Deck 7: Legal Aspects of Real Estate Finance

Question 1

Most notes are witnessed and notarized.

Answer 1

False

Question 2

A state statute that establishes a ceiling or maximum rate of interest to be charged on the loan is called a usury statute.

Answer 2

True

Question 3

Generally, a note cannot be prepaid before the date established in the note for payment.

Answer 3

True

Question 4

All foreclosures must take place through judicial proceedings.

Question 5

A foreclosure sale generally has the effect of divesting and terminating all junior encumbrances on the real property.

Question 6

Property sold subject to a debt means that the purchaser does not have personal liability to pay the debt.

Question 7

A maker of a note is not released by the sale of the security securing the note.

Question 8

Power of sale foreclosure is generally a judicial foreclosure proceeding.

Question 9

Usury statutes establish a minimum rate of interest that can be charged on the loan.

Question 10

The legal means of requiring that real property conveyed in a mortgage be sold and the proceeds used to pay the debt is called foreclosure.

Question 11

A guaranty of a note must be written.

Question 12

A promise to pay the debt of another person is called a guaranty.

Question 13

A change in the terms of the note being guaranteed without the guarantor's consent generally releases the guarantor.

Question 14

The mortgagee of a mortgage is the owner of the property.

Question 15

A mortgage securing a note can be transferred sep arate from the note.

Question 16

Notes are often transferred by the makers of the note.

Question 17

A note signed by both "A" and "B" on which they have joint and several liability means that "A" is responsible for one-half of the note and "B" is responsible for one-half of the note.

Question 18

An oral guaranty is enforceable.

Question 19

Notes are rarely witnessed and notarized.

Question 20

The penalty for usury in some states may be forfeiture of the entire loan amount.

Question 21

A mortgage given to secure any and all debt between the mortgagor and the mortgagee is called:

A) deed of trust
B) wrap mortgage
C) open-end mortgage
D) installment mortgage

Question 22

A debtor's rights in bankruptcy are determined by:

A) the law of the state where the debtor resides
B) the law of the state where the creditor resides
C) federal law
D) the law of the state where the property is located

Question 23

Which of the following is true about a bankrupt debtor?

A) bankruptcy enjoins all foreclosure proceedings against debtor
B) bankrupt debtor can terminate executory contracts to purchase real property
C) bankrupt debtor can terminate unexpired leases
D) all of the above
E) (a) and (c)

Question 24

A debtor always has the right to pay off the debt and redeem the real property from foreclosure prior to the sale.

Question 25

A state statute that gives a property owner the right to buy back his or her property after a foreclosure sale is called:

A) a usury statute
B) a redemption statute
C) an anti-deficiency statute
D) a receivership statute

Question 26

Which of the following is not a mortgagee's remedy for debtor's default on a mortgage?

A) judicial foreclosure
B) nonjudicial foreclosure
C) appointment of a receiver
D) injunction

Question 27

Postforeclosure redemption is permitted in all states.

Question 28

The person other than the debtor or maker of a note who promises the payee of the note that the debtor's note will be paid is called:

A) endorser
B) receiver
C) guarantor
D) comaker

Question 29

Anti-deficiency laws generally provide that a mortgage creditor cannot sue a mortgage debtor for a deficiency owed on the debt unless the creditor can establish that the property sold for fair market value at the foreclosure sale.

Question 30

The debtor's signature is no longer required on a UCC-1 financing statement.

Question 31

Which of the following are requirements for a valid mortgage?

A) name of the parties
B) a valid description of the property
C) effective delivery to the lender
D) all of the above
E) (a) and (b)

Question 32

A state statute that establishes the ceiling or maximum rate of interest to be charged on a loan is a:

A) usury statute
B) foreclosure statute
C) redemption statute
D) endorsement statute

Question 33

​ "A" borrows $50,000.00 from the bank and pledges real property as security. After the loan, "A" sells the property to "B," who buys subject to the mortgage. "B" then defaults on the mortgage loan. Under the circumstances, which of the following statements are true? A) bank may foreclose on the property
B) bank can sue "A" to recover debt
C) bank cannot sue "B" to recover debt
D) "A" cannot sue "B" for reimbursement if "A" pays the bank
E) all of the above
F) none of the above

Question 34

Some states allow UCC-1 financing statements to be filed electronically.