Ch. 16: IRA - Residential Land Uses

When a borrower and lender work out an agreement by which the borrower surrenders the property to the lender in exchange for forgiveness of debt, the process is called a. deed in lieu of foreclosure b. trust deed c. land contract d. mortgage

Deed in Lieu of Foreclosure

In periods of rising interest rates, the borrower may be able to sell his property for a higher price if the new owner can assume the existing loan. Because this is not advantageous to the lender, what type of clause may be included in the promissory note to preclude assumption? a. due-on-sale clause b. defeasance clause c. prepayment clause d. acceleration clause

Due-on-sale clause

The practice of charging interest to borrowers who pledge their property as collateral but leaving them in possession of the property is called a. security b. mortgage c. hypothecation d. usury

hypothecation

By verifying there are no "clouds" on the title, the lender qualifies the a. buyer b. seller c. income d. property

property

Which of the following categories account for the largest portion of all mortgage credit in the United States? a. 1-4 Family Residential b. Multifamily Residential c. Commerical d. Farm

1-4 Family Residential

The loan to value ratio for a VA loan can be as high as a. 95% b. 97.75% c. 100% d. 80%

100%

Although most promissory notes require a series of future periodic payments to service to debt, most notes contain a provision that makes the full amount (plus interest owed to date) immediately due and payable should a borrower default on the note. This provision is known as a(n) a. Deficiency Judgement b. Hypothecation c. Prepayment Clause d. Acceleration Clause

Acceleration Clause

The requirement the lender disclose the annual percentage rate of interest is mandated by the a. Real Estate Settlement and Procedures Act b. Consumer Credit Protection Act c. Equal Credit Opportunity Act d. Fair Housing Act

Consumer Credit Protection Act

If the mortgagor fails to make payments or defaults on other terms of the mortgage agreements, the mortgages can begin a. equity of redemption proceedings b. due-on-sale proceedings c. foreclosure proceedings d. hypothecation proceedings

Foreclosure Proceedings

Which of the following factors makes mortgage credit necessary for most home buyers? a. Large Transaction Amounts b. Short payment periods c. Federal Regulation d. Lack of Available Credit

Large Transaction Amounts

What is the basic distinction between mortgage bankers and mortgage brokers? a. Mortgage brokers typically do not service the loans they originate. b. Mortgage bankers typically do not service the loans they originate. c. Mortgage brokers do not originate new loans, but only service existing loans. d. Mortgage bankers do not originate new loans, but only service existing loans.

Mortgage brokers typically do not service the loans they originate.

The percentage of an borrower's gross monthly income required to meet monthly housing expenses (only) is called the a. mortgage debt ratio b. total debt ratio c. loan-to-value ratio d. income-to-debt ratio

Mortgage debt ratio

In a real estate transaction, the debt obligation secured by a mortgage is generally accompanied by a a. defeasance b. acceleration c. promissory note d. deed of trust

Promissory Note

Seller financing, where the seller holds a security interest on the property, best describes a a. purchase money mortgage b. deed of trust c. land contract d. second mortgage

Purchase Money Mortgage **Land Contract is technically right in California!

The requirement that the cost of borrowing money (including fees and other charges) be expressed to loan applicants in the form of an annual percentage rate of interest comes from a. Equal Credit Opportunity Act b. Regulation Z c. RESPA d. Fair Credit Reporting Act

Regulation Z

In most cases, real estate is purchased by means of a. secured loan b. cash c. an unsecured loan d. None of the above

Secured Loan

The development of a secondary market for mortgage loans is largely attributable to a. The actions of individuals borrowers b. The policies of the Federal Reserve Board c. The success of the savings and loan industry d. The standardization of mortgage loans due to insurance and guarantee programs

The standardization of mortgage loans due to insurance and guarantee programs

Unlike FHA loans, VA loans are back by a. title insurance b. mortgage insurance purchased by the borrower c. mortgage insurance paid for the federal government d. a guarantee program back by the federal government

a guarantee program back by the federal government

In a promissory note, which clause calls for all payments being due immediately in the case of default? a. defeasance b. acceleration c. due on sale d. prepayment

acceleration

The primary difference between a secured and unsecured loan is a. whether the lender charges interest on the debt. b. whether the lender has a claim on specific assets of the borrower in the event of default. c. whether the borrower can simply surrender the pledged asset to the lender instead of repaying the debt. d. All of the above

whether the lender has a claim on specific assets of the borrower in the event of default.