Real Estate Finance

Question 1

Thompson is several months behind on her payments. The lender is starting foreclosure proceedings with the full balance due immediately. This is the lenders right according to the

Granting clause

Acceleration clause

Defeasance clause

Alienation clause

Answer 1

Acceleration clause

Note
The acceleration clause allows the lender to clean the entire balance due and payable mediately

Question 2

The amount of money that is advanced by the lender and ultimately repaid by the borrower is referred to as

Interest

Note

Principal

Mortgage

Answer 2

Principal

Question 3

The lender on Johnson’s mortgage has elected to force Johnson to pay off his mortgage rather than let a new buyer assume the loan. This is the lenders right under the

Assumption clause

Acceleration clause

Alienation clause

Reconveyance clause

Answer 3

Alienation clause

Note
The alienation clause is also called a due on sale clause which allows the lender the option of making the loan due and payable in full when the property is sold

Question 4

A purchase money mortgage maybe

Land contract

A first mortgage

Insured by the FHA

Guaranteed by the VA

Answer 4

A first mortgage

Question 5

The lender and a deed of trust is also the

Trustee

Mortgagor

Beneficiary

Trustor

Answer 5

Beneficiary

Question 6

If an assumption of an existing loan takes place in the original borrower is relieved of liability this is referred to as a

Novation

Defeasance

Redemption

Alienation

Answer 6

Novation

Question 7

The document that shows the debt exists and how it will be repaid is the

Deed of trust

Mortgage

Promissory note

Sales contract

Answer 7

Promissory note

Question 8

If Mitchell allows Thompson to assume her alone and Thompson defaults in the payments is Mitchell still liable on the loan

No because Thompson assumed all I ability

Yes because Mitchell is liable until it’s paid off

Yes unless Michele has been released from my reality

No as long as Thompson had to qualify for the assumption

Answer 8

Yes unless Mitchell has been released from liability

Question 9

Williams is paying off his loan 18 years early to refinance to a lower interest rate. His current lender is asking for one point fee in addition to the balance due this is a

Discount point

Defeasance fee

Prepayment penalty

Acceleration penalty

Answer 9

Prepayment penalty

Question 10

Baxter has borrowed $40,000 against his home with a second mortgage from ace mortgage company. In this transaction, ace mortgage co is the

Trustor

Mortgagee

Beneficiary

Mortgager

Answer 10

Mortgagee

Question 11

What secondary mortgage organization is the most recently created and specializes in the purchase of sale of conventional loans in the secondary market

FNMA Fannie Mae

GNMA Ginnie Mae

FHLMC Freddie Mac

MGIC

Answer 11

Freddie Mac

Question 12

A property has three lanes encumbering it a first mortgage a second mortgage a third mortgage. These numbers refer to

What are the liens are from a seller a mortgage company or a third-party lender

The size of the liens

The priority of the lien

The dates of the liens

Answer 12

The priority of the liens

Question 13

The best word to describe the action of financing property is

Note

Interest

Mortgage

Borrowing

Answer 13

Borrowing

Question 14

A mortgage is a

Defeasance

Note

Loan

Security instrument

Answer 14

Security instrument

Question 15

Power of sales most closely associated with

Strict foreclosure

Judicial foreclosure

Nonjudicial foreclosure

Equitable redemption

Answer 15

Nonjudicial foreclosure

Note
The power of sale allows the wonder to bypass court proceedings and proceed with nonjudicial foreclosure by filing the notice of default and beginning the advertisement of the foreclosure sale

Question 16

A mortgage clause that allows the borrower to force the release of the lien when the debt is paid in full is

Habendum clause

Alienation clause

Acceleration clause

Defeasance clause

Answer 16

Defeasance clause

Question 17

Martha has pledged her home and neighboring parcel as blanket security for a note but still retains possession of both. This pledging is an example of

Liquidity

Deed of trust

A mortgage

Hypothecation

Answer 17

Hypothecation

Note
A borrower who has hypothecated collateral does not give up possession of the collateral

Question 18

Which of the following is true regarding recording a mortgage document

An unrecorded mortgage is illegal

Mortgages must be recorded to be valid

Mortgages must be recorded to effectively provide notice

The priority of the mortgage is established by the date of each mortgage

Answer 18

Mortgages must be recorded to effectively provide notice

Note
The purpose of recordings is to provide notice. The lien is perfectly valid against the mortgage or without recording but it is ineffective against third parties without providing notice