Quiz Ch. 55-61

Question 1

A buyer’s _________ is their ability to make mortgage payments, as evaluated by their debt-to-income ratio.

Answer 1

mortgage capacity

Question 2

The _________ insures mortgages with high loan-to-vallue ratios (LTV) that are made with less demanding cash down payment requirements than loans originated by conventional lenders.

Answer 2

Federal Housing Administration (FHA)

Question 3

A _________ occurs when a seller carries back a note executed by the buyer to evidence a debt owed for the purchase of the seller’s property.

Answer 3

seller financing arrangement

Question 4

The tax impact a carryback seller will receive on their carryback financing is ________ category income, regardless of whether the property sold was in another income category.

Answer 4

portfolio

Question 5

The amount of interesst a private, non-exempt lender can charge is regulated by statute and the California Constitution, collectively called:

Answer 5

usury laws.

Question 6

The most common penalty suffered by a non-exempt private lender in violation of the usury laws is:

Answer 6

the forfeiture of all interest paid on the loan.

Question 7

Default mortgage insurance coverage provided by private insurers for conventional loans with loan-to-value ratios higher than 80% is referred to as:

Answer 7

private mortgage insurance (PMI).

Question 8

A note calling for the entire amount of its principal to be paid together with accrued interest in a single lump sum when the principal is due is called a:

Answer 8

straight note.

Question 9

________ call for periodic adjustments to the interest rate and the amount of scheduled payments.

Answer 9

Adjustable rate mortgages (ARMs)

Question 10

A mortgage providing for installment payments to be periodically increased by predetermined amounts to accelerate the payoff of principal is known as a:

Answer 10

graduated payment mortgage (GPM)