Chapter 8
How many geographical districts are included in the federal reserve system...?
12
Promissory Note
A borrower's personal promise to pay a debt according to the agreed terms.
Alienation Clause
A clause in a contract giving the lender certain rights in the event of a sale or other transfer of mortgaged property.
Land Contract
A contract used in a sale of real property whereby the seller retains title to the property until all or a prescribed part of the purchase price has been paid.
Deed in Lieu of Foreclosure
A deed to real property accepted by a lender from a defaulting borrower to avoid the necessity of foreclosure proceedings by the lender.
Real Estate Settlement Procedures Act (RESPA)
A federal law requiring the disclosure to borrowers of settlement (closing) procedures and costs by means of a pamphlet and forms prescribed by the United States Department of Housing and Urban Development.
FIXED-RATE MORTGAGE
A fully amortizing loan in which the interest rate on the note remains the same throughout the term of the loan.
A mortgage creates which of the following...?
A lien on the property
Fixed-rate Mortgage
A mortgage in which the interest rate does not change.
Ginnie Mae
A nickname for the Government National Mortgage Association (GNMA), a U.S. government agency that purchases FHA and VA mortgages.
Foreclosure
A procedure whereby property pledged as security for a debt is sold to pay the debt in event of default in payments or terms.
Release Clause
A stipulation that upon the payment of a specific sum of money to the holder of a trust deed or mortgage, the lien of the instrument as to a specifically described lot or area shall be removed from the blanket lien on the whole area involved.
Assignment
A transfer by a person of that person's rights under a contract.
This refers to a condition in a real estate financing instrument giving the lender the power to declare all sums owed the lender immediately due and payable upon the happening of an event...?
Acceleration clause
Reserves
An accumulation of funds, collected by the lender from the borrower as part of each monthly mortgage payment, an amount allocated to pay property taxes and insurance when they are done.
PITI
An acronym denoting that a mortgage payment includes, principal, interest, taxes, and insurance.
Mortgage
An instrument recognized by law by which property is hypothecated to secure the payment of a debt or obligation; a procedure for foreclosure in event of default is established by statute.
A legal document by which a borrower pledges certain real property or collateral as guarantee for the repayment of a loan is referred to as a...?
Deed of trust
This Act prohibits discrimination in granting or arraigning credit on the basis of race, color, religion, national origin, sex, marital status, or age...?
Equal Credit Opportunity Act
A mortgage loan in which payments are insured by the Federal Housing Administration is known as a...?
FHA-insured loan
Which of the following operates in the secondary mortgage market...?
Fannie Mae Freddie Mac Ginnie Mae All of the above
The federal banking system of the United States is known as the...?
Federal Reserve System
A procedure whereby property pledged as security for a debt is sold to pay the debt in event of default in payments or terms is known as...?
Foreclosure
Subsidy Buydown
Funds provided usually by the builder or seller to temporarily reduce the borrower's monthly principal and interest payment.
Which of the following is a charge for the use of money...? Principal
Interest
This refers to an instrument recognized by law by which property is hypothecated to secure the payment of a debt or obligation...?
Mortgage
Usury
On a loan, claiming a rate of interest greater than that permitted by law.
Which of the following refers to a federal law requiring the disclosure to borrowers of settlement (closing) procedures and costs by means of a pamphlet and forms prescribed by HUD...?
RESPA
Buying back one's property after a judicial sale is known as...?
Redemption
Which of the following is not considered a violation of the ECOA...?
Refusing to lend to a minor
This refers to a stipulation that upon the payment of a specific sum of money to the holder of a trust deed or mortgage, the lien on the property shall be removed...?
Release clause
Funds provided usually by the builder or seller to temporarily reduce the borrower's monthly principal and interest payment is known as a...?
Subsidy buydown
Principle
The amount of money borrowed, or the amount of the loan.
Amortization
The liquidation of a financial obligation on an installment basis.
Truth in Lending
The name given to the federal statutes and regulations (Regulation Z) which are designed primarily to insure that prospective borrowers and purchasers on credit receive credit cost information before entering into a transaction.
