Chapter 8: Real Estate Finance

With what type of clause does the entire balance of the loan become due and payable when an owner is alienating, transferring, or conveying a property?

Alienation clause

Impound accounts are NOT used to pay:

Interest

What document does a trustee record after being notified by the lender of the trustor's nonpayment?

Notice of Default

The trustee issues a reconveyance deed when the promissory note is:

Paid in full

The 1% loan fee on FHA loans is usually paid by the:

Seller

The nominal interest rate is:

Stated in the note

What provision in an instrument of finance would permit a change in the priority of liens on a property?

Subordination clause

A lender charges an origination fee, which includes points. One "point" is equal to:

1% of the loan amount.

A clause in a financial instrument that allows a lender to demand immediate payment of the entire note balance is known as a(n):

Acceleration clause

Should the trustor default, the trustee may have to sell the property for the:

Beneficiary

The trustor is also known as the:

Borrower

Which of the following liens are NOT eliminated by a foreclosure sale?

Federal tax liens, State, county, or city assessments and taxes

What type of fixed interest loan has payments that start out lower and gradually increase?

Graduated payment mortgage

Which of the following is NOT a party to a trust deed?

Grantor

A person who takes a negotiable instrument from another with no knowledge of defect is called a(n):

Holder in due course

What is true concerning the APR?

It is expressed as an annual and percentage rate.

The practice of purchasing real estate using a small amount of your own money and a large portion of borrowed funds is known as:

Leverage

The basic instrument used to evidence an obligation or debt is a:

Promissory note

Another term for the trustee is:

Third party

What do we call a borrower who secures a loan through a trust deed?

Trustor