Finance

Question 1

A lender who originates a loan is referred to as part of the

Answer 1

Primary money market

Question 2

Those who buy existing loans are part of the:

Answer 2

Secondary money market

Question 3

All loans which come after a first mortgage are referred to as ______ ______

Answer 3

junior liens

Question 4

Which of the following are considered both primary and secondary lenders?

Answer 4

Private individuals and insurance companies

Question 5

Which of the following are NOT considered primary lenders?

Answer 5

GNMA (Ginnie Mae) and FNMA (Fannie Mae)

Question 6

FNMA provides a source of funds for approved lenders.

Answer 6

True

Question 7

Sometimes secondary lenders purchase existing loans at a discount.

Answer 7

True

Question 8

The Federal Reserve Bank ____________ set interest rates.

Answer 8

Does Not

Question 9

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 ______.

Answer 9

Leverage

Question 10

. LTVR, or loan to value ratio, is determined by:

Answer 10

dividing the amount of the loan by the value.

Question 11

A clause which allows for a new loan to take priority over one already in place is called the:

Answer 11

Subordination Clause

Question 12

The clause which requires the lender to reconvey all interest in the property when the loan is paid off:

Answer 12

Defeasance Clause

Question 13

The right of the lender to call a loan due and payable immediately, is conveyed in the:

Answer 13

Acceleration Clause

Question 14

A blanket loan uses _______ or more parcels of real property to secure the loan.

Answer 14

2

Question 15

The interest you pay on a loan is

Answer 15

Simple Interest

Question 16

19. The effect in the secondary money market of buying a note at a discount is to __________________ the yield to the secondary lender.

Answer 16

Increase

Question 17

A loan where the mortgagee makes regular monthly payments to the mortgagor is a reverse annuity mortgage.

Answer 17

True

Question 18

“Debt service” refers to which of the following?

Answer 18

Principle and Interest

Question 19

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.

Answer 19

True

Question 20

What clause is sometimes placed in a loan to protect lessees?

Answer 20

non- disturbance

Question 21

FNMA is privately owned and government regulated

Answer 21

True

Question 22

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.

Answer 22

Interest

Question 23

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.

Answer 23

1%, Lower

Question 24

Outrageous and illegal interest is called ______________.

Answer 24

Usury

Question 25

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.

Answer 25

fully amortized

Question 26

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.

Answer 26

Straight

Question 27

. If the seller carries all or part of the financing to sell the home it’s called:

Answer 27

Purchase money mortgage

Question 28

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.

Answer 28

Graduated

Question 29

A clause used to discourage borrowers from refinancing when interest rates are falling: ______________________________ penalty clause.

Answer 29

Prepayment

Question 30

When borrowers fail to maintain their property, they are committing

Answer 30

Waste

Question 31

A ___ _______ loan offers the lender no other option in the event of default except what they get from foreclosure.

Answer 31

non-recours

Question 32

When the lender agrees up front to a certain interest rate which will not go up prior to closing, it is called a:

Answer 32

Lock in

Question 33

A chattel mortgage uses __________ property for collateral

Answer 33

Personal

Question 34

A package loan uses both real property and personal property as collateral

Answer 34

True

Question 35

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.

Answer 35

Open

Question 36

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.

Answer 36

Partial

Question 37

An appraisal for a VA loan is called a Certificate of __________________ value.

Answer 37

Reasonable

Question 38

The money for FHA and VA loans is obtained from approved:

Answer 38

Lender

Question 39

The formula for determining the equity in your home is:

Answer 39

Value of the home minus the balance of the liens against it

Question 40

The interest rate with no discount points is called par.

Answer 40

True

Question 41

In the case of a foreclosure sale where $50,000 equity is realized from the sale, who gets the equity?

Answer 41

Lien Theory: Borrower; Title Theory: Lender

Question 42

Define Hypothecation:

Answer 42

Asset is pledged as collateral to secure a loan, without giving up title, possession or ownership rights

Question 43

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.

Answer 43

True

Question 44

__________ __ _______reveals all current information about the existing loan.

Answer 44

Certificate of Estoppel

Question 45

When you give something as collateral, and you DO give up possession, that is called:

Answer 45

Pledge (opposite of Hypothecation)

Question 46

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.

Answer 46

True

Question 47

Utah is a __________ theory state.

Answer 47

Lien

Question 48

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.

Answer 48

Title

Question 49

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.”

Answer 49

Deed

Question 50

A deed in foreclosure is an example of _____alienation.

Answer 50

Involuntary

Question 51

Once the buyer and seller have signed a uniform real estate sales contract, the buyer receives equitable title while the seller retains legal title.

Answer 51

True