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Basic Appraisal Principles > Chapter 11 > Flashcards

Chapter 11 Flashcards

1
Q

From the 1930s through the 1960s, mortgage lending was done primarily at the ______ level.

A

local

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2
Q

primary sources of mortgage capital were: (4)

A

State or federally chartered savings banks
Savings and loan institutions
Commercial banks
Credit unions

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3
Q

Savings banks are either ______or ______owned.

A

mutual, stockholder

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4
Q

many mutual savings banks went public and converted into stockholder-owned institutions in what year?

A

1990

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5
Q

A market created by government and private agencies for the purchase and sale of existing mortgages, which provides greater liquidity for mortgages.

A

Secondary mortgage

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6
Q

In 1968, FNMA was split into two organizations:

A

Fannie Mae and Ginnie Mae

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7
Q

Who purchases single family and multifamily FHA, VA and conventional mortgages.

A

Fannie Mae

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8
Q

Who guarantees securities that are backed by government-guaranteed or government-insured loans (e.g, VA, USDA, and FHA).

A

Ginnie Mae

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9
Q

In 1970, Congress created ________ to provide a secondary market for conventional mortgages, primarily for thrifts.

A

Freddie Mac

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10
Q

When mortgage rates are going up or in a state of flux, it may be attractive for a buyer to purchase a house and take over its existing mortgage, rather than getting a new one at a higher or less stable rate. What is this called?

A

Mortgage Assumption

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11
Q

A contract in which a purchaser of real estate agrees to pay a small portion of the purchase price when the contract is signed and additional sums, at intervals and in amounts specified in the contract, until the total purchase price is paid and the seller delivers the deed

A

Contract for deed

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12
Q

a variation of seller financing, and offers buyers an alternative to a new mortgage from a financial institution.

A

Wrap around contracts

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13
Q

Up until the 1970s, mortgage lending was typically done at the ______ level.

local
national
international

A

Local

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14
Q

What type of loans are assumable without the permission of the lender?

  • VA loans only
  • FHA loans only
  • VA and FHA loans
  • Very few loans of any type are assumable without lender permission
A

Very few loans of any type are assumable without lender permission

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15
Q

The principal operators in the secondary mortgage market include

pension funds, insurance companies, corporate investors

Fannie Mae, Freddie Mac, Ginnie Mae

Fannie Mae, Sallie Mae, Ginnie Mae

FHA, VA, USDA

A

Fannie Mae, Freddie Mac, Ginnie Mae

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16
Q

A pledge of a described property interest as collateral or security for the repayment of a loan under certain terms and conditions.

A

Mortgage

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17
Q

A mortgage that is neither insured nor guaranteed by an agency of the federal government, although it may be privately insured

A

Conventional loan

18
Q

A mortgage in which a party other than the borrower assures payment in the event of default, e.g., a VA-guaranteed mortgage or a SBA-guaranteed mortgage

A

Guaranteed mortgage

19
Q

A mortgage in which a party other than the borrower assures payment on default by the mortgagor in return for the payment of a premium, e.g., FHA-insured mortgages, private mortgage insurance (PMI).

A

Insure mortgage

20
Q

A mortgage that has priority over all other mortgage liens on a property.

A

First mortgage

21
Q

A lien placed on property after a previous lien has been made and recorded; a lien made subordinate to another by agreement; e.g., second and third mortgages; also called second lien or third lien

A

Junior Lien

22
Q

The process of retiring a debt or recovering a capital investment, typically through scheduled, systematic repayment of the principal

A

Amortization

23
Q

A mortgage with an interest rate that does not vary over the life of the loan.

A

Fixed rate mortgage

24
Q

A mortgage that is not fully amortized at maturity, and thus requires a lump sum, or balloon, payment of the outstanding balance

A

Balloon Mortgage

25
Q

A debt secured by real property in which mortgage payments are usually projected to match increases in the borrower’s income. The periodic payments start out low and gradually increase.

A

Graduated-payment mortgage (GPM)

26
Q

A debt secured by real property with an interest rate that may move up or down following a specified schedule or in accordance with the movements of a standard or index to which the interest rate is tied.

A

Adjustable-rate mortgages (ARM)

27
Q

How much is a loan point?

A

1% of the amount of a mortgage loan

28
Q

True or False? FHA charges a mortgage insurance premium to borrowers.

A

True

29
Q

Reverse annuity mortgages are primarily intended for what type of borrower?

A

Senior Homeowners

30
Q

A property has a first mortgage of $180,000, a second mortgage of $25,000, and a third mortgage of $10,000. The borrower defaults, and the property is sold for $210,000. The holder of the third mortgage receives ______, and the holder of the second mortgage receives ________.

A

$5,000, $25,000

31
Q

How is the FHA mortgage insurance program funded?

A

by mortgage insurance premiums paid by borrowers

32
Q

Which of the following is a guaranteed loan?

VA
FHA
Conventional
ARM

A

VA

33
Q

A property has a first mortgage of $120,000, a second mortgage of $30,000, and a third mortgage of $15,000. It is foreclosed and sold for $155,000. The holder of the third mortgage gets $________ and the holder of the second mortgage receives $ _________.

A

5,000, 30,000

34
Q

Which was the first kind of mortgage to be developed?

A

Fixed-rate

35
Q

In 1968, FNMA was split into two organizations, which were

A

Fannie Mae and Ginnie Mae

36
Q

A property has a first mortgage of $120,000, a second mortgage of $30,000, and a third mortgage of $15,000. It is foreclosed and sold for $145,000. The holder of the third mortgage gets $_______ and the holder of the second mortgage receives $ ________.

A

$0, $25,000

37
Q

Which of the following is an insured loan?

VA
FHA
Personal
ARM

A

FHA

38
Q

An ARM is

another term for a balloon mortgage
an adjustable-rate mortgage
an amortized rebate mortgage
illegal in most states

A

Adjustable rate morgtage

39
Q

Which of these is NOT a primary participant in the secondary mortgage market?

FHA
Fannie Mae
Freddie Mac
Ginnie Mae

A

FHA

40
Q

Mortgage assumptions are

illegal
attractive when rates are rising
attractive when rates are falling
permitted by all lenders

A

Attractive when rates are falling

Basic Appraisal Principles (19 decks)

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