Financing Flashcards
(129 cards)
1
Q
A land contract is also referred to as a(n): A » right of first refusal B » installment contract C » option contract D » listing contract
A
B » installment contract
Note: A land contract is also called an installment contract as well as a contract for deed. A right of first refusal gives a person the first opportunity to buy if a property is put up for sale. An option contract gives a person the right to buy at a set price for a definite time period in the future. A listing contract is between a seller and broker allowing the broker to try and sell the property.
2
Q
Define Right Of First Refusal
A
Gives a person the first opportunity to buy if a property is put up for sale.
3
Q
Define Option Contract
A
Gives a person the right to buy at a set price for a definite time period in the future
4
Q
Define Listing Contract
A
A listing contract is between a seller and broker allowing the broker to try and sell the property.
5
Q
In a land contract or contract for deed, the seller who retains the fee simple title is referred to as the: A » optionor B » optionee C » vendee D » vendor
A
D » vendor
Note: A seller is always called a vendor. The optionor is a giver of an option contract (seller). The optionee is the receiver of an option contract (possible buyer). The vendee is always a buyer.
6
Q
Define Optionor
A
Giver of option (seller)
7
Q
Define Optionee
A
Receiver of option (possible buyer)
8
Q
Define Vendee
A
Buyer of property; in a contract for deed, buyer is one who gets possession of property and pays “installments” to the seller until the contract is paid off
9
Q
Define Vendor
A
Seller of property; in a contract for deed, seller is one who retains legal title
10
Q
A buyer wanted to purchase a property from a seller and assume the FHA loan on the property. The buyer, however, did not have enough money to assume the loan and make the down payment on the property. The buyer agreed to make equal monthly payments to the seller for one year for the down payment. This type of financing would be called a: A » shared appreciation mortgage B » package mortgage C » reverse annuity mortgage D » contract for deed
A
D » contract for deed
11
Q
Define Shared Appreciation Mortgage
A
A type of mortgage where the lender shares in appreciation plus interest; a form of a participation loan
12
Q
Define Package Mortgage
A
Uses both real and personal property as security
13
Q
Define Reverse Annuity Mortgage
A
A type of mortgage where the mortgagee (lender) pays the mortgagor (borrower) a fixed amount every month; usually for retired people with home completely paid off
14
Q
Define Contract For Deed
A
Owner financing where the seller keeps the warranty deed for the entire duration of the contract for deed; thus the seller retains legal title. The buyer gets possession and receives an equitable title upon the signing of the contract for deed, allowing for the buyer to obtain the deed after the entire contract is paid off. Also referred to as an installment contract or land contract.
15
Q
In a contract for deed, when does the buyer obtain legal title?
A » At the signing of the sales contract
B » At closing
C » When the contract terms are satisfied
D » Only after recording of the deed
A
C » When the contract terms are satisfied
Note: At the signing of the sales contract the buyer obtains an equitable title.
16
Q
In a contract for deed, when does the buyer receive the deed to the property?
A » When the contract is signed
B » When the deed is recorded
C » When the contract is recorded
D » When the payment obligation is paid in full
A
D » When the payment obligation is paid in full
17
Q
What type of interest does the buyer receive in the property after the seller accepts the offer? A » Equitable B » Easement C » Record D » Equity
A
A » Equitable
The right to receive the title in the future is call “equitable title”.
18
Q
Usury laws are designed to protect the: A » seller B » broker C » lender D » borrower
A
D » borrower
Note: Usury laws set the maximum interest that a lender can charge.
19
Q
A loan for which of the following transactions would be covered under Regulation Z?
A » A commercial restaurant purchased for $985,000
B » Buying three condominiums in a resort area
C » A residential home purchased with a loan of $185,000
D » Purchasing an airplane for $5 million for a corporation
A
C » A residential home purchased with a loan of $185,000
Note: Regulation Z applies to residential loans.
