Financing

wraparound mortgage

A $55,000 mortgage and note are given by the buyer to the seller. The seller keeps the underlying $35,000 VA mortgage on the property. This is called a(n):

more than one piece of property

A blanket mortgage is usually designed to cover:

Release

A blanket mortgage usually contains which of the following clauses?

default

A borrower does not meet all the obligations of the mortgage agreement. This is usually referred to as being in:

$783 NOTE: s $58,000 x 90% = $52,200 for the loan x 1.5% = $783 for the discount points.

A buyer bought a property for $60,000 which had an appraisal of $58,000. If the lender charged 1 1/2 discount points, with the borrower receiving a 90% loan, how much were the points?

The amount of principal in the first month's payment was $28.00 EXPLANATION $403 (P & I per month) X 12 months (per year) X 30 years = $145,080 (total P&I paid over the 30 years) - $50,000 (principal) = $95,080 interest paid over the term of the loan (so A & B are both wrong). $50,000 X 9% = $4,500 (interest per year) / 12 months = $375 (interest the first month); $403 (P&I) - $375 (int.) = $28 principal paid the first month.

A buyer obtained a $50,000 loan with a 9% interest rate. The loan was amortized over 30 years with a monthly payment of $403. Which of the following statements is true?

$571.39 (P&I/mo) X 12 months X 30 years = $205,700.40 (P&I paid over 30 years); $205,700.40 (P&I) - $60,000 (principal paid back) = $145,700.40 (interest paid)

A buyer obtained a $60,000 loan at 11% interest for 30 years, with monthly principal and interest payments of $571.39. What was the total amount of interest paid over the 30 year term?

$90,000 X 10% = $9,000 (int/yr) / 12 months = $750 (int/mo); $789.81 (P&I) - $750 (int) = $39.81 (principal).

A buyer obtained a 10% interest rate loan in the amount of $90,000. The term of the loan was 30 years and the monthly payment of principal and interest was $789.81. How much of the first month's payment will be paid on the principal?

$583.33 (int/mo) X 12 months = $6,999.96 (int/yr) / 9.75% = $71,794.46 (loan); $71,794.46 (loan) / 70% = $102,563.52

A buyer purchased a house obtaining a new loan with a 70 to 30 loan to value ratio. The annual interest rate was 9 3/4%. The first month's interest was $583.33. What was the sale price of the house?

$80,000 x 80% = $64,000 loan. The loan is based on the lower of sale price or appraisal. $100,000 price less a loan of $64,000 = $36,000 down payment.

A buyer purchased a property for $100,000 obtaining an 80% loan to value ratio. The appraisal came in at $80,000. What would be the down payment?

$175,000 - $4,500 - $98,000 = $72,500

A buyer purchased a property for $130,000 putting 20% down. The buyer also immediately took out a $10,000 home equity loan. Five years later, the home has a current value of $175,000 while the home equity loan is down to a balance of $4,500 and the first mortgage has a current balance of $98,000. What is the seller's equity in the property?

$60,000 x 85% = $51,000 loan x 2% = $1,020.

A buyer purchased a property for $60,000 putting 15% down and paying two discount points. How much in dollars were the points?

Arrange for the lender to give a release of liability to the seller

A buyer purchased a seller's home and assumed the seller's loan. The seller does not want to remain liable for the loan. What should the seller do?

Each month the loan balance was reduced by $75. $75 X 6 months = 450 (total principal paid over the six months). $6,000 (original loan) - 450 (paid on principal) = $5,550 (loan balance).

A buyer took out a $6,000 loan for 10 years at 10.5% interest. The buyer made principal payments of $75 a month on the loan in addition to interest. What would be the principal loan balance after 6 months of payments?

contract for deed NOTE: A contract for deed is owner financing where the buyer makes payments directly to the seller.

A buyer wanted to purchase a property from a seller and assume the FHA loan on the property. The buyer, however, did not have enough money to assume the loan and make the down payment on the property. The buyer agreed to make equal monthly payments to the seller for one year for the down payment. This type of financing would be called a:

alienation

A buyer was going to take over on a seller's existing loan as part of the real estate transaction. The lender, however, was going to change the interest rate on the buyer to the prevailing current rate. In order for the lender to do this, there must have been what type of clause in the mortgage?

purchase money mortgage

A buyer who had insufficient funds for a down payment gave a note and mortgage to the seller for the difference. This is BEST referred to as:

buydown mortgage NOTE:A buydown mortgage is where the seller pays extra money to buy down the interest rate on behalf of the buyer (similar to paying discount points).

