Real Estate Test Unit 7

To comply with advertising requirements under the Truth-inLending Act, and ad should state a. "9% annual interest" b. "9% interest" c. "9% annual percentage rate" d. "9% compounded interest"

"9% annual percentage rate"

A buyer purchased a house for $160,000 and obtained an 80 percent loan at 9 percent with 1 1/2 points. How much will the buyer have to pay for the points charged by the lender? a. $1,600 b. $1,920 c. $2,400 d. $14,400

$1,920

A homeowner borrowed $120,000, to be repaid in monthly installments of $820 at 8% annual interest. How much of the borrower's first monthly payment was applied to reducing the principal amount of the loan?a. $10 b. $20 c. $800 d. $820

$20

A borrower has an 8%, fixed rate, amortizing loan. If the current loan balance is $56,000, how much interest will the borrower pay in the next loan payment? a. $373.33 b. $480 c. $4,480 d. $5,600

$373.33

If a lender agrees to make a loan based on an 80 percent loan-to-value ration, what is the amount of the loan if the property appraises for $114,500 and the sales price is $117,000? a. $83,200 b. $91,300 c. $91,600 d. $92,900

$91,600

A lender making a loan with an interest rate of 9 1/4 percent wishes to raise the yield on the loan to 9 3/4 percent. If it takes approximately 8 points to raise the yield 1 percent, how many points must the lender charge? a. 2 b. 3 c. 4 d. 8

4

The party that gives a deed of reconveyance when a real estate loan is repaid is the a. mortgagor b. trustor c. trustee d. mortgagee

trustee

When using a deed of trust in a real estate loan, title to the property is held by the a. seller b. lender c. trustor d. trustee

trustee

The Federal national Mortgage Association(Fannie Mae) performs which of the following? a. Originates loans to homebuyers b. Buys and sells mortgages c. Guarantees VA loans d. Insures FHA loans

Buys and sells mortgages

All of the following buy and sell loans in the secondary market except a. FHA b. GNMA c. FNMA d. FHLMC

FHA

The purchasers of a new home take out a loan that requires them to pay a mortgage insurance premium (MIP). The type of loan the purchasers have is a(n) a. conventional loan b. VA loan c. FHA loan d. FNMA loan

FHA loan

The purpose of the alienation clause in a mortgage is to a. prevent the loan from being assumed b. prevent the loan from being sold c. allow for interest rate changes to be made d. allow negative amortization to accrue

Prevent the loan from being assumed

Which of the following statements regarding VA loans is correct? a. a VA loan can be used to purchase non-owner occupied rental property b. VA loans may be up to 100 percent of the property's appraised value c. a veteran who has obtained one VA loan may never obtain another d. the lender is not protected because the VA would be reimbursed if the loan defaults

VA loans may be up to 100% of the property's appraised value

Borrowers seeking Federal Housing Administration (FHA) loans should go to a. the Federal Reserve Bank b. the Department of Housing and Urban Development (HUD) c. the Federal Housing Administration (FHA) d. a qualified lending institution

a qualified lending institution

If a borrower fails to make the loan payments when due, the lender can demand immediate payment of the entire balance under the a. acceleration clause b. alienation clause c. prepayment clause d. defeasance clause

acceleration clause

If the borrower defaults, a mortgage clause that allows the lender to require that all of the loan payments be due immediately is called a(n) a. acceleration clause b. due-on-scale clause c. alienation clause d. defeasance clause

acceleration clause

The clause that gives the lender the right to end the loan if title to the property is transferred is called a(n) a. acceleration clause b. alienation clause c. defeasance clause d. graduated clause

alienation clause

Liquidation of loan through periodic payments that include principal and interest is called a. alienation b. redemption c. amortization d. acceleration

amortization

An owner who no longer wants to be primarily responsible for a mortgage should find a buyer willing to a. subordinate the loan b. give a wraparound loan c. take the property subject to the loan d. assume the loan

assume the loan

In a loan that requires periodic payments that do not fully amortize the loan balance by the final payment, what term best describes the final payment? a. variable b. acceleration c. balloon d. graduated

balloon

A developer received a loan that covers five parcels of real estate and provides for the release of the mortgage lien on each parcel when certain payments are made on the loan. This loan arrangement type is called a a. package loan b. purchase-money loan c. blankey loan d. wraparound loan

blanket loan

Tom purchased a new house for $175,000. He made a down payment of $15,000 and obtained a $160,000 mortgage loan. The builder of Tom's house paid the lender a fee to reduce Tom's loan rate by 3 percent for the first year and 2 percent for the second year. This type of loan arrangement is a a. buydown mortgage b. wraparound mortgage c. package mortgage d. blanket mortgage

