Real Estate: Financing
The maximum commission a loan broker may charge to negotiate an $8,000 hard money first trust deed, due in 2 years is: $400. $500. $600. $700.
$400. (5%)
A holder in due course is an innocent party who purchased a: negotiable instrument without knowledge of any defects. non-negotiable instrument without knowledge of any defects. negotiable instrument with knowledge of defects. non-negotiable instrument with knowledge of defects.
negotiable instrument without knowledge of any defects.
A written promise to pay or evidence of a debt is called a: deed of trust. promissory note. mortgage. deed.
promissory note.
All of the following instruments are commonly recorded, except: deed of trust. promissory note. mortgage. lien.
promissory note.
The instrument by which a trustee conveys the bare legal title back to a trustor when a trustor has paid off a deed of trust is a: quitclaim deed. grant deed. reconveyance deed. warranty deed.
reconveyance deed.
To bring current and restore is to: pledge. usury. reinstate. redeem.
reinstate.
To buy a car, a man obtained a second on his home for $2,400, payable $77.00 per month, including interest at 6%. When he sold his home, he paid off the entire loan balance of $1,989. What was the face amount of the principal on the loan? $2,400 $2,772 $2,000 $1,989
$2,400
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: $390. $400. $459. $700.
$400.
A 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%.
If a revision occurs with a Loan Estimate, a lender has __________ days to give the borrower the revised estimate. 2 3 4 5
3
According to the Real Property Loan Law (Article 7), when a loan is secured by a borrower's residence, a prepayment penalty is allowed within ________ of the executation of the instrument. 4 years 5 years 6 years 7 years
7 years
JoAnn, a licensed real estate broker, decides to stop selling real estate and start brokering real estate loans. What kind of a license does she need? A MLO license endorsement A real property securities dealer's license A lender's license No license other than the real estate broker's license she already has
A MLO license endorsement
What is any charge payable directly or indirectly by the borrower and imposed directly or indirectly by the lender? A prepayment penalty A finance charge A loan estimate An actual rate
A loan estimate
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
A prepayment penalty
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 A reconveyance deed to Ms. Hassen
A reconveyance deed to Ms. Hassen
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 of the above
All of the above
What is the maximum loan available on a VA loan? 80% of appraisal 90% of appraisal $45,000 Amount on CRV
Amount on CRV
Which party benefits the most from the recordation of a Request for Notice of Default? The trustee of the second deed of trust The trustor of the second deed of trust Beneficiary of the second deed of trust None of the above
Beneficiary of the second deed of trust
Broker Baker negotiates a hard money second trust deed for Paul in the amount of $7,500 with a 5-year term. Baker charges Paul $2,500 commission for his service. Which of the following is a correct statement as to this transaction? It is not legal because it is usurious. Broker Baker cannot collect his commission. Broker Baker can collect his commission. Broker Baker can only collect the legal commission of 15%, which is $1,125.
Broker Baker can only collect the legal commission of 15%, which is $1,125.
What loan product requires a Loan Estimate? Closed-end mortgages Open-end mortgages Home equity lines of credit Reverse mortgages
Closed-end mortgages
Which of the following are synonymous? Take-out loan and construction loan Construction loan and interim loan Interim loan and take-out loans Construction loan and open end loan
Construction loan and interim loan
Under the provisions of FHA the borrower is required to pay the non-recurring closing costs unless the seller agrees to pay part or all of them. Which of the following are not considered non-recurring closing costs? Credit information costs and loan points (fees) Structural, pest control fees, and FHA appraisal fees Drawing and escrow fees; title search and title insurance Currently due property taxes and hazard insurance on property
Currently due property taxes and hazard insurance on property
Which of the following would distinguish between a first and second deed of trust? Date of recording County recorder's permission Term of each loan Amount of each loan
Date of recording
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.
Department of Veterans Affairs.
