Financing the Transaction and Settlement Flashcards
What does a discount point do?
A: covers the cost to originate the loan
B: Increases the lender yield
C: Raises the interest rate
D: Decreases the lenders yield
B: Increases the lender yield
A mortgage banker borrows on existing loans they hold, this is called?
A: Warehousing
B: Discounting
C: Wraparound Lending
D: Estoppel
A: Warehousing
A conventional loan is:
A: Not guaranteed or insured by a government agency
B: Guaranteed by a government agency
C: Obtainable through FHA
D: At a lower interest rate than an FHA loan
A: Not guaranteed or insured by a government agency
A mortgage that has not been recorded:
A: has no legal effect
B: Is effective between the lender and the borrower only
C: is a lien on the property
D: Is effective against a subsequent purchaser of the mortgaged premises, provided that the purchaser gave value and did not have knowledge of the unrecorded mortgage.
B: Is effective between the lender and the borrower only
A written instrument transferring the grantor’s ownership of, or interest in, real property is known as a/an:
A: Mortgage
B: Easement
C: Deed
D: Title
C: Deed
The most complete title protection is offered by:
A: an extended coverage policy
B: a standard title policy
C: a certificate of title
D: an abstract of title
A: an extended coverage policy
Standard title insurance covers:
A: recorded title defect
B: Unrecorded title defects
C: All title defects
D: Defects disclosed by a competent survey
A: recorded title defect
Who acknowledges a deed?
A: Grantor
B: Grantee
C: Vendee
D: Notary
A: Grantor
A buyer insists that a seller sign a document that states there are no unrecorded liens against the property and that the seller is the rightful and lawful owner. The buyer is asking the seller to sign:
A: Property disclosure statement
B: Agency disclosure statement
C: Hypothecation clause
D: Affidavit of title
D: Affidavit of title
The front end ratio of an FHA loan would apply to which of the following?
A: sales price divided by potential rent
B: total down payment compared to sales price
C: total monthly loan payment compared to gross monthly income
D: interest rate divided by monthly payment
C: total monthly loan payment compared to gross monthly income
In a foreclosure sale, the debtor:
A: many not bid on the property
B: may be a successful bidder and be awarded the title to the property
C: Advertises to secure exposure for the sale
D: Is freed of any future responsibility regarding the liens
A: many not bid on the property
When the seller creates a wraparound loan with the buyer the benefit to the seller would be:
A: arbitrage
B: novation
C: negative amortization
D: estate for years
A: arbitrage
The owner of a parcel of real property wishes to convey his interest to a certain buyer. The transfer of the grantor’s ownership interest, if any, would be accomplished by which of the following?
A: Mortgage
B: Easement
C: Deed
D: Title
C: Deed
The type of lender with the greatest percentage of assets invested in residential mortgages is a/an:
A: mutual savings bank
B: life insurance company
C: savings and loan
D: commercial bank
C: savings and loan
The buyer and seller enter into a contract for deed. In many jurisdictions, this would most likely be a:
A: wraparound mortgage
B: land installment contract
C: condominium
D: lease with option
B: land installment contract
After buying property at a sheriff’s foreclosure auction, what document would a person receive to prove he is entitled to the deed upon confirmation of sale?x
A: Certificate of habitation
B: Certificate of sale
C: Certificate of title
D: Certificate of no defense
B: Certificate of sale
A buyer agrees to purchase real property by making monthly payments to the seller and then receiving a deed at a later point in time. Such an agreement is known as a/an:
A: Straight term mortgage
B: Construction loan
C: Land installment contract
D: Certificate of sale
C: Land installment contract
While both the mortgage deed and the mortgage note are signed by the borrower, the note is:
A: Signed in duplicate with a copy each for the buyer and the bank
B: Not recorded
C: Not really necessary
D: Retained by the borrower as a reminder of its maturity date
B: Not recorded
Which of would a buyer prefer: land installment contract or purchase money mortgage?
