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Real Estate 90 Sec ON1 (20452) > Financing > Flashcards

Financing Flashcards

1
Q

Define Elongated

A

Long in relation to Width, esp. unusually so.

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2
Q

What are the courses of action would the Federal Reserve Board take during an elongated period of “Tight Money”?

A
  1. Purchasing Large Blocks of Gov’t Bonds
  2. Lower the reserve req’ments of Bank Members
  3. Decrease the discount rate for Bank Members
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3
Q

What is “Tight Money”?

A

A decrease in spending dollars b/c of a decrease in the money supply.

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4
Q

What is best expresses the terms assume & subject to?

A

When a Buyer takes title subject to an existing loan, he takes no liability for the note.

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5
Q

What is Hypothecate?

A

is when a borrower pledges a piece of collateral, such as a rental property, home or movable asset like Car, Boat, or Stocks, to obtain a loan.

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6
Q

What is Subordination?

A

is the process of ranking home loans (Mortgage, HELOC or Home Equity Loan) by order of importance.

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7
Q

What is 2nd-Mortgage (Jr-Lien)?

A

is a loan you take out using your house as collateral while you still have another loan secured by your house.

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8
Q

What is a Interim Loan?

A

are no interest, no fee, short-term construction Loans, provided by the Trust to Borrowers.

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9
Q

What is Construction Loan (aka “Self-Build Loan”?

A

is a Short-Term Loan used to finance the building of a home or another Real Estate Project.

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10
Q

What is a Take-Out Loan?

A

A type of Long-Term Financing that replaces Short-Term Interim Financing.

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11
Q

What is request of Notice of Default?

A

It means the Borrower must immediately remit pymt & other costs, such as filing fees, or the prime lender may take legal action, usually a foreclosure.

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12
Q

Why would a Trustor (Borrower) benefit from a Subordination Clause?

A

This makes it easier to obtain an additional loan on their property.

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13
Q

Who signs a Deed of Reconveyance?

A

A Trustee

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14
Q

What is a Deed of Reconveyance?

A

A deed of reconveyance is a document that transfers a property’s title from a mortgage lender to the borrower, indicating that the borrower has fulfilled their obligation to repay the loan and now owns the property.

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15
Q

What is a Holder in Due Course?

A

is a legal term to describe the person who has received a negotiable instrument in good faith and is unaware of any prior claim, or that there is a defect in the title of the person who negotiated it.

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16
Q

You purchase a negotiable note & have no knowledge of any defects. You are know as:

A

Holder in Due Course.

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17
Q

Who benefits from a Subordination Clause in a Deed of Trust?

A

A Trustor (Borrower)

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18
Q

Who signs a Deed of Reconveyance?

A

Trustee

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19
Q

A borrower on a new loan is req’d to advance $412 for an Impound acct. He would do so for the benefit of:

A

The Trustor Only.

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20
Q

A borrower on a new loan is req’d to advance $412 for an Escrow acct. He would do so for the benefit of:

A

The Mortgagor & the Mortgagee.

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21
Q

A Broker negotiated a Hard Money $4K Note secured by a 2nd Deed of Trust w/ a term of 4 yrs, for a client. Considering the above transaction, what is the Max legal commission?

A

$600 (15%)

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22
Q

A Check is a:

A

Negotiable Instrument

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23
Q

A Client contacts you to give you a listing. You look at his papers & discover that he is purchasing the property on a contract of sale. The contract contains no Acceleration Clause & there are no restrictions in the contract of sale prohibiting resale or assignment. Your Client could:

A

Sell or Assign his rights but not his duties w/out approval of the contract seller.

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24
Q

As a condition of granting a loan, a lender will often charge discount pts. What is not true concerning discount pts?

A

FHA & VA regulations forbid the lender to charge discount pts when their agencies insure or guarantee the loan.

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25
Q

Assume you have a job for an insurance company to procure 1st trust deed loans & you are compensated for your services. This req’s:

A

An Active RE Broker’s License

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26
Q

Assume you purchase a piece of property & execute a promissory note. In this situation you are:

A

The maker of the note.

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27
Q

At time when money is considered tight:

A

A seller may have to pay for all the pts. in order that the buyer may obtain an FHA Loan.

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28
Q

Beneficiaries prefer purchase money mortgages & deed of trust b/c they have priority over:

A

Buyer’s Liens at the time of purchase.

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29
Q

Broker, Jenny Johnson, was approved for the $200K Bank Loan that she needed to open up her Real Estate Office, as long as as she agreed to keep $20K in a Saving Acct. at the Bank at all times during the term of her Loan. This is known as:

A

Compensating Balance.

30
Q

Broker are req’d to retain copy of the Mortgage Loan Disclosure Statement in their office files for a period not less than:

A

3 Years.

31
Q

“CRV” is common phrase used in the financing of Real Estate. The CRV is issued by the:

A

VA (Veteran’s Administration)

32
Q

What is “CRV”?

A

Certificate of Reasonable VAlue- A Veterans Administration appraisal that esta. the Max VA Mortgage Loan Amt. for a specified property.

33
Q

Considering Construction Financing, the Lender will usually release the final pymt to the borrower when:

A

The Lien Period has expired.

34
Q

Doug is a homeowner who has failed to make pymts on a Trust Deed for 2/mos. The Trustee has Recorded a Notice of Default. What does Doug have?

A

Right of Reinstatement.

35
Q

Edna Hall is a farmer & needs to raise additional working capital & wishes to encumber her growing crops. If the lending institution is agreeable to this, Ms. Hall would be asked to sign a:

A

Financing Statement.

