Ch. 10 Exam Questions Flashcards
In a tight money market, one would expect to find:
A slower sales pace, as potential buyers wait for interest rates to fall.
In a tight money market, interest rates are high because there is less money for lending.
The Federal Reserve, in order to slow down and escalating rate of inflation, May:
Raise the discount rate charged to member banks.
In an inflationary trend, the government will want to slow down the economy and may raise the discount rate as one method of decreasing the money supply in circulation.
The Federal Reserve normally affects the supply of money in circulation by all of the following, except:
Buying or selling gold on the international market.
Changing reserve requirements, buying or selling bonds, and adjusting the discount rate are ways the federal reserve affect the money supply in circulation.
The prime rate is governed by:
Individual banks.
The prime rate is the rate each bank offers to their most preferred commercial customers.
The federal national mortgage Association (Fannie Mae) was originally created for the primary purpose of:
Increasing the amount of housing loan funds available.
Today, Fannie Mae’s primary responsibility is to:
Maintain an active secondary market for a mortgages.
All of the following are primary lenders, except:
FHA.
FHA is not lender, rather it is an insurer of private mortgages.
And endorsement by a payee in which the payee signs the negotiable instrument but does not specify a particular person who is to receive the funds is known as a:
Blank endorsement.
The period within which a mortgagor may reclaim ownership after foreclosure and sheriffs sale is known as the:
Statutory period of redemption;
A judicial foreclosure and sheriffs sale provides an opportunity for a foreclosed property owner to redeem the property following the sale. This is called the statutory period of redemption.
A provision in any mortgage that prohibits or limits a borrower from paying more than the monthly mortgage amounts in order to pay off a loan ahead of schedule is known as:
Pre-payment penalty clause.
Conversely, a prepayment privilege allows accelerated payment with no penalty.
Construction loans are generally designed to:
Provide high interest short term funds to builders.
Elite and sale contract refers to the:
Purchase of property wherein the seller becomes the buyers lender.
Land contracts are used when a seller becomes the lender for the buyer and retains title until the debt is retired.
When an individual obtains financing for undeveloped land with the intent on constructing a home on the land, the individual should make sure that the loan has:
A subordination clause.
A subordination clause in the loan allows a subsequent lien to take lien priority.
Sean owns five parcels of property that he is willing to hypothecate for a loan to develop the parcels. Sean will be required to execute a:
Blanket mortgage;
A blanket mortgage encumbers more than one parcel of land as security for one loan.
In a sheriffs sale for foreclosure, any excess money received beyond the lenders judgment and costs:
Must be given to the foreclosed upon owner.