20
Q
Define Regulation Z
A
A federal law pertaining to lenders having to disclose all loan costs to borrowers; also referred to as Truth-In-Lending Laws
21
Q
Define Corporation
A
A type of syndication where owners can limit their liability; a corporation who purchases real estate takes title in severalty
22
Q
How many days does a lender have from the time of receipt of loan application to give to the buyer an estimate of closing costs (The Loan Estimate)? A » 3 days B » 4 days C » 5 days D » 6 days
A
A » 3 days
Note: Under the TILA-RESPA Integrated Disclosure Rules (TRID), a lender must give to the borrower an estimate of closing costs (The Loan Estimate) within 3 days of receipt of loan application.
23
Q
A person was applying for a new VA loan on a single family home purchase. Which federal law was passed to ensure the buyer received disclosure of the total closing costs?
A » Truth-In-Lending Laws (Regulation Z)
B » The Equal Credit Opportunity Act
C » Usury laws
D » The TILA-RESPA Integrated Disclosure Rules (TRID)
A
D » The TILA-RESPA Integrated Disclosure Rules (TRID)
Note: The TILA-RESPA Integrated Disclosure Rules (TRID) requires disclosure of the initial estimate of buyers closing costs (The Loan Estimate) within 3 days of receipt of loan application. Also, TRID requires the disclosure of the final actual closing costs (The Closing Disclosure) for both seller and buyer to be delivered no later than 3 business days before consummation (closing).
24
Q
Define Truth-in-Lending Laws
A
A federal law pertaining to lenders having to disclose all loan costs to borrowers; also referred to as Regulation Z
25
Define Equal Credit Opportunity Act
Bans credit discrimination based on: Race, Color, Religion, National origin, Sex, Age & Marital status
26
```
Who oversees and administers the provisions of the Real Estate Settlement Procedures Act (RESPA)?
A » FBI
B » CIA
C » CFPB
D » SEC
```
C » CFPB
Note: The Consumer Financial Protection Bureau (CFPB) replaced Housing and Urban Development (HUD) for overseeing the RESPA guidelines.
27
Define Real Estate Settlement Procedures Act (RESPA)
A federal law whose purpose is to inform borrowers ahead of time total closing costs so borrowers can shop around to get the best deal
28
```
Truth-In-Lending Laws are also referred to as:
A » HUD
B » RESPA
C » Regulation Z
D » Title VIII
```
C » Regulation Z
29
```
A lender charging an interest rate that is higher than allowed by laws would be violating:
A » fair housing laws
B » equal credit opportunity laws
C » usury laws
D » securities laws
```
C » usury laws
30
Define Usury Laws
Set the maximum interest rate that can be charged by law; states have their own unique usury laws
31
```
The Equal Credit Opportunity Act prohibits discrimination based on:
A » sexual orientation
B » a person being a minor
C » a person being a senior citizen
D » a person's credit rating
```
C » a person being a senior citizen
32
Which of the following would allow a lender to legally reject a loan for a residential house that was in good repair?
A » The buyer was of a different race than the other neighboring owners
B » The house was located in an area primarily used for light industrial
C » The house was located in a minority area of town
D » The buyer had been recently divorced
B » The house was located in an area primarily used for light industrial
33
Which of the following loans would fall under the three-day right of rescission allowed under Regulation Z?
A » A residential loan for a first mortgage
B » A loan for a commercial property
C » A loan for an agricultural property
D » A home improvement loan for a principal residence
D » A home improvement loan for a principal residence
Note: There is not a right of rescission for residential first mortgages, commercial or agricultural loans
34
Define Right of Rescission
Allows for a party to rescind or back out of a contract. On many loans, a borrower has a 3-day right to rescind (back out). However, there is no right of rescission with a real estate sales contract.