36
Q

FHA uses MPR in connection w/ Loans they insure. MPR means:

A

Minimum Property Req’ment.

37
Q

1st Savings Bank granted a Construction Loan in a 5-Stage Plan for the development of a new local mall. When would the last pymt be made?

A

After the Mechanic’s Time Lien has Expired.

38
Q

Following a Trustee sale, the money is dispersed in the following manner:

A

Cost & Expenses of Sale, 1st Trust Deed, 2nd Trust Deed, Balance to the Trustor.

39
Q

Gerald, who is a 17yo minor, wishes to purchase a home. This can be done legally when:

A

Buying a home under the Cal-Vet Program.

40
Q

I = P x R x T has to do w/:

A

Real Estate Loans

41
Q

What is I = P x R x T?

A 
I = Interest
P = Principal
R = Rate
T = Time
42
Q

If the Annual % Rate provided in the Good Faith Est. is out of tolerance under TILA (Truth In Lending Agreement), creditors must provide a corrected TIL Disclosure Statement to a consumer:

A

On or Before the 3rd Business day before consummation of the Transaction.

43
Q

What does Consummation mean?

A

The pt. at which something is complete or finalized.

44
Q

In 1968 a new organization was formed to assume many of the functions of the Federal National Mortgage Association. This organization also works hand in hand w/ the Dept. of Housing & Urban Development (HUD). This organization is know as:

A

Ginnie Mae & Gov’t National Mortgage Association.

45
Q

In a Construction Loan situation, the Lender agrees to an obligatory advance agreement which states that the contractor will receive funds as the construction progresses. The contractor will receive the final pymt:

A

When the Lien period had expired.

46
Q

In a Deed of Trust, who is the Borrower?

A

Trustor.

47
Q

In a promissory note & mortgage signed by 2 or more co-borrowers, when 1 of the co-borrowers defaults, what is the Liability?

A

Ea. is Jointly & Severally Liable.

48
Q

In checking docs in the county recorder’s office, you will find that the recorded Deed of Trust refers to Standard Clauses contained in a previously recorded Deed of Trust. This previously recorded Deed of Trust is known as a:

A

Fictitious Deed of Trust

49
Q

In dealing w/ a Sale w/ a Land Contract “Subject to” a Blanket Encumbrance containing a Release Clause, funds are deposited in an acct. approved by the Real Estate Commissioner for the protection of:

A

Vendee.

50
Q

In purchasing a house, which of the following Methods of Financing could be accomplished w/out a down pymt?

A

VA (Veterans Affair) Loan.

51
Q

In Real Estate Financing, Lenders will sometimes find it necessary to refer to “Nominal Rate” when granting a Loan. This means:

A

It is the Rate of Interest specified in the Promissory Note.

52
Q

In the course of offering a Note for Resale, Mr. Kim, an investor, explains that the Note contains an Alienation Clause. This one fact would:

A

Make the Note more Negotiable.

53
Q

What is an Alienation Clause?

A

AKA a “Due-On-Sale Clause”, is a Real Estate Agreement that req’s a Borrower to pay the remainder of their Mortgage Loan off immediately during the Sale or Transfer of a property title and before a new buyer can take ownership.

54
Q

Insurance companies represent of the major sources of Conventional Loans. Insurance companies:

A

Loan Funds on better type properties.

55
Q

Jane offers to purchase Stan’s property for $139K. Jane takes title “Subject to” a VA Loan. What is the effect on Liability?

A

Stan is Liable for the Loan.

56
Q

Joe wants to expand his business & plans to purchase a piece of Industrial Property. He applies for a loan to help purchase the property. The lender is most interested in:

A

The financial condition & credit standing of the individual or company applying for the loan.

57
Q

The Trustor(Borrower) under a Deed of Trust is the party who:

A

Signs the note as Maker.

58
Q

The Type of Interest charged on Home Loan is:

A

Simple Interest

59
Q

There are many differences between Mortgagees & Deed of Trust. What is the similarity?

A

Security of the Loan.

60
Q

Trustor is to Beneficary as:

A

Mortgagor is to Mortgagee.

61
Q

Under a Land Contract or a Condition Contract of Sale, the seller would not normally initiate a legal action based upon:

A

An agreement not to record.

62
Q

What is the Federal Law req’ing Mortgage Loan Originators to be licensed according to National Standards?

A

Secure & Fair Enforcement for Mortgage Licensing Act.

63
Q

What is the Max Loan available on a VA Loan?

A

$45K.

64
Q

When a Loan is Fully Amortized by Equal Monthly pymts of Principal & Interest. The amt(s) applied to the Principal:

A

Increases while the Interest pymt decreases.

65
Q

When a trust deed is sold, the parties use an escrow in order to:

A

make sure that conditions and terms are met prior to the settlement of the transaction.

66
Q

When purchasing a property under the California Farm and Home Purchase Act, would it be possible to obtain secondary financing at the time of purchase?

A

Yes, secondary financing is allowed at the time of purchase and all during the loan period

67
Q

Which agency holds the deed on a Cal-Vet loan?

A

Department of Veterans Affairs.

68
Q

Which of the following institutions invests most of their funds in home loans?

A

Federal savings banks.

69
Q

Which of the following forms would be required when selling a promissory note served by a trust deed in which an appraisal of the real property is compulsory as in regards to the real estate code?

A

An agreement of sales

70
Q

Which of the following requires mutual mortgage insurance?

A

FHA

Real Estate 90 Sec ON1 (20452) (5 decks)

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