NATIONAL LESSON 4*****

The document that establishes the evidence that there is a debt is the Select one: A. Promissory note B. Mortgage C. Deed of trust D. Conveyance

A. Promissory note

A loan with an interest rate tied to a changing index such as the prime lending rate is called a FHA Loan Conventional Mortgage Percentage Mortgage Adjustable Rate Mortgage

Adjustable Rate Mortgage

The provision that gives the lender the right to declare the entire debt due and payable if mortgaged property is sold is called the: Defeasance Clause Equitable Redemption Alienation Clause Acceleration Clause

Alienation Clause

A loan with payments that include both interest and principal in each payment is called a(n) Balloon Note Term Loan Amortization Promissory Note

Amortization

Funds for VA loans are usually provided by: HUD VA FHA Approved Lender

Approved Lender

An account that is set aside to pay real estate taxes and insurance is known as a(n) Options Account Impound Account Savings Account Brokerage Account

Impound Account

A construction loan is considered to be: Select one: A. A take out loan B. A low risk loan C. An interim loan D. A secondary loan

C. An interim loan

A loan which permits the borrower to later obtain additional funds by borrowing up to the amount of the original loan is a(an): Select one: A. Blanket loan B. Package loan C. open-end loan D. Wrap-around loan

C. open-end loan

A special form to be completed to itemize all charges to be paid by a borrower and seller in connection with settlement is the: HUD-1 Settlement Statement Closing Disclosure Form (CDF) Good Faith Estimate HUD Informational Booklet

Closing Disclosure Form (CDF)

____________ are loans that are not government insured or guaranteed but are controlled by the market place.

Conventional loans

Which of the following statements about the FHA is a true statement? Select one: A. FHA loans are guaranteed by the Federal Government B. The FHA Lends money to consumers with PMI insurance C. The FHA does not allow a borrower to buy a house for more than the appraised value D. None of the above are true

D. None of the above are true

A land contract is a form of: Select one: A. FHA loan B. VA loan C. LVR LOANS D. Seller financing

D. Seller financing

When investors place their money directly, rather than in financial institutions, thereby reducing the availability of mortgage money, this is referred to as: Open End Loan Disintermediation Term Loan Subordination

Disintermediation

With a purchase money loan, the title to the property _________________ to the buyer, and the seller holds a lien on the property. Does not transfer Held by the Beneficiary Does Transfer Held by the trustee

Does Transfer

The difference between what a property is worth minus what is owed is its: Amortization Promissary Note Hypothecation Equity

Equity

A Promissory Note is not: A Document inwhich the Debtor agrees to Pay the Stated Loan A Negiatable Instrument Evidence of the Debt Evidence of Title

Evidence of Title

All of the following are characteristics of a Federal Fair Housing (FHA) loan except: A Mortgage Insurance Premium is Charged FHA provides money for the loan Lender is Insured Against Loss Maximium Mortgage Debt is Determined by a Formula

FHA provides money for the loan

________also known as direct reduction loans, require payment of equal installments made consistently over the life of the loan

Fully Amortized Loans

Pledging property for security for a loan without losing possession of it is: Hypothecation Seller Financing Impound Account Subordination Agreement

Hypothecation

A loan where the borrower obtains a line of credit based upon a percentage of the value of the collateral used as security is example of an: Blanket Loan Wraparound Loan Adjustable Rate Mortgage Open End Loan

Open End Loan

A loan that includes real and personal property in the same loan is a: Package Loan Term Loan Graduated Payment Loan Open End Loan

Package Loan

The ____________________ allows the lender to adjust the interest rate on the loan as was agreed upon at the origination of the loan.

adjustable rate mortgage

An ___________ is an amortized loan designed to lower the monthly payments in the initial years of the loan.

adjustable rate mortgage (ARM)

Making money made on the "spread" in interest rates is called ____________________.

arbitrage

A(n) ____________________ is a loan that is secured by two or more properties as collateral.

blanket mortgage

____________________ is the process by which investors place funds directly rather than infinancial institutions for investment.

disintermediation

A document from the lender stating the current balance, interest rate, monthly payments, etc. is called the

estoppel certificate.

To pledge property as security is to ____________________.

hypothecate

Primary Market Lenders

makes loans to consumers

The title theory states that the borrower grants to the trustee a limited form of title often referred to as ___________________.

naked title

A __________ loan is also referred to as a renegotiable rate mortgage (RRM). It is characterized by periodic monthly payments amortized over a 20, 25, or 30 year period.

partially amortized

The ____________________ is the process that allows the lender, and typically the trustee, to sell the mortgaged property upon default by the borrower.

power of sale

A ___________ mortgage is where the seller agrees to accept a part of the purchase price in the form of a promissory note secured by a mortgage on the property.

purchase money

A(n) ______________________ note has a mortgage attached to it which pledges property as security for the debt.

secured

The ____________________ gives the borrower the right to redeem the property after the foreclosure has been completed.

statutory right of redemption

A violation by lending institutions that occurs when rates of interest are charge in excess of the maximum rate allowed by state law is known as ____________________.

usury

secondary market lenders

which provides funds for lenders.

