Financing
A seasoned loan is:
(a) loan with a payment record.
(b) long-term loan.
(c) first encumbrance.
(d) None of the above
2. Once the debt secured by a deed of trust has been paid in full to the lender, the trustee must give a deed of reconveyance to the trustor:
(a) within 60 days of the trustor's demand.
(b) within 30 days of the trustor's demand.
(c) within 21 days of the trustor's demand.
(d) immediately.
3. Which of the following describes the term "beneficiary statement?"
(a) A statement of the unpaid balance of a loan.
(b) A statement designating the one who will receive the property if the borrower dies.
(c) An itemization of the amount paid to the policy holder for insurance purposes.
(d) A description of the beneficial features of an assumable loan.
4. By law, a monthly payment on a mortgage loan is considered late when it is received by the lender:
(a) 3 days after the due date.
(b) 5 days after the due date.
(c) 10 days after the due date.
(d) more than 10 days after the due date.
5. Which of the following pairs of words are synonymous (the same)?
(a) take-out loan - interim loan
(b) construction loan - interim loan
(c) construction loan - take-out loan
(d) take-out loan - progressive payment loan
6. If an owner is selling a home and won't take anything less than $50,000 and the buyer gets a VA loan for $47,500 what can the buyer do?
(a) Buyer can't get the home because VA loans can
(b) The buyer can get the home as long as the seller accepts a second mortgage for $2,500.
(c) Buyer can get the home if seller reduces price to $47,500.
(d) Buyer can get the home if he/she puts down $2,500 as a down payment.
7. Broker Jones uses ABC Escrow for every transaction because of an arrangement with ABC Escrow that the company gives Broker Jones $40 for every transaction. This arrangement violates:
(a) FIRPTA
(b) RESPA
(c) TILA
(d) Regulation Z
8. Proceeds from a trustee's sale go to the:
(a) costs of sale first, then first lien holder, then junior lien holders with the balance to the trustor.
(b) first lien holder with the balance to junior lien holders.
(c) costs of sale first with the balance to the beneficiary.
(d) None of the above
9. From which of the following could you most likely secure the greatest amount of money for the longest period of time?
(a) private lender
(b) insurance company
(c) savings and loan
(d) commercial bank
10. An adjustable-rate mortgage loan is tied to an interest rate called the:
(a) margin.
(b) index rate.
(c) cap rate.
(d) max rate.
11. From the lender's perspective, a large down payment:
(a) reduces the possibility of default.
(b) makes it more likely that the property will be properly maintained.
(c) streamlines the loan qualification process.
(d) All of the above
12. A broker negotiated a loan for a buyer. He will need to prepare a:
(a) Mortgage Loan Disclosure Statement.
(b) Real Estate Transfer Disclosure Statement.
(c) Good Faith Estimate.
(d) Natural Hazard Disclosure Statement.
13. Which of the following gives the most protection to a property owner in default?
(a) mortgage
(b) trust deed
(c) second trust deed
(d) land contract
14. A buyer has a monthly gross income of $5,000; total mortgage payments of $1,171; and total long-term debts of $325 per month. The front-end ratio is:
(a) 23%
(b) 28%
(c) 30%
(d) 36%
15. A release clause associated with a blanket mortgage is a provision which:
(a) causes the first loan to become subordinate to junior loans.
(b) bridges the interim financing.
(c) releases a portion of property covered by the blanket encumbrance when certain conditions are met.
(d) All of the above
16. When a lender "calls" a loan, he/she:
(a) accelerates all sums owing.
(b) liquidates the obligation by amortization.
(c) seizes the property securing the loan by court action.
(d) calls upon the maker to pay delinquent installments.
17. Most real estate loans charge the following kind of interest rate:
(a) simple.
(b) compound.
(c) usurious.
(d) Any of the above.
19. Upon full repayment of a Cal-Vet loan, the borrower receives a:
(a) new loan commitment.
(b) reconveyance deed.
(c) grant deed.
(d) quitclaim deed.
20. Mutual Mortgage Insurance is paid for by:
(a) the buyer under an FHA loan.
(b) the buyer under a VA loan.
(c) the buyer under a Cal-Vet loan.
(d) All of the above
21. A disadvantage for the buyer under a Land Contract is:
(a) If the seller dies during the contract term, litigation may be necessary to obtain clear title.
(b) Financial institutions consider land contracts unsatisfactory collateral.
(c) Transfer of vendee's interest may be restricted by covenants.
(d) All of the above
22. The primary activities of FNMA in the secondary market involves:
(a) FHA loans only.
(b) all types of real estate loans.
(c) government insured and guaranteed loans.
(d) second mortgages and trust deeds up to $20,000.
23. The term "Secondary Market" as used in financing, refers to:
(a) second loans.
(b) transferring of loans by mortgagors.
(c) transferring of loans by mortgagees.
(d) transferring of loans by sellers.
24. A mortgage is a:
(a) loan secured by collateral of real property.
(b) loan secured by the credit rating of the borrower only.
(c) loan without collateral to secure the loan.
(d) three party instrument with power of sale.
25. Mortgage loan brokers are regulated primarily by:
(a) city laws and regulations.
(b) the Mortgage Loan Brokers Association.
(c) federal regulations.
(d) state laws.
26. The buyer under the terms of a land contract is referred to as:
(a) vendee.
(b) purchaser.
(c) equitable owner.
(d) All of the above.
28. In an adjustable-rate loan, the amount added to the index rate that represents the lender's cost of doing business is called the:
(a) marginal rate.