Mr. Smith sells his lot for $10,000 and takes back a promissory note for $5,000. Needing cash, he immediately sells the note at a discount to Mr. Brown for $3,500, assigning the security instrument and endorsing the note "without recourse." The borrower defaults before making any principal payments. What should Mr. Brown do to recover his loss? Foreclose to recover $3,500 Sue for specific performance to recover his $3,500. Recover from Mr. Smith as the transaction was usurious Foreclose to recover $5,000
Foreclose to recover $5,000
Mr. Small sells his house for $100,000 and takes back a trust deed and note for $50,000. Needing cash, he immediately sells the trust deed and note at a discount to Mr. Big for $35,000, assigning the trust deed and endorsing the note "without recourse." If the trustor defaults before making any principal payments (disregarding costs of collection), by which method would Mr. Big get the greatest amount in the shortest period of time? Foreclosure by trustee's sale to collect $35,000 Sue for specific performance Recover from Mr. Small because the transaction was usurious Foreclosure by trustee's sale to recover $50,000
Foreclosure by trustee's sale to recover $50,000
A broker negotiated a hard money $4,000 note secured by a second deed of trust with a term of 4 years, for a client. Considering the above transaction, which of the following is a correct statement? There would be no limit placed upon the commission the broker could charge His maximum legal commission would be $600 His maximum legal commission would be $400 His maximum legal commission could be 5% of the note or $325, whichever was greater
His maximum legal commission would be $600
Notes are said to be negotiable and non-negotiable. Which of the following is true about a negotiable note? If it is endorsed without recourse, it is non-negotiable. An alienation clause in the note would make it non-negotiable. If a note is secured by a mortgage, the note is negotiable, but the mortgage is non-negotiable. To be negotiable, a note must be endorsed by the maker.
If a note is secured by a mortgage, the note is negotiable, but the mortgage is non-negotiable.
n the language of real estate, which of the following terms does not belong with the others? Joint tenancy Hypothecate Subordination Second mortgage
Joint tenancy
Under the California Veterans' Farm & Home Purchase Plan, the purchaser would initially receive which of the following? Grant deed Warranty deed Land contract State deed
Land contract
Who benefits from a prepayment penalty? Lender Trustor Mortgagor Borrower
Lender
What provides the most security to the lender of a junior loan? Prepayment penalty Notice of default Loan to value ratio Request for foreclosure
Loan to value ratio
Of the following, which would most likely REQUIRE a judicial foreclosure? Mortgage Land contract with power of sale Deed of trust Security deed
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
Mortgage
How many points is a buyer/borrower limited to paying on FHA Loans? One Two Four No limitation
No limitation
In a foreclosure procedure who regulates the trustee's action? The Attorney General The Real Estate Commissioner The Corporations Commissioner None of the above
None of the above
Who would pay the points on a Cal-Vet loan? The buyer The seller The lender None of the above
None of the above (No points on Cal-Vet loan)
Which of the following does not apply to the TILA-RESPA disclosure rules? Closed-end residential mortgages Open-end residential mortgages Construction-only loans Loans for vacant land
Open-end residential mortgages
What type of property is included in a package loan? Personal property Real property and personal property Real property None of the above
Real property and personal property
What is the document commonly used to secure a loan on personal property? Security agreement Financing statement Mortgage Bill of sale
Security agreement
Which of the following is not a negotiable instrument? Promissory note Security instrument Installment note Personal check
Security instrument
Who holds the title to a property bought with a Cal-Vet entitlement? The veteran The trustee The California Department of Veterans Affairs The US Department of Veterans Affairs
The California Department of Veterans Affairs
What consolidated four disclosures under TILA and RESPA into two disclosure forms? The Loan Estimate and the Summary of Costs The Loan Estimate and the Finance Charge Disclosure The Loan Estimate and the Closing Disclosure The Summary of Costs and the Closing Disclosure
The Loan Estimate and the Closing Disclosure
A father needed money to send his son to college. He borrowed enough money from the bank to pay off his existing loan and have enough for his son's college. Later, he sold his home subject to the first trust deed and took a second trust deed as part of the purchase price. In the event of default on both trust deeds, which of the following is true? The bank could obtain a deficiency judgment against the purchaser of the home The bank could obtain a deficiency judgment against the father The father could get a deficiency judgment against the purchaser on the second trust deed None of the above
The bank could obtain a deficiency judgment against the father
Lenders must re-disclose terms or costs on the Closing Disclosure if certain changes occur to the transaction after the Closing Disclosure was first provided that cause it to become inaccurate. Which of the following would not require a corrected Closing Disclosure? The disclosed APR remains unchanged. The disclosed APR becomes inaccurate. The loan product changes. A prepayment penalty is added.
