Chapter 4 Flashcards
Trust deeds are recognized as _______________ where one person or party (the mortgage holder) has superior bargaining power over a weaker person (the borrower).
a. adhesion contracts
b. equality agreements
c. bargaining tools
d. adhesive contracts
A
A hazard insurance provision is a mortgage provision granting a mortgage holder the option to:
a. retain and apply any insurance proceeds to the mortgage balance.
b. release the proceeds to the owner of the building to reconstruct the damaged improvements.
c. Either a. and b.
d. Neither a. nor b.
C
A mortgage provision allowing the mortgage holder to advance payment for fire insurance premiums when the owner fails to maintain adequate insurance is called a(n):
a. forfeiture provision.
b. put option.
c. future advances clause.
d. advance fee addendum.
C
An impound provision in a mortgage calls for the property owner to make a monthly deposit with the mortgage holder sufficient to accumulate funds for the periodic payment of:
a. property taxes.
b. hazard and mortgage insurance premiums.
c. assessment bonds.
d. All of the above.
D
consumer mortgage holder is required to pay _______________ on any balance in an impound account.
a. 2% annual compounding interest
b. 3% monthly compounding interest
c. 2% annual simple interest
d. 4% annual simple interest
C
Following a default, a(n) _______________ in a trust deed gives the beneficiary the right to collect rental income from the income-producing property.
a. impound account
b. future advances clause
c. assignment of rents provision
d. All of the above.
C
Once an assignment of rents provision is recorded, it:
a. gives constructive notice of the mortgage holder’s security interest in the rents.
b. is fully perfected even though the provision states the lien is unenforceable until a default occurs on the note or trust deed.
c. Both a. and b.
d. Neither a. nor b.
C
When a junior lienholder who has enforced its assignment of rents provision receives notice of the senior mortgage holder’s enforcement, the junior lienholder is required to:
a. cease collecting the rents.
b. send a notice to the tenants cancelling its demand for rents.
c. Both a. and b.
d. Neither a. nor b.
C
Intentional failure to timely send a beneficiary statement within 21 days of receipt of request results in a _______________ forfeiture by a mortgage holder to the person making the request.
a. $100
b. $200
c. $300
d. $400
C
A grant deed given by an owner for the sole purpose of securing the future performance of an obligation, such as the payment of money, is considered a(n):
a. mortgage.
b. transfer of ownership.
c. transfer of title.
d. unenforceable lease.
A