35
```
A final payment on a loan that was larger than the previous payments would be called a(n):
A » fully amortized loan
B » balloon payment
C » straight note
D » term loan
```
B » balloon payment
36
Define Straight Note
A loan where the payments apply to interest only; usually short-term; e.g., used on construction loans; principal paid in a balloon at end
37
```
An amortized note left a loan balance to be paid off at the end of the term. This would be called a(n):
A » term loan
B » straight note
C » fully amortized note
D » partially amortized note
```
D » partially amortized note
Note: Final payment is a balloon payment
38
Define Fully Amortized Note
A loan where the payments apply to principal and interest; the entire principal loan balance is totally paid off over the term
39
Define Partially Amortized Note
A loan where the payments apply to principal and interest; however, the principal loan balance is only partially paid down, thus usually requiring a balloon payment at the end of the loan term
40
Which of the following statements would be true of a partially amortized loan?
A » The amount going toward interest increases as time goes along
B » At the end of the loan, there is nothing left to be paid off
C » There are generally smaller monthly payments
D » The loan payments consist of interest only
C » There are generally smaller monthly payments
41
```
At the end of the loan term, an amortized note left a loan balance to be paid off. Which of the following terms BEST describes this type of note?
A » Balloon
B » Fully amortized note
C » Open-end mortgage
D » Construction loan
```
A » Balloon
42
```
A loan where each payment makes contributions toward principal and interest is a(n):
A » straight loan
B » package loan
C » term loan
D » amortized loan
```
D » amortized loan
43
```
A loan was amortized for a 30 year period. If the remaining loan balance was due at the end of 7 years, this is BEST described by which of the following terms?
A » Reverse annuity
B » Term note
C » Balloon payment
D » Amortized segment
```
C » Balloon payment
44
```
A mortgage in which the payments apply to both principal and interest is BEST referred to as:
A » package mortgage
B » purchase money mortgage
C » blanket mortgage
D » amortized mortgage
```
D » amortized mortgage
45
Define Purchase Money Mortgage
Owner financing; typically where a seller carries a second mortgage on behalf of the buyer
46
```
Which of the following best describes a term loan?
A » Reverse Annuity
B » Amortized
C » Interest only
D » Interest and principal
```
C » Interest only
Note: In a term loan, the borrower keeps the principal amount of the loan for the entire term; thus paying interest only during the term of the loan and paying the loan off in a balloon payment at the end.
47
The payment on a graduated payment mortgage usually has gradual increases:
A » and then returns to the original low payment for the remainder of the term
B » over the term of the loan
C » and then levels out for the remainder of the term
D » as the index increases over the remainder of the term
C » and then levels out for the remainder of the term
Note: Payments usually graduate for the first few years and then level out. The increases are determined when the loan is made, not based on an index like an adjustable rate mortgage.
48
```
A mortgage where the interest rate is subject to adjustments periodically is:
A » limited reduction
B » wrap-around
C » graduated payment
D » adjustable rate
```
D » adjustable rate
Note: Adjustable rate mortgages change the rate based on some economic index at regular intervals.
49
```
A property was sold by a foreclosure sale. The sale did not produce enough money to satisfy all the debts on the property. What could the creditors who weren't paid now file?
A » A deed in lieu of foreclosure
B » An estoppel certificate
C » A deficiency judgment
D » A blanket mortgage
```
C » A deficiency judgment
50
Define Deed in Lieu of Foreclosure
An agreement whereby the lender receives the deed to a property from the defaulting borrower rather than foreclosing; this is still referred to as an involuntary alienation; this does help save the borrowers credit
51
Define Deficiency Judgment
A personal judgment against the defaulting borrower for any other debts owed and not satisfied by a foreclosure sale
52
```
A foreclosure on a property is taken by:
A » court action
B » adverse possession
C » a creditor
D » an executor
```
A » court action
53
Define Adverse Possession
Squatter`s Rights; can gain title by using someone else`s property continuously, openly and notoriously (without permission) for a certain period of time
54
Define Executor
One named in will to carry out will
55
In order to have a valid mortgage, there must be a(n):
A » promissory note
B » mortgage document
C » promissory note and mortgage document
D » neither a promissory note nor a mortgage document
C » promissory note and mortgage document
56
Define Promissory Note
Creates the debt; a promise to pay back money that was borrowed; also referred to as a bond
57
```
A lender is going through the foreclosure process. The lender, however, would like to resell the property as soon as possible. The lender should seek a:
A » judicial foreclosure
B » quick foreclosure
C » power foreclosure
D » deed in lieu of foreclosure
```
D » deed in lieu of foreclosure
Note: A deed in lieu of foreclosure allows the lender to forego the foreclosure process and receive the deed to the property from the buyer. This is the quickest way for the lender to receive title to the property and resell.
