Deck 9: Financing the Real Estate Purchase

Question 1

The annual percentage rate on a loan is higher than the interest rate alone.

Answer 1

True

Question 2

Under the federal Truth in Lending Act, Regulation Z, there are four major elements of mandatory disclosure.Which of the following is not one of them?
(a)The finance charge.
(b)Whether the note is negotiable or not.
(c)The annual percentage rate.
(d)The amount financed.
(e)The mandatory right of rescission.

Answer 2

B

Question 3

An FHA mortgage is insured, but not guaranteed, by the Fair Housing Administration.

Answer 3

True

Question 4

The person who lends the money for a mortgage loan is both the payee and a mortgagee.

Question 5

An "on or before" clause in a note is especially important for lenders.

Question 6

Under the modern view of mortgages, the mortgage creates a security interest and no longer represents a transfer of title to the mortgagee.

Question 7

A note without a mortgage is usually worthless while a mortgage without a note has considerable value.

Question 8

The law of mortgages governs cases where personal or real property is used to secure a debt.

Question 9

Courts occasionally create equitable mortgages to protect creditors.

Question 10

In recent years, under the Community Reinvestment Act, lenders have been forced to lend to low-income borrowers in the communities where they take deposits before they can receive governmental approval to merge with a bank in another state.

Question 11

It is possible that a mechanic's lien will have priority over a mortgage even thoughthe mortgage was recorded first.
(Answers in boldface are correct)

Question 12

A sale of property where the mortgage is assumed is similar to a sale of property subject to a mortgage in its effect on the purchaser.

Question 13

In many states, a mortgagor in default on mortgage payments has two different time periods during which the property can be redeemed.

Question 14

Usury laws are governed by the "Uniform Usury Code," which makes usury laws uniform throughout the United States.

Question 15

State Mutual Bank has a mortgage on property owned by Aubrey.Aubrey sold the property to Clarence "subject to" the mortgage.On default, State Mutual can:
(a)not foreclose on the property, but can obtain payment from Aubrey.
(b)foreclose on the property and collect any deficiency from Aubrey.
(c)foreclose on the property and collect any deficiency from Clarence.
(d)none of the above.
(e)two of the above

Question 16

The following description best characterizes which instrument listed below: "A debtor deeds legal title to an independent third party who holds the deed as security for the creditor."
(a)Conventional first mortgage.
(b)Deed of trust.
(c)Purchase money mortgage.
(d)Reverse annuity mortgage.
(e)None of these.

Question 17

Lenders prefer nonnegotiable notes because the eventual holder of the note then becomes a holder in due course.

Question 18

Which of the following fair lending laws was created to fight predatory lending practices:
(a)Equal Credit Opportunity Act.
(b)Community Reinvestment Act
(c)Home Mortgage Disclosure Act.
(d)Home Ownership and Equity Protection Act.
(e)Real Estate Settlement Procedures Act.

Question 19

Under federal law, lenders may not discriminate on the basis of:
(a)marital status.
(b)political party.
(c)receipt of welfare.
(d)two of the above.(a and c)
(e)none of the above.

Question 20

Redlining occurs whenever lenders refuse to make mortgage loans to, or impose stricter mortgage terms on, certain individuals.

Question 21

A nonrecourse note:
(a)results in a borrower becoming personally liable if there is a deficiency at the foreclosure sale.
(b)is the kind of note that homeowners typically sign.
(c)is more advantageous to borrowers than to lenders.
(d)all of the above.

Question 22

The last possible event in the foreclosure process is the:
(a)mortgagor's default on the loan.
(b)execution of deed at foreclosure sale.
(c)equity of redemption.
(d)termination of the statutory redemption period.
(e)foreclosure suit.