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Flashcards in UNIT 14 & 15 Deck (61)
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31

In absence of an agreement to the contrary, the mortgage having priority will be the one
a. for the highest amount.
b. that was recorded first.
c. that was signed first.
d. that is a construction loan.

b. that was recorded first.

32

The pledging of property as security for payment of a loan is
a. disintermediation.
b. equity.
c. hypothecation.
d. subordination.

c. hypothecation.

33

The purpose of a mortgage is to
a. provide security for the loan.
b. convey title of the property to the lender.
c. restrict the borrower's use of the property.
d. create a lien on the property.

a. provide security for the loan.

34

The grantor becomes the lessee and the grantee becomes the lessor under which of the
following financing arrangements?
a. Lease with option to buy
b. Wraparound mortgage
c. Sale and leaseback
d. Assumption of mortgage

c. Sale and leaseback

35

Which of the following pairs of terms is considered MOST synonymous?
a. Interim financing and construction loan
b. Construction loan and variable rate loan
c. Pass-through loan and assumption loan
d. Take-out loan and construction loan

a. Interim financing and construction loan

36

Fannie Mae
a. originates FHA loans in the primary mortgage market.
b. purchases FHA loans in the secondary mortgage market.
c. provides farm loans.
d. provides insurance for FHA loans.

b. purchases FHA loans in the secondary mortgage market.

37

The type of real estate loan that allows the lender to increase the outstanding balance of a
loan up to the original sum in the note while advancing additional funds is the
a. wraparound mortgage.
b. open-end mortgage.
c. growing-equity mortgage.
d. graduated-payment mortgage.

b. open-end mortgage.

38

The Truth-in-Lending Act sets forth requirements regarding real estate loans to
individuals for all of the following purposes EXCEPT
a. equity lines of credit.
b. commercial purposes.
c. additions to residential properties.
d. installation of a backyard swimming pool.

b. commercial purposes.

39

An FHA-insured mortgage loan would be obtained from
a. the Federal Housing Administration.
b. the Department of Housing and Urban Development.
c. any qualified lending institution.
d. any qualified insuring institution.

c. any qualified lending institution.

40

Fannie Mae and Freddie Mac have a common purpose of
a. originating residential mortgage loans.
b. purchasing existing mortgage loans.
c. insuring residential mortgage loans.
d. guaranteeing existing mortgage loans.

b. purchasing existing mortgage loans.

41

Which of the following statements is TRUE?
a. The priority of a mortgage is determined by the execution date.
b. A mortgage document contains no covenants on the part of the borrower.
c. A deed of trust is typically conveyed by the trustor to the beneficiary.
d. A promissory note has to be in writing to be enforceable, but it is not normally
recorded.

d. A promissory note has to be in writing to be enforceable, but it is not normally
recorded.

42

A mortgage broker generally offers which of the following services?
a. Handling the escrow procedures
b. Bringing the borrower and the lender together
c. Providing credit qualification and evaluation reports
d. Granting real estate loans using investor funds

b. Bringing the borrower and the lender together

43

An eligible veteran is under contract to purchase a home for $80,000 that he wants to
finance with a VA-guaranteed 100% loan-to-value loan. Four weeks after contract
formation, a certificate of reasonable value (CRV) for $77,000 was issued for the
property. In this situation, the veteran may consider any of the following options
EXCEPT
a. withdrawing from the transaction without penalty.
b. purchasing the property with an additional $3,000 cash from his own funds.
c. negotiating with the seller to reduce the sales price $3,000.
d. borrowing the $3,000 for the cash down payment from a private source.

d. borrowing the $3,000 for the cash down payment from a private source.

44

A borrower obtained a $7,000 second mortgage loan for five years at 6% interest per
annum. Monthly debt service payments were $50. The final payment included the
remaining outstanding principal balance. What type of loan is this?
a. A fully amortized loan
b. A straight loan
c. A partially amortized loan
d. An accelerated loan

c. A partially amortized loan

45

All of the following statements about short sales are true EXCEPT
a. the lienholder cannot be forced to participate in the short sale.
b. the borrower may be taxed on any debt that is forgiven by the lienholder.
c. the lienholder can file for a deficiency judgment for debt not paid by the sale of
the collateral property.
d. a sales contract has not been created until the lienholder agrees to the short sale
contract terms.

d. a sales contract has not been created until the lienholder agrees to the short sale
contract terms.

