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Chapter 1 : Intro to Real Estate and Real Property > Chapter 6 quiz > Flashcards

Chapter 6 quiz Flashcards

1
Q

Under an installment contract, the title to the property is held by the:
Vendor
Vendee
Trustor
Trustee

A

Vendor

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2
Q

The FHA:
Insures loans
Makes loans
Buy and sells loans
All of the above

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:
Amortization ratio
Loan-to-value ratio
Debt-to–equity ratio
Capital-use ratio

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:
The mortgagor
The mortgagee
The sheriff’s office
The county

A

The mortgagor

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5
Q

The purpose of the Real Estate Settlement Procedures Act (RESPA) is to:
See that the buyers do not borrow more money that they can repay
Make real estate brokers more responsive to the needs of buyers
Help sellers know how much money is required to purchase the property
See that the buyers and sellers know all of their settlement costs

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:
Not personally liable for the repayment of the debt
Not in danger of losing the property by default
Personally responsible for paying the principal balance
Generally released from liability, but not always

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:
Hypothecation
Subordination
Leverage
Equity

A

Equity

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8
Q

Fannie Mae, Ginnie Mae, and Freddie Mac have in common the purpose of:
Originating residential mortgage loans
Purchasing existing mortgage loans
Insuring residential mortgage loans
Guaranteeing existing mortgage loans

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 fully amortized loan
A straight loan
A partially amortized loan
An accelerated loan

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:
Insuring versus the guaranteeing of mortgage loans
Origination versus the purchase of mortgage loans
Use of mortgages versus the use of deeds of trust
Use of discount points versus the use of origination fees

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:
Faster amortization
Higher monthly payments
Quicker equity buildup
Greater impound amounts

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:
Blanket mortgage
Package mortgage
Purchase money mortgage
Wraparound mortgage

A

Package mortgage

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13
Q

In a sale-and-Lease back arrangement the:
Seller retains legal title to the real estate
Buyer becomes the lessee
Broker will not earn a commission
Buyer becomes the lessor

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 home equity loan
A reverse mortgage
A blanket loan
An open-ended loan

A

A reverse mortgage

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15
Q

Under the lien theory, the equitable title to the property is held by the:
mortgagee.
mortgagor.
trustor.
trustee.

A

mortgagee.

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16
Q

Charging more interest than is legally allowed is known as:
escheat.
usury.
a deficiency.
an estoppel.

A

usury.

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17
Q

A mortgagor is the one who:
Gives the mortgage
Holds the mortgage
provides the mortgage funds
forecloses on the mortgage

A

Gives the mortgage

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18
Q

A promissory note:
may not be executed in connection with a real estate loan.
is an agreement to perform or not to perform certain acts.
is the primary evidence of a debt.
is a guarantee by a government agency.

A

is the primary evidence of a debt.

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19
Q

A land contract provides for the:
sale of unimproved land only.
sale of real property under an option agreement.
conveyance of legal title at a future date.
immediate transfer of reversionary rights.

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):
prepayment penalty.
advance interest payment.
loan origination fee.
prepayment of mortgage insurance.

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):
satisfaction of mortgage.
re-conveyance of mortgage.
alienation of mortgage.
reversion of mortgage.

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):
hypothecation agreement
satisfaction of mortgage
subordination agreement
re-conveyance of mortgage

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 default judgment.
a deficiency judgment.
liquidated damages.
punitive damages.

A

a deficiency judgment.

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?
Judgment
Escalator
Forfeiture
Acceleration

A

Acceleration

25
Q

When a mortgage loan has been paid in full, it is important for the borrower to be sure that:
the paid note is placed in a safe deposit box.
he or she obtains a deed of partial reconveyance
the paid mortgage is returned to the lender.
a satisfaction of mortgage is recorded.

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):
due-on-sale clause.
power of sale clause.
defeasance clause.
certificate of sale clause.

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:
legal title.
equitable title.
joint title.
mortgagee in possession.

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:
obtain title insurance.
sign a note.
pay into an impound account.
submit paid tax receipts.

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?
$6,000
$3,400
$2,000
$40,000

A

$6,000

30
Q

In absence of an agreement to the contrary, the mortgage having priority will be the one:
for the highest amount.
that was recorded first.
that was the first mortgage.
that is a construction loan.

