Chapter 3 Introduction (Deed,Lien) Flashcards
The assignor: A. Transfers contract rights B. Receives contract rights C. Must be a United States citizen D. Must be an attorney
Answer A
The assignor is the party transferring contractual rights to another.
The document conveying title from one party to another and guaranteeing that the title is good is known as a: A. Good Faith B. Warranty Deed C. Usury limit D. Red Flags document
B
Under the Guidance on Subprime Mortgage Loans, the CSBS consider all of the following to be a predatory lending practice except:
A) basing a loan off the foreclosure value
B) Refinancing a or borrower repeatedly to collect more fees
C) Charging higher rates to risky buyers
D) Using fraud or deception to sell the loan
C) Charging higher rates to risky buyers
The party transferring the contact or rights to another is known as the A. Assignor B. Assignee C. attorney-in-fact D. Grantor
Answer A
The assignor is the party transferring contractual rights to another.
Which of the following is the most desirable form of real estate? A. Fee Simple B. Life Estates C. Leasehold Estates D. Tenancy Estates
Answer: A
Fee simple is the highest type of personal property interest in the law. A buyer owns the land as well as the improvements on the land.
The borrower does NOT sign which document: A. Deed B. HUD-1/Loan Disclosure C. Mortgage D. Note
Answer A
The borrower does not sign the deed. It’s the grantor and two witnesses who sign the deed.
Which of the following are fees incurred as a result of getting a home loan? A. Closing Cost B. Pre-Paid Cost C. APR fees D. Finance Charges
Answer A
Closing costs are generally the responsibility of the buyer. Oftentimes, however, closing costs are divided between the buyer and the Seller while negotiating the final home price.
What establishes the lien position? A. Date and time of signing B. Date and time the loan was approved C. Date and time of recording D. Date and time of the title search
Answer: C
The date and time of RECORDING establish lien position of the mortgage. Lien Position determines the order in which lien holders are paid when the property is sold.
Which federal agency guarantees mortgage backed securities that arebased on FHA and VA loans? A. FHA B. VA C. Ginnie Mae D. Fannie Mark
C
Which of the following are voluntary liens? A. Subordinate Liens B. Special Assessment C. Mechanics Lien D. None
Answer:A
subordinate lien is a Junior or second mortgage. A mortgage is a voluntary lien; special assessments and mechanic’s liens are involuntary liens.
Tenancy in Entirety does NOT have: A. Equal ownership B. Right of survivorship C. Only one individual’s name on title D. Buy at same time
C
Lis Pardens is also known as a A. Acceleration clause B. Mortgage due on Sale C. Notice of default D. equitable right of redemption
C
What is a transfer of title in which there is no new note and the original buyer retains all the liability? A. Assumption B. Novation C. Subject to the Mortgage D. Lis Pardens
Answer: C
Subject to the mortgage is a transfer of title in which there is no new note and the original buyer retains all the liability.
Which of the following is true of Fee Simple Estates?
A. Last only for the owner’s lifetime and then reverts back to the grantor or to named third parties
B. purchasing the land, the structures on the land, but air and mineral rights belongs to the government
C. The owner must abide by state and federal regulations including zoning, condemnation, health and building codes and taxation.
D. The owner has full control including including zoning, condemnation, health and building code
Answer C
Fee Simple ownership represents absolute ownership of real property (ascompared to leasehold estates, which involve a tenancy). However, even though the property is owned outright, the owner must abide by state and federal regulations including zoning, condemnation, health and building codes and taxation.
Tom had been in an accident and was in traction and unable to work and unable to pay his mortgage until he gets his settlement. Tom settlement came through and h received a large sum that can pay off the house. What should Tom do to keep his home? A. Ask for forbearance B. Equitable right of redemption C. Deficiency Judgement D. Mortgage Acceleration
Answer B
equitable right of redemption allows the mortgagor in default to pay
the entire balance due and keep the property from being foreclosed.
