California real estate. Finance

How are conventional loans different from government loans? What is an example of a government loan?

Conventional loans are not insured by a governmental agency and have higher interest rates. Fha loa is a government loan

Lenders and mortgage loan originators must provide borrowers who apply for a purchase loan secured by real property:

a Special Information Booklet.

real estate broker arranges a hard money loan secured by a second trust deed for $7,000 to be repaid in 5 years. Her maximum commission would be: 15%. 5%. 10%. none of the above

15

The maximum commission a loan broker may charge to negotiate a $4,000 hard money 2nd trust deed, due in 3 years is: 10%. 15%. 20%. 25%.

15%

A lender must give a borrower a revised Loan Estimate within __________ business days if a changed circumstance occurs after the borrower receives the initial estimate. 2 3 4 5

3 Business days

A first deed of trust has a clause in it referring to a previously recorded instrument. That instrument would be:

A fictitious deed of trust. The fictitious deed of trust would be one in which the trustor was misnamed and therefore a new deed of trust would have to be written referring to the original or fictitious deed of trust.

What is a junior loan

A loan recorded after a first deed of trust or mortgage

A collection service is trying to collect a note at the insistence of a holder in due course. The maker of the note could use as a real defense: that there was fraud in the inducement of the note. that there was no consideration to the maker. that the face of the note was materially altered. none of the above

A material alteration of a note (e.g., the face of the note is changed from $500 to $5,000) is an example of a real defense for a maker (borrower) of a note. The maker can refuse to pay the holder in due course (investor and owner of the note) for this reason.

Article 7 of the Real Estate Law provides that interest on a loan may not be charged: prior to the date of the note. until the proceeds of the loan have been made available to the borrower. until the proceeds of the loan have been deposited in escrow. all of the above are requirements of Article 7

All

Which activity would require an MLO to be licensed or have an endorsement on his or her license? Advising on loan terms Collecting information with regard to a residential mortgage loan Preparing loan packages

All

The buyer under the terms of a land contract is referred to as: vendee. equitable title owner. purchaser. all of the above.

All Vendee is the buyer or purchaser. In a land contract the buyer is known as the equitable owner

mortgage is: swing loan. shared appreciation loan. reverse annuity loan. all inclusive trust deed.

All inclusive Definition: A wrap-around mortgage or an all-inclusive trust deed, is a type of seller financing (wrapping an existing loan with a new loan, and allowing the borrower to make one payment for both loans).

The lender does not have to give the borrower a revised Closing Disclosure until the day of consummation, unless there is a(n): addition of a prepayment penalty. change to the APR change to the loan product All of the choices apply.

All of the above

One of the disadvantages of a land contract to a buyer is: the possibility that the buyer would not get the title free and clear of loans. if the seller dies there might be litigation to obtain the title. lending institutions view land contracts as poor collateral. all of the above.

All of the above because land contracts are considered the least desirable form of collateral

What circumstances allow lenders to charge more than disclosed on the loan estimate? Amount charged falls within explicit tolerance thresholds. Charges that may exceed the disclosed amount. Changed circumstances. All of the choices apply.

All of the above.

Title to real property would immediately pass to the purchaser under which of the following contracts? Land Contract of Sale Installment Sales Contract Agreement of Sale None of the above

All of these contracts are conditional sales contracts whereby the seller retains title until the terms of the contract are met. At that time a deed is given and title passes.

In making an offer to purchase Lincoln's property, the Shermans insert the following clause: "Purchase price to be $100,000. Offer conditioned upon buyers obtaining a VA loan to be secured by the property in the amount of $100,000 for 30 years payable approximately $805 per month including interest at 9% per annum plus taxes and insurance." Which of the following most nearly represents the buyers' possibilities in this purchase transaction? If the $100,000 loan cannot be obtained, the buyers may require a return of their deposit and cancel the transaction. If the $100,000 loan cannot be obtained, the parties may renegotiate the terms of the purchase if mutually agreeable. If the maximum loan obtainable on the property is $90,000, the buyers could complete the purchase by making a $10,000 cash down payment. The buyers may choose any of the above options.

