Financing the Transaction and Settlement

Question 1

What does a discount point do?

A: covers the cost to originate the loan
B: Increases the lender yield
C: Raises the interest rate
D: Decreases the lenders yield

Answer 1

B: Increases the lender yield

Question 2

A mortgage banker borrows on existing loans they hold, this is called?

A: Warehousing
B: Discounting
C: Wraparound Lending
D: Estoppel

Answer 2

A: Warehousing

Question 3

A conventional loan is:

A: Not guaranteed or insured by a government agency
B: Guaranteed by a government agency
C: Obtainable through FHA
D: At a lower interest rate than an FHA loan

Answer 3

A: Not guaranteed or insured by a government agency

Question 4

A mortgage that has not been recorded:

A: has no legal effect
B: Is effective between the lender and the borrower only
C: is a lien on the property
D: Is effective against a subsequent purchaser of the mortgaged premises, provided that the purchaser gave value and did not have knowledge of the unrecorded mortgage.

Answer 4

B: Is effective between the lender and the borrower only

Question 5

A written instrument transferring the grantor’s ownership of, or interest in, real property is known as a/an:

A: Mortgage
B: Easement
C: Deed
D: Title

Answer 5

C: Deed

Question 6

The most complete title protection is offered by:

A: an extended coverage policy
B: a standard title policy
C: a certificate of title
D: an abstract of title

Answer 6

A: an extended coverage policy

Question 7

Standard title insurance covers:

A: recorded title defect
B: Unrecorded title defects
C: All title defects
D: Defects disclosed by a competent survey

Answer 7

A: recorded title defect

Question 8

Who acknowledges a deed?

A: Grantor
B: Grantee
C: Vendee
D: Notary

Answer 8

A: Grantor

Question 9

A buyer insists that a seller sign a document that states there are no unrecorded liens against the property and that the seller is the rightful and lawful owner. The buyer is asking the seller to sign:

A: Property disclosure statement
B: Agency disclosure statement
C: Hypothecation clause
D: Affidavit of title

Answer 9

D: Affidavit of title

Question 10

The front end ratio of an FHA loan would apply to which of the following?

A: sales price divided by potential rent
B: total down payment compared to sales price
C: total monthly loan payment compared to gross monthly income
D: interest rate divided by monthly payment

Answer 10

C: total monthly loan payment compared to gross monthly income

Question 11

In a foreclosure sale, the debtor:

A: many not bid on the property
B: may be a successful bidder and be awarded the title to the property
C: Advertises to secure exposure for the sale
D: Is freed of any future responsibility regarding the liens

Answer 11

A: many not bid on the property

Question 12

When the seller creates a wraparound loan with the buyer the benefit to the seller would be:

A: arbitrage
B: novation
C: negative amortization
D: estate for years

Answer 12

A: arbitrage

Question 13

The owner of a parcel of real property wishes to convey his interest to a certain buyer. The transfer of the grantor’s ownership interest, if any, would be accomplished by which of the following?

A: Mortgage
B: Easement
C: Deed
D: Title

Answer 13

C: Deed

Question 14

The type of lender with the greatest percentage of assets invested in residential mortgages is a/an:

A: mutual savings bank
B: life insurance company
C: savings and loan
D: commercial bank

Answer 14

C: savings and loan

Question 15

The buyer and seller enter into a contract for deed. In many jurisdictions, this would most likely be a:

A: wraparound mortgage
B: land installment contract
C: condominium
D: lease with option

Answer 15

B: land installment contract

Question 16

After buying property at a sheriff’s foreclosure auction, what document would a person receive to prove he is entitled to the deed upon confirmation of sale?x

A: Certificate of habitation
B: Certificate of sale
C: Certificate of title
D: Certificate of no defense

Answer 16

B: Certificate of sale

Question 17

A buyer agrees to purchase real property by making monthly payments to the seller and then receiving a deed at a later point in time. Such an agreement is known as a/an:

A: Straight term mortgage
B: Construction loan
C: Land installment contract
D: Certificate of sale

Answer 17

C: Land installment contract

Question 18

While both the mortgage deed and the mortgage note are signed by the borrower, the note is:

A: Signed in duplicate with a copy each for the buyer and the bank
B: Not recorded
C: Not really necessary
D: Retained by the borrower as a reminder of its maturity date

Answer 18

B: Not recorded

Question 19

Which of would a buyer prefer: land installment contract or purchase money mortgage?