58
```
A written document that is used to promise repayment of a loan is called a:
A » promissory note
B » mortgage
C » deed
D » title
```
A » promissory note
59
A lender had to foreclose on a property. When the lender resold the property, the lender used a quitclaim deed. The purpose of this was to:
A » prohibit any future title claims against the lender
B » protect the grantee who purchased the property from the lender
C » prove the lender did not further encumber the title
D » guarantee that the grantor wouldn't come back on the lender
A » prohibit any future title claims against the lender
60
Define Quitclaim Deed
A type of deed transferring title from a seller to a buyer where NO promises are made by the seller. The seller says IF I own it, but I`m not saying I do, I give you whatever rights I MAY have. This deed is typically used to quiet cloudy titles.
61
```
Which of the following liens would take priority getting paid off at a foreclosure sale?
A » A mortgage lien
B » A mechanic's lien
C » A real estate tax lien
D » A judgment lien
```
C » A real estate tax lien
Note: A mortgage lien, mechanic`s lien and judgment lien would be paid off based on recording date.
62
Define Judgment Lien
A lien for personal debts; covers all real and personal property
63
```
The primary purpose of a mortgagor giving a mortgage to the mortgagee is to:
A » secure the mortgage
B » secure the debt
C » secure the deed
D » secure the title insurance
```
B » secure the debt
Note: A mortgage is used as security for the debt.
64
Which of the following statements is true regarding security for a debt?
A » The note secures the mortgage
B » The mortgage secures the note
C » The warranty deed secures the note
D » The note secures the warranty deed
B » The mortgage secures the note
Note: A note "creates" the debt. The mortgage is given as security for the note thus giving the lender (mortgagee) the right to foreclose.
65
```
In foreclosure, after the mortgage and all other debts are paid, to whom would the excess go?
A » The owner who was foreclosed upon
B » Mortgagee
C » Court
D » Sheriff
```
A » The owner who was foreclosed upon
66
```
Which instrument indicates involuntary alienation?
A » Grant deed
B » Deed in foreclosure
C » Quitclaim deed
D » Executor's deed
```
B » Deed in foreclosure
Note: All other deeds listed are voluntary.
67
Define Involuntary Alienation
Involuntary alienation means to transfer something without an owner`s consent.
68
```
Which of the following liens would take priority over all others?
A » The lien that was recorded first
B » Judgment lien
C » Mechanic's lien
D » Real estate tax lien
```
D » Real estate tax lien
69
```
The right of a person to regain title to property after paying all debts is known as:
A » release
B » reversion
C » remainder
D » redemption
```
D » redemption
70
Define Redemption
buy back; defaulting borrower has a certain time period to buy property back at foreclosure sale price plus any other costs owed
71
```
The value of a property over and above all outstanding debts is called:
A » net income
B » equity
C » net value
D » book value
```
B » equity
Note: Value - debts = Equity. Net income refers to income properties only.
72
```
Which of the following is an example of involuntary alienation?
A » Will
B » Foreclosure
C » Dedication
D » Deed
```
B » Foreclosure
73
Define Dedication
Voluntarily giving land to government; typically done by a developer
74
A mortgagee foreclosed but the sale did not produce enough to pay all debts. Which of the following is the MOST likely course of action for the mortgagee to take?
A » File for a judgment lien against the defaulting borrower
B » Have the borrower sign a deed of assumption
C » Have the borrower sign a sales contract
D » The mortgagee could do nothing
A » File for a judgment lien against the defaulting borrower
75
Define Assumption
An assignment of a loan from the seller to the buyer where the buyer becomes primarily liable for debt and the seller remains secondarily liable
76
```
Which of the following is NOT contained in a note?
