Finance Quiz

Question 1

Under an installment land contract, the title to the property is held by the

a. vendor
b. vendee
c. trustor
d. trustee

Answer 1

a. vendor

Question 2

Charging more interest than is legally allowed is known as

a. escheat
b. usury
c. a deficiency
d. an estoppel

Answer 2

b. usury

Question 3

A mortgagor is the one who

a. gives the mortgage
b. holds the mortgage
c. provides the mortgage funds
d. forecloses on the mortgage

Answer 3

a. gives the mortgage

Question 4

A promissory note

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

Answer 4

c. is the primary evidence of a debt

Question 5

A land contract provides for the

a. sale of unimproved land only
b. sale of real property under an option agreement
c. conveyance of legal title at a future date
d. immediate transfer of reversionary rights

Answer 5

c. conveyance of legal title at a future date

Question 6

The administrative fee charged by the lender to make the loan is

a. a loan discount fee
b. an advance interest payment
c. a loan origination fee
d. a mortgage insurance premium

Answer 6

c. a loan origination fee

Question 7

The loan amount expressed as a percentage of the value of the real estate offered as collateral is the

a. amortization ratio
b. loan-to-value ratio
c. debt-to-equity ratio
d. capitalization rate

Answer 7

b. loan-to-value ratio

Question 8

If the amount realized at a mortgage foreclosure auction is more than the amount of the indebtedness and expenses, then the excess belongs to the

a. grantor
b. beneficiary
c. trustee
d. county

Answer 8

a. grantor

Question 9

The purpose of the Real Estate Settlement Procedures Act (RESPA) is to

a. ensure that buyers do not borrow more money than they can repay
b. make real estate brokers more responsive to the needs of buyers
c. help sellers know how much money is required to purchase the property
d. see that borrowers know all their settlement costs

Answer 9

d. see that borrowers know all their settlement costs

Question 10

If the proceeds from the sale of a foreclosed property are less than the amount required to satisfy the outstanding mortgage loan debt and legal expenses, the grantor may be responsible for

a. a default judgement
b. a deficiency judgement
c. liquidated damages
d. punitive damages

Answer 10

b. a deficiency judgement

Question 11

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 by the borrower is the

a. alienation clause
b. escalator clause
c. forfeiture clause
d. acceleration clause

Answer 11

d. acceleration clause

Question 12

When a mortgage loan has been paid in full, it is important for the borrower to be sure that

a. the paid not is placed in a safe deposit box
b. a deed of partial reconveyance is obtained
c. the paid mortgage is returned to the lender
d. the satisfaction of mortgage is recorded

Answer 12

d. the satisfaction of mortgage is recorded

Question 13

The financial interest in a property held by the owner in excess of any liens against it is called

a. hypothecation
b. subordination
c. leverage
d. equity

Answer 13

d. equity

Question 14

The trustee foreclosed on a property after the borrower defaulted on the loan payments. At the foreclosure auction, however, the house sold for only $129,000. The unpaid balance of the loan at the time of the sale was $140,000. What must the lender do to recover the $11,000 the borrower still owes?

a. sue for damages
b. sue for specific performance
c. seek a judgement by default
d. seek a deficiency judgement

Answer 14

d. seek a deficiency judgement

Question 15

The right a grantor has to regain the property ownership by paying the debt after a foreclosure sale is called

a. acceleration
b. redemption
c. reversion
d. recapture

Answer 15

b. redemption

Question 16

The seller agrees to sell the property to the buyer for $100,000. The buyer was unable to qualify for a mortgage loan for this amount with a traditional lender 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

a. legal title
b. equitable title
c. joint title
d. reversionary title

Answer 16

b. equitable title

Question 17

The pledging of property as security for payment of a loan is

a. disintermediation
b. equity
c. hypothecation
d. subordination

Answer 17

c. hypothecation

Question 18

Fannie Mae

a. originates FHA loans in the primary mortgage market
b. purchases FHA loans in the secondary mortgage market
c. provides farm loans
d. provides insurance for FHA loans