A developer wants to sell a lot in a tract of land owned by the developer. The current interest rates are 13%. The developer would like to pay extra money to the lender to allow the buyer to obtain a reduced interest rate. This type of arrangement would be known as a(n):

balloon payment

A final payment on a loan that was larger than the previous payments would be called a(n):

cout action

A foreclosure on a property is taken by:

$39,379 (sale price) X 80% (loan) = $31,503.20 (loan amount). $229.69 (int./mo) X 12 months = $2,756.28 (interest/year). $2,756.28 / $31,503.20 = 8.75%. 8 3/4% I did it as: 39,379 X 20%= 7,875.8/229.69= 34.2888241

A house sold for $39,379. The buyer paid 20% down. Monthly interest on the loan was $229.69. What was the annual interest rate on the loan?

usury laws NOTE: Usury laws set the maximum interest rate that can be charged by law.

A lender charging an interest rate that is higher than allowed by laws would be violating:

loan to value ratio

A lender expressing the amount of the loan to the estimated property value is called a:

prohibit any future title claims against the lender

A lender had to foreclose on a property. When the lender resold the property, the lender used a quitclaim deed. The purpose of this was to:

impounds or escrow account

A lender is adding 1/12 of the annual taxes and insurance to a borrower's monthly mortgage payment. These prepaid taxes and insurance are kept in a(n):

deed in lieu of foreclosure NOTE: deed in lieu of foreclosure allows the lender to forego the foreclosure process and receive the deed to the property from the buyer. This is the quickest way for the lender to receive title to the property and resell.

A lender is going through the foreclosure process. The lender, however, would like to resell the property as soon as possible. The lender should seek a:

A residential home purchased with a loan of $185,000 NOTE: regulation z refers to residential loans

A loan for which of the following transactions would be covered under Regulation Z?

reverse annuity mortgage (RAM)

A loan that is paid off either by the sale of property or death of the borrower is called a(n):

Balloon payment

A loan was amortized for a 30 year period. If the remaining loan balance was due at the end of 7 years, this is BEST described by which of the following terms?

amortized loan

A loan where each payment makes contributions toward principal and interest is a(n):

amortized mortgage

A mortgage in which the payments apply to both principal and interest is BEST referred to as:

Mortgagee

A mortgage is recorded to protect the

acceleration

A mortgage provision that gives the lender the right to call the balance due upon cause (such as non-payment) is called

adjustable rate

A mortgage where the interest rate is subject to adjustments periodically is:

File for a judgment lien against the borrower

A mortgagee foreclosed but the sale did not produce enough to pay all debts. Which of the following is the MOST likely course of action for the mortgagee to take?

$15,000 (loan) X 11% = $1,650 (interest/year). $1,650 / 12 months = $137.50 (interest/mo). $137.50 X 18 (months = $2,475 (interest. $2,475 (interest) + $15,000 (principal) = $17,475 (total paid back).

A person obtained a $15,000 term loan at an 11% annual interest rate. If the loan was repaid in a single payment after 18 months, what would be the total amount of the payment?

The TILA-RESPA Integrated Disclosure Rules (TRID)

A person was applying for a new VA loan on a single family home purchase. Which federal law was passed to ensure the buyer received disclosure of the total closing costs?

Equity

A property appraised for $42,000. If the buyer borrowed $28,000, what is the difference between the two amounts called?

$129,000 X 20% = $25,800 (down). $129,000 - $25,800 (down) = $103,200 (loan). $103,200 (loan) X 2% (discount) = $2,064 (points). $25,800 (down) + $2,064 (points) + $750 (closing costs) = $28,614 (total due).

A property sold for $129,000 with the buyer putting 20% down. The lender charged 2 points and $750 closing costs. What was the total due from the buyer at closing?

$116,000 - $79,000 = $37,000 of equity. The answer is none of the above.

A property was purchased for $92,000 putting $11,000 down. A few years later, the property appraised for $116,000 while the loan balance was down to $79,000. What is the owner's equity in the property?

Beneficiary

A property was sold in a state using a trust deed as the form of security. Who benefits MOST from the holding of the trust deed?

It changes the priority of the mortgages

A subordination clause in a mortgage does which of the following?

promissory note

A written document that is used to promise repayment of a loan is called a:

subrogation NOTE: Subrogation is signing over rights to an insurance company upon being paid for a claim.

All of the following clauses could be included in a mortgage EXCEPT:

the contract price or appraisal, whichever is lower

An 80% loan to value ratio means that the loan amount will be based on 80% of:

subordination

An agreement to waive priority is:

partially amortized note

An amortized note left a loan balance to be paid off at the end of the term. This would be called a(n):

reverse annuity mortgage (RAM) NOTE: A reverse annuity mortgage (RAM) allows for senior citizens to receive extra money from a lender to help in the retirement years. The lender receives a mortgage on the property.

