Section 11 Unit 3 Exam

An adjustable rate mortgage has an initial interest rate of 5%. When the first interest rate adjustment date arrives, the rate can be adjusted a maximum of 1%. At all subsequent adjustment dates, the interest rate can be adjusted a maximum of 2%. The highest rate of interest that may be charged at any given time is 9%. What does the 1% rate represent? A. initial cap B. lifetime cap C. periodic cap D. usury

A

an adjustable rate mortgage has an interest rate of 5% and a lifetime cap of 6%. what's the maximum rate that may be charged at any point during the life of the loan? A. 11% B. 30% C. 5% D. 6%

A

how do the primary and secondary mortgage markets work together A. the primary market packages loans to sell to the secondary market B. the primary market regulates the secondary market C. the secondary market packages loans to sell to the primary market D. the secondary market regulates the primary market

A

which institution was established in 1938 to purchase FHA-insured loans from individual lenders, group the loans together, and sell them as mortgage-backed securities to investors? A. fannie mae B. farmer mac C. freddie mac D. ginnie mae

A

what could be a consequence if there were no secondary mortgage market? A. interest rates would fall B. lenders might not have funds available to make new loans to the public C. there wouldnt be any institutions available to service loans D. unemployment would rise

B

An adjustable rate mortgage has an initial interest rate of 5%. When the first interest rate adjustment date arrives, the rate can be adjusted a maximum of 1%. At all subsequent adjustment dates, the interest rate can be adjusted a maximum of 2%. The highest rate of interest that may be charged at any given time is 9%. What does the 2% rate represent? A. initial cap B. lifetime cap C. periodic cap D. usury

C

in which market do lenders purchase packaged loans? A. housing market B. primary mortgage market C. secondary mortgage market D. stock market

C

what is it called when a number of percentage points is added to the index to determine the rate for an adjustable rate mortgage A. initial cap B. lifetime cap C. margin D. usury

C

what type of arrangement allows the buyer to retain the title to the property, but places a security interest in the property on behalf of the seller? A. a straight-term loan B. land contract C. purchase money mortgage D. wrap-around mortgage

C

which of the following loan types involves a type of graduated payment A. amortized B. fixed C. pledged account D. straight

C

which statement is true of the secondary mortgage market? A. borrowers have a say in which entity may purchase their mortgages in this market B. lenders dont purchase loans from other lenders in this market C. the borrower's rights are unaffected D. the loan originator continues to service the loan after its sold

C

what institution was formed in 1968 and took over the sale of the government loan market A. Fannie Mae B. Farmer Mac C. Freddie Mac D. Ginnie Mae

D