Real Estate Chapter 9

The Real Estate Settlement Procedures Act does which of these -requires the use of a standard settlement statement for a mortgage loan closing - prohibits kickbacks between the vendors of closing-related services and lenders -requires that a borrower receive a good-faith estimate of closing costs shortly after a loan application -requires that the borrower be able to inspect the closing statement a dat before the actual closing -all of the above

All of the above

Which of these statements is true about mortgage loans for income producing real estate? they are usually partially amortizing loans they often have a prepayment penalty they often are nonrecourse loans they can be interest-only loans all of the above

All of the above

A common risk that frequently interferes with a lender's efforts to work out a defaulted loan through either nonforeclosure means or foreclosure is equity of redemption statutory right of redemption exculpatory clauses Bankruptcy deficiency judgment

Bankruptcy

The risk of bankruptcy tends to travel with the risk of foreclosure since both can result from financial distress. Known popularly by its section in the Federal Bankruptcy Code, which of the following types of bankruptcy is a court-supervised workout for a troubled business? Chapter 1 bankruptcy Chapter 7 bankruptcy Chapter 11 bankruptcy Chapter 13 bankruptcy

Chapter 11 bankruptcy

Known popularly by its section in the Federal Bankruptcy Code, which of the following types of bankruptcy is a court-supervised workout for a troubled household? Chapter 1 bankruptcy Chapter 7 bankruptcy Chapter 11 bankruptcy Chapter 13 bankruptcy

Chapter 13 bankruptcy

Known popularly by its section in the Federal Bankruptcy Code, which of the following types of bankruptcy is the traditional form of bankruptcy wherein the court simply liquidates the assets of the debtor and distributes the proceeds to creditors in proportion to their share of total claims? Chapter 1 bankruptcy Chapter 7 bankruptcy Chapter 11 bankruptcy Chapter 13 bankruptcy

Chapter 7 bankruptcy

From a home mortgage lender's perspective, which statement is true about the effect of bankruptcy upon foreclosure Chapter 7 is the most "lender friendly" form Chapter 11 is the most "lender friendly" form Chapter 13 is the most "lender friendly" form

Chapter 7 is the most "lender friendly" form

With what type of loan security arrangement is the deed held by a neutral party and returned upon payment of the mortgage in full? contract for deed mortgage Deed of trust nonrecourse loan recourse loan

Deed of trust

In an attempt to regulate home mortgage lending after the mortgage crisis of 2007, which of the following acts created an independent oversight agency tasked with the responsibility of overseeing and enforcing federal consumer financial protection laws; enforcing antidiscrimination laws in consumer finance; restricting unfair, deceptive, or abusive acts or practices; receiving consumer complaints; promoting financial education; and watching for emerging financial risks for consumers? Equal Credit Opportunity Act (ECOA) Truth-in-Lending Act (TILA) Real Estate Settlement Procedures Act (RESPA) Dodd-Frank Wall Street Reform and Consumer Protection Act

Dodd-Frank Wall Street Reform and Consumer Protection Act

Which of the following acts prohibits discrimination in lending practices on the basis of race, color, religion, national origin, sex, marital status, age, or because all or part of an applicant's income derives from a public assistance program? Equal Credit Opportunity Act (ECOA) Truth-in-Lending Act (TILA) Real Estate Settlement Procedures Act (RESPA) Home Ownership and Equity Protection Act (HOEPA)

Equal Credit Opportunity Act (ECOA)

The characteristics of a borrower than can be considered by a lender in a mortgage loan appreciation are limited by the: Truth-in-lending act real estate settlement procedures act equal credit opportunity act home ownership and equity protection act community reinvestment act

Equal Credit Opportunity Act.

