Chapter 15: Real Estate Financing Principles

Question 1

Charging more interest than is legally allowed is called?

Answer 1

Usury

Question 2

A promissory note…

Answer 2

Is the primary evidence of a debt

Question 3

A land contract provides for the…

Answer 3

Conveyance of legal title at a future date.

Question 4

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

Answer 4

A loan origination fee

Question 5

A man just purchased his first home with a fixed-rate loan. The interest he will pay over the life of the loan is?

Answer 5

Simple interest

Question 6

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

Answer 6

Loan to value ratio

Question 7

If the amount realized at a sheriffs sale as part of a mortgage foreclosure is more than the amount of the indebtedness and expenses, then the excess belongs to…

Answer 7

The mortgagor

Question 8

If a borrower defaults and the court simply awards the ledger full legal title, what kind of foreclosure has taken place?

Answer 8

Strict

Question 9

A homeowner has just made the final payment on her home mortgage to her lender. There will still be a lien on her property until the lender records an?

Answer 9

Satisfaction of mortgage

Question 10

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

Answer 10

Subordination agreement

Question 11

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

Answer 11

A deficiency judgement

Question 12

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 12

Acceleration

Question 13

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

Answer 13

Satisfaction of mortgage is recorded

Question 14

A deed of trust differs from a mortgage in what ways?

Answer 14

Number of parties involved in the loan

Redemption rights allowed after foreclosure

Time period Permitted to cure a default

Question 15

Person who assumes an existing mortgage loan is?

Answer 15

Personally responsible for paying the principal balance

Question 16

Interest in the property held by the owner in excess of any liens against it is called?

Answer 16

Equity

Question 17

The mortgagee foreclosed on a property after the borrower defaulted on the loan payments. At the foreclosure sale, however, the house sold for only $229,000. The unpaid balance of the loan at the time of the sale was $240,000. What must the lender so to recover the $11,000 the borrower still owes?

Answer 17

Seek a deficiency judgment

Question 18

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

Answer 18

Redemption

Question 19

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

Answer 19

Due on sale clause

Question 20

The defeasance clause in a mortgage requires the mortgagee to execute?

Answer 20

Satisfaction of mortgage

Question 21

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 the buyer enter into a contract for deed. The interested buyer has in the property under contract for deed is?

Answer 21

Equitable title

Question 22

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

Answer 22

Deed in Lieu of foreclosure

Question 23

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

Answer 23

Pay into an impound account

Question 24

When real estate is sold under an installment land contract and the buyer takes possession of the property, the legal title?

Answer 24

Is kept by the seller until the purchase price is paid according to the contract

Question 25

What is true about a land contract?

Answer 25

The buyers given possession

Question 26

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

Answer 26

$6000

Question 27

If they yield on a 30 year loan is 10 1/4% and the mortgage lender charges 3 points, what is the interest rate on the mortgage note?

Answer 27

9 7/8%

Question 28

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

Answer 28

Was recorded first

Question 29

The pledging of property as security for payment of the loan is called?

Answer 29

Hypothecation

Question 30

Purpose of the mortgage is to?

Answer 30

Provide security for the loan

Question 31

What is not associated with mortgage or deed of trust foreclosure?

Answer 31

Remainder

Question 32

The clause in a mortgage that best describes the requirement of the mortgagee to execute a satisfaction of mortgage when the note has been fully paid is?

Answer 32

Defeasance

Question 33

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

Answer 33

Mortgagor