Real Estate Principles: Q11/Chp 55-61

Question 1

1) A buyer's \_\_\_\_\_\_\_\_\_ is their ability to make mortgage payments, as evaluated by their debt-to-income (DTI) ratio.
A) balance sheet
B) mortgage capacity
C) loan-to-value ratio (LTV)
D) yield spread premium (YSP)

Answer 1

B) mortgage capacity

Question 2

2) The \_\_\_\_\_\_\_\_ insures mortgages with high loan-to-value ratios (LTV) that are made with less demanding cash down payment requirements than loans originated by conventional lenders.
A) Truth-in-Lending Act
B) Keep Your Home California program
C) MGIC Investment Corp.
D) Federal Housing Administration (FHA)

Answer 2

D) Federal Housing Administration (FHA)

Question 3

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
a. short sale
b. mortgage cramdown
c. seller financing arrangement
d. loan assumption

Answer 3

C) seller financing arrangement

Question 4

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.
A) portfolio
B) passive
C) earned
D) deductible

Answer 4

A) portfolio

Question 5

5) The amount of interest a private, non-exempt lender can charge is regulated by statute and the California Constitution, collectively called:
A) usury laws
B) Fair Housing Laws
C) private mortgage insurance (PMI)
D) loansharking

Answer 5

A) usury laws

Question 6

6) The most common penalty suffered by a non-exempt private lender in violation of usury laws is:
A) a five year jail sentence
B) the forfeiture of all interest paid on the loan
C) the forfeiture of all principal remaining due
D) A $100,000 fine

Answer 6

B) the forfeiture of all interest paid on the loan

Question 7

7) Default mortgage insurance coverage provided by private insurers for conventional loans with loan-to-value ratios higher than 80% is referred to as:
A) the loan-to-value ratio (LTV)
B) homeowners’ insurance
C) private mortgage insurance (PMI)
D) American Land Title Association (ALTA) insurance

Answer 7

C) private mortgage insurance (PMI)

Question 8

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 principle is due is called a(n):
A) straight note
B) installment note
C) interest-extra note
D) interest-included note

Answer 8

A) straight note

Question 9

9) \_\_\_\_\_\_\_\_\_\_\_ call for periodic adjustments to the interest rate in the amount of scheduled payments.
A) All-inclusive trust deeds (AITDs)
B) Adjustable rate mortgages (ARMs)
C) Fixed-rate mortgages 
D) Shared appreciation mortgages (SAMs)

Answer 9

B) Adjustable rate mortgage is (ARMs)

Question 10

10) A mortgage providing for installment payments to be periodically increased by predetermined amounts to accelerate the payoff of principal is known as a(n):
A) shared appreciation mortgage (SAM)
B) graduated payment mortgage (GPM)
C) adjustable rate mortgage (ARM)
D) all-inclusive trust deed (AITD)

Answer 10

B) graduated payment mortgage (GPM)