Chapter 2 Flashcards
A(n) _______________ calls for periodic payments of principal and interest, or interest only, until the principal is paid in full by amortization or a final/balloon payment.
a. installment note
b. straight note
c. sleeper note
d. bridge note
A
With a(n) _______________, payments increase periodically by predetermined amounts until the payment fully amortizes the principal over the remaining life of the mortgage without a further increase in payments, the interest rate on the note being fixed.
a. shared appreciation mortgage (SAM)
b. graduated payment mortgage (GPM)
c. all-inclusive trust deed (AITD) note
d. straight note
B
A note is:
a. evidence of the existence of a debt created by an underlying agreement to pay money.
b. the debt itself.
c. a lien placed on property to secure debt.
d. None of the above.
A
A(n) _______________ in a note is used to convert a mortgage holder’s recourse paper into nonrecourse paper.
a. exculpatory clause
b. choice-of-law provision
c. equitable assignment
d. guarantee agreement
A
A written modification agreement attached to a note is called a(n):
a. allonge.
b. execution.
c. forbearance.
d. mutual agreement.
A
To avoid loss of priority on a significant modification to a senior mortgage, a junior lienholder needs to agree to the greater risk of loss, called:
a. subordination.
b. hypothecation.
c. pledging.
d. unconscionable advantage.
A
An agreement entered into in which the buyer assumes the existing mortgage and the mortgage holder releases the seller from further liability is called a(n):
a. novation.
b. cash-to-loan (CTL) transaction.
c. exculpatory clause.
d. seller carryback transaction.
A
A(n) _______________ in a note gives the mortgage holder the right to levy a charge against a property owner who pays off the outstanding principal balance on a mortgage prior to its maturity.
a. subordination provision
b. exculpatory clause
c. late charge provision
d. prepayment penalty provision
D
When a prepayment penalty is allowed on fixed rate consumer mortgages classified as qualified mortgages (QMs), the penalty period is limited to _______________ after origination.
a. one year
b. two years
c. three years
d. five years
C
When the mortgage limits a prepayment penalty to only _______________, the mortgage holder is not permitted to include the penalty when the property is redeemed or bid on at the trustee’s sale.
a. voluntary payoffs
b. involuntary payoffs
c. Both a. and b.
d. Neither a. nor b.
A
