REE CH 9

Added to the index of the adjustable rate is a margin, which is the lender's "markup." For standard Adjustable Rate Mortgage (ARM) loans, the average industry margin has been stable at approximately:

275 basis points

A partially amortizing loan always will have

A balloon payment

Ways that a lender may respond to a defaulted loan *without resorting to foreclosure* include all of the following *except:*

Accelerate the debt

Which of these statements is true about mortgage loans for *income producing real estate?*

All of the above -They usually are partially amortizing loans -They often have a prepayment penalty -They often are nonrecourse loans

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?*

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

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?

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 pursuing a court supervised process of terminating all of the borrower's claims of ownership of the property, this is commonly referred to as:

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 ?

Defeasance prepayment penalty

A lender may reserve the right to require prepayment of a loan at any time they see fit through a(n):

Demand clause

The characteristics of a borrower than can be considered by a lender in a mortgage loan appreciation are limited by the:

Equal Credit Opportunity Act

Which if these points in a mortgage loan would be addressed in the *mortgage* (possibly in the note as well)?

Escrows

The element of an adjustable interest rate that is the "moving part" is the:

Index

A significant number of mortgage loans use adjustable interest rates, in which the interest rate of the loan is tied to an index rate that fluctuates over time. For income-producing property, the most common index rate is the:

London Interbank Offered Rate (LIBOR)

Which statement is correct about the *right of prepayment* of a *home mortgage* loan?

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

Which of these aspects of a mortgage loan will be *addressed in the note* rather than in the mortgage?

Prepayment penalty

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:

Subject to the mortgage

A type of loan that has grown in volume in recent years which has raised concerns about predatory lending practices is the:

Subprime mortgage

The difference between judicial foreclosure and power of sale in the treatment of defaulted mortgages can be significant. All of the following statements regarding power of sale are true EXCEPT:

The foreclosed property is typically sold through a public auction administered by the court.

The Truth in Lending Act gives a home mortgage borrower how long to rescind a mortgage loan?

Three days

Most Adjustable Rate Mortgage (ARM) loans have been marketed with a temporarily reduced interest rate commonly referred to as a:

teaser rate