An elderly person has recently made the last payment on a mortgage. This person would like to supplement their retirement income. The loan most likely to help in this situation would be a:

prepaid taxes and insurance

An escrow or impound account for the lender is for holding:

a limited liquidity investment

An investor investing in land needs to understand that this is:

Balloon

At the end of the loan term, an amortized note left a loan balance to be paid off. Which of the following terms BEST describes this type of note?

Verification of any reports issued and all disclosures about lead paint have been given to the buyer before a loan is approved

Because of health problems with lead paint, some federal institutions such as FHA are requiring which of the following?

3 days NOTE: Under the TILA-RESPA Integrated Disclosure Rules (TRID), a lender must give to the borrower an estimate of closing costs (The Loan Estimate) within 3 days of receipt of loan application.

How many days does a lender have from the time of receipt of loan application to give to the buyer an estimate of closing costs (The Loan Estimate)?

require the prepaid tax money paid by the owner be put into a lender's escrow or impound account

If a lender does not want to weaken the security of a property if taxes are unpaid, the lender should:

When the contract terms are satisfied

In a contract for deed, when does the buyer obtain legal title?

When the payment obligation is paid in full

In a contract for deed, when does the buyer receive the deed to the property?

The owner who was foreclosed upon

In foreclosure, after the mortgage and all other debts are paid, to whom would the excess go?

promissory note and mortgage document

In order to have a valid mortgage, there must be a(n):

mortgage brokers NOTE: A mortgage broker is truly a mediator who matches up borrowers and lenders and receives a brokerage fee for doing so.

Mediators who work matching lenders with borrowers are called:

a person being a senior citizen

The Equal Credit Opportunity Act prohibits discrimination based on:

insurance companies

The Federal Housing Administration (FHA) loan program operates in a similar fashion to:

and then levels out for the remainder of the term

The payment on a graduated payment mortgage usually has gradual increases:

secure the debt

The primary purpose of a mortgagor giving a mortgage to the mortgagee is to:

increase the effective yield to the lender

The reason a lender charges discount points is to:

equitable redemption

The right of a defaulting borrower to retain title to a property by satisfying the debt prior to the foreclosure sale is referred to as:

redemption

The right of a person to regain title to property after paying all debts is known as:

equity

The value of a property over and above all outstanding debts is called:

Life insurance

To protect the lender, which of the following items is usually NOT required for the borrower to pay?

Regulation Z

Truth-In-Lending Laws are also referred to as:

borrower

Usury laws are designed to protect the:

The borrower can purchase with a lower down payment

What is an advantage for a borrower who chooses to pay private mortgage insurance (PMI) in receiving a loan?

To insure loans for lenders

What is the primary purpose of the Federal Housing Administration (FHA)?

Both require owner occupancy

What is true about both FHA and VA loans?

Equitable

What type of interest does the buyer receive in the property after the seller accepts the offer?

Due on sale NOTE:The due on sale or alienation clause allows the lender to call the loan balance due and payable upon the sale of property; hence, the loan would be non-assumable.

Which clause in a mortgage would make the loan non-assumable?

Deed in foreclosure

Which instrument indicates involuntary alienation?

Interest only

Which of the following best describes a term loan?

Title insurance

Which of the following is NOT contained in a note?

Foreclosure

Which of the following is an example of involuntary alienation?

A real estate tax lien

Which of the following liens would take priority getting paid off at a foreclosure sale?

Real estate tax lien

Which of the following liens would take priority over all others?

A home improvement loan for a principal residence

Which of the following loans would fall under the three-day right of rescission allowed under Regulation Z?

Package

Which of the following mortgages uses both real and personal property as security?

Sale or assignment of the mortgaged property

Which of the following normally triggers an alienation clause?

The mortgage secures the note

Which of the following statements is true regarding security for a debt?

There are generally smaller monthly payments

Which of the following statements would be true of a partially amortized loan?

The house was located in an area primarily used for light industrial

Which of the following would allow a lender to legally reject a loan for a residential house that was in good repair?

CFPB; The Consumer Financial Protection Bureau (CFPB) replaced Housing and Urban Development (HUD) for overseeing the RESPA guidelines.

Who oversees and administers the provisions of the Real Estate Settlement Procedures Act (RESPA)?

So the loans can be sold easily through warehousing of loans

Why does Freddie Mac require that certain standardized forms and documents be used when a local lender makes a loan?

A land contract is also referred to as a(n):

installment contract

A deficiency judgment

property was sold by a foreclosure sale. The sale did not produce enough money to satisfy all the debts on the property. What could the creditors who weren't paid now file?

In a land contract or contract for deed, the seller who retains the fee simple title is referred to as the:

vendor