All options

Liquidation of an obligation most nearly means: annexation. amortization. acceleration. condemnation.

Amortization

The actual fees are $459 on a $8,000 1st trust deed with a loan term of 2 years. Under Article 7, the maximum that the broker can charge is:

Article 7 states that the costs and expenses cannot exceed 5% of the loan or $390, which ever is greater. In no event can the fee exceed $700. %5 of the principal ($8,000) is $400. The broker cannot charge $459, because $400 is the maximum amount that can be charged.

In order for a seller to relieve herself of primary liability when allowing the buyer to take over her existing loan, she must find a buyer who will: assume the loan. sign a release agreement. buy the property subject to the existing loan. sign a reconveyance.

Assume the loan

A hard money loan is: a loan of money when money is hard to get. a loan made to the trustor to help him purchase a piece of real property. a loan of cash to an existing owner of real property to buy an automobile.

Automobile. Hard money loans are given to existing owners of real property for any purpose other than buying real property. Usually considered a personal loan.

Seller takes back a purchase money first trust deed on a home. The buyer sometime later has to take out a second trust deed with a bank and later defaults on both loans. Which of the following is a true statement? Seller can get a deficiency judgment Bank can get a deficiency judgment No one can get a deficiency judgment on a trust deed Both (a) and (b) are correct

Bank can get a deficiency judgment. There is no deficiency judgment allowed on a purchase money loan. The loan from the bank is hard money and therefore a deficiency judgment would be allowed as long as the bank foreclosed through court action.

Mortgage companies, which operate primarily as mortgage loan correspondents of life insurance companies, mutual savings banks, and others, are usually regulated by: federal law. state law. county ordinances. Federal Housing Administration.

Because they are not acting as institutional lenders they are not subject to federal law

You, as an agent, have sold a home for which you negotiated a first loan with a bank and a second loan to be taken back by the seller. You have been requested to record a Request for Notice. This is usually to protect:

Beneficiary of the second loan

Who are parties of a deed of trust

Beneficiary trustor and trustee. Vendee isn't

How old does one need to be to buy a loan under the cal vet program?

Cal-Vet allows minors who are on active duty with any of the armed forces of the United States to purchase a home using the Cal-Vet program, if otherwise qualified.

A hard money loan is one made in exchange for: cash. property. a novation. a deed.

Cash

Which of the following is a final disclosure that reflects the actual terms of the transaction? Loan Estimate Actual Estimate Closing Disclosure Finance Disclosure

Closing disclosure For loans that require a Loan Estimate and that go to closing, lenders must provide borrowers

Broker, Jenny Johnson, was approved for the $200,000 bank loan that she needed to open up her real estate office, as long as she agreed to keep $20,000 in a savings account at the bank at all times during the term of the loan. This is known as: compensating balance. security deposit. collateral. risk control.

Compensating balance

Mr. Noro bought a property using a purchase money trust deed. A few years later he sold the property to Ms. Hassen for all cash. Which of the following would not be disclosed by the public records? A grant deed to Mr. Noro The original trust deed that Mr. Noro used in purchasing the property A reconveyance deed to Mr. Noro

Correct answer is (d). Since Ms. Hassen paid all cash for property, there would be no need for a reconveyance deed to Ms. Hassen. Therefore, it would not appear on public records.

A man had a promissory note in the amount of $200,000 secured by a second mortgage. He sold it to a friend for $150,000. This would be known as: a prepayment. hypothecation. usury. discounting.

Discounting.

Under the Article 7 of the Real Estate Law, any loan other than trust deed taken back by a seller, made by any person and secured directly by a lien on real property comprising an owner-occupied dwelling that provides for installment payments and the term of which is six years or less, shall require substantially equal installment payments over the period of the loan with the final payment not payable until the maturity date thereof. This section of the law: applies to all real property loans. means you must have monthly payments on the loan. does not apply to a 7-year loan. requires a mortgage broker license when negotiating such a loan.

