Review questions chapter 7

When traded in the market, Jr. loans are usually sold at

A discount

All of the following encumbrances are considered Junior loans except

A note and the first deed of trust

Interest rates on real estate loans are established by

Agreement between the lender and borrower

A cross defaulting clause in a junior loan

Automatically triggers a default on the junior loan

In the event of a default of the priority senior loan, a junior lender can usually do all of the following except

Change the terms of the junior loan

Junior finance is often utilized for all of the following except

DVA guaranteed loans

Lenders made increase their Yield on real estate loans by using all of the following techniques except

Decreasing the loan term

Interest rates on Junior loans carried it back by home sellers are usually

Equal to or lower than market rates

Are use a junior finance through owner carry backs increase when

Market interest rates are low

Creating a junior loan at the same time as a senior loan is known as

Piggyback lending

A lifting clause in a junior loan contract allows the

borrower to refinance without disturbing the status of the junior loan.

Home equity loans are popular among borrowers because the interest they pay on these loans is

deductible on federal income taxes.

A property seller may choose to carry back a portion of the sale price when the buyer

has insufficient cash for the deposit.

Equity in one's home is generally acquired through a paydown of the first mortgage balance or a(n)

increase in the property's value.

Unlike other types of home equity loans, home-improvement loans may have

longer repayment terms.

Land developers sometimes use junior financing to pay for

offsite improvements.

Lenders solicit borrowers for home equity loans because they can mitigate the risks of these loans by controlling the interest rate and

periodically checking the value of the collateral.

Some lenders provide combinations of first and second mortgages which are known as

piggy-back loans.

When home equity loans become due, borrowers usually

refinance the entire property.

The risk inherent in junior finance is that the

senior lender will get all the money at a foreclosure.