Chapter 11A Engrade Practice Quiz

A building was sold for $115,000. Down payment was made in the amount of $15,000 and deposited in escrow. The buyer obtained a new loan for the balance of the purchase price. The lender charged two discount points. What was the total amount charged to the buyer for points in this purchase? A. $2,000 B. $2,300 C. $3,000 D. $14,375

A

A homebuyer recently financed his first home with a fixed-rate conventional loan. The type of interest he will pay over the life of the loan is probably: A. simple interest B. variable interest C. compound interest D. discounted interest

A

A mortgagor is the one who: A. gives the mortgage B. holds the mortgage C. provides the mortgage funds D. forecloses on the mortgage

A

Andy purchased a new home for $180,000. He paid 20% down and financed the balance at 9% for 30 years. Two discount points are charged. How much money will Andy actually pay at closing for the two discount points? A. $2,880 B. $3,600 C. $1,800 D. $3,100

A

Pledging property as security for repayment of a loan without giving up possession is known as: A. hypothecation B. defeasance C. amortization D. alienation

A

The purpose of a mortgage is to: A. provide security for the loan B. convey title of the property to the lender C. restrict the borrower's use of the property D. create a lien on the property

A

Under a contract for deed, the title to the property is held by the: A. vendor B. vendee C. trustor D. trustee

A

A lender is charging a borrower 6% fixed interest rate and 4 discount points. What is the yield to the investor? A. 6¼% B. 6½% C. 5½% D. 5¾%

B

The borrower utilizing a trust deed is best referred to as the: A. beneficiary B. trustor C. trustee D. mortgagor

B

The defeasance clause in a deed of trust requires the trustee in a specified situation to execute: A. an assignment of mortgage B. a deed of reconveyance C. a satisfaction of mortgage D. a partial release agreement

B

The loan amount expressed as a percentage of the value of the real estate offered as collateral is the: A. amortization ratio B. loan-to-value ratio C. debt-to-equity ratio D. capitalization rate

B

The right a grantor has to regain property ownership by paying the debt after a foreclosure sale is called: A. equity right of redemption B. statutory right of redemption C. reversion D. recapture

B

When a borrower makes regular interest payments to the lender in a construction loan and at the end of the loan must repay the entire loan balance, the term that best describes this type of a loan is: A. amortized B. term C. blanket D. negative amortization

B

Which of the following statements is/are true if a buyer purchases property subject to the seller's loan and then defaults on the loan? l. The buyer is personally liable for the underlying debt. ll. The seller remains personally liable for the underlying debt. A. l only B. ll only C. Both l and ll D. Neither l nor ll

B

A contract for deed provides for the: A. sale of unimproved land only B. sale of real property under an option agreement C. conveyance of legal title at a future date D. immediate transfer of reversionary interests

C

A homebuyer financed his home five years ago with a high loan-to-value, fixed-rate loan. Due to a job transfer, the owner must move, but his home has suffered significant depreciation in value since purchase. Which of the following would be the least acceptable contractual obligation to handle the disposition of the property? A. ask the lien holder to participate in a short sale transaction B. utilize other assets to make up the shortfall between the outstanding mortgage loan balance and the proceeds C. abandon the house and stop making the payments D. convert the house into a rental property and use the rent to make the mortgage payments

C

An existing mortgage loan can have its lien priority lowered through the use of a: A. hypothecation agreement B. satisfaction of mortgage C. subordination agreement D. reconveyance of mortgage

C

Bill and Betty just received $25,000 profit from the sale of their home. They are in the process of buying a new home for $185,500 with an 80% LTV ratio. The lender is charging the normal loan origination fee and is lending the money at 1.5 discount points. Bill and Betty pay an attorney $400 to handle the closing, and they must also pay for the excise tax. How much money will the lender be paid in fees? A. $1,484 B. $2,226 C. $3,710 D. $41,581

C

Gary bought a house for $180,000 with an 85% LTV ratio. The term of the loan is 30 years at a 7% rate of interest. It will take a loan factor of 6.65 per 1,000 to amortize the loan. The annual real property taxes are estimated to be $996. The annual premium for the homeowner's policy is estimated to be $480. What is the monthly PITI? A. $1,017.45 B. $1,100.45 C. $1,140.45 D. $1,320.00

C

In a title state, what is the process for initiating a foreclosure? A. the filing of a lawsuit by the mortgagee B. the filing of a lawsuit by the trustee C. the beneficiary instructing the trustee to deliver proper notices and set a sale date D. the trustee instructing the beneficiary to deliver proper notices and set a sale date

C

The borrower utilizing a mortgage document is known as the: A. vendee B. mortgagee C. mortgagor D. beneficiary

C

The lender is willing to make an 80% loan on the purchase of a home. The home is listed at $190,000. The purchase price is $175,000, and the appraised value of the home is $180,000. How much is the buyer's down payment? A. $36,000 B. $40,000 C. $35,000 D. $38,000

C

The primary obligation of a borrower under a promissory note that is signed in regard to real property is to: A. keep the property insured B. obtain permission from the lender prior to any improvements C. pay the debt D. follow certain procedures regarding the collateral in the event of default

C

How many discount points would the lender need to charge if the lender wishes to increase the yield on the loan from 9% to 10.25%? A. Two points B. Eight points C. Six points D. Ten points

D

If the lender is not paid according to the terms of a promissory note and they hold a security interest in the property through a mortgage or trust deed, which of the following options may the lender pursue? I. Renegotiate the terms and conditions of the promissory note with the borrower II. Foreclose on the property III. File for a deficiency judgment after the foreclosure if state law permits A. l only B. ll only C. Both l and ll D. I, II and III

D

If the monthly interest payment at 6% is $1,050, the principal amount of the loan is: A. $63,000 B. $75,600 C. $126,000 D. $210,000

D

The clause in a deed of trust or mortgage that permits the lender to declare the entire unpaid balance immediately due and payable upon default by the borrower is the: A. alienation clause B. escalator clause C. forfeiture clause D. acceleration clause

D

When a mortgage loan has been paid in full, it is important for the borrower to be sure that: A. the paid note is placed in a safe deposit box B. a deed of partial reconveyance is obtained C. the paid mortgage is returned to the seller D. the satisfaction of mortgage is recorded

D