Lien Order What lien has the highest priority and is paid off first when a property issold? A. Property tax B. Senior mortgage lien C. Mechanic’s lien D. Judgment lien
A
Which of the following allows a purchaser to share liability with the previous owner and without the qualifications of the lender? A. Straw buyer B. Assumption C. Co-buyer D. Novation
Answer: B
Assumption is when the purchaser may take over the mortgagor’s monthly mortgage payments with the knowledge, but without the qualification, of the lender.
**Who can sign security instruments on a borrower’s behalf?
A. Anyone with Power of Attorney
B. Attorney-in-fact or Court Appointed Guardian
C. Spouse
D. Mortgage loan officer
The following persons may sign security instruments on a borrower’s behalf:
• An attorney-in-fact may sign
Court-appointed guardian may sign the security instrument if the borrower is not legally competent, And Borrower with power of attorney
What type of deed transfers ownership without making any guarantee of clear title? A. General warranty deed B. Special warranty deed C. Power of attorney deed D. Quitclaim deed
D
A mortgage lien on an entire tract of land is known as a: A. Buy-down mortgage B. Chattel mortgage C. Blanket mortgage D. Pillow mortgage
C
@@@The underwriter will require verification of employment. Which of the following will NOT serve this purpose?
- A notarized affidavit from the borrower
- Telephone call to the employer by the loan processor
- Paycheck stubs
- A written letter or completed form directly from the employer
A notarized affidavit from the borrower
A written instrument used to convey title or the transfer of ownership from the original owner (grantor) to the new owner Is know as a A. Deed B. Lien C. Title D. Security Instrument
Answer A
A deed is a written instrument used to convey title or transfer ownership.
Which parties sign the deed? A. Grantor, grantee and two witnesses B. Grantor and two witnesses C. Grantee and two witnesses D. Grantee only
B
Tom had been in an accident and was in traction and unableto work and unable to pay his mortgage until he gets his settlement. What should Tom do?
A. Not pay the mortgage until he received the money
B. File for bankruptcy
C. Ask for a forbearance from his lender
D. Call his mortgage broker to delay the payments
C
Forbearance is the choice by the lender not to take action even though the borrower is in default of the loan.
Mortgagors are responsible for certain promises, and are in default if they fail to do which of the following?
Who of the following is considered default if borrowers fail to pay?
A. Repay loan, interest rate, and keep property in good repair
B. Property, hazard and title taxes
C. Repay loan, property tax, hazard insurance and keep property in good repair
D. Hazard, Flood and Mortgage Insurance (PMI)
C
John had defaulted on his loan and now the lender had requested the whole mortgage balance due immediately, this is known as A. Mortgage Acceleration B. Equity Skimming C. mortgage due-on-sale clause D. defeasance clause
Answer: A
Mortgage Acceleration is when the lender demands payment in full due to default. Due on sales clause is when so,done refinances a different loan, the amount is due when that loan changes or is sold
Tenancy in Common does NOT have: A. Equal or unequal ownership B. Buy at same or different times C. Multiple owners D. Right of survivorship
D
For one person to sign a legal document for another person generally would be considered forgery, unless the person signing had:
- a close relationship with the person, i.e., spouse, child, or parent.
- There are no circumstances when this is legally allowable.
- legal power of attorney.
- a writ of being handicapped and unable to sign for themselves.
legal power of attorney.
The conveyor of the deed is the: A. Grantor B. Lender C. Grantee D. Mortgagor
Answer A
The grantor is the conveyor of the deed
Which is the opposite of the pre-payment penalty Clause? A. Defeasance Clause B. Pre-payment privilege C. Mortgage privilege D. Open-End Clause
Answer B
mortgage prepayment privilege clause allows the borrower to pay all or part of the loan before it is due without penalty.
The owner of the property is the A. Assignor B. Assignee C. Grantor D. Grantee
C
The grantor is the owner of a property.
A Grantor is a person who is the? A. conveyor of the deed B. receiver of the deed C. Transfer Contract rights D. Receive contract rights
A
Junior mortgages are: A. Involuntary liens B. Limited to 30 year terms C. Limited to a total of 2 D. Voluntary lien
A mortgage is a voluntary lien; special assessments and mechanic’s liens are involuntary liens.
