Chapter 6 Real Estate Finance

Question 0

Adjustable rate mortgage

Answer 0

A mortgage interest rate that varies, depending on fluctuations of a standard financial index

Question 1

Acceleration Clause

Answer 1

A mortgage clause enabling the lender to declare the entire balance remaining immediately due and payable if the borrower is in default

Question 2

Alienation (due-on-sale) clause

Answer 2

A clause in the note accompanying a mortgage that entitles the lender to declare the principal balance immediately due and payable if the borrower sells the property during the mortgage term; makes the mortgage unassumable without the lenders permission

Question 3

Amortization

Answer 3

Provides for paying a debt by installment payments; each payment covers current interest with the remainder applied to reduction of the principal

Question 4

Ballon mortgage

Answer 4

Provides for installment payments that are not enough to pay off both the principal and interest over the term of the mortgage; the final (ballon) payment to satisfy the remaining principal and interest is larger than any previous payment.

Question 5

Blanket Mortgage

Answer 5

Two or more parcels of real estate are pledged as security for payment of the mortgage debt

Question 6

Bridge Loan

Answer 6

A short-term loan often used to finance projects until a permanent loan is obtained.

Question 7

Buydown

Answer 7

The voluntary payment of discount points to reduce mortgage interest rates when the loan is made

Question 8

Construction mortgage

Answer 8

Interim, or temporary, short-term financing for creating improvements on land

Question 9

Conventional loans

Answer 9

involves no participation by federal; government agencies

Question 10

Deed in lieu of forclosure

Answer 10

Conveyance of property by a borrower in default to the lender to avoid record of foreclosure

Question 11

Default

Answer 11

Failure to perform an obligation, such as making mortgage payments

Question 12

Defeasance clause

Answer 12

A mortgage clause giving the borrower the right to defeat and remove the lien by paying the indebtedness in full

Question 13

Deficiency judgment

Answer 13

A court order stating that the borrower still owes a lender money when the proceeds of a foreclosure sale are not sufficient to satisfy the balance due to the lender

Question 15

Department of Veteran Affairs (VA)

Answer 15

Federal agency offering a loan program that guarantees repayment of the top portion of the loan to the lender in the event the borrower defaults

Question 16

Depression

Answer 16

The lowest possible p