Finance Flashcards
A lender who originates a loan is referred to as part of the
Primary money market
Those who buy existing loans are part of the:
Secondary money market
All loans which come after a first mortgage are referred to as ______ ______
junior liens
Which of the following are considered both primary and secondary lenders?
Private individuals and insurance companies
Which of the following are NOT considered primary lenders?
GNMA (Ginnie Mae) and FNMA (Fannie Mae)
FNMA provides a source of funds for approved lenders.
True
Sometimes secondary lenders purchase existing loans at a discount.
True
The Federal Reserve Bank ____________ set interest rates.
Does Not
When you use as little of your own money and as much of other people’s money as you can to purchase a property, that is the financial principle of ______.
Leverage
. LTVR, or loan to value ratio, is determined by:
dividing the amount of the loan by the value.
A clause which allows for a new loan to take priority over one already in place is called the:
Subordination Clause
The clause which requires the lender to reconvey all interest in the property when the loan is paid off:
Defeasance Clause
The right of the lender to call a loan due and payable immediately, is conveyed in the:
Acceleration Clause
A blanket loan uses _______ or more parcels of real property to secure the loan.
2
The interest you pay on a loan is
Simple Interest
- The effect in the secondary money market of buying a note at a discount is to __________________ the yield to the secondary lender.
Increase
A loan where the mortgagee makes regular monthly payments to the mortgagor is a reverse annuity mortgage.
True
“Debt service” refers to which of the following?
Principle and Interest
The seller needs to close on the purchase of a new home prior to closing on the current home. A loan that would accommodate this is called a Bridge, Gap or Swing.
True
What clause is sometimes placed in a loan to protect lessees?
non- disturbance
FNMA is privately owned and government regulated
True
To control the flow of money, the Federal Reserve sets the reserve requirement and establishes the discount rate, which is the ______________ they charge the banks who borrow from them.
Interest
Discount points are the same as prepaid interest and are used to lower interest rates. One point equals _____ percent. Discount points are used by a primary lender to entice the secondary lender to purchase _______ interest rate loans.
1%, Lower
Outrageous and illegal interest is called ______________.
Usury
When your payments always include both principal and interest, and there is no balance owing at the end of the loan, this is a _____ ________ note or loan.
fully amortized
When your payments are interest only, and you pay off the principal all at once at the end of the loan, this is a _______ note or loan. Any payment which is larger than the scheduled monthly payment is called a balloon payment.
Straight
. If the seller carries all or part of the financing to sell the home it’s called:
Purchase money mortgage
A loan in which the payments will increase annually up to a maximum, as spelled out in the escalation clause, is referred to as a(n) ____________________ payment mortgage.
Graduated
A clause used to discourage borrowers from refinancing when interest rates are falling: ______________________________ penalty clause.
Prepayment
When borrowers fail to maintain their property, they are committing
Waste
A ___ _______ loan offers the lender no other option in the event of default except what they get from foreclosure.
non-recours
When the lender agrees up front to a certain interest rate which will not go up prior to closing, it is called a:
Lock in
A chattel mortgage uses __________ property for collateral
Personal
A package loan uses both real property and personal property as collateral
True
A loan which has a maximum amount and where you borrow only portions of that amount as needed (very similar to the way a credit card or construction loan works), is called a(n) ____________ end mortgage or loan.
Open
A builder obtained a loan to finance construction. In order to convey clear title to individuals who bought houses, the builder would have to have a(n)______ release clause in the loan.
Partial
An appraisal for a VA loan is called a Certificate of __________________ value.
Reasonable
The money for FHA and VA loans is obtained from approved:
Lender
The formula for determining the equity in your home is:
Value of the home minus the balance of the liens against it
The interest rate with no discount points is called par.
True
In the case of a foreclosure sale where $50,000 equity is realized from the sale, who gets the equity?
Lien Theory: Borrower; Title Theory: Lender
Define Hypothecation:
Asset is pledged as collateral to secure a loan, without giving up title, possession or ownership rights
When one enters into a land contract, or contract for deed, the borrower will not receive a deed to the property until the debt is paid in full.
True
__________ __ _______reveals all current information about the existing loan.
Certificate of Estoppel
When you give something as collateral, and you DO give up possession, that is called:
Pledge (opposite of Hypothecation)
In a Lien Theory state, title to the property is held by the borrower and the lender holds a lien until the loan is paid off. If default occurs, the lender can foreclose.
True
Utah is a __________ theory state.
Lien
A Uniform Real Estate Contract (also known as a Land Contract, Contract for Deed, or Installment Sales Contract) is written as though Utah is a _________ Theory State.
Title
If there are no other liens against the property, and the borrower is in default, the lender might accept a ____________ in lieu of foreclosure, sometimes called a “friendly foreclosure.”
Deed
A deed in foreclosure is an example of _____alienation.
Involuntary
Once the buyer and seller have signed a uniform real estate sales contract, the buyer receives equitable title while the seller retains legal title.
True
