Question 1

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 2

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 3

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 4

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 5

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.

Question 6

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 7

The term "servicing" describes which of the following? Choose all that apply.

Accepted Answer

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

Quiz 2: Vocabulary