The disclosed APR remains unchanged.
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
Which of the following is true? A mortgage may be reinstated within 1 year following the sale The trust deed may be redeemed during the 3 months following notification of defaults The trust deed may be reinstated up until 5 days before a trustee's sale All of the above
The trust deed may be reinstated up until 5 days before a trustee's sale
On the Loan Estimate, how are fees and settlement charges determined? They are the actual cost of vendors. They are the average of costs supplied by competitive bid. They are the estimated, normal fees for the type of loan as known by the loan originator. They are industry wide standard costs
They are the estimated, normal fees for the type of loan as known by the loan originator.
In a deed of trust, which of the following is the borrower? Grantor Mortgagor Trustor Trustee
Trustor
Which of the following is the borrower on a promissory note secured by a deed of trust? Grantor Vendor Trustor Mortgagor
Trustor
"CRV" is a common phrase used in the financing of real estate. The CRV is issued by the: Fannie Mae U.S. Department of Veterans Affairs. Federal Housing Administration. California Department of Veteran's Affairs.
U.S. Department of Veterans Affairs.
Lenders and mortgage loan originators must provide borrowers who apply for a purchase loan secured by real property: a Special Information Booklet. the Closing Statement. the Lead-based Paint disclosure. a Qualified Mortgage disclosure.
a Special Information Booklet.
A hard money loan is considered to be: a loan from a commercial lender wherein the proceeds are credited to the borrower in cash. the same as a purchase money loan. a loan for money in a hard market. none of the above.
a loan from a commercial lender wherein the proceeds are credited to the borrower in cash.
The most important factor in the qualification of a buyer for a loan is his: number of dependents. savings account. adequacy of income. type of job.
adequacy of income.
The buyer under the terms of a land contract is referred to as: vendee. equitable title owner. purchaser. all of the above.
all of the above.
Liquidation of an obligation means: annexation. amortization. acceleration. condemnation.
amortization.
Under a land contract or a conditional contract of sale, the seller would not normally initiate a legal action based upon: specific performance. damages. an agreement not to record. any of the above
an agreement not to record.
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: trustee of the first loan. trustee of the second loan. trustor of the second loan. beneficiary of the second loan.
beneficiary of the second loan.
A loan covering several properties secured by a mortgage or deed of trust is a: shared equity loan. roll-over loan. installment loan. blanket loan.
blanket loan.
Under TILA-RESPA, consummation of the loan occurs when the: borrower becomes contractually obligated to the lender on the loan. borrower becomes contractually obligated to a seller on a real estate transaction. buyer and seller sign a purchase agreement. seller becomes contractually obligated to the lender on the loan.
borrower becomes contractually obligated to the lender on the loan.
All of the following are elements under the definition of "application" under Regulation Z, except the: borrower's monthly income. borrower's credit score. loan amount. value of the property.
borrower's credit score.
A hard money loan is one made in exchange for: cash. property. a novation. a deed.
cash
Most construction loans are made by: savings banks. commercial banks. life insurance companies. both (a) and (c) above
commercial banks.
When a borrower fails to pay, it is known as: redemption. reinstatement. default. devise.
default
The process of depositors removing funds from savings is called: deficiency. disintermediation. deregulation. default.
disintermediation.
In checking 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 deed of trust is known as a: prima facia deed of trust. short form deed of trust. master deed of trust. fictitious deed of trust.
fictitious deed of trust.
A trustee's sale is related to: yard sale. foreclosure. installment sale. deficiency judgment.
foreclosure
In real estate, reserves is another name for: impounds. assessment tax overpayment. escrow account. trust account.
impounds.
The largest loans would most likely be made by a(n): mutual savings bank. commercial bank. federal bank. insurance company.
insurance company.
A holder in due course would be successful against a defense of: incapacity of the maker. lack of consideration to the maker. forgery of the maker's signature. the interest rate of the note exceeded the usury law limitations.
lack of consideration to the maker.
An impound account on a loan benefits the: borrower. lender. FHA. trustor.
lender
Using borrowed money to the greatest extent possible is called: warehousing. intermediation. leverage. regulation.
leverage
A down payment of $1,000 for the purchase of an apartment house valued at $690,000 is a good example of: plottage. leverage. highest and best value. none of the above
leverage.