Answer 18

b. purchases FHA loans in the secondary mortgage market

Question 19

The Truth-in-Lending Act sets forth requirements regarding real estate loans to individuals for all of the following purposes EXCEPT

a. equity lines of credit
b. commercial purposes
c. additions to residential properties
d. installation of a backyard swimming pool

Answer 19

b. commercial purposes

Question 20

An FHA-insured mortgage loan would be obtained from

a. the Federal Housing Administration
b. the Department of Housing and Urban Development
c. any qualified lending institution
d. any qualified insuring institution

Answer 20

c. any qualified lending institution

Question 21

An eligible veteran is under contract to purchase a home for $80,000 that he wants to finance with a VA-guaranteed 100 percent loan-to-value loan. Four weeks after contract formation, a certificate of reasonable value (CRV) for $77,000 was issued for the property. In this situation, the veteran may consider any of the following options EXCEPT

a. withdrawing from the transaction without penalty.
b. purchasing the property with an additional $3,000 cask from his own funds
c. negotiating with the seller to reduce the sale price $3,000
d. borrowing the $3,000 for the cash down payment from a private source

Answer 21

d. borrowing the $3,000 for the cash down payment from a private source

Question 22

A borrower obtained a $7,000 second mortgage loan for five years at 6 percent interest per annum. Monthly debt service payments were $50. The final payment included the remaining outstanding principal balance. What type of loan is this?

a. a fully amortized loan
b. a straight loan
c. a partially amortized loan
d. an accelerated loan

Answer 22

c. a partially amortized loan

Question 23

All of the following statements about short sales are true EXCEPT

a. the lienholder cannot be forced to participate in the short sale
b. the borrower may be taxed on any debt that is forgiven by the lienholder
c. the lienholder can file for a deficiency judgement for debt not paid by the sale of the collateral property
d. a sales contract has not been created until the lienholder agrees to the short sale contract terms

Answer 23

d. a sales contract has not been created until the lienholder agrees to the short sale contract terms

Question 24

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. a conventional loan
b. a straight loan
c. a participation loan
d. an amortized loan

Answer 24

d. an amortized loan

Question 25

Regulation Z applies to

a. business loans
b. real estate sales agreements
c. commercial loans less than $10,000
d. personal credit transactions less than $25,000

Answer 25

d. personal credit transactions less than $25,000

Question 26

The Equal Credit Opportunity Act

a. is a federal law that regulates real estate agent actions in advertising financing for listings
b. requires that a rejected credit applicant be told why credit was denied
c. has protected classes that are identical to fair housing laws
d. is a state banking law that regulates mortgage lender practices

Answer 26

b. requires that a rejected credit applicant be told why credit was denied

Question 27

A lender will take all the following factors into consideration when deciding whether or not to approve a borrower’s mortgage loan application EXCEPT

a. the marital status of the borrower
b. the creditworthiness of the borrower
c. the amount of the borrower’s income
d. the borrower credit score

Answer 27

a. the marital status of the borrower

Question 28

Which of the following terms may appear in an advertisement for a real estate loan without triggering Regulation Z full disclosure requirements?

a. “$499 monthly payments”
b. “only one penny down”
c. “8 percent interest rate or lower”
d. “assumable mortgages available”

Answer 28

d. “assumable mortgages available”

Question 29

A longer mortgage loan term will

a. decrease the number of loans being made
b. result in lower monthly mortgage payments
c. prevent many individuals from owning homes
d. cause interest rates to increase

Answer 29

b. result in lower monthly mortgage payments

Question 30

The federal agency that is tasked with the oversight of the public welfare in connection with lending practices is the

a. Federal Reserve
b. Housing and Urban Development Agency
c. Consumer Financial Protection Bureau
d. Federal Trade Commission

Answer 30

c. Consumer Financial Protection Bureau