The following are characteristics of a VA loan except: The Loan is Guaranteed An eligible Veteran, eligible Dependents of Veterans, Reservist, and National Guardsmen, having served for 6-years, qualify. The Loan is Insured Little or No Down Payment is Required

The Loan is Insured

A veteran wishes to receive a loan for $70,000 to buy a home. The home has been appraised by the VA at $68,000. Which of the following most accurately describes the veteran's situation? The Veteran may buy the Home with a VA Loan if the Seller agrees to Holds a Second Mortgage. The Veteran may buy the Home with a VA Loan only if He is able to lower the Purchase Price to $68,000 The Veteran may buy the Home with a VA Loan if He makes a Down Payment of $2000. The Veteran may not Buy the Home.

The Veteran may buy the Home with a VA Loan if He makes a Down Payment of $2000.

Which of the following is not a privately owned for profit company? Select one: A. FNMA B. GNMA C. FHLMC D. All of the above

B. GNMA

A contract in which title is not transferred until all terms have been met is a(an): Select one: A. Real estate sales contract B. Installment land contract C. Option contract D. Earnest money contract

B. Installment land contract

Which of the following allows the lender to take title to the property without having to go to court or having a court ordered sale. Select one: A. Judicial Foreclosure B. Strict Foreclosure C. Equity of Redemption D. Deed of Trust Foreclosure

B. Strict Foreclosure

John agrees to take over paying Bill's loan when he buys Bill's house. John will not be liable to the lender if he defaults, but Bill remains liable. This is known as buying Select one: A. By assumption B. Subject to the mortgage C. By arbitrage D. By acceleration

B. Subject to the mortgage

In a loan having a balloon payment: Select one: A. The last payment has a higher interest rate B. The last payment is larger than the previous payments C. The last payment is the principal only D. only interest is paid until the last payment

B. The last payment is larger than the previous payments

A term or straight loan provides for: Interest Payments PITI Payments Delayed Payments Interest and Principal Payments

Interest Payments

Lenders use construction loans, also known as ____________________, to extend credit for the specific purpose of new construction or for renovating existing improvements. Renegotiable Rate Mortgage Interim Financing Index Loans Variable Rate Loans

Interim Financing

When a mortgagor goes into default and the mortgagee files a foreclosure act in court, asking the court to allow the sale of the property at auction and apply the proceeds to the debt, the method used is known as: Truth in Lending Act Strict Foreclosure Judicial Foreclosure Fair Housing Act

Judicial Foreclosure

The relalationship between the loan amount and the value of what you owe is known as: Interest Equity PMI LTV

LTV

The percentage relationship between the loan granted by the lender and the value of the property is known as the

Loan to Value Ratio (LTV).

On a FHA loan a buyer would not be required to Meet FHA Credit Standards Make a 20% Down payment on a Loan Provide Mortgage Insurance to Protect the Lender Find an Approved Lender to make the Loan

Make a 20% Down payment on a Loan

RESPA was created to which of the following: Protecting consumers from abusive lending practices Providing Appraisal Services for Home Buyers Making Loans to the Public Assist in the Purchase of Home Insurance

Protecting consumers from abusive lending practices

A type of loan that is particularly valuable to older couples that do not want to sell their home, but whose retirement income is not quite enough to make ends meet is known as: Sale and Leaseback Mortgage Growing Equity Mortgage Reverse Annuity Mortgage Blanket Loan

Reverse Annuity Mortgage

An agreement to finance large commercial or industrial property is a: Graduated Payment Plan Wraparound Loan Sale and Leaseback Agreement Balloon Payment

Sale and Leaseback Agreement

The Power of Sale is a process that is best described by which one of the following: Must get a Court Order to Proceed to Foreclosure Creates High Cost for the Lender and is the most Complicated Foreclosure Process Sell the Mortgaged Property upon Default by the Borrower Rent out the Property upon Default by the Borrower

Sell the Mortgaged Property upon Default by the Borrower

A land contract is a form of: Rural Development Loans FHA Loan VA Loan Seller Financing

Seller Financing

An agreement that changes the order of priority of liens between two creditors is called: Disintermediation Amortization Insubordination Subordination

Subordination

Bank A holds a lien on a home on which Bank B already had a lien. The lender subsequently entered into an agreement inwhich Bank A moved into a first lien position. This is an example of a: Disintermediation Agreement Hypothication Agreement Subordination Agreement Reverse Annuity Mortgage

Subordination Agreement

You financed the purchase of a home by means of a Trust Deed. Until you pay off the Trust Deed the title will be held by the: Trustor Beneficiary Seller Trustee

Trustee

Changing an interest rate higher than allowed by law is known as: Subordination Hypothecation Usury Amortization

Usury