A » Interest rate
B » Total interest
C » Title insurance
D » Mortgage amount
```
C » Title insurance
77
```
A property appraised for $42,000. If the buyer borrowed $28,000, what is the difference between the two amounts called?
A. Equity
B Net Income
C Debt Service
D Title
```
A. Equity
78
Define Debt Service
Debt service is the part of the monthly payment that goes to pay principal and interest.
79
```
A property was sold in a state using a trust deed as the form of security. Who benefits MOST from the holding of the trust deed?
A » Trustee
B » Trustor
C » Beneficiary
D » Landlord
```
C » Beneficiary
Note: A Beneficiary can get the trustee to sell the property without a court judgment upon default by the Trustor.
80
Define Trustee
The receiver of a trust deed; a neutral third party whose primary job is to foreclose if payments are not made to the lender or beneficiary
81
Define Trustor
The giver of the trust deed (borrower)
82
Define Beneficiary
Legal holder of the note (lender)
83
```
A mortgage is recorded to protect the:
A » mortgagor
B » mortgagee
C » trustor
D » trustee
```
B » mortgagee
84
Define Mortgagor
The giver of a mortgage (borrower)
85
Define Mortgagee
The receiver of a mortgage (lender)
86
```
A borrower does not meet all the obligations of the mortgage agreement. This is usually referred to as being in:
A » rescission
B » redemption
C » default
D » defeasance
```
C » default
87
```
A developer wants to sell a lot in a tract of land owned by the developer. The current interest rates are 13%. The developer would like to pay extra money to the lender to allow the buyer to obtain a reduced interest rate. This type of arrangement would be known as a(n):
A » loan origination fee
B » secondary market activity
C » buydown mortgage
D » tying contract
```
C » buydown mortgage
88
Define Buydown Mortgage
A buydown mortgage is where the seller pays extra money to buy down the interest rate on behalf of the buyer (similar to paying discount points).
89
What is a tying contract?
Tying two unrelated real estate transactions together
90
The reason a lender charges discount points is to:
A » cover the costs of initiating the loan
B » increase the effective yield to the lender
C » offset selling the loan at a premium
D » account for the time value of money
increase the effective yield to the lender
91
Define Discount Points
Extra money paid up front in cash to a lender in order for the buyer to receive a lower interest rate; in essence, pre-paid interest; 1 point = 1 percent; discount points are always based on the loan amount
92
```
Mediators who work matching lenders with borrowers are called:
A » mortgage bankers
B » mortgage brokers
C » banks
D » savings and loans
```
B » mortgage brokers
93
```
An escrow or impound account for the lender is for holding:
A » title insurance payments
B » prepaid taxes and insurance
C » discount point payments
D » mortgage payments
```
B » prepaid taxes and insurance
94
```
A lender is adding 1/12 of the annual taxes and insurance to a borrower's monthly mortgage payment. These prepaid taxes and insurance are kept in a(n):
A » lender's account of choice
B » borrower's account
C » impounds or escrow account
D » state account
```
C » impounds or escrow account
95
Define Escrow Account
A separate account for holding other peoples` money; e.g., a broker holding earnest money in escrow or a lender holding pre-paid taxes and insurance in escrow
96
A subordination clause in a mortgage does which of the following?
A » It changes the priority of the mortgages
B » It cancels the mortgage after the final payment
C » It prevents the loan from being assumed
D » It calls the loan due and payable upon nonpayment
A » It changes the priority of the mortgages
97
Define Subordination Clause
A mortgage clause where lenders change the lien priority that is different than recording date; lender waives their right in favor of another
98
```
A buyer was going to take over on a seller's existing loan as part of the real estate transaction. The lender, however, was going to change the interest rate on the buyer to the prevailing current rate. In order for the lender to do this, there must have been what type of clause in the mortgage?