Doesn't apply to a seven-year loan. The answer to the question is contained in the statement to the question. You will note that the law applies to loans of "6 years or less," so it will not apply to a 7-year loan. Article 7, Section 10244.1

Subprime loans: do not qualify for sale to Fannie Mae or Freddie Mac. are guaranteed by GNMA. will not be carried by a conventional lender. have low interest rates.

Don't qualify for sale to Fannie Mae or Freddie Mac

Which of the following does not belong with the others? CRV Highest loan-to-value ratio FHA

Fha Answers (a), (b), and (d) all refer to VA loans. CRV (certificate of reasonable value) is the appraisal of the house for VA. 100% of the CRV can be obtained on a VA loan.

In checking trust deed documents in the county recorder's office, you will find that the recorded deed of trust refers to standard clauses contained in a previously recorded deed of trust. This previously recorded trust deed is known as a: prima facie deed of trust. short form deed of trust. master deed of trust. fictitious deed of trust.

Fictitious deed of trust. Nearly all deeds of trust used by banks, escrow and title companies are the short form. This merely recites the trustor's name, the trustee, describes the property, and has a place for signature. The terms of the trust deed are not printed in the short form but refer to an original deed of trust recorded in each county, and it is identified as a fictitious deed of trust. This lists all the terms and conditions in detail.

A(n) ____________ is a person who is an innocent purchaser of a negotiable note without knowledge of any defect

Holder in due course

In the lending business many terms are synonymous. Which of the following pairs has synonymous terms? Interim loan--construction loan Take out loan--construction loan Interim loan--take out loan Amortized progressive loan--take out loan

Interim and construction

What is another word for construction loan

Interim loan

Land contracts, also referred to as installment contracts, are commonly used when the purchaser does not have sufficient cash to take title and pay the balance of the purchase price. Of the following, which is a correct statement concerning a land contract?

It is a security instrument. The contract of sale is a financing instrument with many names. It may be called an installment sale contract, a contract of sale, an agreement of sale, a conditional sales contract, a contract for deed, or a land sales contract.

Which of the following real estate terms does not belong with the others? Joint tenancy Hypothecate Subordination Second mortgage

Joint tenancy A second mortgage is subordinate to the first mortgage. To hypothecate is to give (personal property) in pledge as security for a debt. A mortgage is given as security for the note. The one that does not belong is joint tenancy.

Under the California Veterans' Farm & Home Purchase Plan, the purchaser would initially receive which of the following?

Land contract

A lender receiving a mortgage or deed of trust as security for a promissory note would be given the best protection by the:

Lenders consider the property value their prime protection, particularly when the property is the security for the loan.

A lender must provide the borrower with good faith estimates of credit costs and transactions terms on the: Summary Estimate Loan Estimate Closing Disclosure Escrow Closing Notice

Loan estimate

In real estate financing, reference is sometimes made to take out loans. This refers to: net amount after points and prepaid interest are deducted. a blanket encumbrance. a construction loan. long term loan taken out after construction.

Long term loan taken out after construction

Mr. McCormick can secure a loan with the term of 15 years or 30 years. What is his advantage if he chooses the longer term loan?

Lower monthly payment

In the course of offering a note for resale, Mr. Kim, an investor, explains that the note contains an alienation clause. This one fact would:

Make the note more negotiable

Encumbrances. The seller under a land contract

May not add encumbrances in excess of the amount owed

Which of the following documents is not a negotiable instrument?

Mortgage

Which security instrument is most valuable to a buyer who may fall on temporary hard times or default on payments? First deed of trust Second deed of trust Financing agreement

Mortgage because it gives the borrower to redeem the loan

The person who loans money secured by a mortgage on a parcel of real property is called a: mortgagee. trustee. mortgagor. trustor.

Mortgagee

A check is a: negotiable instrument. promissory note. holder in due course.

Negotiable instrument. A negotiable instrument is a written unconditional promise or order to pay a certain amount of money at a definite time or on demand.

When do deeds of trust outlaw? Never 3 years 3 years from the date of the last payment 5 years from the date of execution

Never. Promissory notes do outlaw, but deeds of trust never outlaw since they have conveyed title to the property.

