Chapter 9

Question 1

in California, based on lending tradition, trustees and other loans are commonly referred to as

Answer 1

mortgages

Question 2

the party borrowing the money

Answer 2

trustor

Question 3

the lender who is lending money for the purchase of real property

Answer 3

beneficiary

Question 4

The third, disinterested party who holds naked legal title to the property

Answer 4

trustee

Question 5

the charge for borrowing money

Answer 5

interest

Question 6

this fee is based on the loan amount and is collected as compensation for processing the loan and setting it up on the books

Answer 6

loan origination fee

Question 7

the rate charged on conventional loans

Answer 7

prevailing market rate

Question 8

it charged to the borrower for paying off all or part of a loan balance before the due date

Answer 8

prepayment penalty

Question 9

reserves to cover property taxes, insurance, and / or MIP

Answer 9

impound account

Question 10

Savings Banks, commercial Banks, and life insurance companies

Answer 10

institutional lenders

Question 11

direct lenders that underwrite for usually hundreds of investors

Answer 11

mortgage Banker

Question 12

these Brokers shop for a lender for the borrowers in earn a fee by putting lender and borrower together

Answer 12

mortgage loan broker

Question 13

what a loan on well-located properties to borrowers with good income and credit is called

Answer 13

Prime loan

Question 14

this type of Insurance allows institutional lenders to make loans above the usual 75 to 80% of the sales price

Answer 14

private mortgage insurance

Question 15

a loan for which the payments are usually the same each month for the life of the loan

Answer 15

fixed rate mortgage

Question 16

a variable mortgage rate

Answer 16

adjustable rate mortgage

Question 17

with this type of special purpose loan, the rate and term are fixed, but monthly payments are smaller at the beginning of the term and increase over time

Answer 17

graduated payment mortgage

Question 18

this occurs when monthly installment payments are insufficient to pay the interest accruing on the principles balance, so the unpaid interest must be added to the principal due

Answer 18

negative amortization

Question 19

this type of loan for senior citizens is a loan where the lender pays the bar or a fixed monthly payment based on the value of the property

Answer 19

reverse annuity loan

Question 20

another name for the Federal National Mortgage Association that dominates the secondary mortgage Market

Answer 20

Fannie Mae

Question 21

this gives lenders a fast objective measurement for your ability to repay a loan or make timely credit payments

Answer 21

credit scoring FICO

Question 22

this act lets borrowers and customers know the cost of credit so they can compare cost with those of other credit sources and thereby avoid the uninformed use of credit

Answer 22

truth in Lending Act (reg Z)

Question 23

in a trust deed, this Clause makes the entire note due and payable, should the property be sold or default occur

Answer 23

acceleration clause

Question 24

charging more than the legally allowed percentage of Interest

Answer 24

usury

Question 25

When A lender accepts less than what is owed in the loan

Answer 25

short sale