PRINCIPLES AND PRACTICES CHP 14 Flashcards
To sell loans to Fannie Mae, the primary market lender must
A. allow the secondary agencies to audit its books.
B. be a federal government-affiliated lender.
C. be willing to suffer significant discounting losses.
D. follow the underwriting guidelines of the secondary market.
D. follow the underwriting guidelines of the secondary market.
Mortgage bankers typically make loans in the
A. money market.
B. primary market.
C. secondary market.
D. stock market.
B. primary market.
Tabitha wants a loan to purchase a house. She could complete an application with each of the following EXCEPT
A. ABC bank.
B. Ginnie Mae.
C. Jim, a mortgage broker.
D. SL Savings & Loan.
B. Ginnie Mae.
An example of a servicing activity for which a servicing fee may be charged is
A. collecting monthly mortgage payments.
B. increasing interest rates charged to borrowers.
C. purchasing mortgages on the secondary market..
D. setting reserve requirements and discount rates.
A. collecting monthly mortgage payments.
Which is NOT a function of the secondary markets?
A. moderate effects of local real estate cycles
B. provide lenders with money to make more loans
C. serve as a depository for consumer assets
D. standardize underwriting guidelines
C. serve as a depository for consumer assets
Which of these is NOT a type of security instrument?
A. deed of trust
B. land contract
C. mortgage
D. promissory note
D. promissory note
Barb is ready to cash in her retirement savings and move south. She wants to sell her house to her son and daughter-in-law, who are unlikely to be approved for a new loan. She decides to let them assume her mortgage. If her current mortgage includes a(n) clause, Barb may be required to pay the balance in full when she transfers title to the kids.
A. acceleration clause
B. alienation clause
C. power of sale clause
D. subordination clause
B. alienation clause
Hypothecation involves the
A. diminishing of the loan balance as monthly payments of principal and interest are made.
B. passing of legal title to a disinterested third party
until a loan is repaid.
C. pledge of property as collateral for a loan while continuing to possess it.
D. promise to discharge the lien on a property once a loan is repaid.
C. pledge of property as collateral for a loan while continuing to possess it.
If a borrower wants to pay more toward principal every month to reduce the total amount of interest they pay, what mortgage clause should they be most concerned about?
A. acceleration clause
B. alienation clause
C. prepayment clause
D. subordination clause
C. prepayment clause
If the total payments over the life of a loan pay off the entire balance of principal and interest, the loan is referred to as
A. annualized.
B. compounding.
C. diminishing.
D. fully amortized.
D. fully amortized.
Victoria gets a 10-year straight loan for $60,000 at an interest rate of 4% to finance the purchase of a vacation cottage in the hills. Every month, she pays the lender $200. In 10 years, how much will she owe the lender?
A. $0
B. $24,000
C. $60,000
D. $84,000
C. $60,000
A 30-year fixed rate loan for $165,000 at 4.75% interest has an $860.72 monthly payment of principal and interest. What is the loan balance after the second payment?
A. $164,139.28
B. $164,346.87
C. $164,583.99
D. $164,792.41
C. $164,583.99
A 20-year fixed rate loan for $146,000 has an interest rate of 5%. The monthly payment of P&I is $963.54. What is the principal reduction with the first monthly payment?
A. $355.21
B. $481.17
C. $528.03
D. $608.33
A. $355.21
A borrower has a 30-year, fixed rate, fully amortized mortgage loan for $110,000. They pay $695.20 for principal and interest every month. How much interest will they pay over the life of this loan?
A. $20,856
B. $110,000
C. $140,272
D. $250,272
C. $140,272
With an adjustable rate mortgage, the index is added to the ___ to determine the___
A. cap/margin
B. interest rate / principal
C. margin/interest rate
D. principal/ cap
C. margin/interest rate
