Flashcards in CHAPTER 3 -- FINANCING REAL ESTATE Deck (93)
What does a loan secured by real property usually consist of?
A promissory note and a trust deed
What is the name for an innocent party who purchases a negotiable instrument without knowledge of any defects?
Holder In Due Course
What differentiates a straight note from other loans?
No principal payments are made during the term of the note. The entire principal is paid on maturity. Generally carry higher interest rates.
Are mortgages and trust deeds negotiable instruments?
No. They are not negotiable.
A loan secured by real property usually consists of:
(A) a financing statement and trust deed; (B) a promissory note and a trust deed; (C) FHA or VA insurance; (D) a security agreement and financing statement.
(B) a promissory note and a trust deed
Amortization tables are used to:
(A) determine the interest rate on a loan; (B) compute the APR; (C) compute the monthly payment; (D) determine the term of the loan.
(C) compute the monthly payment
The liquidation of a financial obligation on an installment basis is known as:
(A) conveyancing; (B) acceleration; (C) amortization; (D) conversion.
Do trust deeds and mortgages get recorded?
Yes, in order to secure the debt.
All the following are considered an estate in real property, EXCEPT:
(A) reversion; (B) deed of trust; (C) fee simple; (D) leasehold.
(B) deed of trust
When using a trust deed to purchase a home, the buyer borrowing the money is called the trustor. The trustor:
(A) receives a promissory note for the amount that is borrowed; (B) receives a less than freehold estate; (C) signs a promissory note; (D) holds the trust deed which is used as security for the loan.
(C) signs a promissory note
Who has the right of possession of the property during the redemption period following the court foreclosure sale on a mortgage?
(A) the person who purchased the property at the court foreclosure; (B) the trustor; (C) the mortgagee; (D) the mortgagor.
(D) the mortgagor
How often must the trustee sale be advertised?
Once a week for three weeks (after waiting three months after the notice of default)
How many days before the trustee sale can the trustor reinstate the loan?
Up until five (5) days before the trustee sale.
When is a deficiency judgement possible?
Only if there is a COURT foreclosure on a non-purchase money loan and the fair market value is less than the loan amount (rare).
What is a purchase-money loan?
- Any seller financing
- Any loan created to purchase 1-4 owner occupied residential units.
How much in advance must a lender notify a borrower before a balloon payment is due?
Not less than 90 days, nor more than 150 days before the balloon payment is due.
What controls if there is a conflict between the terms of the promissory note and those of the trust deed?
The promissory note controls.
When a lender in a trust deed takes a deed-in-lieu of foreclosure, who becomes the owner of the property?
(A) vendor; (B) trustor; (C) beneficiary; (D) trustee.
Broker Jane sold a home. The seller carried back a second trust deed. Broker Jane recorded a "Request for Notice of Default." Who normally benefits from a "Request for Notice of Default?"
(A) the beneficiary in the second trust deed; (B) the trustor; (C) the trustee; (D) the mortgagor.
(A) the beneficiary in the second trust deed
Lenders may not impose a late charge in a payment due on a promissory note secured by a trust deed until the payment is:
(A) 5 days late; (B) more than 7 calendar days late; (C) 10 days late; (D) more than 10 days late.
(D) more than 10 days late
Up to what amount are loan broker commissions limited on first trust deeds or mortgages?
Up to what amount are loan broker commissions limited on junior loans?
What is the maximum percentage of commission a loan broker can make on a hard money first trust deed?
What is the maximum percentage of commission a loan broker can make on a hard money second trust deed?
Are land contracts negotiable instruments?
No, land contracts are not negotiable instruments.
The maximum commission a loan broker may charge to negotiage an $8,000 hard money first trust deed, due in 2 years is:
(A) $200; (B) $400; (C) $800; (D) $1,000.
The maximum commission a loan broker may charge to negotiate a $4,000 hard money second trust deed, due in 3 years is:
(A) $200; (B) $400; (C) $600; (D) $800.
A shared appreciation mortgage (SAM) is most beneficial when:
(A) prices of homes are appreciating; (B) there is a tight money market; (C) financing is readily available; (D) prices of homes are declining.
(A) prices of homes are appreciating
In what three ways is a grant deed different when compared to a land contract of sale?
- interest conveyed to the buyer (equitable in land contract)
- signatures of the parties
- and/or the designation of the purchase price.