Question 1

An equitable right of redemption:&#10;A) is allowed after foreclosure&#10;B) allows a delinquent mortgagor to prevent foreclosure by paying delinquent interest and other costs&#10;C) is the same as a statutory right of redemption&#10;D) none of the above

Accepted Answer

An equitable right of redemption allows a delinquent mortgagor to prevent foreclosure by paying delinquent interest and other costs, whereas a statutory right of redemption allows the mortgagor to reclaim the property after foreclosure by paying the full amount that was owed on the mortgage. Therefore, choice A is incorrect, and choice C is not accurate as the two are not the same. Choice D is incorrect as there is an equitable right of redemption.

Question 2

Title insurance:&#10;A) insures against losses on a property due to natural disasters&#10;B) insures against losses due government restrictions on the use of the property&#10;C) insures against losses due to changes in interest rates&#10;D) none of the above

Accepted Answer

Title insurance protects against losses from defects in the title, not from natural disasters, government restrictions, or changes in interest rates.

Question 3

A deficiency judgment is:&#10;A) a judgment that allows the mortgagor to redeem the property prior to foreclosure&#10;B) a judgment against the borrower for the difference between the amount owed to a lender and the value of the property sold at a foreclosure sale&#10;C) a judgment that allows the mortgage insurer to pursue the lender for losses in a foreclosure&#10;D) none of the above

Accepted Answer

A deficiency judgment is a court order stating that the borrower owes the lender the difference between the amount owed on the mortgage and the amount the property sold for at a foreclosure sale. In other words, if the sale of the foreclosed property doesn't cover the full amount owed on the mortgage, the lender can obtain a deficiency judgment to recoup the remaining balance from the borrower.

Question 4

Two methods of foreclosure include:&#10;A) power-of-sale and statutory&#10;B) power-of-sale and judiciary&#10;C) judiciary and statutory&#10;D) none of the above

Accepted Answer

Power-of-sale and judiciary are both commonly used methods of foreclosure. Power-of-sale allows the lender to sell the property without going through the court system. Judiciary foreclosure involves the lender going through the court system to obtain a judgment against the borrower, which can then be used to sell the property. Both methods have their advantages and disadvantages, and the best choice depends on the specific situation and requirements of the lender.

Question 5

Foreclosure is a process that:&#10;A) returns the property to a borrower when the loan is paid off&#10;B) is consistent in all states as required by federal law&#10;C) is exercised by a buyer of the property&#10;D) none of the above

Accepted Answer

Foreclosure is a legal process used by a lender to recover the unpaid balance on a loan by taking ownership of the property securing the loan. It is not a process that returns the property to the borrower when the loan is paid off, nor is it consistent in all states as each state has its own foreclosure laws. Finally, foreclosure is not exercised by a buyer of the property but rather by the lender who holds the lien on the property.

Question 6

FHA mortgage insurance:&#10;A) protects the borrower against all losses due to default&#10;B) protects the lender against all losses due to fraud&#10;C) protects the lender and borrower from all losses due to foreclosure&#10;D) none of the above

Accepted Answer

FHA mortgage insurance primarily protects the lender against the borrower's default, not all losses due to default, fraud, or foreclosure. It does not directly protect the borrower or cover all losses due to fraud or foreclosure.

Question 7

The FHA up-front mortgage insurance premium (MIP)is:&#10;A) refunded if the loan is subsequently assumed&#10;B) equal to five percent of the face amount of the loan&#10;C) can be financed under some conditions&#10;D) none of the above

Accepted Answer

The FHA up-front mortgage insurance premium (MIP) can be financed under some conditions, allowing the borrower to roll the cost of the premium into the overall loan amount. Option A is incorrect as the premium is not refunded if the loan is assumed. Option B is incorrect as the premium amount can vary depending on the loan amount and other factors, but it is generally between 1.75% to 2.25%.

Deck 14: Mortgage Default Insurance, Foreclosure, Title Insurance