buydown mortgage

The defeasance clause in a mortgage a. prevents the loan from being assumed b. prevents the loan from being sold c. allows for interest rate changes to be made d. cancels the mortgage when the loan is repaid

cancels the mortgage when the loan is repaid

The clause that makes the mortgage void when the loan is repaid is called the a. defeasance clause b. alienation clause c. acceleration clause d. prepayment clause

defeasance clause

A borrower's house may be used as collateral for a loan while the borrower continues to occupy the property through the process of a. acceleration b. alienation c. hypothecation d. subordination

hypothecation

The Federal Housing Administration FHA has developed several loan programs designed to a. insure housing loans b. provide funding for housing loans c. guarantee housing loans d. buy and sell housing loans

insure housing loans

The Equal Credit Opportunity Act makes it illegal for lenders to refuse credit or discriminate because an applicant a. has bad credit history b. is an unmarried woman c. is a single parent who cannot afford the loan payments d. is unemployed with no assests

is an unmarried woman

Discount points charged by the lender on a loan are computed as a percentage of the a. loan amount b. closing costs c. sales price d. down payment

loan amount

The type of activity a mortgage broker usually performs is a. making loans from its own funds b. servicing mortgage loans c. matching borrowers and lenders d. selling mortgage-backed securities

matching borrowers and lenders

the primary purpose of the Truth-in-Lending Act (regulation Z) is to a. protect the lender against defaulting loans b. establish minimum interest rates c. provide the borrower with information on the loan costs d. prevent discrimination against loan applicants

provide the borrower with information on the loan costs

Funds for Federal Housing Administration (FHA) loans are usually provided by a. the Federal Housing Administration b. the Federal Reserve System c. qualified lenders d. the Department of Housing and Urban Development

qualified lenders

After a borrower's house is foreclosed by the lender, the borrower may regain the property by exercising the right of a. redemption b. quiet enjoyment c. defeasance d. alienation

redemption

The mortgagor's right to regain property following a mortgage foreclosure is known as the right of a. redemption b. alienation c. satisfaction of mortgage d. mortgage acceleration

redemption

Lenders are required to disclose the total cost of borrowing under a. the Equal Credit Opportunity Act b. Regulation Z c. the federal Fair Housing Act d. the Real Estate Settlement Procedures Act RESPA

regulation Z

Fran purchased her house for cash 30 years ago. Today, Fran receives a monthly check from the bank that supplements her pension income. Fran most likely has obtained a(n) a. graduated payment mortgage b. reverse annuity mortgage c. adjustable rate mortgage d. blanket mortgage

reverse annuity mortgage

The type of loan that provides for interest only payments to be made is called a(n) a. term loan b. amortized loan c. wraparound loan d. graduated payment loan

term loan

An individual's right to inspect her file at a credit bureau is included in a. the Truth-in-Lending Act b. the Equal Credit Opportunity Act c. Regulation Z d. the Fair Credit Reporting Act

the Fair Credit Reporting Act

The borrower's right to rescind a new consumer loan within three business days is provided by a. the Equal Credit Opportunity Act b. RESPA c. the Community Bank Reinvestment Act d. the Truth-in-Lending Act

the Truth-in-Lending Act

A purchaser obtains a fixed-rate loan to finance a home. Which of the following characteristics is true of this loan? a. The loan cannot be sold in the secondary market b. The amount of interest to be paid is predetermined c. The monthly payment amount will fluctuate each month d. The loan's interest rate will change according to an index

the amount of interest to be paid is predetermined

under the Truth-in-Lending Act (regulation Z) which of the following is not a component of the annual percentage rate for a loan? a. the loan interest rate b. the loan origination fee c. discount points d. the broker's commission

the broker's commission

Which of the following describes the monthly loan payments on an amortized loan? a. the principal portion of the payment decreases b. equal amounts are applied to interest and principal c. there is no charge in the portion applied to the principal d. the interest portion of the payment decreases

the interest portion of the payment decreases

which of the following statements is true of VA loans? a. they are available only to veterans who served in combat b. they are guaranteed by the government c. they are made only by the VA d. they may be assumed

they are guaranteed by the government

Which of the following best describes the secondary market? a. Lenders who deal exclusively in second mortgage loans b. the major originator of mortgage loans for single-family residences c. where loans are bought and sold after they have been originated d. the major originator of FHA and VA loans

where loans are bought and sold after they have been originated