Financing

Question 1

The ________ regulates the flow of money and the cost of credit to help stabilize the market fluctuation that create inflations or recession. The 12 regional Federal Reserve Banks follow the polices set by a seven-member Board of Governors.

Answer 1

Federal Reserve Bank System

Question 2

Created in 1932 to provide mortgage insurance on loans made by FHA-approved lenders throughout the United States; part of the Department of Housing and Urban Development; found at www.fha.com

Answer 2

Federal Housing Administration

Question 3

The ______ is the borrower’s promise to pay the amount borrowed. The promissory note is the evidence of the debt. It establishes the underlying obligation of the loan transaction. In other words, the promissory note is the borrower’s IOU to the lender.

Answer 3

Promissory note

Question 4

The ______ is used to identify the real estate that deserves as assurance that the loan will be repaid.

Answer 4

Security instrument

Question 5

The real property will be forfeited to the holder of the security instrument if the underlying debt is not paid.

Answer 5

Hypothecation

Question 6

1. Principal x Rate = Annual Rate
   The principal is the unpaid balance of the loan. The rate is the percentage rate of interest paid.
2. Interest on a loan ordinarily is calculated monthly. To find interest per month, divide the annual by 12.

Example:
$176,000 x .06 = $10,560
$10,560 / 12 = $880 monthly interest.

To find interest for a number of days, find interest by dividing the annual interest by 360 days in the year.
Example:
$176,000 x .06 = $10,560 annual interest
$10,560 / 360 = $29.33 daily interest
$29.33 x 17 = $498.67 interest for 17 days

Answer 6

Principal x Rate = Annual rate

Question 7

The California Foreclosure Prevention Act has extended the waiting period between filing of the notice of default and filing of the subsequent notice of sale from 90 days to 180 days, effective June 15, 2009, but the Act exempts from the extensions lenders with comprehensive loan modification programs.

Answer 7

Notice of Sale

Question 8

An _____ ______ is the legal action by which the court orders the sheriff to evict the present occupant.

Answer 8

Unlawful detainer

Question 9

Purchaser of a foreclosed home must give tenants at least 90 days before starting eviction proceedings. If the tenant has a fixed-term lease that began before the transfer of title at the foreclosure sale, the new owner must honor the lease unless the new owner can prove the an exception intended to prevent fraudulent leases applies.

Question 10

Mortgage guaranty insurance available to conventional lenders on the high-risk portion of a loan, with payment included in the borrower’s loan installment.

Answer 10

Private Mortgage Insurance (PMI)

Question 11

Amount of loan divided by purchase or market value of property.

Answer 11

Loan-to-value ratio

Question 12

Federal law that requires certain disclosures in consumer credit transaction; implemented by Regulation Z that is now subject to the Consumer Financial Protection Bureau.

Answer 12

Truth in Lending Act (TILA)

Question 13

TRID (TILA-RESPA Integrated Disclosure Rule) applies to

Answer 13

Construction-only loans

Question 14

RESP (Real Estate Settlement Procedures Act) covers the

Answer 14

Closing Disclosure form

Question 15

A lender that discriminates against a loan applicant because of race has violated

Answer 15

the Equal Credit Opportunity Act

Question 16

In a deed of trust, the lender is

Answer 16

the beneficiary

Question 17

In a deed of trust, the borrower is

Answer 17

the trustor

Question 18

In a mortgage, the lender is

Answer 18

the mortgagee

Question 19

Federal savings and loan activities are overseen by

Answer 19

the Office of the Comptroller of the Currency

Question 20

An agent who has been granted a power of attorney by a principal.

Answer 20

Attorney-in-fact

Question 21

An agent authorized to act in the capacity of the principal

Answer 21

Power of attorney

Question 22

An agent authorized to carry out a specific act or acts.

Answer 22

Special power of attorney

Question 23

An agent authorized to carry out all of the business dealings of the principal

Answer 23

General power of attorney

Question 24

The Office of Thrift Supervision (OTS)) regulates the savings and loan industry.

Question 25

The Federal Housing Finance Agency (FHFA) oversees the Federal Home Loan Banks, which lend funds to member institutions.

Question 26

Investment funds and savings provide the capital needed for the industry to grow and prosper.

Question 27

A purchaser of a foreclosed home must give tenants at least 90 days before starting eviction proceedings.

Question 28

California law that prohibits discrimination against persons in one of the identified groups in accommodations and business establishments.

Answer 28

Unruh Civil Rights Act.

Question 29

The Loan Estimate must also be delivered or placed in the mail no later than the seventh business day before consummation of the transaction.

Question 30

For loans that require a Loan Estimate and the proceed to closing, creditors must provide a final disclosure that reflects the actual terms of the transaction and is called the _____ _____. The creditor is generally required to ensure that the consumer receives the ______ ______ no later than three business days before consummation of the loan.

Answer 30

Closing Disclosure

Question 31

The creditor must provide the consumer with good-faith estimates of credit costs and transaction terms on a new form called ________. The creditor is generally required to provide the Loan Estimate within three business days of the receipt of the consumer’s loan application.

Answer 31

Loan Estimate

Question 32

Form mandate by the TILA-RESPA rule that helps consumers to understand all the costs of the transaction. It must be provided to consumers three business days before closing.

Answer 32

Closing Disclosure

Question 33

An undertaking or adoption of a debt or an obligation resting primarily on another person.

Answer 33

In a loan assumption

Question 34

When a grantee takes title to real property “subject to” a mortgage or trust deed, the grantee is not responsible to the holder of the promissory note for the payment of the amount due, and the original maker of the note retains primary responsibility for the underlying debt.

Answer 34

Subject to