Chapter 9 FRL 306

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Chapter 9 FRL 306
2013-02-04 21:07:37
Real Estate Finance Laws Contracts

Test Problems Chapter 9
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  1. The element of an adjustable interest rate that is the "moving" part is the:
  2. Which of these aspects of a mortgage loan will be addressed in the note rather than in the mortgage?
    Prepayment penalty.
  3. A lender reserve the right to require prepayment of a loan at anytime the see fit through a(n):
    Demand clause.
  4. When a buyer of a property with an existing mortgage lo0an acquires the property without signing the note for the existing loan, the buyer is acquiring the property:
    Subject to the mortgage.
  5. Which of these pints in a mortgage loan would be addressed in the mortgage (possibly in the note as well)?
  6. To finance a property where either the borrower, the property, or both fail to qualify for standard mortgage financing, a common non-mortgage solution is through the:
    Contact for deed.
  7. Ways that a lender may respond to a defaulted loan without resorting to foreclosure include:
    • Offer credit counseling
    • Allow short sale to a third party
    • Defer/forgive some of the past-due payments
    • Accept a deed in lieu of foreclosure.
    • NOT Accelerate debt
  8. If a lender in a standard first mortgage wishes to foreclose cost effectively, it is crucial to have which clause in the mortgage?
    Acceleration clause.
  9. A common risk that frequently interferes wiht a lender's efforts to work out a defaulted loan through either non-foreclosure means or foreclosure is:
  10. The characteristics of a borrower that cqn be considered by a lender in a mortgage loan application are limited by the:
    Equal Credit Opportunity Act.
  11. The Real Estate Settlement Procedures Act (RESPA) does these:
    • - requires standard settlement statement
    • - prohibits kickbacks
    • - requires GFE to borrowers
    • - requires borrower to inspect closing statement a day before closing
  12. Foreclosure tends to be quickest in states that:
    Have power of sale.
  13. From a home mortgage lender's perspective, which statement is true about the effect of bankruptcy upon foreclosure:
    Chapter 7 bankruptcy is the most "lender friendly" form.
  14. The most internationally oriented index rate for adjustable rate mortgage is:
    LIBOR rate.
  15. A type of loan that occurred in recent years, which raised concerns about predatory lending practices, was the:
    Sub-prime mortgage.
  16. A partially amortizing loan always will have:
    A balloon payment.
  17. These statements are true about mortgage loans for income producing properties real estate.
    • - partially amortizing
    • - prepayment penalty
    • - non-recourse loan
    • - can be I/O loan
  18. With what type of loan security arrangement is the deed held by neutral third party and returned upon payment of the mortgage in full?
    Deed of trust.
  19. The Truth-in-Lending Act (TILA) gives some mortgage borrowers how long to rescind a mortgage loan?
    3 days.
  20. Which statement is correct about the right of prepayment of a home mortgage loan?
    Most home mortgage loans have the right of prepayment without charge, but not all, and the borrower should check the loan carefully.
  21. Capital markets can be divided into four
    main categories: private equity, public equity, private debt, and public debt. Given
    an example of a real estate asset that trades in the private equity market is.
    An example is any real asset, for example an office block.
  22. A significant number of mortgage loans use adjustable interest rates, in which the interest rate of the loan is tied to an index rate that fluctuates over time. For income-producing property, what is the most commonly used index rate?
    LIBOR (London Interbank Offer Rate)
  23. Three types of prepayment penalty: Percentage, Yield Maintenance, and Defeasance
    • Prepayment penalty; a percentage of the outstanding balance is
    • owed at prepayment.

    Yield maintenance: The lender receives the present value of CF losses; thus if rate have gone up, there is no lump sum;

    Defeasance: The borrower has to place a portfolio of Treasury Securities into a trust that will replicate the lender’s CFs had the prepayment not happened.