The first item to be paid out of foreclosure funds is the Costs of Sale – advertising, attorney fees, trustee fees, etc.
If the amount realized at a Sheriff’s sale upon a delinquent mortgage is more than the indebtedness, the excess belongs to the mortgagor.
Before foreclosure who has the right to reclaim the property forfeited due to a mortgage default the borrower, under the right of Equitable Redemption.
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.
A mortgage clause used in refinancing the first mortgage which allows the second mortgage to take the first place is called subordination.
A buyer assumes the mortgage. How is the seller relieved of the liability? Novation
Which mortgage clause allows a lender to regain their investment if the borrower does not pay his payment? Acceleration
In which way are a mortgage document and promissory note similar? Both are contracts
A mortgage or deed of trust may be recorded.
On a $150,000 loan, the lender charges a 1 point service charge. How much does the borrower have to pay? $1,500
If a borrower purchases a property for $200,000, and borrows $160,000 he/she is said to have a LTV ratio of? 80%
The loan amount is $80,000, and the monthly principal and interest payment will be $499.00 a month for 30 years. How much interest will be paid over the term of the loan? $499 x 12 = $5,998, $5,998 x 30 = $179,640, $179,640 -$80,000 = $99,640
The cost of points is not deducted from the loan. Points are treated as a separate debit or charge on a settlement statement, charged to the party who has agreed to pay them.
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
A lender charges discount points on a loan to improve the lender’s yield.
To determine the monthly principal portion of a monthly loan payment you must deduct the monthly interest from the monthly payment.
Determine the monthly interest on a loan with a balance of $168,300, a monthly payment of $1,356.80, and an interest rate of 7.75%? $168,300 x 7,75% = $13,043.25, $13,043.25 ÷ 12 = $1,086.94
Remember for purposes of determining the new loan balance, you will not have to know how to determine the payment amount.
When determining a mortgage loan balance, the monthly loan payment interest is deducted from the payment.
A mortgage has a balance of $70,000 at 11.5% interest for a period of 25 years. The monthly P & I payment is $711.53, what is the interest charge for the second monthly payment? $70,000 x 11.5% = $8,050, $8,050 ÷ 12 = $670.83, $711.53 – $670.83 = $40.70, $70,000 – $40.70 = $69,959.30, $69,959.30 x 11.5% = $8,045.32, $8,045.32 ÷ 12 = $670.44
In Step 3 what do you subtract from the monthly payment amount to solve for the monthly principal? Current monthly interest
What is the balance on an amortized loan of $340,000 after the first payment if the interest rate is 6% with a monthly P&I payment of $2,028? $340,000 x 6% = $20,400, $20,400 ÷ 12 = $1,700, $2,028 – $1,700 = $328, $340,000 – $328 = $339,672
When a real estate loan uses both real and personal property as collateral for the loan it is called a (an) package mortgage.
A loan on real estate, that includes fixtures, and appliances used extensively in the sale of condominiums is a (an) package mortgage.
A mortgage where the interest rate fluctuates and is usually tied to an index; payment amount increases are capped for each period and for the term of the loan is called an Adjustable-rate Loan (sometimes called an ARM).
A type of mortgage which allows the lender to increase the outstanding balance of a loan up to the original amount of the loan in order to advance additional funds is called an open-end mortgage.
A situation where an owner sells his or her improved property and at the same time, signs a long-term lease with the buyer is called a (an) sale-leaseback.
A Budget Mortgage is a loan, which has a payment composed of the following? Principal, interest, taxes and insurance
A borrower applied for a VA guaranteed first time mortgage for $50,000; however, the property appraised for $46,000. If the buyer still wanted to buy the property which could happen? The VA could allow the borrower to make up the difference in cash
An FHA mortgage loan is obtained through which of the following? Qualified lending institutions
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.
A veteran desired a loan to buy a 200 acre residence. There are no VA lenders in the area. Which could happen? The VA could loan the money themselves.
The primary purpose of private mortgage insurance (PMI) is to protect the lender.
What can the VA require a veteran do when obtaining a loan? Make the veteran automatically assume liability for the loan
The basic difference between an FHA and a VA loan is The FHA insures loans, the VA guarantees them.
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.
When you obtain an FHA loan, what generally happens? An FHA appraiser must appraise the property
Private mortgage insurance is associated with conventional loans.