Considering a 25-year amortized loan, the longer the term of the note the: lower the interest rate. higher the interest rate. lower total monthly payment. higher total monthly payment.
lower total monthly payment.
Lenders must ensure that figures quoted on the Loan Estimate are: made in good faith and completely accurate. made in good faith and consistent with information available to the lender. completely accurate based on information given by a third party. completely accurate based on information provided by the borrower's reference.
made in good faith and consistent with information available to the lender.
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: prevent transfer. not be acceptable or legal. reduce the face value. make the note more negotiable.
make the note more negotiable.
FHA uses MPR in connection with loans they insure. MPR means: maximum percentage rate. minimum percentage rate. minimum property requirement. maximum property requirement.
minimum property requirement.
The person who loans money secured by a mortgage on a parcel of real property is called a: mortgagee. trustee. mortgagor. trustor.
mortgagee.
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 at all.
When a contractor receives the money from a construction lender in stages of his construction, it is called an: obligatory advance. optional advance. open end mortgage. progressive financing.
obligatory advance.
A lender or mortgage broker must provide the new Integrated Disclosures for real estate transactions: immediately. beginning January 1, 2015. on or after October 3. 2015. involving properties built after October 3, 2015.
on or after October 3. 2015.
If 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 3rd business day before consummation of the transaction.
Mortgages and deeds of trust are considered to be: personal property. promissory notes. estates in real estate. all of the above.
personal property.
Will needs $2,000 to close an escrow. He holds a $6,000 promissory note secured by a second mortgage on a farm. Manny agrees to lend him the necessary amount if Will puts up the note as security. This type of security is known as a: pledge. chattel mortgage. purchase money mortgage. subordination clause.
pledge
A man sold a lot for $25,000 and took back a note for $9,000. He is now in need of some cash and wants to use the note as security for a loan with the bank. This type of loan transaction would be known as: pledge agreement. mortgage. reconveyance. release of payment.
pledge agreement.
Most hard money loans that are available today are obtained from: private lenders. state chartered savings banks. federal chartered savings banks. federal national mortgage associations.
private lenders.
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.
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.
servicemembers who sign a deed of trust.
When using a purchase money deed of trust, the trustor: receives a promissory note for the amount borrowed. lends money to the beneficiary. signs the promissory note and deed of trust and gives it to the beneficiary. only signs the deed if trust.
signs the promissory note and deed of trust and gives it to the beneficiary.
A note payable interest only is called a(n): straight note. amortized installment note. nonnegotiable note. adjustable rate note.
straight note.
Subordinate is most opposite to: superior. inferior. subrogation. novation.
superior.
Long term loans to be issued by one lender upon completion of the interim construction financing by another lender are known as: discount loans. take out loans. redemption loans. renewal loans.
take out loans.
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 application.
Ms. Blue had been showing homes to a young, newly married couple for quite some time and finally found one which they wanted to buy. But even with the best loan available, they did not have enough cash for the down payment. They felt that they could raise the additional money they needed by borrowing against their automobile and other sundry personal property. Under these circumstances, the broker should: advise against it. tell them it is their decision to make, but point out the pitfalls of this kind of financing. advise them to go ahead because real estate always appreciates in value. tell them nothing and let them make their own decision.
tell them it is their decision to make, but point out the pitfalls of this kind of financing.
Considering construction financing, the lender will usually release the final payment to the borrower when: the lien period has expired. notice of completion is recorded. work has stopped for 30 days. none of the above
the lien period has expired.
A borrower on a new loan is required to advance $412.00 for an escrow account. He would do so for the benefit of: the mortgagor only. the mortgagor and the mortgagee. Fannie Mae. the mortgagee, primarily.
the mortgagee, primarily.
The power of sale is given to the trustee by the: beneficiary. seller. vendor. trustor.
trustor.
In dealing with a sale with a land contract subject to a blanket encumbrance containing a release clause, funds are deposited in an account approved by the Real Estate Commissioner for the protection of: beneficiary. trustor. vendor. vendee.
vendee
In a construction loan situation, the lender agrees to an obligatory advance agreement which states that the contractor will receive funds as the construction progresses. The contractor will receive the final payment: when the building is completed. immediately upon recordation of a Notice of Completion. one month prior to completion. when the lien period has expired.
when the lien period has expired.