REI Final - Ch 9
The index rate for adjustable rate mortgages most recently adopted, and growing in use, is:
A SOFR rate.
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.
If the lender in a standard first mortgage wishes to foreclose cost effectively, it is crucial to have which clause in the mortgage:
Acceleration clause.
The Real Estate Settlement Procedures Act does which of these:
All of these
Which of these statements is true about mortgage loans for income-producing real estate?
All of these.
A common risk that frequently interferes with a lender's efforts to work out a defaulted loan through either nonforeclosure means or foreclosure is:
Bankruptcy.
Known popularly by its section in the Federal Bankruptcy Code, which of the following types of bankruptcy is the traditional form of bankruptcy wherein the court simply liquidates the assets of the debtor and distributes the proceeds to creditors in proportion to their share of total claims?
Chapter 7 bankruptcy
From a home mortgage lender's perspective, which statement is true about the effect of bankruptcy upon foreclosure?
Chapter 7 bankruptcy is the most "lender friendly" form.
To finance the purchase of a property where either the borrower, the property, or both fail to qualify for the standard mortgage financing, a common nonmortgage solution is through the:
Contract for deed.
With what type of loan security arrangement is the deed held by a neutral party and returned upon payment of the mortgage in full?
Deed of trust.
A lender may reserve the right to require prepayment of a loan at any time they see fit through a(n):
Demand clause.
Which of the following acts prohibits discrimination in lending practices on the basis of race, color, religion, national origin, sex, marital status, age, or because all or part of an applicant's income derives from a public assistance program?
Equal Credit Opportunity Act (ECOA)
Which of these points in a mortgage loan would be addressed in the mortgage (possibly in the note as well)?
Escrows.
Foreclosure tends to be quickest in states that:
Have power of sale.
Which of the following acts was passed out of concern for abusive predatory practices in subprime lending?
Home Ownership and Equity Protection Act (HOEPA)
The element of an adjustable interest rate that is the "moving part" is the:
Index.
Which of these aspects of a mortgage loan will be addressed in the note rather than in the mortgage?
Late fee.
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.
When a buyer of a property with an existing mortgage loan acquires the property without signing the note for the existing loan the buyer is acquiring the property:
Subject to the mortgage.
A type of loan that occurred in recent years which raised concerns about predatory lending practices was the:
Subprime mortgage.
The Truth-in-Lending Act gives some mortgage borrower how long to rescind a mortgage loan?
Three business days
The dominant form of mortgage loan structure for income-producing property is a:
balloon mortgage loan.
A contract for sale of the property with the special provision that the actual delivery of a deed conveying ownership will occur well after the buyer takes possession of the property is more commonly referred to as:
contract for deed.
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 with prior agreement in the loan docs to convey the property to the lender rather than pursue a court supervised process of terminating all the borrower's claims of ownership of the property, this is commonly referred to as:
deed in lieu of foreclosure.
If a property is sold, either in fact or in substance (e.g., through a lease with an option to buy), which of the following clauses gives the lender the right to "accelerate" the loan, requiring the borrower to pay it off?
due-on-sale clause
Standard mortgage loans require monthly payments typically composed of two components: interest and principal repayments. When scheduled mortgage payments are insufficient to pay all the accumulating interest, causing some interest to be added to the outstanding balance after each payment shortfall, the loan is said to be:
negatively amortizing.
When a buyer acquires a property having an existing mortgage loan, a decision must be made as to whether the subsequent owner of the property can preserve the loan. If the buyer does not add his or her signature to the note, the buyer does not take on any personal liability. In this case, the buyer is said to:
purchase the property subject to the existing loan.
With most standard home loans, the lender can hold the borrower personally liable in the event of a default. Such loans are commonly referred to as:
recourse loans.
Even after a property goes into foreclosure, it is still possible for the borrower to reclaim the property as long as they produce the outstanding mortgage balance and all foreclosure costs incurred to that point. In a state such as Florida, this right may even extend beyond the date of the foreclosure sale. When this occurs, this right is more commonly referred to as:
statutory redemption.
It is possible to have a secured real estate loan without a mortgage through the use of a contract for deed. In contrast to the standard real estate sale, which of the following events occurs after the closing when dealing with a contract for deed?
title to the property passes to the buyer
