Question 1

Ruth owns a home on which she has two mortgages provided by Security Bank.Town Refinance Inc.tells Ruth that it can refinance the loans to reduce her payments.Town Refinance provides all of the required documents,which accurately state the payments under the new loan as higher.Ruth does not read the documents.Town Refinance is most likely liable for

Accepted Answer

The answer of Ruth owns a home on which she...

Question 2

Seymour borrows $350,000 from Reliable Bank to buy a home.Seymour stops making payments on the loan ten months later.After the bank repossesses the property securing the loan but before it is sold,Seymour wants to buy it.This is

Accepted Answer

The right of redemption allows a borrower to buy back their property after default and foreclosure but before it is sold. In this scenario, Seymour wants to exercise his right of redemption to buy the property back from the bank.

Question 3

Jaime buys a home by paying part of the purchase price up front in cash and borrowing the rest of the funds from Valley Credit Union.The part of the price paid up front in cash is

Accepted Answer

The part of the purchase price paid up front in cash is called a down payment.

Question 4

Rita borrows $30,000 from South State Credit Union.South State accepts Rita's equity in her home as collateral,which can be seized if the loan is not repaid on time.This is

Accepted Answer

This is a home equity loan, where the borrower pledges their home as collateral to secure the loan. If the loan is not repaid on time, the lender can foreclose on the home to recover the amount owed.

Question 5

Fact Pattern 31-1A 
24-Hour Credit Corporation issues high-cost and high-fee mortgage products to people,including Benny,who could not easily obtain credit under other loan programs.
-Refer to Fact Pattern 31-1A.Under federal law,if 24-Hour Credit fails to provide certain material disclosures with respect to the loan,Benny's right to rescind the loan

Accepted Answer

Under the Truth In Lending Act, if a lender fails to provide certain material disclosures with respect to the loan, the borrower's right to rescind the loan is extended for up to three years. This applies to high-cost mortgages, such as those offered by 24-Hour Credit Corporation, which charge fees and interest rates that are much higher than the market average. Therefore, Benny's right to rescind the loan would be extended for up to three years if 24-Hour Credit failed to provide the necessary disclosures.

Question 6

Milo borrows $125,000 from North State Bank to buy a home.To comply with the Statute of Frauds,the mortgage must be

Accepted Answer

The Statute of Frauds requires certain contracts, including mortgages, to be in writing to be enforceable. Therefore, the mortgage must be in writing.

Question 7

Fact Pattern 31-1A 
24-Hour Credit Corporation issues high-cost and high-fee mortgage products to people,including Benny,who could not easily obtain credit under other loan programs.
-Refer to Fact Pattern 31-1A.Under federal law,disclosures with respect to one of 24-Hour Credit's loans must be provided

Accepted Answer

Under federal law, lenders are required to provide disclosures to borrowers a certain number of days before the loan is finalized, giving the borrower time to review the terms of the loan and ask any questions before agreeing to the terms.

Question 8

Great Plains Bank provides a loan to enable Helene to buy real property.This loan is

Accepted Answer

A mortgage is a type of loan used specifically for buying real property. It allows the borrower to purchase the property with the understanding that they will pay back the loan amount plus interest over a set period of time.

Question 9

Darwin borrows $200,000 from Evermore Bank to buy a home.Less than six months into the term,Darwin stops making payments on the loan.To initiate the process to repossess and auction off the property securing the loan,Evermore must

Accepted Answer

Recording a notice of default with the appropriate county office is the first step in the foreclosure process. This notice informs the borrower that they have defaulted on their loan and gives them a timeframe within which to cure the default before the property is auctioned off. Once the notice of default has been recorded and the required waiting period has passed, the lender can proceed with the auction. Therefore, choice C is the best option.

Question 10

Consumer Mortgage Loans provides Demi with a mortgage to buy a home.Under the terms,Demi can choose to pay only the interest portion of the monthly payments and forgo paying of the principal for five years.This is

Accepted Answer

The mortgage provided to Demi is an interest-only mortgage, as she can choose to pay only the interest portion of the monthly payments and forgo paying the principal for five years. This type of mortgage allows borrowers to have lower monthly payments initially, but they will eventually have to pay off the principal. It is a legal option for some borrowers, but it may not be the best choice for everyone, as it can result in higher overall costs in the long run.