Which of the following is does NOT describes Annual Percentage Rate?
(a) A measure of the cost of consumer credit represented in dollars and cents
(b) A percentage expressing the nominal interest rate plus finance charges
(c) A percentage of the total interest paid over the life of the loan
(d) A dollar figure expressing the loan principal and closing fees
B
When the mortgagor and mortgagee title insurance policies are issued at the same time, this is known as: A. Simultaneous issue B. Concurrent issue C. Subsequent issue D. Dual issue
A
Kathy has just got her home foreclosed. However, the proceeds are not sufficient to pay off her negative equity home. Which of the following can the lender file against Kathy? A. mortgage due-on-sale clause B. Mortgage Acceleration Claus C. Mortgage Pre-Penalty D. Deficiency Judgement
D
deficiency judgment allows the lender to claim other assets from the
borrower when the proceeds of the foreclosure sale are insufficient to satisfy the mortgage lien.
When two parties are in an assumption, which of the following allows the original borrower to be released from all liabilities? A. Straw buyer B. Assumption C. Co-buyer D. Novation
Answer D
Novation is an assumption in which the original borrower is released from all liability.
What type of real estate co-ownership is only for married couples? A. Tenants in common B. Joint tenancy C. Tenancy by the entireties D. Spousal tenancy
C
@@@When a Preliminary Title Report shows a judgment, which of the following is true?
- Borrowers will not get a loan.
- Judgments have no bearing on mortgages.
- An indemnification agreement may be required.
- The judgment must always be paid off.
Judgement have to be paid off
Which of the following allows inheritance? A. Tenancy in Common B. One owner tenancy C. Tenancy in Entirety D. None
A
Who receives the title transfer? A. Assignor B. Assignee C. Grantor D. Grantee
Answer: D
The grantee is the party receiving the title transfer.
The assignee of a mortgage and note is participating in the: A. Primary lending market B. Capital market C. Secondary mortgage market D. Options market
Answer C
The borrower does not sign the deed. It’s the grantor and two witnesses who sign the deed.
Which of the following is NOT a characteristic of a Tenants in Common form of ownership: A. Equal shares B. Buy at different times C. Right of survivorship D. Ability to will share
Answer C
The receiver of the deed is the: A. Grantee B. Grantor C. Mortgagee D. Assignee
Answer A
The grantee is the party receiving the title transfer.
Which of the following is when each owner owns 100% of the Property? A. Tenancy in Common B. Joint Tenancy C. Tenancy in Entirety D. None
C
What is the official document from a mortgage holder releasing the debtor from the mortgage?
(a) Reconveyance Deed
(b) Subordination Deed
(c) Special Warranty Deed
(d) Mortgage Release Deed
A
When the mortgagor voluntarily conveys the deed to the lender in exchange for satisfaction of the debt is known as A. Exculpatory Clause B. Deed Restrictions C. Deed in Liu of foreclosure D. Deed of Covenant
Answer C
Deed in Lieu of Foreclosure occurs when the mortgagor voluntarily
conveys the deed to the lender in exchange for satisfaction of the debt.
Which if the following covers multiple tracts of land.
A builder, for example, would use what to pay for construction of several homes in one neighborhood.
A. Retired home clause
B. Piggyback loan
C. Partial Release Clause
D. Blanket Mortgage
D
Which is NOT a promise by the mortgagor A. Keep the home in good repair B. Obey all state and county laws C. Pay the hazard insurance D. Pay the mortgage payment
B
Which of the following would be an appropriate entry on the 1003 if asked for the “manner” in which title will be held?
- Joint tenants with full rights of survivorship
- Tenancy for years
- In a bank safety deposit box
- Periodic tenancy
Joint tenants with full rights of survivorship
An individual with power of attorney who is able to sign the contract if one of the parties is not able or competent to sign. A. Assignor B. Assignee C. attorney-in-fact D. Grantor
Answer: C
An attorney-in-fact is an individual with power of attorney who is able to sign the contract if one of the parties is not able or competent to sign.
