Chapter 12 Quiz

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Borrowers can elect whether to have FHA or PMI on most mortgages.

False

Both FHA and VA operate under an entitlement program.

False

Currently, the contract rate on FHA loans is set by the Secretary of HUD and is generally less than the rate on similar conventional loans.

False

Entitlement is restored to a qualified veteran when the mortgage is either repaid in full or assumed by a new buyer.

False

Historically the VA has used an appraisal to decide whether to take title to a property in foreclosure. Today, however, it is standard procedure for the VA to take title when a property goes into foreclosure

False

Judicial foreclosure allows the court to transfer title from the borrower to the lender without having a sale of the property.

False

Since FHA insurance reduces for the lender the risk associated with default by the borrower, the insurance premium is paid by the lender.

False

The VA guarantees both the lender and the borrower against losses.

False

Title insurance insures against losses due to eminent domain.

False

Title insurance specifically covers losses caused by events that occur after the payment of the premium.

False

Under the current rules, the FHA annual insurance premium must be paid for the entire life of the loan regardless of the down payment.

False

Whereas VA loans are limited by the amount of entitlement, FHA loans have no limit on the amount that can be insured. Group of answer choices

False

A power-of-sale foreclosure allows a public sale of the property without a court order.

True

Equitable right of redemption is the right to reclaim the property before the foreclosure sale.

True

Funds for making FHA loans are provided by local FHA-approved lenders.

True

Private mortgage insurance (PMI) insures the top portion of the loan, allows the insurer to pay the claim and take title to the property, and is provided by private insurers on conventional loans.

True

The VA guarantee is a partial insurance program, whereas the FHA is a full insurance program.

True

The funding fee charged on a VA loan varies with the down payment

True

The interest rate charged on VA loans is currently allowed to float with the market and is no longer set by the Director of the VA.

True

With a VA loan, it is possible to have a release of liability without a restoration of entitlement.

True


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