Chapter 12 - Principles of Real Estate Financing

Question 1

Charging more interest than is legally allowed is known as …

Answer 1

-usury

Question 2

A mortgagor is the one who …

Answer 2

Borrows Money

Question 3

A promissory note …

Answer 3

is the primary evidence of a debt.

Question 4

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

Answer 4

a loan origination fee

Question 5

The interest paid by the borrower at the settlement table to cover the period of time until the first payment is due is called …

Answer 5

-simple interest

Question 6

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 the …

Answer 6

-mortgagor

Question 7

After a borrower makes the final payment on a home mortgage, the lien remains on the property until the lender records …

Answer 7

-a satisfaction of mortgage

Question 8

An existing mortgage loan can have its lien priority lowered by a

Answer 8

-subordination agreement

Question 9

If the quarterly interest at 10.5 percent is $3,150 the principle amount of the loan is

Answer 9

$120,000

Question 10

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

Answer 10

-deficiency judgement

Question 11

The clause in a mortgage that permits the lender to declare the entire unpaid balance immediatley due and payable upon default is the

Answer 11

-acceleration clause

Question 12

When a mortgage loan has been paid in full, it is important for the borrower to be sure that

Answer 12

-a satisfaction of mortgage is recorded

Question 13

A deed of trust differs from a mortgage in all of the following EXCEPT

• the number of parties involved in the loan
• the obligation of the borrower to repay the funds
• the redemption rights allowed after foreclosure
• the time period permitted to cure a default

Answer 13

-the obligation of the borrower to repay the funds

Question 14

A person who assumes an existing mortgage loan is

Answer 14

personally responsible for paying the principle balance

Question 15

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

Answer 15

-equity

Question 16

The mortgagee foreclosed on a property after the borrower defaulted on the loan. At the foreclosure sale, however, the house sold for only $29,000. The unpaid balance of the loan at the time of the sale was $40,000. What must the lender do to recover the $11,000 the borrower still owes?

Answer 16

-Seek a deficiency judgement

Question 17

The right a mortgagor has to regain the property by paying the debt after a foreclosure sale is called

Answer 17

-redemption

Question 18

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

Answer 18

-due on sale clause

Question 19

The defeasance clause in a mortgage requires the mortgagee to execute

Answer 19

-a satisfaction of mortgage

Question 20

A “friendly foreclosure” enables a mortgagor to prevent the mortgagee from taking the property by statutory means. This can be accomplished by

Answer 20

-a deed in lieu of foreclosure

Question 21

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

Answer 21

-that was recorded first.

Question 22

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

Answer 22

-hypothecation

Question 23

A mortgage broker generally offers which service?

Answer 23

Bringing the borrower and the lender together

Question 24

A borrower obtained a $7,000 second mortgage loan for five years at 6 percent interst per annum. Monthly payments were $50. The final payment included the remaining outstanding principle balance. What type of loan is this?

Answer 24

-Partially amortized

Question 25

The principle distinction between the primary mortgage market and the secondary mortgage market is in the…

Answer 25

origination versus the purchase of mortgage loans

Question 26

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

Answer 26

-an amortized loan

Question 27

If the amount of a home equity loan is $13,500 and the interest is 7.5 percent, what is the amount of the semiannual interest payment?

Answer 27

$506.25

Question 28

The supply of mortgage money for single-family homes is regulated by the Federal Reserve System through which of the following?

• Reserve requirements and discount rates
• Federal National Mortgage Association
• Federal Housing Administration
• Department of Housing

Answer 28

-Reserve requirements and discount rates

Question 29

Last month’s loan payment included $412.50 interest on a $60,000 loan balance. What is the annual rate of interest?

Answer 29

8(1/4) percent

Question 30

The purpose of a mortgage is to

Answer 30

provide security for the loan