Chap 6 Real Estate Financing

Question 1

A real estate loan payable in periodic installments that are sufficient to pay the principle in full during the term of the loan is called:

Answer 1

Amortized loan

Question 2

Which of the following would a borrower obtain a residential real estate mortgage loan:

Insurance company
Pension fund
Endowment fund
Commercial lender

Answer 2

Commercial lender

Question 3

In Illinois, if a borrower defaults on their mortgage payments the owner has the right to redeem their property through which redemption right?

Answer 3

Equitable right of redemption

Question 4

What is associated with a mortgage?

Answer 4

Acceleration
Defeasance
Assignment of rents

Question 5

The truth-in-lending law, implemented by regulation Z, sets forth certain requirements regarding loans to individuals for which purposes

Answer 5

Household use improvements
Room additions
Swimming pools

Question 6

A lender may protect its interests in a mortgage loan by obtaining additional security from:

Answer 6

A private mortgage insurance

Question 7

The type of mortgage loan that uses both real and personal property as a security is a?

Answer 7

Package mortgage

Question 8

An extension of credit from a seller to a buyer to allow the buyer to complete the transaction is called a

Answer 8

Purchase money mortgage

Question 9

What are the ways lenders service loans?

Answer 9

Collecting payments
Paying real estate taxes from escrow accounts
Sending overdue notices

Question 10

Discount points charged on a VA guaranteed mortgage loan can be paid by:

Answer 10

Buyer and seller

Question 11

The type of real estate loan that allows the lender to increase the outstanding balance of a loan up to the original sum in the note while advancing additional funds is the:

Answer 11

Open end mortgage

Question 12

Mortgage lenders want assurance that future real estate taxes will be paid. The most common way to do this is to require the borrower to:

Answer 12

Pay into an impound account

Question 13

The finance fee charged by the lender to make the loan is a?

Answer 13

Loan origination fee

Question 14

For purposes of mortgage foreclosures, Illinois is classified as what type of state?

Answer 14

Judicial foreclosure

Question 15

What type of loan allows for the release of a portion of the property as the loan is paid down?

Answer 15

Blanket loan

Question 16

A developer had a mortgage loan on his entire housing development. When he sold the lot to a buyer, he was able to deliver title to that lot free of the mortgage lien by obtaining a partial lease. What type of loan did the developer have?

Answer 16

Blanket mortgage

Question 17

The clause in a deed of trust or mortgage that permits the lender to declare the entire unpaid Balance immediately due and payable upon Default is what clause?

Answer 17

Acceleration clause

Question 18

Which of the following would be a legal way to advertise loan terms?

$499 per month
$1000 down
8% interest
Assumable mortgages

Answer 18

Assumable mortgages

Question 19

In a sale-and-lease back arrangement the

Answer 19

Buyer becomes the lessor

Question 20

Dannie has owned her house for over 50 years. It has fallen into disrepair but, because she lives on a fixed income, she does not have the money to make the needed repairs. She has a considerable amount of equity in the house. What type of loan would probably best suit her needs?

Answer 20

A reverse annuity mortgage

Question 21

The seller agrees to sell the house to the buyer for $200,000. The buyer was unable to qualify for a mortgage loan for this amount so the seller and buyer enter into a contract for deed is?

Answer 21

Equitable title

Question 22

When compared with a 30 year payment period, taking out a loan with a 20 year payment period would result In?

Answer 22

Faster amortization
Higher monthly payments
Quicker equity build up

Question 23

Illinois is most accurately referred to as what type of mortgage theory state?

Answer 23

Intermediate

Question 24

The purpose of a mortgage is to:

Answer 24

Provide security for the loan

Question 25

A borrower has secured an FHA insured loan. This means the FHA will will insure who against a loss?