A

that was recorded first.

31
Q

The pledging of property as security for payment of a loan is:
disintermediation.
equity.
hypothecation.
subordination.

A

hypothecation.

32
Q

The purpose of a mortgage is to:
provide security for the loan.
convey title of the property to the lender.
restrict the borrower’s use of the property.
give title to a third party.

A

provide security for the loan.

33
Q

Which of the following would NOT be associated with a mortgage?
acceleration
defeasance
grantor
assignment of rents

A

grantor

34
Q

Illinois is most accurately referred to as what type of mortgage theory state?
Title
Lien
Trust
Intermediate

A

Intermediate

35
Q

. Illinois statutory usury ceiling for real estate financing is:
20 percent.
35 percent.
3 percent over prime.
There is no ceiling

A

There is no ceiling

36
Q

For purposes of mortgage foreclosures, Illinois is classified as what type of state?
Strict foreclosure
Judicial foreclosure
Non-judicial foreclosure
Redemptive non-foreclosure

A

Judicial foreclosure

37
Q

Which of the following pairs of terms is considered synonymous?
Interim financing and construction loan
Construction loan and pass-through loan
Pass-through loan and take-out loan
Take-out loan and construction loan

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:
wraparound mortgage.
open-end mortgage.
growing-equity mortgage.
graduated-payment mortgage.

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:
household use improvements.
business use.
room additions.
swimming pools.

A

business use.

40
Q

An FHA-insured mortgage loan would MOST LIKELY be obtained from which of the following?
The Federal Housing Administration
The Department of Housing and Urban Development
Any qualified lending institution
Any qualified insuring institution

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 EXCEPT the:
buyer.
seller.
buyer and seller.
mortgage lender.

A

mortgage lender.

43
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):
conventional loan.
straight loan.
participation loan.
amortized loan.

A

participation loan.

44
Q

An extension of credit from a seller to a buyer to allow the buyer to complete the transaction is called a:
growing equity mortgage.
purchase money mortgage.
package mortgage
blanket mortgage.

A

purchase money mortgage.

45
Q

From which of the following would a borrower most likely obtain a residential real estate mortgage loan?
An insurance company
A pension fund
An endowment fund
A commercial lender

A

A commercial lender

46
Q

Regulation Z applies to:
business loans.
real estate sales agreements.
commercial loans under $10,000.
personal credit transactions under $25,000.

A

real estate sales agreements.

47
Q

In a graduated payment loan:
mortgage payments decrease.
mortgage payments balloon in 5 years.
mortgage payments increase.
the interest rate on the loan adjusts annually.

A

mortgage payments increase.

48
Q

Which of the following normally purchases mortgages in the secondary mortgage market?
Mortgage bankers
Ginnie Mae
Federal Housing Administration
Veterans Administration

A

Ginnie Mae

49
Q

What type of loan allows for the release of a portion of the property as the loan is paid down:
blanket loan.
reverse annuity mortgage.
open ended loan.
home equity loan.

A

blanket loan.

50
Q

The type of loan that will MOST LIKELY have the lowest loan-to-value ratio is a:
conventional loan without PMI.
FHA loan.
PMI loan.
VA loan.

A

conventional loan without PMI.

51
Q

A lender may protect its interest in a mortgage loan by obtaining additional security from:
private mortgage insurance.
title insurance.
the borrower’s note.
impound accounts.

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:
the marital status of the borrower.
the creditworthiness of the borrower.
the amount of the borrower’s income.
the ability of the borrower to make the payments

A

the marital status of the borrower.

53
Q

One of the ways lenders increase their revenue is by servicing loans. All of the following are activities of servicing loans EXCEPT:
collecting payments.
paying real estate taxes from escrow accounts.
renegotiating interest rates.
sending overdue notices.

A

renegotiating interest rates.

54
Q

Which of the following, standing alone, would be a legal way to advertise loan terms?
A. $499 per month
$1,000 down
8% interest rate
Assumable mortgages

A

Assumable mortgages

55
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?
Blanket mortgage
Purchase money mortgage
Package mortgage
Open-end mortgage

A

Blanket mortgage

56
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?
$5,000
$3,750
$1,875
$1,785

A

$1,875

57
Q

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

A

lender

Chapter 1 : Intro to Real Estate and Real Property (12 decks)

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