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Finance Flashcards

National Finance

An agreement to waive prior rights in favor of another is called: Subordination.
A mortgage or deed of trust: May be recorded.
Which is true about a promissory note? It is the primary evidence of a loan.
Which clause protects a lender if he does not want the loan to be assumed by another party? Due on sale (alienation).
A mortgage clause used in refinancing the first mortgage which allows the second mortgage to take the first place is called: Subordination.
When a lender requires tax and/or insurance amounts to be deposited with the lender by placing the monies in an escrow account, a “Budget Mortgage or Deed of Trust” occurs. These escrow accounts may also be referred to as: Impound or Reserve Accounts.
Foreclosure would terminate which of the following? Equitable redemption rights.
In a Deed of Trust, the party who holds, “Naked Legal Title” (one without possessory rights), and can claim the property without going through the courts is the: Trustee.
Which of the following would be first in priority? *Special Assessments*First mortgage of $20,000Judgment LiensYou cannot tell unless you know the order of recording.
The loan amount is $80,000 and the monthly principal and interest payments will be $499.00 a month for 30 years. How much interest will be paid over the term of the loan? $99,640.00
The buyer was required to pay $4000 in discount points. The loan balance was $80,000. How many points did the lender require? 5.
Based on the theory, (a rule of thumb) how many discount points are required to increase the percentage yield on a mortgage from 11% to 12%? 8 points.
The loan amount is $70,000, and the monthly principal and interest payment will be $479.00 a month for 30 years. How much interest will be paid over the term of the loan? $102,440.00
Determine the monthly interest on a loan with a balance of $168,300, a monthly payment of $1356.80, and in interest rate of 7.75%. $1086.94
In step 3, what do you subtract from the monthly payment amount to solve for the monthly principal? Current monthly interest.
A homeowner has a mortgage balance of $149,570.75. If the interest rate on the loan is 9.5% and the monthly payment is $1303.55, what will be the mortgage balance after the next two payments? $149,330.91.
A type of loan where interest and principal are paid on an equal basis until the final payment, which is larger, is called a Balloon Loan or: Partially amortized loan.
What kind of loan would be fully paid out over the life of the loan? Fully amortized loan.
A mortgage given as part of the buyer’s consideration for the purchase of real property, and delivered at the same time that the real property is transferred as a simultaneous part of the transaction is a(n): Purchase Money Mortgage (PMM).
A type of payment plan where a buyer pays interest only and the final payment is principal at the end of the loan period: Straight.
A real estate loan where a homeowner receives monthly payments based on accumulated equity rather than a lump sum and is repaid upon the death of the owner or sale of the property is a(n): Reverse Annuity Mortgage.
An Adjustable Rate Mortgage (ARM) contains an escalator clause that allows the interest to adjust over the loan term. How often the loan rate may change is determined by the: Adjustment period.
What is the purpose of FHA? To act as an insurance company of first mortgages.
In 1975 a veteran paid off his VA loan and sold his house. Would he be entitled to another VA loan? Yes, because he paid off the first loan and sold the mortgaged property.
Rural Economic and Community Development (RECD) loans are either made: Directly by RECD or made by a private lender with RECD guaranteeing a certain percentage.
Conventional mortgages usually require: A larger down payment.
An FHA mortgage loan is obtained through which of the following? Qualified Lending Institutions.
Conventional mortgage loans are: not guaranteed or insured by any government agency.
The legal doctrine by which a person is prevented from asserting rights or facts that are inconsistent with a previous position or representation made by act, conduct, or silence is known as: Estoppel.
Many states charge what is called a transfer tax when the property is conveyed by one of the following means: Deed.
A lender will look at which items when deciding to qualify a property: All of these items:Location, Condition (repairs and predictions), Type of property (residential, commercial, agricultural).
When underwriting a mortgage loan a lender considers all of the following except: Credit worthiness of the seller.A lender considers these: Quality of the property that is being financed, Credit worthiness of the buyer, and Quality of the title to the property being financed.
Protection to an owner of property against losses sustained as a result of a defective title to real estate can be accomplished by: Title insurance.
Transfer taxes are generally paid by the: Seller.
The Federal Reserve controls lenders by: Telling lenders what percentage of their assets they can loan.
The primary distinction/s between the primary and secondary mortgage market is? The secondary mortgage market is fundamentally a holding or warehouse process.
The Federal National Mortgage Association (FNMA) sells seasoned mortgages and deeds of trust to individual investors and financial institutions. A seasoned mortgage is one that has been: In existence for some time and has a good record of repayment by the mortgagor.
The Federal Reserve controls the money supply by: Requiring how much of a banks assets have to be on reserve.
Which is not an agency that deals (buys loans) in the secondary market? Federal Housing Administration.
All of the following are sources for obtaining a residential mortgage for the purchase of a single-family residence, except: FNMA.*These are sources for obtaining a residential mortgage for the purchase of a single-family residence: Savings and loans, Commercial banks, and Mortgage brokers.
RESPA requires lenders to provide a HUD “Guide to Settlement” booklet and a Good Faith Estimate (GFE) of all costs related to settlement to borrowers within: 3 days of loan application.
Unsophisticated investors should seek: Legal and tax counsel before making any real estate investments.
Which agency administers RESPA? Consumer Financial Protection Bureau (CFPB).
An advantage of real estate investment is tax savings, the capital gain exclusion on a principal residence excludes the gain up to: $250,000 per individual (up to $500,000 for a couple).
Truth in Lending applies to all of the following, except: Commercial property.*Truth in Lending applies to: Residential loans, Federally related 1-4 family properties, and Family farms.
Which of the following mortgage closing transactions require compliance under TRID rules? Unimproved property.
The Truth in Lending laws apply to the financing of: Single family residences.
The Equal Credit Opportunity Act prohibits lenders from discriminating against consumers in the granting of credit based on the following protected classes: Race, color, religion, national origin, sex, marital status, age, or dependency on public assistance.
What is the latest date that a settlement agent is allowed to provide the seller with the Closing Disclosure? At consummation of the mortgage.

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