Act B. Secure and Fair Enforcement for Mortgage Licensing Act C. Fair Housing Act (Title VIII of the Civil Rights Act) D. Equal Credit Opportunity Act

Fair Housing Act (Title VIII of the Civil Rights Act)

In acting as an agent for another person, the broker carries several special responsibilities, which by law must be adhered here to throughout the transaction process. These responsibilities constitute what is commonly referred to as a: A. Subagency relationship B. Dual agency relationship C. Fiduciary relationship D. Open listing relationship

Fiduciary relationship

Which of the following types of institutions has historically been the largest purchaser of residential mortgages? A. Commercial banks B. Savings and Loans C. Government sponsored enterprise D. Mortgage banking companies

Government sponsored enterprise

Foreclosure tends to be quickest in states that:

Have power of sale

The element of an adjustable interest rate that is the "moving part" is the:

Index

It would be hard to overstate the importance of the Federal Housing Administration (FHA) in the history of housing finance. Which of the following instruments created by the FHA is considered the single most important financial instrument in modern housing finance? A. Level-payment, fully amortizing loan B. Adjustable rate mortgage C. Partially-amortizing balloon loan D. Subprime mortgage loan

Level-payment, fully amortizing loan

The ability of homeowners to prepay the principal on their outstanding mortgage balance creates cash flow uncertainty for the lender. As a result, the lender may wish to prohibit prepayment on a mortgage loan for a specified period of time after its origination. This is accomplished through which of the following? a. Defeasance b. Yield Maintenance Provision c. Demand Clause d. Lockout Provision

Lockout Provision

A significant number of mortgage loans use adjustable interest rates, in which the interest rate of the loan is tied to an index rate that fluctuates over time. For income-producing property, the most common index rate is the:

London Interbank Offered Rate (LIBOR)

The emergence of mortgage securities propelled the development of mortgage companies, an entity significantly different from the thrifts and banks that previously dominated the mortgage landscape. Which of the following parties is responsible for providing mortgage origination services and initial funding within this new framework? A. Mortgage banker B. Mortgage broker C. Portfolio lender D. Security analyst

Mortgage banker

Which statement is correct about the right of prepayment of a home mortgage loan?

Most home mortgage loans have the right of prepayment without charge, but not all, and the borrower should check the loan carefully

Which of these aspects of a mortgage loan will be *addressed in the note* rather than in the mortgage?

Prepayment penalty

All 50 states have licensing laws that regulate persons and companies that engage in the brokerage business. Interpreting and enforcing state licensing laws falls under the responsibilities of which of the following parties? A. Broker B. Real estate commission C. National Association of Realtors D. Salesperson

Real estate commission

When a buyer of a property with an existing mortgage loan *acquires the property without signing the note for an existing loan* the buyer is acquiring the property:

Subject to the mortgage

A type of loan that has grown in volume in recent years which has raised concerns about predatory lending practices is the:

Subprime mortgage

When a party in a contract fails to perform (e.g. breach of contract, nonperformance, or default) the other party has a variety of remedies. All of the following are remedies that an aggrieved seller may pursue EXCEPT: A. Sue for damages. B. Retain the earnest money deposit as liquidated damages. C. Agree to rescission of the contract. D. Sue for specific performance

Sue for specific performance

The internal rate of return (IRR) and the net present value (NPV) are tools that are widely used in real estate investment and finance decision making. An investor would most likely pursue an investment if which of the following circumstances was true? A. The going-in IRR exceeds the investor's required rate of return. B. The going-in IRR is less than the investor's required rate of return. C. The NPV is negative. D. The NPV is equal to zero

The going-in IRR exceeds the investor's required rate of return.

When lenders charge discount points (prepaid interest) on a loan, what impact does this have on the loan's yield? A. The yield on the loan will increase. B. The yield on the loan will decrease. C. The yield on the loan will be unaffected. D. The yield on the loan automatically becomes zero.

The yield on the loan will increase.

The Truth in Lending Act gives a home mortgage borrower how long to rescind a mortgage loan?

Three days

The truth-in-lending act gives some mortgage borrowers how long to rescind a mortgage loan

Three days

In considering a three-year-one-year adjustable-rate mortgage (ARM), the interest rate will be fixed for how many years? A. One year B. Two years C. Three years D. Four years

Three years

It is possible to have a secured real estate loan without a mortgage through the use of a contract for deed. In contrast to the standard real estate sale, which of the following events occurs after the closing when dealing with a contract for deed? A. Offer B. Acceptance C. Possession of the property passes to the buyer D. Title to the property passes to the buyer

Title to the property passes to the buyer

The Real Estate Settlement Procedures Act (RESPA) is a federal law that requires federally chartered or insured lenders to provide buyers and sellers with information on all settlement costs. According to RESPA, loan closing information must be prepared on a special form know as the: A. Uniform Settlement Statement or HUD-1 form B. Good-faith estimate C. Settlement Costs and You booklet D. Certificate of occupancy

Uniform Settlement Statement or HUD-1 form

Any contract, whether it is for the sale of real estate or some other entity, must contain five basic elements. However, any contract for the sale of real estate must adhere to two additional requirements. Which of the following contract elements is an additional requirement that must be satisfied in a contract for sale of real estate that isn't necessarily a part of other contracts? A. Competent parties B. Consideration C. Offer and acceptance D. Written form

Written form

Real estate brokers serve as intermediaries by bringing buyers and sellers together in the real estate market. For this service, brokers are paid what is commonly referred to as a: A. commission B. licensing fee C. recovery fee D. listing fee

commission

Since investors prefer to have money now rather than later, money received next week, instead of today, is not worth as much to those receiving it. Therefore an adjustment to the prospective cash flows is required. This process is referred to as: A. compounding B. discounting C. amortizing D. hedging

discounting

The real estate settlement procedures act does which of these: a) requires the use of a standard settlement statement for a mortgage loan closing b) prohibits kickbacks between vendors of closing-related services and lenders c) requires that a borrower receive a good-faith estimate of closing costs shortly after a loan application d) requires that the borrower be able to inspect the closing statement a day before the actual closing e) all of the above

e) all of the above

Which of these statements is true about mortgage loans for income producing real estate: a) they usually are partially amortizing loans b) they often have a prepayment penalty c) they often are non-recourse loans d) they can be interest-only loans e) all of the above

e) all of the above

Throughout the process of originating and selling mortgages, mortgage companies face a number of risks. Therefore, it is important for a lending institution to evaluate the risks of mortgage loan default through a process commonly referred to as: A. mortgage fallout B. loan servicing C. warehousing D. loan underwriting

loan underwriting

One of the main distinctions between commercial mortgage loans and residential mortgage loans lies in the personal liability of the borrower. With residential loans, the lender can hold the borrower personally liable in the event of a default. Such loans are commonly referred to as: A. recourse loans B. nonrecourse loans C. conforming loans D. nonconforming loans

recourse loans

Risk is the possibility that actual outcomes will vary from what was expected when the asset was purchased. If investors require a higher rate of return for undertaking more risk, the underlying assumption is that investors are: A. risk neutral B. risk averse C. risk taking D. hedging risk

risk averse

Mortgage originators can either hold loans in their portfolios or sell them to investors. When a mortgage originator decides to sell mortgages to an institution, for example, this transaction occurs in what is commonly referred to as the: A. primary mortgage market B. secondary mortgage market C. over-the-counter market D. loan origination market

secondary mortgage market