Chapter 12 Quiz
Borrowers can elect whether to have FHA or PMI on most mortgages.
False
Both FHA and VA operate under an entitlement program.
False
Currently, the contract rate on FHA loans is set by the Secretary of HUD and is generally less than the rate on similar conventional loans.
False
Entitlement is restored to a qualified veteran when the mortgage is either repaid in full or assumed by a new buyer.
False
Historically the VA has used an appraisal to decide whether to take title to a property in foreclosure. Today, however, it is standard procedure for the VA to take title when a property goes into foreclosure
False
Judicial foreclosure allows the court to transfer title from the borrower to the lender without having a sale of the property.
False
Since FHA insurance reduces for the lender the risk associated with default by the borrower, the insurance premium is paid by the lender.
False
The VA guarantees both the lender and the borrower against losses.
False
Title insurance insures against losses due to eminent domain.
False
Title insurance specifically covers losses caused by events that occur after the payment of the premium.
False
Under the current rules, the FHA annual insurance premium must be paid for the entire life of the loan regardless of the down payment.
False
Whereas VA loans are limited by the amount of entitlement, FHA loans have no limit on the amount that can be insured. Group of answer choices
False
A power-of-sale foreclosure allows a public sale of the property without a court order.
True
Equitable right of redemption is the right to reclaim the property before the foreclosure sale.
True
Funds for making FHA loans are provided by local FHA-approved lenders.
True
Private mortgage insurance (PMI) insures the top portion of the loan, allows the insurer to pay the claim and take title to the property, and is provided by private insurers on conventional loans.
True
The VA guarantee is a partial insurance program, whereas the FHA is a full insurance program.
True
The funding fee charged on a VA loan varies with the down payment
True
The interest rate charged on VA loans is currently allowed to float with the market and is no longer set by the Director of the VA.
True
With a VA loan, it is possible to have a release of liability without a restoration of entitlement.
True