A builder would like to get a Loan that will allow the portion of the mortgage that was used to fund that home is paid back to the lender when a home is sold and then retired is known as a A. Retired home clause B. Piggyback loan C. Partial Release Clause D. Partial Loan
Answer: C
Partial release clause in a blanket mortgage allows the developer’s lien to be released as the parcel is sold.
Which of the following cannot be discriminatory and are said to “run withthe land,” which means they continue indefinitely? A. Construction Loan B. Deed Restrictions C. Deed in Liu D. Deed of Covenant
B
Deed restrictions may be placed in the deed and control the use of the property.
Which of the following is not true about a mortgage note?
A. The note is not recorded and APR is not listed on note
B. The note is recorded and The APR is on the note
C. All borrower and co-borrowers must sign the note
D. The note is legal evidence of the debtor
Answer: B
The annual percentage rate(APR) is not on the note. The note is the legal evidence of the debt and is notrecorded.
Which of the following requires the lender to send a Satisfaction of Mortgage notice to the borrower within sixty days of paying off the loan? A. Due on Sale Clause B. exculpatory clause C. defeasance clause D. open-end clause
Answer: C
The mortgage defeasance clause prevents the lender from foreclosing unless the borrower is in default. It also requires the lender to send a Satisfaction of Mortgage notice to the borrower within sixty days of paying off the loan.
According to the Truth-in-Lending Act (TILA), which of the following fees is EXCLUDED from the calculation of the annual percentage rate? A. Hazard insurance B. Wire transfer C. Prepaid interest D. Mortgage insurance premiums
Answer A
The APR is a measure of the cost of credit, expressed as a nominal yearly rate based on the amount and timing of the payments made by the consumer. Since an APR measures the total cost of credit, including costs such as transaction charges or premiums for credit guarantee insurance, it is not an interest rate, as that term is generally used. The APR is a function of:
- The amount financed;
- The finance charge; and
- The payment schedule.
Which of the following can stop the deficiency Judgement? A. Lis Pardens B. Exculpatory Clause C. Deed in liu D. Defeasance Clause
Answer: B.
mortgage exculpatory clause prevents the lender from requesting a deficiency judgment against the borrower when the proceeds of the
foreclosure are insufficient to pay off the mortgage lien.
Which of the following is the party receiving the contractor rights? A. Assignor B. Assignee C. attorney-in-fact D. Grantor
Answer: b
The assignee is the party receiving the contractual rights.
PUD is the acronym for: A. Planned Unit Development. B. Primary Utility Disclosure. C. Preliminary Uniform Disclosure. D. Planned Urban Development.
Answer D
Planned Unit Development.
A notice which is filed when the lender files a foreclosure lawsuit is known as a A. Deed in liu B. Mechanics Lien C. Lis Penchant D. Lis Pendens
Answer D
lis pendens is a notice filed by the lender when it initiates a foreclosure
lawsuit.
Fees assigned by lenders, appraisers, title companies and governments are known as A. Closing Cost B. Pre-Paid Cost C. APR fees D. Finance Charges
Answer A
Closing cost are Fees assigned by lenders, appraisers, title companies and governments
When there is a new note and the original borrower is released from allliability, this is known as transferring title by: A. Creative financing B. Assumption C. Novation D. Subject to the mortgage
Answer C
Novation is an assumption in which the original borrower is released from all liability.
The succession of conveyances of the title to real property is known as the:
(a) cloud on title
(b) chain of title
(c) encumbrance of title
(d) reconveyance deed of title
B
A partial release clause is part of which of the following? A. Residential Loan B. Construction loan C. Blanket loan D. Closed End Loans
Answer C
A blanket mortgage contains partial release clause
Which of the following permits future additional advances from the same loan? A. Blanket Mortgage B. Advance Loan C. Mortgage Privilege D. Open-End Clause
Answer: D
The mortgage open-end clause permits future additional advances from the same loan.