Fannie Mae
The shortened name for the Federal National Mortgage Association (FNMA), a privately owned corporation that purchases FHA, VA, and conventional mortgages.
Assumption of Mortgage
The taking of a title to property by a grantee wherein the grantee assumes liability for payment of an existing note secured by a mortgage or deed of trust against the property, becoming a co-guarantor for the payment of a mortgage or deed of trust note.
Conforming Loan
Those loans processed on uniform loan forms according to FNMA/FHLMC guidelines.
When a deed of trust is used, who serves as a neutral third party to the borrower and lender...?
Trustee
One who borrows money from a trust deed lender is referred to as the...?
Trustor
Reverse Annuity Mortgage
Used by older people who need additional income and want to take advantage of the equity in their homes.
This refers to an interest rate on a loan that is greater than that permitted by law...?
Usury
This is a loan made to qualified veterans for the purchase of real property wherein the Department of Veteran's Affairs guarantees the lender payment of the mortgage...?
VA loan
Acceleration Clause
A condition in a real estate financing instrument giving the lender the power to declare all sums owing lender immediately due and payable upon the happening of an event, such as sale of the property, or a delinquency in the repayment of the note.
Judicial Foreclosure
A court proceeding requiring that property be sold to satisfy a mortgage lien.
Deed of Trust
A legal document by which a borrower pledges certain real property or collateral as guarantee for the repayment of a loan. It differs from the mortgage in a number of important respects. For example, instead of their being two parties to the transaction there are three. There is the borrower who signs the trust deed and who is called the trustor. There is the third, neutral party, to whom trustor deeds the property as security for the payment of the debt, who is called the trustee. And, finally, there is the lender who is called the beneficiary, the one who benefits from the pledge agreement in that in the event of a default the trustee can sell the property and transfer the money obtained at the sale to lender as payment of the debt.
Home Equity Loan
A loan against the equity in a home.
VA Loan
A loan made to qualified veterans for the purchase of real property wherein the Department of Veteran's Affairs guarantees the lender payment of the mortgage.
Purchase Money Mortgage
A mortgage given by a buyer to a seller to secure payment of all or part of the purchase price.
Balloon Mortgage
A mortgage in which the scheduled payment will not amortize the loan over the mortgage term; therefore, for the debt to be fully satisfied, a final payment called a balloon payment, larger than the uniform payments, is required.
FHA-insured Loan
A mortgage loan in which payments are insured by the Federal Housing Administration.
ADJUSTABLE RATE MORTGAGE (ARM)
A mortgage loan which bears interest at a rate subject to change during the term of the loan, predetermined or otherwise.
Adjustable Rate Mortgage (ARM)
A mortgage loan which bears interest at a rate subject to change during the term of the loan, predetermined or otherwise.
Conventional Loan
A mortgage securing a loan made by investors without governmental underwriting, i.e., which is not FHA insured or VA guaranteed. The type is customarily made by a bank or savings and loan association.
Freddie Mac
A nickname for the Federal Home Loan Mortgage Corporation (FHLMC), a corporation wholly owned by the Federal Home Loan Bank System that purchases FHA, VA, and Conventional mortgages.
INTEREST-ONLY MORTGAGE
A straight, non-amortizing loan in which the lender receives only interest during the term of the loan and principal is repaid in a lump sum at maturity.
This refers to a clause in a contract giving the lender certain rights in the event of a sale or other transfer of mortgaged property...?
Alienation clause
A transfer by a person of that person's rights under a contract is known as a...?
Assignment
When is an acceleration clause typically executed...?
At the sale of the property
This refers to a mortgage in which the scheduled payment will not amortize the loan over the mortgage term; therefore, for the debt to be fully satisfied, a final payment larger than the uniform payments is required...?
Balloon mortgage
When a deed of trust is used, the lender is referred to as the...?
Beneficiary
A mortgagor is also referred to as a...?
Borrower
Redemption
Buying back one's property after a judicial sale.