If a Veteran wanted to buy a $60,000 house in a city with a population of 100,000 people, which of the following loans could he NOT apply for? RECD loan
A veteran had a VA loan using his full entitlement. He allows another veteran to assume the loan without VA approval. Could he immediately get another VA loan? No, because he is still liable for the loan.
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.
Conventional mortgage loans are not guaranteed or insured by any government agency.
Conventional mortgages usually require A larger down payment.
An FHA mortgage loan is obtained through which of the following? Qualified lending institutions
For a veteran to obtain a VA loan, the VA must issue a certificate of eligibility.
On a government backed loan, which of the following would be permitted concerning pre-payment penalties? Prepayment penalties are not allowed, under any circumstances, on VA or FHA loans.
Under which of the following would one MOST likely see an estoppel certificate? A lender sells a loan and the new mortgagee wants to know the existing balance
A qualified buyer is one who has demonstrated the financial capacity and credit worthiness required to afford the asking price. In qualifying a buyer the lender looks at these factors? Income, net worth and credit history
A Buyer has demonstrated the financial capacity and creditworthiness required to afford the asking price by providing the lender with all of the following, except an appraisal equal to or higher than the contract price.
Transfer taxes are generally paid by the seller
Assets include all of the following, except revolving and installment loan accounts.
When underwriting a mortgage loan a lender considers all of the following, except credit worthiness of the seller.
Settlement is another name for closing and brings the real estate transaction to completion.
A lender will look at which items when deciding to qualify a property? All of these items.
A qualified buyer is one who has demonstrated the financial capacity and credit worthiness required to afford the asking price. In qualifying a buyer the lender looks at these factors? Income, net worth and credit history
Many states charge what is called a transfer tax when the property is conveyed by one of the following means deed
When underwriting a mortgage loan a lender considers all of the following, except credit worthiness of the seller.
A Buyer has demonstrated the financial capacity and creditworthiness required to afford the asking price by providing the lender with all of the following, except an appraisal equal to or higher than the contract price.
All of the following were originally established to buy and sell mortgages in order to stimulate mortgage lending, except Maggie Mae (MGIC).
The two biggest money lenders of residential real estate mortgages are savings and loans and banks.
An increase in the availability of money would lead to which effects? Interest rates would go down
Which of the following is considered a part of the secondary mortgage market? Federal Home Loan Mortgage Corporation (FHLMC)
The primary distinction/s between the primary and secondary mortgage market is? The secondary market is fundamentally a holding or warehousing 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.
In terms of stating mortgage rate interest, the standardized rate required by the Truth in Lending Act to facilitate comparison loan shopping is called the annual percentage rate.
Which of the following advertised financing terms would NOT trigger a full disclosure under Regulation Z $265,000 sale price
A primary purpose of the Truth in Lending Act is to make loan cost information readily available to consumer borrowers.
Truth In Lending applies to all of the following, except commercial property.
Purchasing an investment property , like an apartment complex may be more rewarding if the investor has the required management skills.
The two major sections of the Truth In Lending law, includes advertising and Annual Percentage Rate (A.P.R.).
The Truth in Lending laws apply to the financing of single family residences.
Which agency administers RESPA? Consumer Financial Protection Bureau (CFPB)
Under the Real Estate Settlement Procedures Act (RESPA), lenders are prohibited from taking kickbacks or unearned fees.
A house sold for $42,000. The buyer made a 20% down payment. Monthly interest on the loan was $252. What was the interest rate on the loan? 9%
Who is NOT an originator of primary loans? FHA
Usury MOST nearly means ______________ illegal interest.
Who is the largest purchaser in the secondary market? Fannie Mae
A mortgage broker _____________ arranges loans between borrowers and investors.
An owner advertised “beautiful acreage only $5,000 down, owner will personally finance down payment.” Would this be in violation of the Truth in Lending Act? No, owners are not covered by Reg. Z.
A VA loan may be granted for the purchase of a one-family to four-family if _________________ the veteran agrees to live there.
A buyer wants to take out an FHA loan. The broker should refer the buyer directly to ______________ any approved lending institution such as a bank or savings and loan association.