What is true of closing cost?
A. 3rd party charges where the lender allows borrower to shop for their own services
B. Fees that count as Lenders Expense
C. fees paid in return for the services of all who were involved in the homebuying process.
D. Anything user wouldn’t have to pay if it’s a cash deal
Answer C
Closing cost are fees paid in return for the services of all who were involved in the homebuying process.
@@@Which of the following is true concerning Service Release Premium (SRP)?
- Loan term is a factor of the SRP
- Type of loan does not affect the SRP
- The interest rate is a factor of the SRP
- There is no such thing as SRP
The interest rate is a factor of the SRP
Which of the following is true of recording time on a mortgage?
A. It plays a role in the lien priority of Junior Mortgages
B. It plays a role in lien priority of Mortgages
C. It determines when the payoff must be paid
D. It determines the position for all lien priorities
Answer: A
It only determines the priority of Junior liens because Primary liens, Government expenses of sale, Delinquent property taxes, Special assessment liens, and Federal estate tax lien will always come before Junior Loans.
The date and time of recording establish lien position of the mortgage.
Lien Position determines the order in which lien holders are paid when the property is sold.
The pledging of property as collateral for a loan: A. Defeasance B. Hypothecation C. Exculpation D. Intermediation
B
Hypothecation occurs when an asset is pledged as collateral to secure a loan, without giving up title, possession, or ownership rights, such as income generated by the asset
Which of the following has a right of survivorship (no inheritance)? A. Tenancy in Common B. One owner tenancy C. Tenancy in Entirety D. None
C
@@@The purpose of a Market Conditions Addendum is to:
- replace the need for a full appraisal.
- reveal prior marketing efforts by any realtor.
- provide the lender with an understanding of the market trends and conditions in the subject property.
- provide the lender/client with a clear and accurate understanding of the market trends and conditions prevalent in the subject neighborhood.
provide the lender/client with a clear and accurate understanding of the market trends and conditions prevalent in the subject neighborhood.
lis pendens is a notice filed by the lender when it initiates a foreclosure lawsuit is a part of? A. Lien Theory B. Title Thory C. Mortgage Acceleration Clause D. Forebearance
Answer: A (lis = lien)
@@@The Verification of Mortgage (VOM) must be provided for all existing mortgages and be sent to the underwriter by the:
- processor.
- title company.
- borrower.
- real estate agent.
processor
Which of the following is not true about a mortgage note?
A. The note is not recorded
B. The APR is on the note
C. All borrower and co-borrowers must sign the note
D. The note is legal evidence of the debt
Answer: B
The annual percentage rate (APR) is not on the note.
Who cannot act as a power of attorney on behalf of the borrower? A. The sister of the borrower B. The Spode of the borrower C. A friend of the borrower D. The real estate agent
Answer D.
Cannot sign or be Power of Attorney for borrower:
The lender or any affiliate of the lender.
• Any employee of the lender or any other affiliate of the lender.
• The loan originator.
• The employer of the loan originator or any employee of the employer of the loan originator.
• The title insurance company providing the title insurance policy or any affiliate of such title insurance company (including, but not limited to, the title agency closing the loan), or any employee of either such title insurance company or any such affiliate.
• Any real estate agent with a financial interest in the transaction or any person affiliated with such real estate agent.
@@@If a trust deed is recorded, which of the following is true?
- It verifies both the lender and borrower signed the document.
- Ownership is conveyed.
- A lien is released.
- An encumbrance is created.
A voluntary lien is placed on the property creating an encumbrance.
What is a finance charge?
A. Anything user wouldn’t have to pay if it’s a cash deal
B. Anything that benefits the lender
C. Fees that count as Lenders Expense
D. fees paid in return for the services of all who were involved in the homebuying process.
Answer A
Which of the following are considered lender expense fees? A. Closing Cost B. Pre-Paid Cost C. APR fees D. Finance Charges
Answer C
