Ch 11 - Loan Classifications

Question 1

What a grantee agrees to pay a debt,

_______

Answer 1

A loan is being assumed

Question 2

Any loan not government guaranteed or government insured

Answer 2

Conventional loan

Question 3

A provision that states the borrower may obtain the release of anyone lot or parcel from the lead by repairing a definite about of the loan

Answer 3

Partial release clause

Question 4

Enables a borrower who is paying off an existing mortgage to obtain additional financing from the second lender

Answer 4

All-inclusive mortgage, also called a wrap-around mortgage

Question 5

A type of mortgage where the interest rate and maturity are fixed but the monthly payment gradually rises

Answer 5

Graduated payment mortgage (GPM)

Question 6

A mortgage generally originated at one rate of interest, with the rate fluctuating up or down during the loan term based on a certain economic indicator

Answer 6

Adjustable rate mortgage (ARM)

Question 7

Limits on interest rate adjustments to the amount of increase in any one year and over the life of the loan

Answer 7

CAP

Question 8

A premium added it to the index that determines the interest rate

Answer 8

Margin

Question 9

The shared-appreciation mortgage could also be called a…

Answer 9

Participation loan

Question 10

True or false:

The funding fee is waived for DISABLED veterans

Answer 10

True

Question 11

True or false:

Under an open-end mortgage, the lender is obligated to advance any additional funds

Answer 11

False

Question 12

True or false:

A reverse loan allows senior citizens to realize the equity build up in their homes without having to sell

Answer 12

True

Question 13

True or false:

There is no VA limit on the amount of the loan a veteran can obtain

Answer 13

True

Question 14

True or false:

Residential property purchased with a VA loan must be owner-occupied

Answer 14

True

Question 15

True or false:

For loans originated since December 15, 1989, there are no assumptions without complete buyer qualification and there are no longer any investor loans

Answer 15

True, but this specifically applies to FHA loans

Question 16

Under a budget mortgage loan, at the time the loan is made, the borrower is required to establish a reserve fund for the payment of these items

Answer 16

pro rata share of real estate taxes, insurance

Question 17

Who was the first private insurance company to insure conventional loans?

Answer 17

Mortgage guaranty insurance corporation (MGIC)

Question 18

What kind of mortgage secures a note executed by the borrower to the lender, as well as any future advances of funds made by the lender to the borrower or his or her successors in title?

Answer 18

An open-end mortgage

Question 19

What was created in 1934 to encourage improvement in housing standards and conditions, provide an adequate home-financing system through insurance of housing credit, and exert a stabilizing influence on the mortgage market?

Answer 19

Federal Housing Administration (FHA)

Question 20

For which kind of loan will the lender disburse the loan proceeds in installments?

Answer 20

A construction loan

Question 21

What is the most popular FHA program, which applies to loans on one-to-four family residences?

Answer 21

Title II, Section 203(b)

Question 22

What is the federal agency under the US Department of agriculture, originally designed to handle emergency farming financing, that channels credit to farmers in rural residents and communities?

Answer 22

Rural economic and community development administration (RECD)

Question 23

What is the objective of a graduated payment mortgage (GPM)?

Answer 23

To help borrowers qualify for loans by basing repayment schedules on salary expectations