Chap 12 Flashcards
A buyer agrees to purchase a property with an existing mortgage lien. In which situation is the new buyer the only party responsible for the debt?
A) Assumption of an existing mortgage B) Estoppel C) Novation D) only brokers and sales associates are paid commissions for their services.
Explanation
The answer is novation. A novation agreement makes the buyer solely responsible for any default on the mortgage loan.
A lender declares all the unpaid balance due and payable as a result of default. The lender is exercising the
A) due-on-sale clause. B) defeasance clause. C) acceleration clause. D) right to reinstate clause.
Explanation
The answer is acceleration clause. The lender is exercising the acceleration clause.
financing vehicle in which the vendor holds title to the property until the buyer has met the stated obligations is a
A) purchase-money mortgage. B) contract for deed. C) term mortgage. D) balloon mortgage.
Explanation
The answer is contract for deed. A financing vehicle in which the vendor holds title to the property until the buyer has met the stated obligations is a contract for deed.
If a mortgagee does NOT want the mortgage to be paid ahead of schedule, the mortgage will normally contain
A) a prepayment penalty clause. B) a defeasance clause. C) an acceleration clause. D) a redemption clause. Explanation
The answer is a prepayment penalty clause. If a mortgagee does not want the mortgage to be paid ahead of schedule, the mortgage will normally contain a prepayment penalty clause.
The person who borrows money to help pay for the purchase of real property is called at various times the
A) lender. B) mortgagee. C) lienor. D) mortgagor.
he answer is mortgagor. The person who borrows money to help pay for the purchase of real property is called at various times the mortgagor.
The loan-to-value ratio is 80%. A buyer wants to acquire a property with a purchase price of $116,000. Calculate the required down payment.
A)
$23,200
B)
$32,800
C)
$20,000
D)
$92,800
Explanation
The answer is $23,200. The required down payment is $23,200: $116,000 × .2 = $23,200.
A borrower who is in default on a mortgage is allowed to prevent the lender from foreclosing on the property by paying the mortgagee the delinquent principal and interest, plus any expenses the mortgagee has incurred in attempting to collect the payments. This right is called
A) novation. B) a satisfaction of mortgage. C) an acceleration clause. D) the equity of redemption.
Explanation
The answer is the equity of redemption. This right is called the equity of redemption.
A couple has just made the final mortgage payment on their home. What document must the mortgagee file on their behalf?
A) Lis pendens B) Estoppel certificate C) Satisfaction of mortgage D) Novation
Explanation
The answer is satisfaction of mortgage. The mortgagee must file the satisfaction of mortgage on behalf of the couple.
In title theory states, the mortgage clause that provides that the conveyance of title to the lender is defeated when all the terms of the agreement have been fulfilled is the
A) release clause. B) insurance clause. C) defeasance clause. D) penalty clause.
Explanation
The answer is defeasance clause. In title theory states, the mortgage clause that provides that the conveyance of title to the lender is defeated when all the terms of the agreement have been fulfilled is the defeasance clause.
A home was purchased with a down payment of $50,000 and a loan of $200,000 at 6% interest for 20 years. Monthly payments are $1,432.86. What is the loan-to-value ratio?
A) 25% B) 70% C) 75% D) 80%
80
When a vendee buys “subject to the mortgage,” the
A) vendee becomes responsible for the note. B) vendor is relieved of the obligation for the promissory note. C) vendee is not responsible for the note. D) original obligation is substituted with a new note by novation.
The answer is vendee is not responsible for the note. When a vendee buys “subject to the mortgage,” the vendee is not responsible for the note.
In a mortgage transaction in Florida, the legal evidence of the personal debt is the
A) property (collateral). B) borrower's credit history. C) note. D) mortgage instrument. \
Explanation
The answer is note. In a mortgage transaction in Florida, the legal evidence of the personal debt is the note.