A » acceleration
B » alienation
C » defeasance
D » subordination
```
B » alienation
Note: An alienation or due on sale clause in a mortgage allows a lender to call the loan due and payable when the property is sold or raise the interest rate, as is the case here. The acceleration clause in a mortgage allows the lender to call the loan due and payable upon nonpayment.
99
If a lender does not want to weaken the security of a property if taxes are unpaid, the lender should:
A » pay the taxes personally
B » require the prepaid tax money paid by the owner be put into a lender's escrow or impound account
C » ask the state for a notice if the taxes are not paid
D » require the owner to pay three years of taxes in advance at closing
B » require the prepaid tax money paid by the owner be put into a lender's escrow or impound account
100
```
Which clause in a mortgage would make the loan non-assumable?
A » Acceleration
B » Due on sale
C » Prepayment
D » Defeasance
```
B » Due on sale
Note: The due on sale or alienation clause allows the lender to call the loan balance due and payable upon the sale of property; hence, the loan would be non-assumable. The acceleration clause calls the loan due and payable upon nonpayment. The prepayment penalty allows the lender to charge a penalty if the loan is paid off early. The defeasance clause voids the security once the loan is paid off.
101
A buyer purchased a seller's home and assumed the seller's loan. The seller does not want to remain liable for the loan. What should the seller do?
A » Put in the sales contract that the seller will not be liable anymore
B » Have the buyer agree to a release of liability in the sales contract
C » Arrange for the title company to give a release of liability to the seller
D » Arrange for the lender to give a release of liability to the seller
D » Arrange for the lender to give a release of liability to the seller
Note: This is also referred to as a Novation
102
Which of the following normally triggers an alienation clause?
A » Failure to pay mortgage payments
B » Failure to pay taxes
C » Sale or assignment of the mortgaged property
D » Cancellation of the insurance
C » Sale or assignment of the mortgaged property
Note: An alienation clause is a due on sale clause
103
Define Alienation Clause
(Due on Sale Clause) A mortgage clause where a lender calls a loan balance due and payable upon selling the property; makes loan non-assumable
104
```
All of the following clauses could be included in a mortgage EXCEPT:
A » defeasance
B » alienation
C » subrogation
D » acceleration
```
C » subrogation
105
Define Subrogation
Signing over rights in a claim to a title insurance company in return for getting paid off
106
```
An agreement to waive priority is:
A » subordination
B » subrogation
C » acceleration
D » alienation
```
A » subordination
107
```
To protect the lender, which of the following items is usually NOT required for the borrower to pay?
A » Hazard insurance
B » Life insurance
C » Property taxes
D » Principal and interest
```
B » Life insurance
108
```
A mortgage provision that gives the lender the right to call the balance due upon cause (such as non-payment) is called:
A » anticipation
B » alienation
C » acceleration
D » defeasance
```
C » acceleration
Note: this is also known as a default clause, usually for non-payment. Alienation is a clause that calls the note due upon sale (due on sale clause). Defeasance clause makes the mortgage null and void upon paying off the note.
109
```
What is the primary purpose of the Federal Housing Administration (FHA)?
A » To buy notes from lenders
B » To make loans to borrowers
C » To set maximum interest rates
D » To insure loans for lenders
```
D » To insure loans for lenders
110
Why does Freddie Mac require that certain standardized forms and documents be used when a local lender makes a loan?
A » This will guarantee the mortgage payment for the note holder
B » So the lender can issue a certificate of authenticity
C » So the loans can be sold easily through warehousing of loans
D » So the buyer can easily understand all the loan costs
C » So the loans can be sold easily through warehousing of loans
111
An investor investing in land needs to understand that this is:
A » a limited liquidity investment
B » an investment where the rate of return does not keep up with inflation
C » an investment that is hardly ever profitable
D » a very expensive investment
A » a limited liquidity investment
112
```
A lender expressing the amount of the loan to the estimated property value is called a:
A » loan to income ratio
B » loan to value ratio
C » loan to debt ratio
D » loan to equity ratio
```
B » loan to value ratio
113
Define Loan to Value Ratio
The percent the loan is to the total value; e.g., a loan of $80,000 on a property valued at $100,000 would result in an 80% loan to value ratio
114
What is true about both FHA and VA loans?
