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A1 Florida Real Estate Sales Associate License > Chapter 12: Real Estate Finance > Flashcards

Chapter 12: Real Estate Finance Flashcards

1
Q

_____ theory of mortgages are the oldest form, in which the lender retains the title during the duration of the loan period.

A

Title

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2
Q

_____ theory of mortgages allows the borrower to retain the title, but places a lien on the property. The buyer is given the opportunity to cure the default before forfeiting the property.

A

Lien

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3
Q

Florida uses the _____ theory of mortgages.

A

lien

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4
Q

When money is borrowed, the lender requires the borrower to sign a _____, which is evidence of a personal debt. It contains the name of the parties, interest rate, amount of money.

A

promissory note

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5
Q

A ______ accompanies a note and is security for its repayment.

A

Mortgage

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6
Q

The pledge of property as security for a loan is called ______.

A

Hypothecation

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7
Q

The party who gives the mortgage to the lender to secure the loan is the ______.

A

Mortgagor

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8
Q

The party that receives the mortgage from the property owner is the _____.

A

Mortgagee

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9
Q

The mortgagor owns ______ property while the mortgagee owns the mortgage, which is ______ property.

A

real

personal

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10
Q

When a loan has been paid off in a lien theory state, the mortgagor should receive a _____.

A

Letter of satisfaction

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11
Q

An ______ clause in a mortgage requires a borrower to carry fire and hazard insurance.

A

insurance

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12
Q

A ______ clause in a mortgage requires the borrower to properly maintain the property during the loan term.

A

Maintenance

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13
Q

The only legally necessary clause in a mortgage, it protects the borrower by requiring the lender to acknowledge performance by the borrower.

A

Defeasance clause

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14
Q

The ______ clause in a mortgage allows the lender to declare the entire outstanding balance is due immediately.

A

Acceleration

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15
Q

The _____ clause or _____ clause in a mortgage prevents the borrower from transferring any rights in the property without the lender’s approval.

A

alienation clause

due-on-sale clause

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16
Q

The ______ clause in a mortgage allows the lender to change the interest rate due to change in use of the property.

A

escalator clause

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17
Q

The ______ clause in a mortgage allows the lender to appoint a trustee to manage the property and collect rent upon default by the borrower.

A

receivership clause

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18
Q

The ______ clause in a mortgage limits the lender’s rights in a foreclosure to the amount received from the sale of the property.

A

exculpatory clause

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19
Q

The _____ clause, in a mortgage that covers more than once parcel, allows individual lots to be released.

A

release clause

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20
Q

Loan origination fees are expressed in ______. One _____ is 1 percent of the amount borrowed, expressed in dollars.

A

points

point

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21
Q

Loan origination fees must be paid by the ______.

A

borrower

22
Q

Discount points, or _______, are expressed in points and increase the lender’s yield by _____%.

A

prepaid interest

1/8%

23
Q

The rate actually received by the lender, including discount points, is called the _______.

A

effective yield

24
Q

The process of qualifying the applicant and the property (analyzing risk) is called ________.

A

mortgage underwriting

25
Q

When a lender refuses to loan based on racial or economic of a neighborhood, it’s called _______, which is prohibited by federal law.

A

redlining

26
Q

The _______ Act require lenders to judge every applicant based on their own credit rating and income. They are also required to consider a spouse’s income.

A

Equal Credit Opportunity Act (ECOA)

27
Q

Every applicant is evaluated for loan worthiness by 3 criteria:

  1. _______
  2. _______
  3. _______
A

Credit history
Income
Other assets

28
Q

?
—————————– = HER (Housing Expense Ratio)
Monthly gross income

A

PITI

29
Q

?
—————————– = TOR (Total Obligations Ratio)
Monthly gross income

A

PITI + othe monthly obligations

30
Q

Front end ratio is another name for _________

A

HER (Housing Expense Ratio)

31
Q

Back end ratio is another name for _______.

A

TOR (Total Obligations Ratio)

32
Q

Conventional loan ratios (HER/TOR) are:

A

28% / 36%

33
Q

FHA loan ratios (HER/TOR) are:

A

31% / 43%

34
Q

VA loan ratio (TOR) is:

A

41%

35
Q

LTV ratio = ___________

A

Sales price or appraised value

36
Q

Mortgages that do not contain _______ clauses can be assumed by the buyer without permission of the seller.

A

Due-on-sale clauses

37
Q

In an assumption of an existing mortgage, the original borrower (now the seller) has _______ responsibility for repaying the promissory note.

A

secondary

38
Q

In an assumption with notation, the lender would _______ the seller’s name from the loan and _______ the name of the new buyer/borrower.

A

remove

substitute

39
Q

________ releases the seller from any further liability for the debt.

A

Novation

40
Q

If a mortgaged property is sold ________, the new owner acquires ownership without assuming responsibility for the promissory note.

A

subject to the existing mortgage

41
Q

Failure to perform as agreed in the promissory note is called ______.

A

default

42
Q

______ is the right of a borrower to cure a default before foreclosure.

A

Equity of redemption

43
Q

_______ gives a borrower the right to cure a loan that is in default by paying all owed plus late payments, lawyer fees, interest, etc.

A

Right to reinstate

44
Q

______ is enforcement of a mortgage.

A

Foreclosure

45
Q

If all lien holders have been paid for proceeds from a foreclosure, any excess remaining goes to the _______.

A

mortgagor

46
Q

Settlement is another word for ______.

A

closing

47
Q

Real Estate Settlement Procedures Act (RESPA) requires:

  1. _____
  2. _____
  3. _____
A

Provide good faith estimates of closing costs
Information booklet
HUD-1 statement

48
Q

The ______ act requires that borrowers be clearly shown the costs of credit in dollars and percentages.

A

Truth-in-lending Act

49
Q

Borrowers are allowed ______ business days as a recision period on refinances of a principal residence.

A

3

50
Q

An ad that contains any numbers would be considered to have _______ and require disclosures including _____, ______, and ______.

A

triggering terms
down payment
terms
APR

A1 Florida Real Estate Sales Associate License (20 decks)

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