Assume you are employed and compenstated by an insurance company to originate first trust deed loans. This activity requires: an active real estate license. an active real estate broker's license with MLO endorsement. no license at all. a MLO license according to the California Residential Mortgage Lending Act.

No license B&P Code 10133.1(a)(1) exempts any person or employee of banks, trust companies, savings and loan associations, industrial loan companies, pension trusts, credit unions, or insurance companies from needing a real estate license or MLO endorsement. These entities are also exempt from licensure under the CA Residential Mortgage Loan Originators License Law. (CA Fin Code Sectoin 50002(c)(13).

Points on a Cal-Vet loan are paid by: the lender. the Department of Loan Approvals. the borrower. none of the above

None of the above because there are no points in CAL vet loans

the annual percentage rate provided in the good faith estimate is out of tolerance under TILA, creditors must provide a corrected TIL disclosure statement to a consumer: at the time of consummation of the transaction. one week before the consummation of the transaction. on or before the 3rd business day before consummation of the transaction. no more than 3 business days after the consummation of the transaction.

On or before the third business day before consummation of the transaction

Assume a husband and wife are going to purchase a piece of real property. Which of the following would carry the least weight in granting the loan for the purchase of the property? Husband's overtime pay Wife's salary Amount of the down payment The appraisal of the property

Overtime pay

Mortgages and deeds of trust are considered: real property. personal property. chattels real. estates.

Personal property

A man sold his property for $25,000 and took back a promissory note for $9,000 sucured by a first deed of trust. He is now in need of some cash and wants to use the deed of trust as security for the loan with the bank. This type of loan transaction would be known as:

Pledge agreement

Under the TILA-RESPA rule, what term refers to a charge imposed for paying "all or part of" a transaction's principal before the date on which the principal is due? A finance charge A prepayment penalty An annual percentage rate A loan estimate

Prepayment penalty

Which of the following may not be a blanket encumbrance,as it applies to subdivisions?

Property taxes

Doug is a homeowner who has failed to make payments on a trust deed for two months. The trustee has recorded a notice of default. What does Doug have? Right of redemption Right of reinstatement Loan moratorium rights A problem, he has lost his opportunity to stop foreclosure

Right of reinstatement until five days before the trustee sale

There are many differences between mortgages and deeds of trust. All of the following are differences, except the: number of parties involved in the instrument. conveyance of title.. security for the loan. remedy for default.

Security for the loan In both mortgages and deeds of trust, the real property is the underlying security for the loan.

Which of the following is not a negotiable instrument?

Security instrument

The Servicemembers Civil Relief Act is of the greatest interest to: soldiers and sailors during war. land developers who were members of the military. real estate licensees. servicemembers who sign a deed of trust.

Service members to sign a deed of trust

A federal act that provides protection against foreclosures of real property owned by a person in the service is: Serviceman's Readjustment Act of 1944. Servicemembers Civil Relief Act. Moratorium Relief Act of 1968. Release of Obligation Act of 1947.

Servicemembers civil relief act

The trustor under a deed of trust is the party who: lends the money. receives the note. holds the property in trust. signs the note as maker.

Signs the note as maker

What clause is used to change the priority of a financial instrument? Alienation clause Subordination clause Or more clause Acceleration clause

Subordination clause

A loan originator is an individual who: obtains a listing from a seller. records the names of potential borrowers in a logbook. takes a residential mortgage loan application. takes a loan application for a timeshare.

Takes a residential mortgage loan app

A holder in due course is one who has taken a negotiable instrument that is complete and valid on its face, has become the holder before it was overdue, and taken it in good faith without knowledge of defect in the title. Under which of the following circumstances would a person taking a negotiable instrument not be classified as a holder in due course? Taking a note endorsed in blank, that is, where the holder simply signs his name on the back of the note Taking a straight note on which payment is not due for two years Taking a note that is made payable to bearer rather than to the order of a specific person Taking a note properly endorsed by the payee but not signed by the maker