A: Either as both convey equitable title
B: Purchase money mortgage
C: Either as both convey legal title
D: land installment contract
B: Purchase money mortgage
Once a person has gone to the courthouse and reviewed all documents pertaining to the property he intends to buy, he is said to have:
A: Ad Valorem notice
B: Constructive notice
C: Actual notice
D: Caveat Emptor
C: Actual notice
Each January, a homeowner receives an estoppel certificate from his bank indicating:
A: the closing cost incurred in selling the home
B: the amount of the taxes and insurance held in escrow
C: the amount of real property taxes that the homeowner will owe for the upcoming year
D: the amount of principal remaining on the mortgage.
D: the amount of principal remaining on the mortgage.
A home seller would purchase title insurance for a buyer. What type of insurance would a buyer purchase for a lender?
A: homeowners insurance
B: automobile insurance
C: mortgage title insurance
D: life insurance
C: mortgage title insurance
Insurance policy premiums are prorated from the date the policy is:
A: written
B: recorded
C: expired
D: assigned
D: assigned
In the settlement statement required by RESPA, the earnest money deposited by a buyer is shown as a:
A: none of the answers
B: credit to the buyer
C: debit to the buyer
D: debit to the seller
B: credit to the buyer
A mortgage is recorded to:
A: comply with truth in lending regulations
B: create a valid lien
C: Transfer title to the mortgagee
D: Assure amortization payments
B: create a valid lien
The closing statement should be signed by:
A: the broker
B: the buyer
C: the broker, buyer, and seller
D: the seller
C: the broker, buyer, and seller
Real Estate taxes are prorated as of the day of closing. The real estate taxes are:
A: a debit to the seller and a credit to the buyer
B: a debit to both the buyer and seller
C: a debit to the buyer and a credit to the seller
D: a credit to both buyer and seller
A: a debit to the seller and a credit to the buyer
When a lenders advertising is considered bait and switch it would be regulated by:
A: Sherman anti trust laws
B: federal reserve
C: fair housing act of 1988
D: truth in lending
D: truth in lending
Property is attached in order to:
A: Construct zoning boundary lines
B: Compute valuation for mortgage loan purposes
C: Compute cost replacement value
D: Provide security for payment of a debt or judgment
D: Provide security for payment of a debt or judgement
Which of the following apply to a VA loan?
A: PMI
B: MIP
C: Funding Fee
D: Front and back end rates
C: Funding Fee
What applies to the Federal National Mortgage Association?
A: Guarantee loans
B: Secondary Market
C: Insures Loans
D: Governmental Agency
B: Secondary Market
A clause used in a mortgage allowing the lender to call for the full payment of the mortgage because the owner transferred ownership of the property to a third party is known as the:
A: Hypothecation Clause
B: Prepayment Clause
C: Appreciation Clause
D: Alienation Clause
D: Alienation Clause
An alienation clause in a mortgage refers to the clause that:
A: Allows the lender to charge a penalty for early payment
B: Allows the lender to call for full payment of the mortgage because the owner sold the property
C: Calls the entire mortgage due if the owner moves outside the US
D: Pledges the property as security to a third party
B: Allows the lender to call for full payment of the mortgage because the owner sold the property
A viable alternative to foreclosure would be:
A: Filing a writ of execution
B: Filing a Lis Pendens notice
C: A deed in lieu of foreclosure
D: Filing an attachment
C: A deed in lieu of foreclosure
A homeowner’s property has been foreclosed upon by the bank and sold at public auction. The homeowner owed $50,000.00 on the mortgage but the property sold for only $40,000.00. To collect the $10,000.00, the lender could do which of the following?
A: Ask for dedication
B: Obtain a deficiency judgment
C: File a deed of trust
D: File a deed in lieu of foreclosure
B: Obtain a deficiency judgment
According to Reg. Z, what disclosure would NOT be required?
A: Finance charges
B: Annual percentage rate
C: Annual property taxes
D: Interest rate
C: Annual property taxes
A homeowner receives a duplicate 1099 form from the bank showing how much interest has been paid over the last year and what principal amount is remaining on the mortgage. This document is a/an:
A: Certificate of habitation
B: Estoppel certificate
C: Certificate of sale
D: Certificate of title
B: Estoppel certificate
A buyer wants to purchase an older home in a low-income area. The home needs rehabilitation but has a good future due to a growing economy. What loan best suits the buyer’s needs?
A: Variable rate
B: FHA 203K
C: Reverse annuity
D: Join Venture
B: FHA 203K
