Chapter 13: Types of Mortgages & Sources of Finance (MC) Flashcards Preview

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Flashcards in Chapter 13: Types of Mortgages & Sources of Finance (MC) Deck (15):
1

Prior to deregulation of the banking industry in the 1980s, which institutions were dominant in providing funds for the purchase of single-family residences?

a. commercial banks
b. saving and loan associations
c. the FHA
d. mortgage bankers

b. saving and loan associations

2

The major source of funds for large commercial real estate developments are

a. savings and loan associations.
b. commercial banks.
c. life insurance companies.
d. mutual savings banks.

c. life insurance companies.

3

If the Federal Reserve Board decides to purchase government securities in the open market, the effect will be to

a. decrease the money supply and cause interest rates to increase.
b. increase the money supply and cause interest rates to decrease.
c. limit the amount of money member banks may use for loan purposes, causing interest rates to increase.
d. create a "tight money" market.

b. increase the money supply and cause interest rates to decrease.

4

Which group of financial institutions traditionally preferred to make short-term loans for construction?

a. mutual savings banks
b. savings and loan associations
c. life insurance companies using a mortgage banker
d. commercial banks

d. commercial banks

5

The secondary mortgage market is

a. the market where second mortgages are sold.
b. where loans originated in the primary market are sold.
c. where loans made only by private parties are sold.
d. the market where second mortgages are originated.

b. where loans originated in the primary market are sold.

6

Mortgage brokers are usually compensated for their service by a

a. monthly loan service fee.
b. salary.
c. finder's fee or commission.
d. share of the borrower's assets.

c. finder's fee or commission.

7

A capital deficit area has

a. insufficient local funds.
b. too few banks.
c. excessive wealth.
d. more savings and loan institutions than secondary mortgage investors.

a. insufficient local funds.

8

Disintermediation occurs when

a. deposits exceed the demand for loans.
b. depositors withdraw their savings from depository institutions.
c. the Internal Revenue Service taxes earning of investments.
d. the Federal Reserve Board reduces the discount rate.

b. depositors withdraw their savings from depository institutions.

9

A blanket mortgage that allows for the release of a single parcel upon payment of a specified sum contains which clause?

a. defeasance
b. acceleration
c. satisfaction
d. release

d. release

10

The Federal Housing Administration

a. originates loans.
b. insures loans.
c. guarantees loans.
d. certifies loans.

b. insures loans.

11

Interest rates for Federal Housing Administration mortgages are determined by the

a. market
b. FHA
c. government
d. Congress

a. market

12

The Federal National Mortgage Association was originally formed to purchase what type of loans?

a. conventional
b. FHA
c. VA
d. deeds of trust

b. FHA

13

Construction loans are paid out in

a. full at the beginning of construction.
b. equal installments during the construction process.
c. full upon completion of construction.
d. draws after specific stages of construction have been completed.

d. draws after specific stages of construction have been completed.

14

If a mortgage loan payment consists of interest only, the final payment which includes the full amount borrowed is called a

a. monthly payment.
b. balloon payment.
c. amortized payment.
d. term payment.

b. balloon payment.

15

Deeds of trust

a. are only used when the parties trust each other.
b. are never used in title theory states.
c. are used in lien theory states.
d. temporarily convey title to a third party.

d. temporarily convey title to a third party.

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