Taking a note properly endorsed by the payee but not signed by the maker If the note is not signed by the maker it is not negotiable

man purchased a residence for $125,000. He deposited $115,000 cash, and a note secured by a deed of trust for the balance of the purchase price. Three years after the closure of escrow he executed a second deed of trust on the property to secure a loan he used to purchase an automobile. Considering the above facts which is a correct statement? The beneficiary of the first trust deed may foreclose in the event of default but has no recourse to a suit for a deficiency The beneficiary on the second deed of trust may not sue for a deficiency judgment because it is classified as a purchase money trust deed Both beneficiaries have the right of foreclosure and to sue for any deficiency they suffer Neither beneficiary has any right to sue after the foreclosure as they have received their full rights under a trust deed relationship

The beneficiary of the first trust deed may foreclose in the event of default but has no recourse to a suit for a deficiency

What does the Closing Disclosure Form integrate and replace? The existing HUD-1 and final TILA disclosure The existing HUD-1 and preliminary TILA disclosure The existing HUD-1 The final TILA disclosure

The existing HUD-1 and final TILA disclosure

What consolidated four disclosures under TILA and RESPA into two disclosure forms?

The loan estimates and closing disclosure

There are two instruments involved in a security transaction involving a deed of trust - the promissory note and the deed of trust. Of the following, which is a correct statement concerning these instruments?

The promissory note is the instrument used to bring a deficiency action to court.

Which of the following does not apply to a mortgage?

Trustee

The power of sale is given to the trustee by the

Trustor

Who benefits from a subordination clause in a deed of trust? Trustor Trustee Beneficiary Mortgagee

Trustor because it allows the borrower to borrow money on the deed of trust

The right or power to sell property in the event of default under the terms of the deed of trust are given by:

Trustor to trustee

CRV is a common phrase used in the financing of real estate. CRV is issued by the: Fannie Mae. Department of Veterans Affairs. Federal Housing Administration. California Department of Veterans Affairs.

Va

In real estate financing, lenders will sometimes find it necessary to refer to nominal rate when granting a loan. This means: that the rate of interest in the final granting of the loan will be greater than the commitment. points will be required as the rate required by the lender would exceed the legal rate of interest. the term used by lenders when the maximum rate of interest allowed by law is obtainable on financing a property. it is the rate of interest specified in the promissory note.

What is the rate of interest specified in the promissory note

When money is said to be tight, which of the following would provide the best form of investment? Real property security instruments Government issued bonds Unsecured promissory notes Savings account at your local bank

When the money market is tight, interest rates on mortgages and deeds of trust tend to increase drastically; therefore, real property security instruments would be a good form of investment during a tight money market.

A man bought unimproved property and executed a first mortgage for 10 years. He plans to build on the property within 2 years. The lack of which clause in the first mortgage could cause him future concern? Alienation Subrogation Subordination Acceleration

Without a subordination clause in the first mortgage, he could not obtain a subsequent construction loan.

Under TILA-RESPA, consummation of the loan occurs when the:

borrower becomes contractually obligated to the lender on the loan

Mr. Dunn bought a house. The seller took back a second trust deed and note. Mr. Kirk later buys the property subject to the loan. If Mr. Kirk immediately defaults, the seller:

cannot get a deficiency judgment because it was a purchase money loan. In California and a few other states, the mortgagee cannot recover a deficiency judgment on a purchase-money mortgage; these states have enacted so-called antideficiency legislation.

The relationship between effective and nominal interest is that:

effective interest is what the buyer pays. Nominal interest is what is specified in the note.

A purchase money loan is a(n):

loan made at the time of the sale whose proceeds go to the seller.

For a credit transaction in which the security interest is a consumer's principal residence, the consumer can exercise his or her right to rescind the transaction until: midnight of the 3rd day following consummation. midnight of the 3rd business day following consummation. 5:00PM of the 3rd business day following consummation. 5:00PM of the 7th calendar day following consummation.

midnight of the 3rd business day following consummation.

Regulation Z requires creditors to make good faith estimates of the required mortgage disclosures, and deliver or place them in the mail:

no later than 3 business days after receiving a consumer's application for a dwelling-secured closed-end loan.

If compensation is paid to a short sale negotiator or broker, the compensation:

should be disclosed to all parties in the purchase agreements,the escrow instructions, and the HUD 1 closing statement