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Units 15 & 16 Study Guide: Real Estate Financing > Assessment > Flashcards

Assessment Flashcards

1
Q

A mortgage is classified as a(n) ___ lien on real estate

A

Voluntary

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2
Q

A mortgage is a(n) ___ in which a(n) ___ pledges real property to the ___ as a security for a debt.

A

Financing agreement
Mortgagor pledges to the mortgagee

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3
Q

In one form of security instrument, the borrower actually turns over ___ title to the secured property, while retaining ___ title.

A

Turns over legal title
Retains equitable title

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4
Q

When a property is mortgaged, the owner must execute a(n) ___ and a(n) ___.

A

Promissory note
Security instrument

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5
Q

PITI refers to…

A

Principal
Interest
Taxes
InsuranceA

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6
Q

In a typical deed of trust, the mortgagee is the ___, and the borrower is the ___.

A

Mortgagee = beneficiary
Borrower = Trustor

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7
Q

One discount point is equal to 1% of the ___.

A

Loan amount

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8
Q

For borrowers, 1 discount point = 1% of the loan amount and is charged as ___ at closing.

A

Prepaid interest

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9
Q

In the event of a borrower’s default, a(n) ___ makes foreclosure easier by giving a lender the right to declare the entire debt due and payable

A

Acceleration clause

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10
Q

In most mortgage documents, the ___ requires the mortgagee to execute a satisfaction when the note has been fully paid, returning to the mortgagor all interest in the real estate

A

Defeasance

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11
Q

In most mortgage documents, the defeasance clause requires the mortgagee to execute a(n) ___ when the note has been fully paid, returning to the mortgagor all interest in the real estate

A

Satisfaction

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12
Q

After a real estate loan that is secured by a deed of trust has been repaid in full, the ___ executes a release deed or deed of reconveyance that releases the property back to the ___.

A

Trustee executes
Released to the trustor

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13
Q

After a deed of trust has been repaid in full, the trustee executes a(n) ___ or ___ that releases the property back to the trustor

A

Release deed
Deed of reconveyance

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14
Q

A buyer who purchases real property and assumes the seller’s debt becomes personally obligated for the repayment of the entire debt. True or false?

A

True

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15
Q

A(n) ___ begins at one rate of interest, then fluctuates up or down during the loan term

A

Adjustable rate mortgage

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16
Q

In states that permit ___, the court simply awards full legal title to the lender and no sale of the property takes place.

A

Strict foreclosure

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17
Q

A(n) ___ allows a homeowner aged 62 or older to borrow money against the equity built up in the home

A

Reverse mortgage

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18
Q

___ is defined as the act of charging interest in excess of the maximum legal rate

A

Usury

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19
Q

After the redemption period, the successful bidder at a foreclosure receives a(n) ___ that conveys whatever title the borrower had with no warranties

A

Deed

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20
Q

Lenders are NOT allowed to charge prepayment penalties on loans that are insured or guaranteed by the ___ or a(n) ____

A

the federal government
government sponsored enterprise

21
Q

If the lender must obtain insurance on property located in a flood hazard area because the borrower did not, the lender can….

A

Add the premium cost to the unpaid debt

22
Q

A(n) ___ occurs when the lender sells the loan to an investor or other mortgage company

A

Assignment of mortgage

23
Q

When a mortgage lender finds that a borrower has not made necessary repairs to the property, the lender usually immediately proceeds to foreclosure. True or false?

A

False

24
Q

A married couple, both 65 years old, have retired. They have almost $800,000 in equity in their home but they don’t have enough cash to travel as they always dreamed of doing. The couple could consider what financing alternative?

A

Reverse mortgage

25
Q

A document that indicates that a loan has been made is called…

A

a promissory note

26
Q

A borrower defaults on a mortgage and the lender forecloses. The lender’s foreclosure suit is filed on March 15 and the sale is to be held on May 10. If the borrower attempts to redeem the property on May 1, they are exercising….

A

Equitable right of redemption

27
Q

A house is listed for $250,000. It is purchased for $230,000 with a 20% down payment. The balance is financed by a fixed-rate mortgage at 6%. The lender charges 4 points. If there are no other closing costs involved, how much money does the borrower need at closing?

A

$53,360

28
Q

One afternoon, a client calls a real estate broker and tells them “My lender just told me that my note and mortgage is a negotiable instrument. What does that mean?” The broker should tell them that means, the mortgage can be ___ but the client is not ____.

A

Sold by the lender
affected

29
Q

A deed of trust involves all of the following EXCEPT:
a) Lender
b) borrower
c) trustee
d) mortgagor

A

Mortgagor

30
Q

In a lien theory state, a buyer purchases property and takes out a mortgage as part of the purchase price. The buyer has ___ to the property.

A

Legal title

31
Q

A basic form homeowners insurance policy provides coverage against ___, ___, and ___ damage

A

Fire
Lightning
Smoke

32
Q

A mortgage company charges borrowers a 1.5% loan origination fee. What will the mortgage company charge as a fee if the asking price of a house was $235,000, the sales price is $210,000, and the buyer is making a down payment of $50,000?

A

$2,400

33
Q

A mortgage document contains the clause: “In the event of Borrower’s default under the terms of this Agreement, Lender may declare the entire unpaid balance of the debt due and payable immediately.” This clause is called…

A

Acceleration clause

34
Q

This month, a borrower made the last payment on a mortgage loan. The lender must execute a(n)…

A

Satisfaction of mortgage

35
Q

A consumer’s income, outstanding loans, and other financial factors, will be reflected in the consumer’s ___.

A

Credit score

36
Q

A buyer purchases property from a seller for $45,000 in cash and assumes the seller’s outstanding mortgage balance of $98,500. The lender executes a release for the seller. The buyer fails to make any mortgage payments, and the lender forecloses. At the foreclosure sale, the property is sold for $75m,000. Based on those facts, who is liable and for what amount?

A

The buyer is liable for $23,500

37
Q

The decision whether to buy or rent should involve consideration of ___ and ___.

A

Housing affordability
Current mortgage interest rates

38
Q

A borrower defaulted on a mortgage loan, leaving an unpaid balance of $95,000. After receiving only $85,000 from the sale of the property, the lender filed for a(n) ___.

A

Deficiency judgment

39
Q

When a homeowner defaulted on a home loan, the trustee immediately sold the property to recover the debt. The trustee acted under the terms of the security instrument. Based on these facts, the exercise of this ___ is an example of nonjudicial foreclosure

A

power of sale

40
Q

When a homeowner defaulted on a home loan, the trustee immediately sold the property to recover the debt. The trustee acted under the terms of the security instrument. Based on these facts, the exercise of this power of sale clause is an example of ___.

A

Nonjudicial foreclosure

41
Q

The difference between the interest rate that the lender charges and what the investment demands can be made up by charging ___.

A

Discount points

42
Q

What is the term that refers to a lender charging an interest rate that is higher than that permitted by law?

A

Usury

43
Q

The mortgagor is the…

A

Borrower

44
Q

If the lender waits to call the entire note due and payable if the borrower stops making payments, the security instrument must include…

A

an acceleration clause

45
Q

When a deed of trust is the security instrument, which party is the trustee?

A

The lender

46
Q

Lenders charge a loan origination fee to…

A

Cover the expenses involved in generating the loan

47
Q

Without the ___, lenders would have to sue the borrower for every overdue payment.

A

Acceleration clause

48
Q

The major disadvantage to lenders when accepting a(n) ___ is that they take the real estate subject to all junior liens.

A

Deed in lieu of foreclosure

Units 15 & 16 Study Guide: Real Estate Financing (2 decks)

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