Question 11

Property Financial Corporation makes loans that qualify,under a Federal Reserve Board amendment to Regulation Z,as Higher-Priced Mortgage Loans (HPMLs).Quinn applies to Property Financial for an HPML.To make the loan,the lender must

Accepted Answer

To grant an HPML, the lender must verify the borrower's ability to repay the loan under the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act. This involves assessing the borrower's income and other liabilities to ensure that they can afford the loan. The other options listed (inflating the property value, imposing prepayment penalties, structuring to evade HPML protections) are illegal or unethical practices that lenders should not engage in.

Question 12

Kenton borrows $150,000 from Liberty Home Finance Corporation to buy a home.Federal law concerns primarily

Accepted Answer

Federal law requires certain disclosures with respect to a mortgage, such as the annual percentage rate, finance charges, and total amount financed. This is to ensure that borrowers understand the terms of their mortgage and can make informed decisions. The other choices are not directly related to federal law concerning mortgages.

Question 13

Harbor Bay Bank has made mortgage loans to consumers that qualify for the Home Affordable Modification Program (HAMP),which offers incentives to lenders to change the terms of certain loans.The purpose of HAMP is to

Accepted Answer

The purpose of the Home Affordable Modification Program (HAMP) is to reduce monthly payments to levels that homeowners can afford. The program offers incentives to lenders to modify the terms of certain loans and allow eligible homeowners to stay in their homes and avoid foreclosure. Therefore, the best choice is C.

Question 14

Main Street Lenders,Inc. ,attempts to coerce Nolan-who specializes in determining the value of real and personal property-into misstating the value of a property on which a loan is to be issued.This is

Accepted Answer

Coercing an appraiser into misstating the value of a property is considered a violation of federal law. The practice is known as appraisal fraud and can lead to severe legal consequences for both the lender and the appraiser involved. It is important to maintain ethical and legal standards in the lending industry to prevent fraudulent practices that can have negative consequences for borrowers and lenders.

Question 15

Velma borrows $110,000 from Watershed Bank to buy a home.If she fails to make payments on the mortgage,the bank has the right to repossess and auction off the property securing the loan.This is

Accepted Answer

The scenario described is foreclosure, which is a legal process by which a lender takes possession of a property from a borrower who has failed to meet the terms of the mortgage agreement.

Question 16

Fact Pattern 31-1A 
24-Hour Credit Corporation issues high-cost and high-fee mortgage products to people,including Benny,who could not easily obtain credit under other loan programs.
-Refer to Fact Pattern 31-1A.24-Hour Credit assigns Benny's loan to Consolidated Mortgage Investment Corporation.For most purposes,Consolidated

Accepted Answer

Because Benny's loan was issued as a high-cost and high-fee mortgage by 24-Hour Credit, Benny may have claims under federal law against 24-Hour Credit. When the loan is assigned to Consolidated Mortgage Investment Corporation, they take on the loan subject to any claims that Benny could assert against 24-Hour Credit. Therefore, Choice D is the best answer.

Question 17

Ridgeline Bank provides Stanley with a mortgage to buy a home.The rate of interest is fixed for three years and then adjusts annually.This is

Accepted Answer

This is an adjustable-rate mortgage, as the rate of interest is fixed for three years and then adjusts annually.

Question 18

Lorna borrows $175,000 from Mountainside Credit Union to buy a home.Among the terms that must be disclosed under federal law is the annual percentage rate.This is

Accepted Answer

The annual percentage rate (APR) is the actual cost of the loan on a yearly basis, including interest rate and any additional fees or charges associated with the loan. It provides borrowers with a standardized way to compare the total cost of different loan options.

Question 19

Kim's home is valued at $250,000.Kim has paid the mortgage-she has 100 percent equity in the property.She wants to start a new business with Lloyd.To obtain funds,Kim refinances the loan through Metro Bank,borrowing $200,000 for fifteen years at an interest rate of 4.85 percent.Before the loan is completed,Metro provides Kim with all of the required disclosures.On the day of the loan,a fifteen-year Treasury bond is yielding 2.85 percent.Kim pays $7,500 in fees to the bank.Less than a month later,she sells her interest in the new business to Lloyd and wants to rescind the loan.Which federal law covers this loan-TILA,HOEPA,HPML,or HAMP? Can Kim rescind the deal? Explain.

Accepted Answer

The answer of Kim's home is valued at $250,000.Kim has...

Question 20

Reed borrows $150,000 from Suburban Credit Union to buy a home,which secures the loan.Three years later,Reed stops making payments on the loan.After Suburban Credit repossesses and auctions off the property to Tyler,equity remains.This amount most likely belongs to

Accepted Answer

The answer of Reed borrows $150,000 from Suburban Credit Union...

Quiz 31: B:mortgages Foreclosures After the Recession