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Real Estate > Chapter 6 > Flashcards

Chapter 6 Flashcards

1
Q

Under an installment contract, the title to the property is held by the:

A

Vendor

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2
Q

The FHA:

A

Insures loans

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3
Q

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

A

Loan-to-value ratio

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4
Q

If the amount realized at a sheriff’s sale as part of a mortgage foreclosure is more than the amount of the indebtedness and expenses, then the excess belongs to:

A

The mortgagor

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5
Q

The purpose of the Real Estate Settlement Procedures Act (RESPA) is to:

A

See that the buyers and sellers know all of their settlement costs

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6
Q

A person who assumes an existing mortgage loan is:

A

Personally responsible for paying the principal balance

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7
Q

The interest in a property held by the owner in excess of any liens against it is called:

A

Equity

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8
Q

Fannie Mae, Ginnie Mae, and Freddie Mac have in common the purpose of:

A

Purchasing existing mortgage loans

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9
Q

A borrower obtained a $7,000 second mortgage loan for five years at 6 percent interest per annum. Monthly payments were $50. The final payment included the remaining outstanding principal balance. What type of loan is this?

A

A partially amortized loan

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10
Q

The principal distinction between the primary mortgage market and the secondary mortgage market is in the:

A

Origination versus the purchase of mortgage loans

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11
Q

When compared with a 30-year payment period, taking out a loan with a 20-year payment period would result in all of the following EXCEPT:

A

Greater impound amounts

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12
Q

The type of mortgage loan that uses both real and personal property as security is a:

A

Package mortgage

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13
Q

In a sale-and-Lease back arrangement the:

A

Buyer becomes the lessor

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14
Q

Danni has owned her house for over 50 years. It has fallen into disrepair but, because she lives on a fixed income, she does not have the money to make the needed repairs. She has a considerable amount of equity in the house. What type of loan would probably best suit her needs?

A

A reverse mortgage

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15
Q

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

A

mortgagee.

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16
Q

Charging more interest than is legally allowed is known as:

A

usury

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17
Q

A mortgagor is the one who:

A

Gives the mortgage

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18
Q

A promissory note:

A

is the primary evidence of a debt.

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19
Q

A land contract provides for the:

A

conveyance of legal title at a future date.

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20
Q

The finance fee charged by the lender to make the loan is a(n):

A

loan origination fee.

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21
Q

Laura 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 a(n):

A

satisfaction of mortgage.

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22
Q

An existing mortgage loan can have its lien priority lowered through the use of a(n):

A

subordination agreement

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23
Q

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:

A

a deficiency judgment.

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24
Q

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?

A

Acceleration

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25
Q

When a mortgage loan has been paid in full, it is important for the borrower to be sure that:

A

a satisfaction of mortgage is recorded.

26
Q

The clause in a mortgage instrument that would prevent the assumption of the mortgage by a new purchaser is a(n):

A

due-on-sale clause.

27
Q

The 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 buyer enter into a contract for deed. The interest the buyer has in the property under a contract for deed is:

A

equitable title.

28
Q

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

A

pay into an impound account.

29
Q

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

A

$6,000

30
Q

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

A

that was recorded first.

31
Q

The pledging of property as security for payment of a loan is:

A

hypothecation

32
Q

The purpose of a mortgage is to:

A

provide security for the loan.

33
Q

Which of the following would NOT be associated with a mortgage?

A

grantor

34
Q

Illinois is most accurately referred to as what type of mortgage theory state?

A

Intermediate

35
Q

Illinois statutory usury ceiling for real estate financing is:

A

There is no ceiling

36
Q

For purposes of mortgage foreclosures, Illinois is classified as what type of state?

A

Judicial foreclosure

37
Q

Which of the following pairs of terms is considered synonymous?

A

Interim financing and construction loan

38
Q

The type of real estate loan that allows the lender to increase the outstanding balance of a loan up to the original sum in the note while advancing additional funds is the:

A

open-end mortgage.

39
Q

The Truth-in-Lending Law, implemented by Regulation Z, sets forth certain requirements regarding loans to individuals for all of the following purposes EXCEPT loans for:

A

business use.

40
Q

An FHA-insured mortgage loan would MOST LIKELY be obtained from which of the following?

A

Any qualified lending institution

41
Q

Which of the following statements is true?

The priority of a mortgage is determined by the date on which it was executed.

A mortgage document contains no covenants or promises on the part of the borrower.

A deed of trust is typically conveyed by the trustor to the beneficiary.

A buyer does not have to be a veteran to assume a VA loan.

A

A buyer does not have to be a veteran to assume a VA loan.

42
Q

Discount points charged on a VA guaranteed mortgage loan can be paid by any of the following:

A

buyer, seller, buyer and seller.

43
Q

Discount points charged on a VA guaranteed mortgage loan can be paid by any of the following EXCEPT the:

A

mortgage lender.

44
Q

A real estate loan payable in periodic installments that are sufficient to pay the principal in full during the term of the loan is called a(n):

A

amortized loan.

45
Q

An extension of credit from a seller to a buyer to allow the buyer to complete the transaction is called a:

A

purchase money mortgage.

46
Q

From which of the following would a borrower most likely obtain a residential real estate mortgage loan?

A

A commercial lender

47
Q

Regulation Z applies to:

A

real estate sales agreements.

48
Q

In a graduated payment loan:

A

mortgage payments increase.

49
Q

What type of loan allows for the release of a portion of the property as the loan is paid down:

A

blanket loan.

49
Q

Which of the following normally purchases mortgages in the secondary mortgage market?

A

Ginnie Mae

50
Q

The type of loan that will MOST LIKELY have the lowest loan-to-value ratio is a:

A

conventional loan without PMI.

51
Q

A lender may protect its interest in a mortgage loan by obtaining additional security from:

A

private mortgage insurance.

52
Q

A lender will take certain factors into consideration when deciding whether to grant a borrower a mortgage loan. All of the following are legitimate factors EXCEPT:

A

the marital status of the borrower.

53
Q

A lender will take certain factors into consideration when deciding whether to grant a borrower a mortgage loan. All of the following are legitimate factors:

A

the creditworthiness of the borrower, the amount of the borrower’s income, the ability of the borrower to make the payments

54
Q

One of the ways lenders increase their revenue is by servicing loans. All of the following are activities of servicing loans:

A

collecting payments, paying real estate taxes from escrow accounts, sending overdue notices.

55
Q

One of the ways lenders increase their revenue is by servicing loans. All of the following are activities of servicing loans EXCEPT:

A

renegotiating interest rates.

56
Q

Which of the following, standing alone, would be a legal way to advertise loan terms?

A

Assumable mortgages

57
Q

A developer had a mortgage loan on his entire housing development. When he sold a lot to a buyer, he was able to deliver title to that lot free of the mortgage lien by obtaining a partial release. What type of loan did the developer have?

A

Blanket mortgage

58
Q

A borrower has secured an FHA insured loan. This means that the FHA will insure which of the following against a possible loss?

A

lender

59
Q

A borrower and seller have agreed to split the discount points. The sale price of the property was $125,000 and the borrower secured a 75% loan. If the lender charged four discount points and a one percent origination fee, how much did the borrower and the seller each pay?

A

$1,875

Real Estate (22 decks)

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