Foreclosure tends to be quickest in states that: are title theory states are lien theory states have judicial foreclosure have power of sale have statutory redemption

Have power of sale

Which of the following acts was passed out of concern for abusive predatory practices in subprime lending? Equal Credit Opportunity Act (ECOA) Truth-in-Lending Act (TILA) Real Estate Settlement Procedures Act (RESPA) Home Ownership and Equity Protection Act (HOEPA)

Home Ownership and Equity Protection Act (HOEPA)

The element of an adjustable interest rate that is the "moving part" is the: teaser rate index margin adjustment period none of these

Index

The most internationally oriented index rate for adjustable rate mortgages is: Federal Home Loan Bank cost-of-funds index treasury constant maturity rate a LIBOR rate a home mortgage loan interest rate index The Wall Street Journal prime rate

LIBOR

Which statement is correct about the right of prepayment of a home mortgage loan? -all home mortgage loans have the right of prepayment without charge -Most home mortgage loans have the right of prepayment without charge, but not all, and the borrower should check the loan carefully -Home mortgage loans give the right of prepayment without charge only in some states

Most home mortgage loans have the right of prepayment without charge, but not all, and the borrower should check the loan carefully

A type of loan that has grown in volume in recent years which has raised concerns about predatory lending practices is the adjustable rate mortgage contract for deed purchase money mortgage subprime mortgage power of sale mortgage

Subprime mortgage

The Truth in Lending Act gives a home mortgage borrower how long to rescind a mortgage loan 24 hours two days Three days a week a month

Three days

Congress has enacted a number of regulations that have established criteria for evaluating home loan applicants and mandating disclosures in the origination of home loans. Which of the following congressional acts requires important disclosures concerning the cost of consumer credit, including the computation of the annual percentage rate (APR)? Equal Credit Opportunity Act (ECOA) Truth-in-Lending Act (TILA) Real Estate Settlement Procedures Act (RESPA) Home Ownership and Equity Protection Act (HOEPA)

Truth-in-Lending Act (TILA)

A partially amortizing loan always will have caps only one stated term a balloon payment a prepayment penalty recourse

a balloon payment

If a homeowner in mortgage distress owes more than the value of the home and is unable to make the loan manageable by refinancing or modifying the mortgage, the next recourse often is a short sale of the property. All of the following statements are true regarding a short sale except -legal costs should be lower with a short sale than with foreclosure. -a short sale usually enables a better sale price and a faster sale than foreclosure. -a short sale is less damaging to the borrower's credit than a foreclosure, thereby enabling the borrower to be eligible for another mortgage loan sooner. -a short sale relieves the seller of any other outstanding obligations on the home, such as owner association fees or a second mortgage.

a short sale relieves the seller of any other outstanding obligations on the home, such as owner association fees or a second mortgage.

Ways that a lender may respond to a defaulted loan without resorting to foreclosure include all of the following except offer credit counseling allow short sale to a third part defer or forgive some of the past-due payments accelerate the debt accept a deed in lieu of foreclosure

accelerate the debt

if the lender in a standard first mortgage wishes to foreclose cost effectively, it is crucial to have which clause in the mortgage acceleration clause exculpatory clause demand clause defeasance clause taking clause

acceleration clause

In a mortgage loan, the borrower always creates two documents: a note and a mortgage. Which of the following pieces of information is provided in the mortgage? -how the interest rate is to be computed -whether the borrower has the right to prepay the principal during the term of the loan, and any prepayment penalties that would be incurred as a result -whether the borrower is released from liability for fulfillment of the contract -an unambiguous description of the property that is being pledged as collateral for the loan

an unambiguous description of the property that is being pledged as collateral for the loan

To finance property where either the borrower, the property, or both fail to qualify for the standard mortgage financing, a common nonmortgage solution is through the: subprime loan deed of trust unsecured load contract for deed balloon loan

contract for deed

Certain mortgage loans contain a due-on-sale clause, which gives the lender the right to terminate the loan at sale of the property. Which of the following types of loans is the most likely to contain a due-on-sale clause? Federal Housing Administration (FHA) loan Veterans Affairs (VA) loan conventional home loan an assumable home loan

conventional home loan

When a borrower defaults on the payment requirements of a loan, there are several options that the lender has at its disposal. When the lender allows the borrower simply to convey the property to the lender rather than pursue a court-supervised process of terminating all of the borrower's claims of ownership of the property, this is commonly referred to as bankruptcy. foreclosure. deed in lieu of foreclosure. equity right of redemption.

deed in lieu of foreclosure.

