Quiz 12 Real Estate Finance Flashcards
A mortgage which is subordinate to another mortgage is called a A) first mortgage. B) purchase money mortgage. C) package mortgage. D) junior mortgage.
D) junior mortgage.
In an installment land contract, what type of title did the seller retain until the loan was paid? A) Legal B) Equitable C) Tenancy on common D) Joint tenancy
A) Legal
In a contract for deed, the seller does not give the buyer the legal title to the property until the final payment is made. This means if there is a contract for five years, during which time the buyer pays the seller a set amount of money and interest, the buyer only has equitable title in the property until the end of the five-year period, and the final payment is made. The seller retains the legal title during that time period.
Which BEST describes an owner’s equity in the property?
A) The value of the property
B) The value over and above the outstanding mortgage balance
C) The amount of equitable redemption
D) The amount of the commission owed on the sale
B) The value over and above the outstanding mortgage balance
Equity is the difference between the amount owed on the property and the value of the property. When the seller sells the property, after all the costs have been subtracted, the remaining money is the equity.
A promissory note would usually contain each EXCEPT
A) the interest rate charged.
B) the total amount owed.
C) the terms of payment.
D) physical description of the collateral.
D) physical description of the collateral.
Foreclosure would terminate A) statutory redemption rights. B) assignment and novation. C) equitable right or equity of redemption. D) All of the above.
C) equitable right or equity of redemption.
A judicial foreclosure requires the court to foreclose the property. In every state, there is a legally required time period of notice to the borrower regarding the equitable right of redemption. This is the legal period of time prior to the sale for the owner to recover the property by paying all required charges and fees. Once the foreclosure takes place, the equitable right or equity of redemption terminates.
When the borrower's mortgage is more than the market value of a home, and they MUST sell the home, a/an \_\_\_\_\_\_\_\_\_\_\_ might be negotiated with the bank. A) foreclosure B) trade C) equity loan D) short sale
D) short sale
Short sales are an agreement from the bank to accept a price for a property, less than the mortgage, at the current market value.
Ronald defaulted on his home mortgage payments. The lender obtained a court order to foreclose on the property. At the foreclosure sale, Ronald's house sold for $29,000, and the unpaid balance of his loan is $40,000. What must the lender do to recover the $11,000 Ronald still owes? A) Sue for damages. B) Sue for specific performance. C) Seek a deficiency judgment. D) Seek a lis pendens.
C) Seek a deficiency judgment.
If there is not enough money for all the liens to be paid, the court may issue a deficiency judgment against the borrower.
Which form of financing would be the greatest risk to the buyer? A) Wraparound mortgage B) Buydown mortgage C) Installment land contract mortgage D) Second mortgage
C) Installment land contract mortgage
The disadvantage to the buyer with an installment contract is that the seller can encumber the property at any time since the seller has the legal title.
A clause in a mortgage releasing the indebtedness once the loan is paid off is A) defeasance. B) alienation. C) subordination. D) acceleration.
A) defeasance.
The defeasance clause is the clause that provides for a satisfaction piece to be issued when the mortgage (deed of trust) has been paid in full.
If the amount realized at the foreclosure sale is more than the indebtedness, the excess belongs to A) the sheriff's office. B) the mortgagee. C) the mortgagor. D) the grantor.
C) the mortgagor.
An instrument that provides evidence of one person owing another money is A) The Collateral. B) The Chattel. C) The Note. D) The Mortgage.
C) The Note.
