IV. FINANCING

The prepayment penalty on a $50,000 mortgage is paid on the original balance as follows: First year penalty is 3.5%, second year is 2.25%, third year is 1%. If the loan was paid off during the second year, calculate the penalty.

$1,125

Charley is purchasing a home for $78,000 and the lender is giving a 90 percent loan at 10 percent interest, plus a 2 percent loan origination fee. How much is the loan origination fee?

$1,404

Property purchase for $600,000 with a $500,000 mortgage, it's present value is $750,000 and the mortgage balance is 450,000. A much equity does the owner have?

$300,000

Based on the 9% APR, how much simple interest accumulates in one year if a buyer purchases a property for $85,000 and receives a loan based on a 75% loan to value ratio?

$5,738

Quarterly interest due is $2,000 and the loan amount is $100,000, what is the annual interest rate that is charged by the lender?

8%

All of the following are true regarding government related loans except: A. An FHA loan is insured by the Federal Housing Administration. B. A VA loan is guaranteed by the Veteran's Administration. C. An FHA loan may be granted to an investor interested in fixing and selling property. D. A VA loan may be granted to an investor who intends to rent the entire property.

A VA loan may be granted to an investor who intends to rent the entire property.

which of the following is true regarding mortgage assignment?

A formal assumption involves approval of the new purchaser by the lender.

Two years ago, John bought a home on a VA loan. John has just been transferred to another city and is concerned with his present mortgage as well as purchasing a new home after the transfer. What can John do?

Allow a non-veteran to assume the loan and move on to purchase another home on a second entitlement

Regarding a VA loan, all of the following are true except:

Applicant must be willing to pay an insurance premium.

Which of the following will trigger a new loan estimate and closing delay?

Borrower cannot qualify for a 15 year loan and must switch to 30 year

The restrictions relating to advertisement of credit terms contained in the Truth-in-Lending law:

D. Mandates the use of the annual percentage rate (APR) when advertising interest rates.

The purpose of the truth-in-lending law is to:

Enable borrowers to easily shop around for interest rates.

All of the following are considered to be a nonconforming loan except:

FHA loans

All of the following are examples of primary lenders except:

GNMA

The following is true about foreclosure sales:

If two mortgages existed on the property, the senior will be paid first and then the junior.

Another name for a land contract is

Installment sale contract/contract for deed

At closing, the lender pressures a borrower to close the transaction despite the fact that he's being quoted 2 point higher than the loan estimate. This behavior by the lender

Is a predatory lending practice

All of the following are considered benefits to a deed in lieu of foreclosure except:

Mortgagor must pay the mortgagee the difference between the mortgage balance and the current appraised value of property

What would a private investor use to insure a conventional loan?

Private Mortgage Insurance (PMI)

Which of the following is true regarding REO

Property owned by a foreclosing lender

The truth-in-lending law permits the advertising of the following without making any further disclosure:

Reasonable monthly terms.

All of the following may be considered as practice of Predatory lending except

Requiring the borrower to attempt credit repair in order to raise credit score

truth-in-lending laws apply to

Residential real estate mortgages 1-4 family dwellings

Helen signed an offer for $150,000 and applied for a VA loan. The appraiser issued a certificate of reasonable value stating that the home was valued at $140,000. What are Helen's options?

She can obtain a 100% loan based on the lower value and she can pay the $10,000 difference out of pocket

A mortgagor's right to reclaim the foreclosed property from the successful bidder within a certain period of time starting from the date of the foreclosure sale is:

Statutory right of redemption

When a foreclosure sale does not bring enough to satisfy the loan balance, the lender may:

Sue the mortgagor for a "deficiency judgment".

If the mortgagee has the property sold at a foreclosure sale and it brings an amount inadequate to pay off the loan, what can the mortgagee do?

Sue the mortgagor for the deficiency

Regulation Z provides a right of rescission:

That expires three business days after the date of consummation of the transaction or the date on which the lender makes material disclosures, whichever is later.

Assume that a buyer is making fully amortized payments of $600 per month on a purchase-money mortgage. Which of the following is true?

The amount applying to interest decreases each month.

If the borrower is making regular equal monthly payments, which is true about principal and interest portions of his payment?

The principal portion is increased while the interest portion is decreased.

A person's right to reclaim property after foreclosure is called the:

The statutory right of redemption.