Loans processed on uniform loan forms according to FNMA/FHLMC guidelines are referred to as...?
Conforming loans
A mortgage securing a loan made by investors without governmental underwriting is referred to as a/an...?
Conventional loan
A deed to real property accepted by a lender from a defaulting borrower to avoid the necessity of foreclosure proceedings by the lender is known as a...?
Deed-in-lieu of foreclosure
A loan against the equity in a home is referred to as a...?
Home equity loan
In a mortgage State, the lender must go through ......................... in order to obtain the property?
Judicial foreclosure
A contract used in a sale of real property whereby the seller retains title to the property until all or a prescribed part of the purchase price has been paid is referred to as a...?
Land contract
A mortgagee is typically the...?
Lender
Private Mortgage Insurance
Mortgage guaranty insurance available to conventional lenders on the first, high risk portion of a loan (PMI).
One to whom a mortgagor gives a mortgage to secure a loan or performance of an obligation is referred to as a...?
Mortgagee
One who gives a mortgage on his or her property to secure a loan or assure performance of an obligation is referred to as a...?
Mortgagor
This occurs when monthly installment payments are insufficient to pay the interest accruing on the principal balance, so that the unpaid interest must be added to the principal due...?
Negative amortization
In a Deed of Trust State, the lender can obtain the property through which of the following means...?
Non-judicial foreclosure
Negative Amortization
Occurs when monthly installment payments are insufficient to pay the interest accruing on the principal balance, so that the unpaid interest must be added to the principal due.
Mortgagee
One to whom a mortgagor gives a mortgage to secure a loan or performance of an obligation; a lender or creditor.
Trustor
One who borrows money from a trust deed lender, then deeds the real property securing the loan to a trustee to be held as security until trustor has performed the obligation to the lender under terms of a deed of trust.
Mortgagor
One who gives a mortgage on his or her property to secure a loan or assure performance of an obligation; a borrower.
Trustee
One who holds property in trust for another to secure the performance of an obligation. Third party under a trust.
Which of the following is an acronym used to describe the components of a mortgage payment...?
PITI
Straight Loan
Periodic payments of interest that are only for the life of the loan, with payment of the principle in full at the end of the loan.
The activity of lenders making mortgage loans to individual borrowers is known as the...?
Primary mortgage market
The amount of money borrowed, or the amount of the loan is known as the...?
Principle
A borrower's personal promise to pay a debt according to the agreed terms is known as the...?
Promissory note
A mortgage given by a buyer to a seller to secure payment of all or part of the purchase price is known as a...?
Purchase Money Mortgage
The buying and selling of existing deeds of trust and promissory notes occurs in the...?
Secondary mortgage market
Which of the following will most likely warrant the highest interest rate...?
Seller financing
A non-judicial foreclosure proceeding may occur with which of the following...?
Seller financing Deed of trust financing Land contract All of the above
An interest only loan is also known as a/an...?
Straight loan
Primary Mortgage Market
The activity of lenders making mortgage loans to individual borrowers.
Mark recently obtained a mortgage and signed a promissory note with the lender. Which of the following is most likely included in Mark's promissory note...?
The amount of the debt The time and method of payment of the debt The interest rate of the loan All of the above
Judicial foreclosure favors which of the following...?
The borrower
Which of the following parties are included in a land contract...?
The buyer and seller
Secondary Mortgage Market .
The buying and selling of existing deeds of trust and promissory notes
Interest
The charge in dollars for the use of money for a period of time.
Prepayment Penalty
The charge payable to a lender by a borrower under the terms of the loan agreement if the borrower pays off the outstanding principal balance of the loan prior to its maturity.
Federal Reserve System
The federal banking system of the United States under the control of central board of governors (Federal Reserve System) involving a central bank in each of twelve geographical districts with broad powers in controlling credit and the amount of money in circulation.
Beneficiary
The lender on the security of a note and deed of trust.
"Subject To" a Mortgage
When a grantee takes title to real property subject to a mortgage, grantee is not responsible to the holder of the promissory note for the payment of any portion of the amount due.term-45
