Unit 16

A borrower obtained a $7,000 second mortgage loan for five years at 6% interest per annum. Monthly payments were $50. The final payment included the remaining outstanding principal balance. What type of loan is this? a. A fully amortized loan b. A straight loan c. A partially amortized loan d. An accelerated loan

c. A partially amortized loan.

A borrower has secured an FHA insured loan. This means that the FHA will insure which of these against a possible loss? a. Buyer b. Seller c. Lender d. Broker

c. Lender.

Which is NOT associated with a VA loan? a. Certificate of eligibility b. Certificate of reasonable value c. One percent prepayment penalty d. Funding fee

c. One percent prepayment penalty.

The grantor becomes the lessee and the grantee becomes the lessor under which financing arrangement? a. Partial sale b. Wraparound mortgage c. Sale and leaseback d. Assumption of mortgage

c. Sale and leaseback.

A mortgage loan requires monthly payments of $175.75 for 20 years and a final payment of $5,095. This type of a mortgage loan is a. a wraparound mortgage. b. an accelerated mortgage. c. a balloon mortgage. d. a variable mortgage.

c. a balloon mortgage.

Which entity normally purchases mortgages in the secondary mortgage market? a. Mortgage bankers b. Ginnie Mae c. Federal Housing Administration d. Veterans Administration

b. Ginnie Mae.

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? a. Blanket mortgage b. Purchase money mortgage c. Package mortgage d. Open-end mortgage

a. Blanket mortgage.

Which pair of terms is considered synonymous? a. Interim financing and construction loan b. Construction loan and pass-through loan c. Pass-through loan and take-out loan d. Take-out loan and construction loan

a. Interim financing and construction loan.

The type of loan that will MOST likely have the lowest loan-to-value ratio is a a. conventional loan without PMI. b. FHA loan. c. PMI loan. d. VA loan.

a. conventional loan without PMI.

A lender will take certain factors into consideration when deciding whether to grant a borrower a mortgage loan. All of these are legitimate factors EXCEPT the a. marital status of the borrower. b. creditworthiness of the borrower. c. amount of the borrower's income. d. ability of the borrower to make the payments.

a. marital status of the borrower.

A lender may protect its interest in a mortgage loan by obtaining additional security from a. private mortgage insurance. b. title insurance. c. the borrower's note. d. impound accounts.

a. private mortgage insurance.

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 4 points and a 1% origination fee, how much did the borrower and the seller each pay? a. $1,785 b. $1,875 c. $3,750 d. $5,000

b. $1,875.

A 70-year-old homeowner 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. A home equity loan b. A reverse mortgage c. A blanket loan d. An open-ended loan

b. A reverse mortgage.

A mortgage broker generally offers which of these services? a. Handling the escrow procedures b. Bringing the borrower and the lender together c. Providing credit qualification and evaluation reports d. Granting real estate loans using investor funds

b. Bringing the borrower and the lender together.

Loans for which use are NOT affected by the Truth in Lending Law lender Regulation Z? a. Household use improvements b. Business use c. Room additions d. Swimming pools

b. Business use.

How is Fannie Mae involved with FHA loans? a. Fannie Mae initiates FHA loans b. Fannie Mae buys FHA loans c. Fannie Mae services FHA loans d. Fannie Mae insures FHA loans

b. Fannie Mae buys FHA loans.

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 a. wraparound mortgage. b. open-end mortgage. c. growing-equity mortgage. d. graduated-payment mortgage.

b. open-end mortgage.

The principal distinction between the primary mortgage market and the secondary mortgage market is in the a. insuring versus the guaranteeing of mortgage loans. b. origination versus the purchase of mortgage loans. c. use of mortgages versus the use of deeds of trust. d. use of discount points versus the use of origination fees.

b. origination versus the purchase of mortgage loans.

The type of mortgage loan that uses both real and personal property as security is a a. blanket mortgage. b. package mortgage. c. purchase money mortgage. d. wraparound mortgage.

b. package mortgage.

An extension of credit from a seller to a buyer to allow the buyer to complete the transaction is called a a. growing equity mortgage. b. purchase money mortgage. c. package mortgage. d. blanket mortgage.

b. purchase money mortgage.

Fannie Mae, Ginnie Mae, and Freddie Mac have in common the purpose of a. originating residential mortgage loans. b. purchasing existing mortgage loans. c. insuring residential mortgage loans. d. guaranteeing existing mortgage loans.

b. purchasing existing mortgage loans.

An FHA-insured mortgage loan would MOST likely be obtained from a. the Federal Housing Administration. b. the Department of Housing and Urban Development. c. any qualified lending institution. d. any qualified insuring institution.

c. any qualified lending institution.

The maximum amount for payments in an adjustable-rate mortgage is set by the a. ceiling. b. term. c. cap. d. factor.

c. cap.

In a graduated payment loan, a. mortgage payments decrease. b. mortgage payments balloon in five years. c. mortgage payments increase. d. the interest rate on the loan adjusts annually.

c. mortgage payments increase.

One of the ways lenders increase their revenue is by servicing loans. All of these are activities of servicing loans EXCEPT a. collecting payments. b. paying real estate taxes from escrow accounts. c. renegotiating interest rates. d. sending overdue notices.

c. renegotiating interest rates.

Which of these statements, standing alone, would not trigger additional advertising rules by the Truth in Lending Act? a. "$499 per month" b. "$1,000 down" c. "8% interest rate" d. "Assumable mortgages"

d. "Assumable mortgages"

Which of these statements is TRUE? a. The priority of a mortgage is determined by the date on which it was executed. b. A mortgage document contains no covenants or promises on the part of the borrower. c. A deed of trust is typically conveyed by the trustor to the beneficiary. d. A buyer does not have to be a veteran to assume a VA loan.

d. A buyer does not have to be a veteran to assume a VA loan.

From which of these would a borrower most likely obtain a residential real estate mortgage loan? a. An insurance company b. A pension fund c. An endowment fund d. A commercial lender

d. A commercial lender.

Which loan is covered by the Real Estate Settlement Procedures Act (RESPA)? a. Loan to purchase a ten-unit apartment building b. Land contract c. Loan to purchase a commercial building d. Loan for a one-to-four-family residential property

d. Loan for a one-to-four-family residential property.

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. a conventional loan. b. a straight loan. c. a participation loan. d. an amortized loan.

d. an amortized loan.

In a sale-and-leaseback arrangement, the a. seller retains legal title to the real estate. b. buyer becomes the lessee. c. broker will not earn a commission. d. buyer becomes the lessor.

d. buyer becomes the lessor.

When compared with a 30-year payment period, taking out a loan with a 20-year payment period will result in all of these EXCEPT a. faster amortization. b. higher monthly payments. c. quicker equity buildup. d. greater impound amounts.

d. greater impound amounts.

Regulation Z applies to a. business loans. b. real estate sales agreements. c. commercial loans under $10,000. d. personal credit transactions under $25,000.

d. personal credit transactions under $25,000.