For most mortgage loans on commercial real estate, the right of prepayment is constrained through a prepayment penalty. Which of the following types of prepayment penalties requires a borrower to provide the lender with some combination of U.S. Treasury securities that will serve to replace the cash flows of the loan being paid off? -yield-maintenance prepayment penalties -prepayment lockout -defeasance prepayment penalty -curtailment penalty

defeasance prepayment penalty

A lender may reserve the right to require prepayment of a loan at any time they see fit through a(n): taking clause acceleration clause demand clause due-on-sale clause escrow clause

demand clause

Assume that an individual has just lost his job and has been consistently late paying his bills. The bank recognizes deterioration in the individual's credit score and has notified him that he must pay his home equity line of credit in full. The mortgage clause that makes this possible is known as the demand clause. insurance clause. escrow clause. exculpatory clause.

demand clause

Even after a property goes into foreclosure, it is still possible for the borrower to reclaim the property as long as he or she produces the outstanding mortgage balance and all foreclosure costs incurred to that point. In a state such as Georgia, this right only extends to the date of the foreclosure sale. When this occurs, this right is more commonly referred to as equity of redemption. statutory redemption. strategic default. substantive default.

equity redemption.

Which if these points in a mortgage loan would be addressed in the mortgage (possibly in the note as well)? loan amount interest rate late fees escrows loan term

escrows

Which of these aspects of a mortgage loan will be addressed in the note rather than in the mortgage: a. late fee b. escrow requirement c. takings d. acceleration e. maintenance of property

late fee

A special contract in which the borrower pledges the mortgaged property as security to the lender is commonly referred to as the mortgage (deed of trust). listing contract. note. assignment of mortgage.

mortgage (deed of trust).

In a mortgage agreement, the borrower conveys to the lender a security interest in the mortgage property. The lender, i.e., the individual who receives the mortgage claim, is known as the broker. mortgagor. agent. mortgagee.

mortgagee

When a buyer acquires a property having an existing mortgage loan, a decision must be made as to whether or not the subsequent owner of the property can preserve the loan. If the buyer does not add his or her signature to the note, the buyer does not take on any personal liability. In this case, the buyer is said to -assume the old loan. -purchase the property subject to the existing loan. -obtain the property through the use of a contract for deed. -foreclose on the property.

purchase the property subject to the existing loan.

With most standard home loans, the lender can hold the borrower personally liable in the event of a default. Such loans are commonly referred to as -recourse loans. -nonrecourse loans. -conforming loans. -nonconforming loans.

recourse loans.

Even after a property goes into foreclosure, it is still possible for the borrower to reclaim the property as long as he or she produces the outstanding mortgage balance and all foreclosure costs incurred to that point. In a state such as Florida, this right may even extend beyond the date of the foreclosure sale. When this occurs, this right is more commonly referred to as equity of redemption. statutory redemption. strategic default. substantive default.

statutory redemption.

When a buyer of a property with an existing mortgage loan acquires the property without signing the note for an existing loan the buyer is acquiring the property: by assumption by contract for deed by deed of trust by default subject to the mortgage

subject to the mortgage

Foreclosure is considered the ultimate recourse of the lender because it allows the lender to bring about sale of the property to recover the outstanding indebtedness. All of the following statements regarding foreclosure are true except -foreclosure is a costly process for all parties involved. -only those claimants who are properly notified and engaged in the foreclosure suit can lose their claims to the property. -when a lender forecloses on a property, it extinguishes all superior liens, bringing about a free and clear sale of the property. -the net recovery by a lender from a foreclosed loan seldom exceeds 80% of the outstanding loan balance and commonly is much less than this amount.

when a lender forecloses on a property, it extinguishes all superior liens, bringing about a free and clear sale of the property.