Chapter 17: Real Estate Finance Flashcards
A homeowner borrows money from a lender and gives the lender a mortgage on the property as collateral for the loan. The homeowner returns title to the property. This is an example of…
Hypothecation
Which of the following best expresses the mechanics of a mortgage loan transaction?
The borrower gives the lender a note and a mortgage in exchange for loan funds
In a deed of trust transaction, which of the following occurs?
The trustor conveys title to a trustee in exchange for loan funds from the beneficiary
A lender lends money to a homeowner and takes legal title to the property as collateral during the payoff period. They’re in a…
Title theory State
A lender who charges a rate of interest in excess of legal limits is guilty of…
Usery
A lender is charging three points on a $500,000 loan. The borrower must therefore pay the lender an advance amount of
$15,000
The difference between a balloon loan and an amortized loan is…
An amortized loan is paid off over the loan period
A distinctive feature of a promissory note is that
It is a negotiable instrument
When the terms of the mortgage loan or satisfied, the mortgagee…
May be required to execute a release of mortgage document
In addition to income, credit, and employment data, a mortgage lender requires additional documentation, usually including…
An appraisal report
The three overriding considerations of a lender’s mortgage loan decision are…
The ability to repay, the value of the collateral, and the profitability of the loan
The loan to value ratio is an important underwriting criteria, for the primary reason that…
The lender wants to ensure the loan is fully collateralized
The equal credit opportunity act or ECOA requires lenders to…
Consider the income of a spouse in evaluating a families creditworthiness
The purpose of an income ratio in qualifying a borrower is to…
Safeguard against over-indebtedness
A borrower’s debt ratio is derived by…
Dividing one’s deaths by one’s gross income
A lender’s commitment to lend funds to a borrower in order to retire another outstanding loan is called a…
Take out loan commitment
At the closing of a mortgage loan…
The parties complete all loan origination documents and the loan is funded
Which laws or regulations require mortgage lenders to disclose financing costs and annual percentage rate to a borrower before funding alone?
Truth in lending laws
Which laws or regulations prevent mortgage lenders from discriminating and extending credit to potential Powers based on race, color, religion, national origin, sex, marital status, age, and dependency on public assistance?
The equal credit opportunity act
Which laws or regulations require mortgage lenders to provide an estimate of the closing cost to a borrower and forbid them to pay kickbacks for referrals?
The real estate settlement procedures act
The federal reserve system regulates the money supply in which of the following ways?
Buying securities, changing the discount rate, and controlling banking reserves
One of the primary purposes for the secondary mortgage market is to…
Cycle funds back to primary lenders so they can make more loans
The major players in the secondary mortgage market are…
Fannie Mae, Freddie Mac, and Ginnie Mae
A principal role of FNMA is too…
Purchase FHA backed in VA backed loans
The primary role of the Federal Housing Authority in the mortgage lending market is to…
Insure loans made by approved lenders
The principal role of the veteran’s administration in the mortgage lending market is to…
Guarantee loans made by approved lenders
A graduated payment loan as a mortgage loan where…
The loan payments gradually increase
A buydown is a financing arrangement where…
The borrower pays additional interest at the onset in order to obtain a lower-interest-rate
The key feature of an adjustable mortgage loan is that…
The interest rate may vary
One feature of a wraparound mortgage loan is that…
The seller offering the buyer a wraparound can profit from a difference in interest rates
A builder is required to secure a loan with mortgages on three properties. This is an example of…
A blanket mortgage loan
Which of the following is true of a loan with negative amortization
Payments are not sufficient to retire the loan