The lender is not insured or guaranteed against a loss, by reason of the borrower’s default in repayment, under which type of loan? Conventional
If a single parent is applying for a real estate loan, when would the fact have to be revealed that part of the parent’s income is from child support? If the parent was relying on the income for repayment of the loan
Which of the following is considered a conventional loan? Commercial bank ARM loan
An impound or reserve account MOST benefits whom? The lender
If advertised alone, which would be in violation of TRUTH IN LENDING? “No down payment required”
On a $50,000 loan the borrower is required to pay 2 points. How much does the borrower have to pay the lender? $51,000.00
A home improvement company was negotiating with a home owner to add two rooms onto a home. The company agreed to take a second mortgage as long as the homeowner also included the rest of the property in the loan. The company and the homeowner agreed to a price and the company provided the necessary disclosure form on Monday and the homeowner signed the agreement at noon the following day. Assuming that the week had five business days, until what time could the homeowner rescind the loan? Friday, midnight
In most states, by paying the debt after a foreclosure sale, the mortgagor has the right to regain the property. What is this right called? Statutory right of redemption
All of the following are true of conventional loans except what? The requirements to qualify are uniformly fixed by state law.
The Pickets are purchasing a home for $78,000 and the lender is giving them a 90% loan at 10% interest, plus a 2% loan origination fee. How much is the loan origination fee? $1,404
In a repayment of a mortgage loan, which type of interest is used? Simple
RESPA would prohibit which of the following acts? Paying of kickbacks
In an installment land contract, what type of title did the seller retain? Legal
The finance charges recorded on the Truth in Lending statements would include all of the following EXCEPT: Recording fees and title insurance premiums
An increase in the availability of money would lead to which effect? Interest rates would go down.
Which of the following would usually occur in a sale-and-leaseback transaction? The property is sold on the condition that the new owner lease it back to the seller at the time title passes.
Under an FHA graduated payment mortgage, which of the following fluctuates over the term of the loan? Monthly payments
When the lender under a deed of trust required title insurance, who would be the most likely person to pay for it? The trustor
A borrower bought a $74,000 house with no down payment. The loan was probably ______________ a VA loan.
Which of the following describes a mortgage that requires principal and interest payments at regular intervals and calls for the liquidation of the debt by periodic installments until the debt is satisfied? Amortized loan
An owner was selling his own home. Can he advertise the down payment? Yes, because it was his own home
A buyer assumes the mortgage. How is the owner relieved of the liability? Novation
A standardized yardstick expressing the true annual cost of borrowing is expressed as a/an APR
Discrimination is prohibited in lending practices under _____________ ECOA.
The maximum permissible “loan to value ratios” are _____________ based on sale price or appraised value, whichever is lower.
Why would a mortgagee (beneficiary) have an appraisal on the property? To assure the property value is sufficient to cover the loan
Which of the following is true of a second mortgage? It is usually issued at a higher rate of interest.
The seller under a land contract is called _____________ the vendor.
A buyer wanted to use a promissory note for consideration on the purchase of a property. Can he do this? Yes, this is acceptable as long as the seller agrees.
In which of the following markets may a lender sell a loan that a mortgage banker has previously originated? Secondary market
A mortgage company makes a number of loans to be assembled into one package and sold to permanent investors. This process is an example of interim financing to the mortgage company and is called: Warehousing
The clause in a trust deed or mortgage which permits the mortgagee to declare the entire unpaid sum due upon a default by a mortgagor is called a(n) ______________ acceleration clause.
The Smiths’ purchased a residence for $75,000. They made a down payment of $15,000 and agreed to assume the seller’s existing mortgage, which had a current balance of $23,000. The Smiths’ financed the remaining $37,000 of the purchase price by executing a second mortgage whereby the seller became a mortgagee. This type of loan is called a Purchase money mortgage
When the amortized payment of a mortgage remains constant over the period of the loan but leaves an outstanding balance to be paid at the end, this payment is called: A balloon payment
Under Regulation Z, consummation is defined as the time when a consumer becomes contractually obligated on a credit transaction.
On an 8% straight term loan of $6,071 the borrower paid total interest of $1,700. How long did he have the loan? 42 months
The Loan Estimate must be delivered to an applicant within three business days of loan application.
The discount points charged by a lender on a federal VA or FHA loan are a percentage of the ________________ loan amount.
Which transaction requires a securities’ license? Selling shares in Fannie Mae
The primary purpose of Truth in Lending is to _____________ disclose the true costs of obtaining credit.
______ is the cost per thousand that is required to create the principal and interest payment necessary to pay off a loan. A factor
Effective October 1, 2015, the real estate industry has new requirements as specified in the TILA/RESPA Integrated Disclosure (TRID) Rule.

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