All of the following are true regarding a Veteran's Administration Loan except:

The veteran must put down at least 3% down payment.

Which of the following violates RESPA

Title company offers a bonus to licensee for referring transactions to them.

An individual may qualify for an FHA loan. Where would you refer him?

To any participating primary lender

When is a mortgagor most likely released from liability under a mortgage?

Upon recording a discharge

An "acceleration clause" found in a promissory note or mortgage would mean that:

Upon the happening of a certain event, the entire amount of the unpaid balance becomes due.

A lender questions a couple's mortgage application asking if they were planning to marry and have several children because their income is barely enough to support the mortgage payments. This behavior by the lender

Violates the equal credit opportunity act

When the loan payments remain the same, leaving a lump sum due at the end of the loan term, this lump sum payment is called:

a balloon payment

The mortgagor decides to peacefully surrender property to the mortgagee. This is referred to as:

a deed in lieu of foreclusure

Mortgage satisfaction is evidenced by which of the following?

a discharge

When mortgage loan is satisfied, the lender will issue and record:

a discharge

Upon the sale of property, title remains with the seller and will not be transferred until the buyer makes the final payment on the balance. This is known as:

a land contract

In real estate financing, the debt is evidenced by:

a promissory note

Helen bought a $185,000 home and financed it 100% through the local bank. Chances are she obtained:

a va loan

A clause in a mortgage that may permit the lender to call the entire balance due if the property is sold or otherwise conveyed by the mortgagor is called:

alienation clause (due on sale clause)

A buyer wants to take out an FHA loan. The broker should refer the buyer directly to:

any approved lending institution such as a bank or savings and loan association

Susan used a $30,000 home equity loan secured by her present home, to purchase an investment that she was thinking of fixing and flipping at a later time, which of the following types of loans is most applicable to her situation?

bridge loan

Which of the following is NOT considered to be a benefit of an FHA loan? A. A low down payment B. Property will be fixed up before closing C. Loans are automatically assumable D. Loans are insured

c. loans are automatically assumable

The purpose of the truth-in-lending act is to:

disclose to the consumer the true cost of obtaining credit

A clause that requires the full loan balance to become due to the creditor if property is disposed of is:

due on sale/alienation clause

Which of the following is a source of primary mortgage funds?

federal savings and loan association

A lower loan to value ratio can lead to

increased equity

seller sold property on the installment plan and promised to convey title to the buyer when the balance is finally paid off. This arrangement is best described as a:

land contract/contract for deed

Which of the following is not included in the APR?

legal fees

a land contract gives the buyer all of the following except: The right to live on the property. The right to lease out the property. The right to sell the property. Legal title to the property.

legal title to property

The points of non-conventional loans are computed and based on:

loan amount

Under Truth-in-Lending, it is permissible to advertise which of the following statements alone?

low down payment

The Truth-in-Lending law is designed to do which of the following?

make it possible to easily shop loan interest and terms

The difference between property fair market value and the amount owed on it is the:

mortgagor's equity

A relatively short-term loan that involves regular monthly payments and a lump sum due at the end of the loan term is:

partially amortized loan

A property can be auctioned in a Sheriff sale, but the owner/mortgagor has the right to get it back by paying the Sheriff's deed holder. This right is known as:

redemption

the right of a person to reclaim his property after a foreclosure sale is the right of:

redemption

A type of mortgage suitable for those thinking of semi-retirement that involves receiving regular monthly payments for a specified period is known as:

reverse mortgage

During foreclosure, Sharon was informed that her house was sold by the court, but she had a limited time to get it back if she paid a certain amount, what was the court referring to?

right of redemption

A lender agrees to settle a mortgage loan at less than the loan balance, this is known as

short sale

a relatively short-term loan that may require interest to be paid periodically and the total sum of principal to be paid at the end of the loan term is:

terms/straight loan

A mortgage clause that calls the entire loan balance due upon default is:

the acceleration clause

Of the following, who is benefited by an acceleration clause in a mortgage?

the lender

When financing a home through VA, the points are based on:

the loan amount

When financing property with a lender, which instrument is required to create a lien on the property being financed?

the mortgage contract

In the event a first mortgagee fails to record his/her mortgage and a good-faith second mortgagee records his/her mortgage first, which of the following would be true?

the second mortgagee has priority

The payment of an old loan with a new loan is termed "refinancing". Which is the least likely purpose for "refinancing" loans?

to acquire the property