Unit 8: Review Questions

A holder in due course must take a negotiable instrument: a. within 90 days of its execution b. with knowledge of all defenses against it c. without notice of any defense against its enforcement d. for cash

c. without notice of any defense against its enforcement

RESPA covers: a. the listing agreement b. the broker's commission c. the Closing Disclosure form d. the loan application form

c. the Closing Disclosure form

MOST adjustable-rate loans are: a. assumable b. not assumable c. held by sellers d. not allowed for federal institutions

a. assumable

The highest bidder at a judicial foreclosure receives: a. a deed b. a contract c. a title d. a certificate of sale

d. a certificate of sale

In a deed of trust, the lender is: a. the trustor b. the trustee c. the beneficiary d. the holder

c. the beneficiary

Which of the following is NOT an institutional lender? a. mortgage company b. thrift c. insurance company d. savings and loan

a. mortgage company

In a deed of trust, the borrower is: a. the trustor b. the trustee c. the beneficiary d. the holder

a. the trustor

The federal agency that insures savings accounts is the: a. FDIC b. FNMA c. FHLMC d. FHA

a. FDIC

The first step in bringing about a trustee's sale is to prepare: a. a declaration of default b. a notice of levy c. a request for notice d, a notice of default

a. a declaration of default

An instrument by which property is hypothecated to secure the payment of a debt or obligation is known as: a. a mortgage b. a reconveyance deed c. an encroachment d. a sheriff's deed

a. a mortgage

To be a negotiable instrument, a promissory note must be: a. a promise to pay money to the bearer b. an oral agreement c. payable at an indefinite future time d. signed by the bearer

a. a promise to pay money to the bearer

David Yoo bought Whiteacre and is making the former owner's original loan payments. If David defaults, the seller will be obligated on the loan. Which statement is TRUE? a. David bought the loan b. David bought the property subject to the loan c. David is subject to a due-on-sale clause d. David does not have title to Whiteacre

b. David bought the property subject to the loan

A provision that gives the lender the right to demand full payment of a mortgage upon a sale of the property is: a. a notice-of-sale b. a due-on-sale clause c. a partition clause d. an escalator clause

b. a due-on-sale clause

Interest rate and payment can change every 3 to 5 years in: a. a graduated payment mortgage b. a renegotiable-rate mortgage c. a growing equity mortgage d. a reverse annuity mortgage

b. a renegotiable-rate mortgage

There is no right of redemption following: a. a strict foreclosure b. a trustee's sale c. a judicial foreclosure d. a mortgage foreclosure

b. a trustee's sale

TRID applies to: a. HELOCs b. construction-only loans c. loans made by a person who makes 5 or fewer mortgages in a calendar year d. reverse mortgages

b. construction-only loans

The FED can increase or decrease the amount of money in circulation by all of the following EXCEPT: a. establishing the discount rate b. issuing government securities c. raising or lowering reserve requirements d. buying and selling government securities

b. issuing government securities

A $450,000 house can be purchased with a $90,000 down payment using the principal of: a. borrowed funds b. leveraging c. partial financing d. home equity

b. leveraging

Federal savings and loan activities are overseen by: a. the FHLMC b. the Office of the Comptroller of the Currency c. the Federal Reserve Board d. the FDIC

b. the Office of the Comptroller of the Currency

In a mortgage, the lender is: a. the mortgagor b. the mortgagee c. the maker d. the holder

b. the mortgagee

Money is a medium of exchange as well as a measure of: a. credit b. value c. intrinsic worth d. investment potential

b. value

An ARM is: a. a graduated payment mortgage b. a growing equity mortgage c. a mortgage in which the interest rate changes periodically based on an index d. a reverse annuity mortgage

c. a mortgage in which the interest rate changes periodically based on an index

Real estate is hypothecated by use of: a. a promissory note b. a negotiable instrument c. a security instrument d. a pledge

c. a security instrument

The repayment of a loan in equal installments that includes both interest and principal reduction is referred to as: a. a hard money loan b. a mortgage loan c. an amortized loan d. a straight loan

c. an amortized loan

Real estate loans generally include a promissory note and a: a. grant deed b. settlement statement c. security instrument d. purchase contract

c. security instrument

A lender that discriminates against a loan applicant because of race has violated: a. the Equal Dignities Rule b. the Truth in Lending Act c. the Equal Credit Opportunity Act d. the Lender's Law

c. the Equal Credit Opportunity Act

The security instrument of choice in California is the: a. quitclaim deed b. grant deed c. mortgage d. deed of trust

d. deed of trust

"The cost of using money" BEST describes: a. an open market b. a free market c. credit d. interest

d. interest

RESPA regulates loans for which of the following? a. commercial property b. multiple family dwellings c. land subdivisions d. one- to four-unit family dwellings

d. one- to four-unit family dwellings

California usury laws apply primarily to: a. financial institutions b. all lenders c. non-financial institutions d. private lenders

d. private lenders