46

The principal distinction between the primary mortgage market and the secondary
mortgage market is in the
a. insuring versus the guaranteeing of mortgage loans.
b. origination versus the purchase of mortgage loans.
c. use of mortgages versus the use of deeds of trust.
d. use of discount points versus the use of origination fees.

b. origination versus the purchase of mortgage loans.

47

A real estate loan payable in periodic installments that are sufficient to pay the principal
in full during the term of the loan is called
a. a conventional loan.
b. a straight loan.
c. a participation loan.
d. an amortized loan.

d. an amortized loan.

48

An extension of credit from a seller to a buyer to allow the buyer to complete the
transaction is called a
a. growing equity mortgage.
b. purchase money mortgage.
c. package mortgage.
d. blanket mortgage.

b. purchase money mortgage.

49

When compared with a 30-year payment period, taking out a loan with a 20-year
payment period would result in all of the following EXCEPT
a. faster amortization.
b. higher monthly payments.
c. quicker equity buildup.
d. greater escrow amounts.

d. greater escrow amounts.

50

Presume the interest rate on an FHA-insured mortgage loan to be 6½% with a current
monthly interest payment of $846. What would be the current principal?
a. $65,988
b. $147,339
c. $156,184
d. $164,970

c. $156,184


$846 × 12 mos. = $10,152 annual int.
÷ 0.065 = $156,184 LV

51

Which of the following is NOT a required chief disclosure for compliance with the Truth-
in-Lending Act?
a. Loan-to-value ratio
b. Annual percentage rate
c. Total of all finance charges
d. Total amount financed

a. Loan-to-value ratio

52

A borrower would MOST likely obtain a residential real estate mortgage loan from
a. an insurance company.
b. a pension fund.
c. a commercial bank.
d. a savings and loan association.

d. a savings and loan association.

53

Regulation Z applies to
a. business loans.
b. real estate sales agreements.
c. commercial loans less than $10,000.
d. personal credit transactions less than $25,000.

d. personal credit transactions less than $25,000

54

FNMA';s activities include buying and selling of all of the following EXCEPT
a. FHA and VA mortgages.
b. conventional mortgages.
c. mortgages at full face value.
d. mortgages at discounted values.

c. mortgages at full face value.

55

The Federal Home Loan Mortgage Corporation was established as a secondary mortgage
market entity to assist the
a. Federal Housing Administration.
b. Federal National Mortgage Association.
c. federal savings and loans.
d. federal banks.

c. federal savings and loans.

56

A graduated payment loan is one in which
a. mortgage payments decrease.
b. mortgage payments balloon in five years.
c. mortgage payments increase as scheduled.
d. the interest rate on the loan adjusts annually.

c. mortgage payments increase as scheduled.

57

If a loan balance is $213,500 and the annual interest rate is 5½%, what is the amount of
the next monthly interest payment?
a. $381.18
b. $597.59
c. $978.54
d. $1,174.25

c. $978.54

$213,500 LV × 0.055
= $11,742.50 ann. int.
÷ 12 months = $978.54

58

A mortgage loan that is secured by both real and personal property is called a
a. blanket mortgage.
b. package mortgage.
c. purchase money mortgage.
d. wraparound mortgage.

b. package mortgage.

59

A mortgage loan requires monthly debt service payments of $675.75 for 20 years and a
final payment of $5,095. This type of a mortgage loan is:
a. a wraparound mortgage.
b. an accelerated mortgage.
c. a balloon mortgage.
d. a variable mortgage.

c. a balloon mortgage.

60

Which of the following statements is NOT TRUE regarding the secondary mortgage
market?
a. Fannie Mae can purchase conventional, FHA, and VA loans.
b. Freddie Mac originally purchased conventional loans primarily from savings
associations.
c. Ginnie Mae is associated with conventional loans.
d. Non-conforming loans do not comply with secondary market guidelines.

c. Ginnie Mae is associated with conventional loans.