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ASREB Real Estate > Financing the Transaction and Settlement > Flashcards

Financing the Transaction and Settlement Flashcards

1
Q

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

A

B: Increases the lender yield

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2
Q

A mortgage banker borrows on existing loans they hold, this is called?

A: Warehousing
B: Discounting
C: Wraparound Lending
D: Estoppel

A

A: Warehousing

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3
Q

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

A: Not guaranteed or insured by a government agency

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4
Q

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.

A

B: Is effective between the lender and the borrower only

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5
Q

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

A

C: Deed

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6
Q

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

A: an extended coverage policy

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7
Q

Standard title insurance covers:

A: recorded title defect
B: Unrecorded title defects
C: All title defects
D: Defects disclosed by a competent survey

A

A: recorded title defect

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8
Q

Who acknowledges a deed?

A: Grantor
B: Grantee
C: Vendee
D: Notary

A

A: Grantor

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9
Q

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

A

D: Affidavit of title

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10
Q

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

A

C: total monthly loan payment compared to gross monthly income

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11
Q

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

A: many not bid on the property

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12
Q

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

A: arbitrage

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13
Q

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

A

C: Deed

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14
Q

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

A

C: savings and loan

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15
Q

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

A

B: land installment contract

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16
Q

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

A

B: Certificate of sale

17
Q

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

A

C: Land installment contract

18
Q

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

A

B: Not recorded

19
Q

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

A

B: Purchase money mortgage

20
Q

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

A

C: Actual notice

21
Q

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.

A

D: the amount of principal remaining on the mortgage.

22
Q

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

A

C: mortgage title insurance

23
Q

Insurance policy premiums are prorated from the date the policy is:

A: written
B: recorded
C: expired
D: assigned

A

D: assigned

24
Q

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

A

B: credit to the buyer

25
Q

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

A

B: create a valid lien

26
Q

The closing statement should be signed by:

A: the broker
B: the buyer
C: the broker, buyer, and seller
D: the seller

A

C: the broker, buyer, and seller

27
Q

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: a debit to the seller and a credit to the buyer

28
Q

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

A

D: truth in lending

29
Q

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

A

D: Provide security for payment of a debt or judgement

30
Q

Which of the following apply to a VA loan?

A: PMI
B: MIP
C: Funding Fee
D: Front and back end rates

A

C: Funding Fee

31
Q

What applies to the Federal National Mortgage Association?

A: Guarantee loans
B: Secondary Market
C: Insures Loans
D: Governmental Agency

A

B: Secondary Market

32
Q

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

A

D: Alienation Clause

33
Q

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

A

B: Allows the lender to call for full payment of the mortgage because the owner sold the property

34
Q

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

A

C: A deed in lieu of foreclosure

35
Q

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

A

B: Obtain a deficiency judgment

36
Q

According to Reg. Z, what disclosure would NOT be required?

A: Finance charges
B: Annual percentage rate
C: Annual property taxes
D: Interest rate

A

C: Annual property taxes

37
Q

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

A

B: Estoppel certificate

38
Q

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

A

B: FHA 203K

ASREB Real Estate (18 decks)

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