A » Both require a certificate of eligibility
B » Both require owner occupancy
C » Both require MIP insurance
D » Both allow non-qualifying assumptions
B » Both require owner occupancy
Note: Only VA loans require a certificate of eligibility. Only FHA loans require MIP insurance.
115
```
The Federal Housing Administration (FHA) loan program operates in a similar fashion to:
A » mortgage brokers
B » commercial banks
C » savings and loans
D » insurance companies
```
D » insurance companies
116
An 80% loan to value ratio means that the loan amount will be based on 80% of:
A » the contract price or appraisal, whichever is higher
B » the contract price or appraisal, whichever is lower
C » the contract price
D » the appraisal price
B » the contract price or appraisal, whichever is lower
117
Because of health problems with lead paint, some federal institutions such as FHA are requiring which of the following?
A » Only that a brochure be given to any buyer explaining lead paint
B » Verification of any reports issued and all disclosures about lead paint have been given to the buyer before a loan is approved
C » Money to be put aside for lead paint abatement in the future if necessary
D » Disclosure only to the buyer of any known lead based paint
B » Verification of any reports issued and all disclosures about lead paint have been given to the buyer before a loan is approved
118
What is an advantage for a borrower who chooses to pay private mortgage insurance (PMI) in receiving a loan?
A » The insurance is tax deductible
B » The borrower can purchase with a lower down payment
C » The borrower receives a lower interest rate
D » The borrower only pays this one time at closing
B » The borrower can purchase with a lower down payment
119
```
An elderly person has recently made the last payment on a mortgage. This person would like to supplement their retirement income. The loan most likely to help in this situation would be a:
A » package mortgage
B » reverse annuity mortgage (RAM)
C » blanket mortgage
D » purchase money mortgage
```
B » reverse annuity mortgage (RAM)
120
```
A $55,000 mortgage and note are given by the buyer to the seller. The seller keeps the underlying $35,000 VA mortgage on the property. This is called a(n):
A » reverse annuity mortgage
B » wraparound mortgage
C » equity mortgage
D » land contract
```
B » wraparound mortgage
121
Define Wraparound Mortgage
A financing arrangement where typically a 2nd lender assumes the note of a 1st lender on behalf the buyer, advances the buyer additional funds to purchase the property with the buyer then making payments on the entire new mortgage made to 2nd lender
122
```
A loan that is paid off either by the sale of property or death of the borrower is called a(n):
A » shared appreciation mortgage (SAM)
B » reverse annuity mortgage (RAM)
C » growing equity mortgage
D » package mortgage
```
B » reverse annuity mortgage (RAM)
123
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A blanket mortgage usually contains which of the following clauses?
A » Escalation
B » Subordination
C » Release
D » Subrogation
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C » Release
124
A blanket mortgage is usually designed to cover:
A » both real estate and personal property
B » more than one transaction
C » more than one piece of property
D » loans over an extended time period
C » more than one piece of property
125
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Which of the following mortgages uses both real and personal property as security?
A » Chattel
B » Package
C » Purchase money
D » Blanket
```
B » Package
126
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A buyer who had insufficient funds for a down payment gave a note and mortgage to the seller for the difference. This is BEST referred to as:
A » wraparound mortgage
B » open end mortgage
C » purchase money mortgage
D » package mortgage
```
C » purchase money mortgage
Note: A purchase money mortgage is when the seller finances all or part of the loan for the borrower (owner financing).
127
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The right of a defaulting borrower to retain title to a property by satisfying the debt prior to the foreclosure sale is referred to as:
A » equitable redemption
B » statutory redemption
C » trustee's sale
D » remainder rights
```
A » equitable redemption
128
What is statutory redemption?
Statutory redemption is the borrower's right to buy the property back AFTER the sale from the purchaser at the foreclosure sale.
129
What are remainder rights?
Remainder rights occur when a life tenant dies and the property passes to a 3rd party (remainderman).
