12- Real Estate Finance

Question 0

What secures the repayment of a debt?

Answer 0

A mortgage

Question 1

Which legal instrument evidences the debt and states the interest rate, term, payment requirement, and other information related to the loan?

Answer 1

Promissory Note

Question 2

When financing the purchase of real estate, what is the role of the mortgagor?

Answer 2

The mortgagor gives a mortgage to a mortgagee

Question 3

Which clause in a mortgage requires the lender to acknowledge performance by the borrower?

Answer 3

Defeasance

Question 4

In order to qualify for an FHA 203b insured mortgage loan, and applicant’s housing expense ratio cannot exceed what percentage?

Answer 4

31%

Question 5

What is the purpose of a receivership clause in a mortgage?

Answer 5

It is used to protect the value of property during the foreclosure process

Question 6

What refers to the right of the mortgage are in default to pay all money owed and prevent the sale of the property at foreclosure?

Answer 6

Equity of redemption

Question 7

What is the primary purpose of discount points?

Answer 7

To decrease the monthly payment required

Question 8

What are the two ratios under which a borrower must qualify in order to receive a FHA insured mortgage loan?

Answer 8

Housing expense and total monthly obligations ratios

Question 9

What process is used by loan underwriters to determine if applicants are satisfactory credit risks?

Answer 9

Qualifying

Question 10

Two discount points on a 7% loan will increase the effective rate of interest on the loan to approximately what rate?

Answer 10

7 1/4%

Question 11

How was title taken if a seller remained solely liable for the balance of the mortgage loan subsequent to transfer of ownership?

Answer 11

Subject to

Question 12

After all liens have been paid following a foreclosure sale, who do any remaining funds belong to?

Answer 12

The mortgagor

Question 13

What is not required by the real estate settlement procedures act (RESPA)?

Answer 13

Disclosure of the annual percentage rate (APR)

Question 14

What is required by the real estate settlement procedures act (RESPA)?

Answer 14

That borrowers be informed of all settlement costs involved in the purchase of a home when funds are obtained from a federally regulated lender

Question 15

In a lien theory states such as Florida, title to property is held by whom during the time period that the resident is making monthly mortgage payments?

Answer 15

Mortgagor

Question 16

If a property owner is foreclosed upon, and the foreclosure result in a sale price greater than the amount of the outstanding liens, the excess will likely be paid to whom?

Answer 16

The mortgagor

Question 17

What not required to be disclosed by the real estate settlement procedures act (RESPA)?

Answer 17

ADA Accessibility Report

Question 18

A buyer purchased a home and arranged financing at an interest rate of 4.5%. At closing the buyer realized that the true interest rate was actually 5.99%. This would be a violation of which legislation?

Answer 18

Truth in lending act

Question 19

After paying mortgage payments for many years, a homeowner finally paid the last payment. How does the lender extinguish the mortgage lien on the property?

Answer 19

The lender would file a satisfaction of mortgage in the county records where the property is located

Question 20

A borrower is consistently late on their mortgage payments, so the bank exercises its ability to raise the interest rate. Which clause in the mortgage document allows the lender to do this?

Answer 20

Escalator clause

Question 21

Which would offer a potential borrower the most favorable interest rate over the life of the loan?

Answer 21

4.0 plus 8 points

8 points x 1/8% = 8/8% or 1% in interest rate; 4% (rate paid by borrower) + 1% (increase due to the discount) = 5% (effective yield)

Question 22

Which clause found in a deed would state that the lender could only look to the property itself for satisfaction of the mortgage debt?

Answer 22

Exculpatory clause

Question 23

Lenders are required to judge loan applicants on the basis of credit rating, income, expenses and assets, without regard to their age, race, religion, sex, martial status, or nationality. Which Act prohibits this discrimination?

Answer 23

ECOA

Question 24

What conveys title to a third party temporarily?

Answer 24

Deed of trust