Question 1

In a condominium hotel you would find the following:

Accepted Answer

Often found in resort areas, a condo hotel is a condominium project with rental or registration desks, short-term occupancy, food and telephone services, and daily cleaning services. It is operated like a commercial hotel even though the units are individually owned.

Question 2

Which is true of the cost of funds index (COFI)?

Accepted Answer

The cost of funds index is one of the indexes used to determine interest rate changes for certain adjustable-rate mortgages. It represents the weight-average cost of savings, borrowings, and advances of the financial institutions such as banks and savings and loans, in the 11th District of the Federal Home Loan Bank.

Question 3

Once you buy a house, the amount you pay each month includes an extra amount above principal and interest. This extra money is held in a special account to pay your taxes and homeowners insurance when it comes due. This account is called:

Accepted Answer

Once you close your transaction, you probably have an escrow account with your lender which is composed of extra money taken from your monthly payments to be put in escrow and pay your taxes and insurance when they come due. The lender pays them with your money instead of you paying them yourself.

Question 4

Which of the following does the Federal Housing Administration do?

Accepted Answer

The main activity of the FHA is the insuring of residential mortgage loans made by private lenders. It sets standards for construction and underwriting but does not lend money or plan or construct housing.

Question 5

If you purchase a type of insurance called homeowner's warranty, you would do so because:

Accepted Answer

Homeowner's warranty will cover repairs to certain items like air conditioning or heating during the coverage period. The buyer often requests the seller to pay for this, but either party can pay.

Question 6

A type of foreclosure proceeding used in some states that is handled as a civil lawsuit and conducted entirely under the auspices of a court is called:

Accepted Answer

A type of foreclosure proceeding used in some states that is handled as a civil lawsuit and conducted entirely under the auspices of a court is called a judicial foreclosure.

Question 7

Which of the following is not part of loan servicing?

Accepted Answer

The company you make your loan payments to is "servicing" your loan by processing payments, sending statements, managing the escrow account, providing collection efforts on delinquent loans, making sure insurance and property taxes are made, handling pay-offs and assumptions, and other services.

Question 8

A period payment cap applies to:

Accepted Answer

The period payment cap applies to an adjustable-rate mortgage where the interest rate and the minimum payment amount fluctuate independently of one another. It is a limit on the amount that payments can increase or decrease during any one adjustment period.

Question 9

The commitment issued by a lender to borrower or other mortgage originator guaranteeing a specified interest rate for a specified period of time at a specific cost is called:

Accepted Answer

A rate lock is a commitment from a lender to the borrower or other mortgage originator guaranteeing a specific rate for a specific time at a specific cost.

Question 10

A fund set aside for replacement of common property in a condominium, PUD, or cooperative project, particularly that which has a short life expectancy, such as carpet or furniture is called:

Accepted Answer

The fund set aside for replacement of common property in a condominium, PUD or cooperative project is called a replacement reserve fund.

Question 11

The term "servicing" describes:

Accepted Answer

Servicing is the collection of mortgage payments from borrowers and related responsibilities of a loan servicer.

Question 12

A two- to-four family property:

Accepted Answer

A two-to-four family property consists of a structure that provides living space for two to four families and ownership is evidenced by a single deed.

Question 13

A home inspection is:

Accepted Answer

A home inspection is a thorough inspection by a professional that evaluates the structural and mechanical condition of the property. A satisfactory home inspection is often a contingency.

Quiz 2: Vocabulary