A: Either as both convey equitable title
B: Purchase money mortgage
C: Either as both convey legal title
D: land installment contract

Answer 19

B: Purchase money mortgage

Question 20

Once a person has gone to the courthouse and reviewed all documents pertaining to the property he intends to buy, he is said to have:

A: Ad Valorem notice
B: Constructive notice
C: Actual notice
D: Caveat Emptor

Answer 20

C: Actual notice

Question 21

Each January, a homeowner receives an estoppel certificate from his bank indicating:

A: the closing cost incurred in selling the home
B: the amount of the taxes and insurance held in escrow
C: the amount of real property taxes that the homeowner will owe for the upcoming year
D: the amount of principal remaining on the mortgage.

Answer 21

D: the amount of principal remaining on the mortgage.

Question 22

A home seller would purchase title insurance for a buyer. What type of insurance would a buyer purchase for a lender?

A: homeowners insurance
B: automobile insurance
C: mortgage title insurance
D: life insurance

Answer 22

C: mortgage title insurance

Question 23

Insurance policy premiums are prorated from the date the policy is:

A: written
B: recorded
C: expired
D: assigned

Answer 23

D: assigned

Question 24

In the settlement statement required by RESPA, the earnest money deposited by a buyer is shown as a:

A: none of the answers
B: credit to the buyer
C: debit to the buyer
D: debit to the seller

Answer 24

B: credit to the buyer

Question 25

A mortgage is recorded to: A: comply with truth in lending regulations B: create a valid lien C: Transfer title to the mortgagee D: Assure amortization payments

Answer 25

B: create a valid lien

Question 26

The closing statement should be signed by: A: the broker B: the buyer C: the broker, buyer, and seller D: the seller

Answer 26

C: the broker, buyer, and seller

Question 27

Real Estate taxes are prorated as of the day of closing. The real estate taxes are: A: a debit to the seller and a credit to the buyer B: a debit to both the buyer and seller C: a debit to the buyer and a credit to the seller D: a credit to both buyer and seller

Answer 27

A: a debit to the seller and a credit to the buyer

Question 28

When a lenders advertising is considered bait and switch it would be regulated by: A: Sherman anti trust laws B: federal reserve C: fair housing act of 1988 D: truth in lending

Answer 28

D: truth in lending

Question 29

Property is attached in order to: A: Construct zoning boundary lines B: Compute valuation for mortgage loan purposes C: Compute cost replacement value D: Provide security for payment of a debt or judgment

Answer 29

D: Provide security for payment of a debt or judgement

Question 30

Which of the following apply to a VA loan? A: PMI B: MIP C: Funding Fee D: Front and back end rates

Answer 30

C: Funding Fee

Question 31

What applies to the Federal National Mortgage Association? A: Guarantee loans B: Secondary Market C: Insures Loans D: Governmental Agency

Answer 31

B: Secondary Market

Question 32

A clause used in a mortgage allowing the lender to call for the full payment of the mortgage because the owner transferred ownership of the property to a third party is known as the: A: Hypothecation Clause B: Prepayment Clause C: Appreciation Clause D: Alienation Clause

Answer 32

D: Alienation Clause

Question 33

An alienation clause in a mortgage refers to the clause that: A: Allows the lender to charge a penalty for early payment B: Allows the lender to call for full payment of the mortgage because the owner sold the property C: Calls the entire mortgage due if the owner moves outside the US D: Pledges the property as security to a third party

Answer 33

B: Allows the lender to call for full payment of the mortgage because the owner sold the property

Question 34

A viable alternative to foreclosure would be: A: Filing a writ of execution B: Filing a Lis Pendens notice C: A deed in lieu of foreclosure D: Filing an attachment

Answer 34

C: A deed in lieu of foreclosure

Question 35

A homeowner's property has been foreclosed upon by the bank and sold at public auction. The homeowner owed $50,000.00 on the mortgage but the property sold for only $40,000.00. To collect the $10,000.00, the lender could do which of the following? A: Ask for dedication B: Obtain a deficiency judgment C: File a deed of trust D: File a deed in lieu of foreclosure

Answer 35

B: Obtain a deficiency judgment

Question 36

According to Reg. Z, what disclosure would NOT be required? A: Finance charges B: Annual percentage rate C: Annual property taxes D: Interest rate

Answer 36

C: Annual property taxes

Question 37

A homeowner receives a duplicate 1099 form from the bank showing how much interest has been paid over the last year and what principal amount is remaining on the mortgage. This document is a/an: A: Certificate of habitation B: Estoppel certificate C: Certificate of sale D: Certificate of title

Answer 37

B: Estoppel certificate

Question 38

A buyer wants to purchase an older home in a low-income area. The home needs rehabilitation but has a good future due to a growing economy. What loan best suits the buyer's needs? A: Variable rate B: FHA 203K C: Reverse annuity D: Join Venture

Answer 38

B: FHA 203K