Answer 25

Lender

Question 26

An FHA insured mortgage loan would most likely be obtained from which of the following

Answer 26

Any qualified lending institution

Question 27

In absence of an agreement to the contrary, the mortgage having priority will be the one:

Answer 27

That was recorded first

Question 28

The amount of a loan expressed as a percentage of the value of the real estate offered as collateral is the

Answer 28

Loan-to-value ratio

Question 29

True or false? A buyer does not have to be a veteran to assume a VA loan?

Answer 29

True

Question 30

Under an installment contract, the title to the property is held by the?

Answer 30

Vendor

Question 31

When s mortage loan has been paid in full,

Answer 31

A satisfaction of mortgage is recorded

Question 32

In a graduated payment loan:

Answer 32

Mortgage payments increase

Question 33

Under the lien theory, the equitable title to the property is held by the

Answer 33

Mortgagee (the lender)

Question 34

A person who asssumes an existing mortgage loan is

Answer 34

Personally responsible for paying the principle balance

Question 35

Illinois statutory usury ceiling for real estate financing is:

Answer 35

There is no ceiling

Question 36

The interest in a property held by the owner in excess of any liens against it is called

Answer 36

Equity

Question 37

If a buyer of an $185,000 home obtains a $150,000 mortgage with 4 points, how much will the lender charge at closing?

Answer 37

$6,000

Question 38

The principle distinction between the primary mortgage market and the secondary mortgage market is?

Answer 38

Origination versus the purchase of mortgage loans

Question 39

Fannie Mae, ginnie Mae, Freddie Mac, have in common the purpose of?

Answer 39

Purchasing existing mortgage loans

Question 40

The purpose of real estate settlement procedures act (RESPA) is to?

Answer 40

See that the buyers and sellers know all of their settlement costs

Question 41

The clause in a mortgage instrument that would prevent the assumption of the mortgage by a new purchaser is a?

Answer 41

Due-on-sale clause

Question 42

Which of the following pairs of terms is considered synonymous?

Answer 42

Interim financing and construction loan

Question 43

Charging more interest than is legally allowed is known as

Answer 43

Usury

Question 44

Laura has just made the final payment on her home mortgage to her lender. There will still be a lean on a property until the lender records a?

Answer 44

Satisfaction of mortgage

Question 45

If the amount realized at a Sheriff's sale as part of a mortgage foreclosure is more than the amount of the indebtedness and expenses, then the excess belongs to?

Answer 45

The mortgagor (the borrower)

Question 46

If a property sold as a mortgage foreclose does not sell for an amount suffieciebt to satisfy the outstanding mortgage debt, the mortgagor may be responsible

Answer 46

A deficiency judgement

Question 47

A land contract provides for the:

Answer 47

Conveyance of legal title at a future date

Question 48

A promissory note:

Answer 48

Is the primary evidence for a debt

Question 49

Type of loan tat will most likely have the lowest loan-to-value ratio?

Answer 49

Conventional loan without PMI

Question 50

The FHA

Answer 50

Insures loans

Question 51

A borrower obtained a $7000 second mortgage loan for five years at 6 percent interest per annum. Monthly payments were $50. The final payment included the remaining outstanding principle balance. What type of loan is this?

Answer 51

A partially amortized loan

Question 52

The pledging of property as a security for payment of a loan is:

Answer 52

Equity

Question 53

What are the legitimate factors a lender will take into consideration when deciding whether to grant a borrower a mortgage loan?

Answer 53

Creditworthiness of borrower Amount of borrowers income Ability to borrow to make payment

Question 54

An existing mortgage loan can have its lien priority lowered through the use of a?

Answer 54

Subordination agreement

Question 55

Regulation Z applies to:

Answer 55

Real estate sales agreements

Question 56

Which of the following normally purchase mortgages in the secondary mortgage market: Mortgage bankers Ginnie mae Federal housing administration Veterans administration

Answer 56

Ginnie Mae

Question 57

A borrower and seller have agreeed to split the discount points. The sales price of the property was $125,000 and the borrower secured a 75% loan. The lender charged four points and a one percent origination fee, how much did the borrower and the seller each pay?

Answer 57

$1,875