Real Estate Finance: Ch. 10

Judicial Foreclosure

A court proceeding that begins when the lender files a complaint and records a notice in the public records announcing a claim on the property to potential buyers

Streamlined Modification Program (SMP)

A loan modification program initiated in 2008 for at-risk borrowers with Fannie Mae and Freddie Mac loans.

Home Affordable Modification Program (HAMP)

A program for modifying a mortgage loan in order for the payment to become within the borrower's ability to pay.

A notice of sale must be given at least _______________ before the date of a foreclosure sale in a non-judicial foreclosure. A) 21 days B) 10 days C) 14 days D) 30 day

A) 21 days

Which of the following must be a judicial foreclosure in Texas? A) A Home Equity Lien B) A Mechanics and Materialman's lien C) A Purchase Mortgage Lien D) A Refinance Mortgage Lien

A) A Home Equity Lien

In a _________________ plan, the borrower pays part of the delinquency each month along with the borrower's regular monthly installment. A) Forbearance B) Recasting C) Deed in Lieu of Foreclosure D) Default

A) Forbearance

The ____________ allows the Treasury to work with loan providers to refinance existing loans to achieve a 31% front-end ratio. A) HAMP B) SMP C) HAFA D) USDA's Special Loan Servicing

A) HAMP

In a ____________ , the lender files suit with the judicial system and the borrower receives a note in the mail demanding payment. A) Judicial Foreclosure B) Power of Sale C) Strict Foreclosure D) Statutory Foreclosure

A) Judicial Foreclosure

The __________ offers delinquent borrowers the opportunity to prevent foreclosure by working with lenders to refinance their existing loan. A) SMP B) HAMP C) HAFA D) USDA's Special Loan Servicing

A) SMP

Deed in Lieu of Foreclosure An alternative to foreclosure wherein the lenders accept a deed rather than funds to settle the debt. Also called friendly foreclosure or voluntary deed

An alternative to foreclosure wherein the lenders accept a deed rather than funds to settle the debt. Also called friendly foreclosure or voluntary deed

Equity of Redemption

At any time up to the moment of the foreclosure, the borrower has the right to step in and pay what is owed and reclaim property forfeited

When the price at auction on a foreclosed property is insufficient to cover the unpaid balance of the loan, the lender may sue for a _____________ . A) Foreclosure Judgment B) Deficiency Judgment C) Debt Relief D) Guarantee

B) Deficiency Judgment

The _______________ allows taxpayers to exclude income from the discharge of debt on their principal residence. A) Form 1099-C B) Mortgage Debt Relief Act of 2007 C) Deficiency Judgment D) Texas Department of Savings and Mortgage Lending

B) Mortgage Debt Relief Act of 2007

A non-judicial foreclosure may occur when a _______________ exists in a mortgage. A) Reverse Mortgage Lien B) Power of Sale Clause C) Line of Credit D) Home Equity Tax Lien

B) Power of Sale Clause

Default-related services include all of the following, except: A) Foreclosure Costs B) Purchase Costs C) Property Inspections D) Property Preservation

B) Purchase Costs

_____________________ is the process of re-amortizing a mortgage. A) Foreclosure B) Recasting C) Forbearance D) Default

B) Recasting

Default

Breach or nonperformance of the terms of a note or covenants of a mortgage

Default of the terms of the loan may cause damage to the _______________ and could lead to loss of the property through foreclosure. A) Lender B) Property C) Borrower's Credit Score D) Servicer

C) Borrower's Credit Score

At any time prior to the foreclosure, the borrower has the right to step in and pay what is owed. This is called _______________. A) Strict Notice B) Non-Judicial Foreclosure C) Equity of Redemption D) Deficiency

C) Equity of Redemption

A(n) _____________ loan is exempt from a deficiency judgment. A) Conventional B) Conforming C) FHA D) VA

C) FHA

The ______________ program is designed for borrowers who cannot afford their current mortgage and need to transition to more inexpensive housing. A) HAMP B) USDA's Special Loan Servicing C) HAFA D) SMP

C) HAFA

If a borrower is in default, the _______________ may start the foreclosure process. A) Seller B) Borrower C) Mortgage Servicer D) Underwriter

C) Mortgage Servicer

A lender may seek a deficiency judgment when the _______________ at the foreclosure auction is less than what is owed on the property. A) Assessed Value B) Market Value C) Sales Price D) Appraisal Value

C) Sales Price

The ____________ offers rural homeowners to lower their monthly mortgage payment to no more than 31% of their verified monthly gross income. A) HAMP B) SMP C) USDA's Special Loan Servicing D) HAFA

C) USDA's Special Loan Servicing

In a ___________ the borrower voluntarily deeds the property to the lender. A) Forbearance B) Modification C) Default D) Deed in Lieu of Foreclosure

D) Deed in Lieu of Foreclosure

Under the Texas Constitution, before lenders commence foreclosure, they must give the borrower time to do one of the following, except: A) Pay the debt secured by the homestead property B) Remedy the condition creating the ground for foreclosure C) Convey the homestead property to the lender by deed in lieu of foreclosure D) File suit against the lender in court

D) File suit against the lender in court

In a ____________________ , the mortgage contains a power of sale clause. A) Judicial Foreclosure B) Strict Foreclosure C) Statutory Foreclosure D) Power of Sale

D) Power of Sale

A Power of Sale is a _________________ . A) Judicial Foreclosure B) Strict Foreclosure C) Sale of Power D) Statutory Foreclosure

D) Statutory Foreclosure

In a _____________ , the lender files a lawsuit of the homeowner that is in default. A) Statutory Foreclosure B) Judicial Foreclosure C) Power of Sale D) Strict Foreclosure

D) Strict Foreclosure

Foreclosure

Legal procedure by which secured property may be sold to satisfy an unpaid note

USDA'S SPECIAL LOAN SERVICING

The USDA offers programs for rural homeowners to lower their monthly mortgage payment to no more than 31 percent of their verified monthly gross (pre-tax) income - making monthly mortgage payments more affordable.

Strict Foreclosure

The lender files a lawsuit on the homeowner that has defaulted

Forbearance

The most common way of resolving a loan default through a plan to suspend payments for a limited time until the borrower is able to begin a repayment schedule

Power of Sale

The power of sale clause is a clause in the deed of trust where the borrower gives the lender the authority to foreclose in the event of default.

Recasting

The re-amortizing of a mortgage

Deficiency Judgment

Through a motion filed in court, the lender seeks to receive an unpaid balance or deficiency on the original mortgage

T or F: There is no right of redemption in Texas.

True

Deed in Lieu of Foreclosure (DIL)

is a mortgage modification option in which a borrower voluntarily deeds their collateral property in exchange for a release from all obligations under the mortgage

The Home Affordable Foreclosure Alternatives Program

is designed for borrowers who cannot afford their current mortgage. This program offers two alternatives, a deed in lieu of foreclosure or a short sale. Whichever action the borrower takes, the program is designed to allow a borrower who can no longer afford the mortgage on their property a way out so they may transition to a less expensive and more affordable option.

Home Affordable Foreclosure Alternatives® (HAFA)

program is designed for borrowers who cannot afford their current mortgage and have a pressing need to transition to more inexpensive housing. HAFA provides two options for transitioning out of a borrowers current mortgage: a short sale or a Deed-in-Lieu (DIL) of foreclosure.