Chapter 6 QUIZ

A borrower and seller have agreed to split the discount points. The sale price of the property was $125,000 and the borrower secured a 75% loan. If the lender charged four discount points and a one percent origination fee, how much did the borrower and the seller each pay?

$1,875

If a buyer of an $185,000 home obtains a $150,000 mortgage with 4 points, how much will the lender charge at closing?

$6,000

From which of the following would a borrower most likely obtain a residential real estate mortgage loan?

A commercial lender

A borrower obtained a $7,000 second mortgage loan for five years at 6 percent interest per annum. Monthly payments were $50. The final payment included the remaining outstanding principal balance. What type of loan is this?

A partially amortized loan

Danni has owned her house for over 50 years. It has fallen into disrepair but, because she lives on a fixed income, she does not have the money to make the needed repairs. She has a considerable amount of equity in the house. What type of loan would probably best suit her needs?

A reverse mortgage

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 is what clause?

Acceleration

Which of the following normally purchases mortgages in the secondary mortgage market?

Ginnie Mae

When compared with a 30-year payment period, taking out a loan with a 20-year payment period would result in all of the following EXCEPT:

Greater impound amounts

The FHA:

Insured loans

Which of the following pairs of terms is considered synonymous?

Interim financing and construction loan

Illinois is most accurately referred to as what type of mortgage theory state?

Intermediate

The type of mortgage loan that uses both real and personal property as security is a:

Package mortgage

A person who assumes an existing mortgage loan is:

Personally responsible for paying the principal balance

Fannie Mae, Ginnie Mae, and Freddie Mac have in common the purpose of:

Purchasing existing mortgage loans

The purpose of the Real Estate Settlement Procedures Act (RESPA) is to:

See that the buyers and sellers know all of their settlement costs

A real estate loan payable in periodic installments that are sufficient to pay the principal in full during the term of the loan is called a(n):

amortized loan.

What type of loan allows for the release of a portion of the property as the loan is paid down:

blanket loan.

The Truth-in-Lending Law, implemented by Regulation Z, sets forth certain requirements regarding loans to individuals for all of the following purposes EXCEPT loans for:

business use.

In a sale-and-Lease back arrangement the:

buyer becomes the lessor

The type of loan that will MOST LIKELY have the lowest loan-to-value ratio is a:

conventional loan without PMI.

A land contract provides for the:

conveyance of legal title at a future date

The clause in a mortgage instrument that would prevent the assumption of the mortgage by a new purchaser is a(n):

due-on-sale clause.

The seller agrees to sell the house to the buyer for $200,000. The buyer was unable to qualify for a mortgage loan for this amount so the seller and buyer enter into a contract for deed. The interest the buyer has in the property under a contract for deed is:

equitable title

A mortgagor is the one who:

gives the mortgage

Which of the following would NOT be associated with a mortgage?

grantor

The pledging of property as security for payment of a loan is:

hypothecation.

A promissory note:

is the primary evidence of a debt

A borrower has secured an FHA insured loan. This means that the FHA will insure which of the following against a possible loss?

lender

The finance fee charged by the lender to make the loan is a(n):

loan origination fee.

Discount points charged on a VA guaranteed mortgage loan can be paid by any of the following EXCEPT the:

mortgage lender.

In a graduated payment loan:

mortgage payments increase.

Under the lien theory, the equitable title to the property is held by the:

mortgagee

One of the ways lenders increase their revenue is by servicing loans. All of the following are activities of servicing loans EXCEPT:

renegotiating interest rates.

Laura has just made the final payment on her home mortgage to her lender. There will still be a lien on her property until the lender records a(n):

satisfaction of mortgage.

An existing mortgage loan can have its lien priority lowered through the use of a(n):

subordination agreement

In absence of an agreement to the contrary, the mortgage having priority will be the one:

that was recorded first.

A lender will take certain factors into consideration when deciding whether to grant a borrower a mortgage loan. All of the following are legitimate factors EXCEPT:

the marital status of the borrower.

A buyer does not have to be a veteran to assume a VA loan. True or false?

true

Charging more interest than is legally allowed is known as:

usury

An FHA-insured mortgage loan would MOST LIKELY be obtained from which of the following?

Any qualified lending institution

Which of the following, standing alone, would be a legal way to advertise loan terms?

Assumable mortgages

A developer had a mortgage loan on his entire housing development. When he sold a lot to a buyer, he was able to deliver title to that lot free of the mortgage lien by obtaining a partial release. What type of loan did the developer have?

Blanket mortgage

The interest in a property held by the owner in excess of any liens against it is called:

Equity

For purposes of mortgage foreclosures, Illinois is classified as what type of state?

Judicial foreclosure

The amount of a loan expressed as a percentage of the value of the real estate offered as collateral is the:

Loan-to-value ratio

The principal distinction between the primary mortgage market and the secondary mortgage market is in the:

Origination versus the purchase of mortgage loans

Illinois statutory usury ceiling for real estate financing is:

There is no ceiling

Under an installment contract, the title to the property is held by the:

Vendor

If a property sold as a mortgage foreclosure does not sell for an amount sufficient to satisfy the outstanding mortgage debt, the mortgagor may be responsible for:

a deficiency judgment.

When a mortgage loan has been paid in full, it is important for the borrower to be sure that:

a satisfaction of mortgage is recorded.

The type of real estate loan that allows the lender to increase the outstanding balance of a loan up to the original sum in the note while advancing additional funds is the:

open-end mortgage.

Mortgage lenders want assurance that future real estate taxes will be paid. The most common way to do this is to require the borrower to:

pay into an impound account.

A lender may protect its interest in a mortgage loan by obtaining additional security from:

private mortgage insurance.

The purpose of a mortgage is to:

provide security for the loan.

An extension of credit from a seller to a buyer to allow the buyer to complete the transaction is called a:

purchase money mortgage.

Regulation Z applies to:

real estate sales agreements.