Key Content (Ch. 4) 9%

Question 1

Owners

Answer 1

Invest in real estate for shelter and income (long term capital growth)

Question 2

Lenders

Answer 2

Invest in mortgages based on the real estate’s value as security

Question 3

Purchasing Power

Answer 3

Home buyers ability to purchase property funded by mortgage money based on 31% of their gross income

Question 4

Preferred method to used to impose a ____on real estate

Answer 4

Lien

Question 5

Lien gives lender or carryback seller right to____ on real estate if borrower defaults

Answer 5

Foreclose

Question 6

Trust deed identifies the following parties in the mortgage transaction;

Answer 6

Borrower/owner (trustor)
Middle man (trustee)
Lender/carryback seller (beneficiary)

Question 7

Trustor

Answer 7

Voluntarily encumbers their property with the trust deed lien.

Question 8

Trustee

Answer 8

(bank) Holds the power of sale to auction the property

Question 9

Beneficiary

Answer 9

(backs trustee) Benefits from the trust deed lien encumbering the property

Question 10

FRM

Answer 10

Fixed Rate Mortgage; note with a fixed interest rate.

Question 11

Periodic Payments

Answer 11

Monthly payments

Question 12

ARM

Answer 12

Adjustable Rate Mortgage; calls for periodic adjustments to the interest rate

Question 13

GPM

Answer 13

Graduated Payment Mortgage; payments increase periodically by predetermined amounts until the payment fully amortizes the principal over remaining life of mortgage (interest rate fixed)

Question 14

AITD note

Answer 14

All-inclusive Trust Deed note (aka a wraparound/overriding note); calls for buyer to pay the carryback seller constant monthly installments of principal and interest.

Question 15

SAM

Answer 15

Shared Appreciation Mortgage; calls for buyer to periodically pay interim interest at fixed rate, then when the principal balance is due, to further pay the mortgage holder additional interest

Question 16

Reconveyance

Answer 16

When a debt secured by a trust deed lien on real estate has been fully paid and the lien is removed from title

Question 17

LTV

Answer 17

An LTV of 80% required buyer to put a minimum down of 20%. Anything greater than 80% requires a PMI

Question 18

Formal Assumption

Answer 18

Between the mortgage holder and the buyer

Question 19

Subject-to-assumption

Answer 19

Between the seller and the buyer

Question 20

Federal Housing Administration

Answer 20

FHA insured mortgage; insures lenders against loss for the full mount of a mortgage.

Question 21

VA Mortgage Guarantee

Answer 21

The VA mortgage guarantees program assists qualified veteran of their surviving spouses to buy a home with zero down payment.

Question 22

Fannie Mae and Freddie Mac

Answer 22

government sponsored enterprises designed to help facilitate home purchases for low to moderate income buyers.

Question 23

Federal Programs

Answer 23

FHA
VA
Fannie Mae and Freddie Mac

Question 24

State programs

Answer 24

CAlHFA
CalVet
HCD

Question 25

Califronia Housing Agency

Answer 25

has several first time buyer assistance programs, 30yr FRM, and with low interest rates

Question 26

California Department of Veteran Affairs

Answer 26

provides vets with a mortgage at a rate generally blow market, low monthly payments and flexible credit standards.

Question 27

California Department of Housing and Community Development

Answer 27

funds local public agenies and private entities which produce affordable housing for rental or ownership.

Question 28

RESPA is administered and enforced by the____

Answer 28

Consumer Financial Protection Bureau

Question 29

TILA-RESPA Intergrated Disclosure(TRID) replaces previous required ____ of settement costs and _____

Answer 29

Good faith estimate(GFE); Truth-in-Lending Act (TILA)

Question 30

Usury Law

Answer 30

Limits the inteerest rate on non-exempt real estate loans to the greater of 10% or the discount rate charged by the Federal Reserve Bank of San Fransisco, plus 5%

Question 31

Usury laws apply only to a _____ or the _______ on a money loan. Thus seller carryback notes are not covered by usury law.

Answer 31

loan of money; forbearance of payment

Question 32

When applying for a mortgage, a buyer has several types of lenders to choose from including the following;

Answer 32

Portfolio Lenders (banks, thrifts, credit unions)
Institutional Lenders (insurance companies)
Warehousing Lenders (bankers who resale the mortgage in secondary market)

Question 33

Institutional lenders often originate mortgages for immediate sale in a process called _____

Answer 33

warehousing

Question 34

A mortgage holder may foreclose on a property in two ways;

Answer 34

Judicial foreclosure aka sheriff’s sale

Non judicial foreclosure aka trustee’s sale

Question 35

Judicial Foreclosure under ___law

Answer 35

mortgage law

Question 36

Non Judicial Foreclosure under ___ provision

Answer 36

power-of-sale

Question 37

In completion of a Judicial Foreclosure the successful bidder is issued a ______

Answer 37

certificate of sale

Question 38

Bidder cannot become owner of foreclosure home until ____expires

Answer 38

redemption period

Question 39

A property owner of a foreclosure home has ____months after the sale to pay off entire debt and costs.

Answer 39

3

Question 40

Non Judicial Foreclosure process has 3 stages;

Answer 40

Notice of Default(NOD)-recorded and mailed
Notice of Trustee’s sale(NOTS)-recorded and mailed
Trustee’s sale-auction occurs, followed by execution of trustees deed

Question 41

After an NOD is recorded and prior to 5 business days before the trustee’s sale, the owner is able to terminate the foreclosure by paying;

Answer 41

Delinquent amounts due aka reinstatement or

Entire amount due aka redemption

Question 42

In a deed-in-lieu of foreclosure only a _____must sign

Answer 42

owner of property