(b) margin.
(c) discount.
(d) overage.
29. A commercial bank agreed to loan George $180,000 for a one year term, but required George to maintain a savings account of $180,000 at all times during the term of the loan. This provision is known as:
(a) risk control.
(b) compensation balance.
(c) mortgage insurance.
(d) security deposit.
30. The source of money for most home loans by institutional lenders is:
(a) bonds.
(b) business profits.
(c) government funds.
(d) individual and family savings.
31. Which of the following is TRUE concerning promissory notes?
(a) They are used as security for trust deeds.
(b) They are recorded at the county recorder's office.
(c) They are always used when real estate is sold.
(d) They are the evidence of the debt.
32. The first step a mortgagee would take to foreclose on a mortgage would be to:
(a) initiate court action.
(b) publish a notice of default.
(c) hold a public auction.
(d) pay off the loan.
33. Why would the payor consider a straight note over an amortized note?
(a) To collect maximum interest
(b) To make minimum monthly payments
(c) To put working capital back into his/her business
(d) None of the above
34. Mortgages and deeds of trust differ in every respect EXCEPT:
(a) security.
(b) parties.
(c) statute of limitations.
(d) title.
35. Which of the following lenders invest more heavily in single-family home loans?
(a) savings and loan associations
(b) commercial banks
(c) insurance companies
(d) individuals
36. Which of the following is TRUE with regard to a "beneficiary statement?"
(a) The lender may charge up to $60 for preparing the statement.
(b) Upon the request of the borrower, the beneficiary must furnish the statement within 21 days.
(c) Failure to provide the statement in time can result in $300 damages.
(d) All of the above
37. All of the following are characteristics of FHA loans EXCEPT:
(a) for housing only
(b) guarantees loans
(c) insures loans
(d) high loan-to-value ratio
39. A subdivider and developer purchased considerable acreage and now plan to construct a tract of 50 homes. In arranging the financing for the new construction, the lender has agreed to advance part of the funds immediately and will release a set of additional money as each home is completed. The funds that will be forthcoming as construction progresses are known as:
(a) obligatory advances.
(b) reconveyance funds.
(c) release monies.
(d) open-end mortgage payments.
40. A contractor obtained a construction loan and the loan funds are to be released in a series of progressive payments. Most lenders disburse the last payment when the:
(a) building is completed.
(b) Notice of Completion is filed.
(c) buyer approves the construction.
(d) period to file a lien has expired.
41. Which of the following laws applies to federally related transactions?
(a) RESPA
(b) Holden Act
(c) ECOA
(d) Truth-in-Lending Act
42. What distinguishes VA loans from FHA and other loans?
(a) no points
(b) maximum loan of $100,000
(c) down payment determined by CRV
(d) no down payment
43. Commercial banks are interested in liquidity and marketability of their loans. Which of the following loans would they prefer?
(a) secondary money market
(b) short-term
(c) long-term
(d) home improvement
44. The right of rescission under truth-in-lending would apply to a(n):
(a) home equity loan.
(b) agricultural loan.
(c) purchase-money loan.
(d) None of the above
45. Which of the following is a general difference between individual and institutional lenders?
(a) Individual lenders make larger loans than institutional lenders.
(b) Individudal lenders charge lower interest rates.
(c) Individual lenders give loans for shorter terms.
(d) Individual lenders do not undertake foreclosure proceedings.
46. Under the Truth-in-Lending Act (Regulation Z), which of the following need NOT be included in the total "finance charge" required as part of the disclosure statement?
(a) commissions or finder's fees to lenders
(b) cost of a credit report and appraisal fee
(c) premium for FHA life insurance
(d) loan origination fee
47. Which of these pairs of terms have the closest relationship to each other:
(a) Take-out/construction loans
(b) Construction/interim loans
(c) Take-out/interim loans
(d) Wrap-around/construction loans
48. From a financing standpoint, the relationship of the parties to a Land Contract would be closest to:
(a) landlord/tenant.
(b) grantor/grantee.
(c) beneficiary/trustor.
(d) vendor/vendee.
49. A prepayment penalty clause found in a contract is often:
(a) written into the contract for the trustee's protection.
(b) a charge to the buyer if he/she is late in making a monthly payment.
(c) for the benefit of the trustor.
(d) a penalty the buyer is charged for paying the contract off early.
50. Why was HUD, Section 8, created?
(a) For minorities to obtain housing
(b) For Federal employees to obtain housing
(c) To create government jobs
(d) To allow affordable housing for all United States citizens
51. When the Federal Reserve Board wants to tighten the money supply, it would:
(a) raise the amount of reserves required for member banks.
(b) raise the discount rate for member banks.
(c) sell government bonds on the open market.
(d) All of the above
52. A promissory note that provides for payment of interest only during the term of the note is a(n):
(a) straight note.
(b) installment note.
(c) amortized note.
(d) non-negotiable note.
53. A veteran is eligible to use either the VA program or the DVA program in purchasing his owner occupied house. In which of these programs would the governmental body retain legal title to the house?
(a) VA
(b) DVA
(d) The VA and DVA both retain legal title
54. Default in a mortgage may be caused by:
(a) failure to pay taxes.
(b) failure to maintain insurance.
(c) failure to make payments.
(d) All of the above
55. A low loan-to-value ratio indicates:
(a) use of government financing.
(b) a low down payment.
(c) a large down payment.
(d) the presence of government insurance.
56. Mr. and Mrs. Lee sell their house and agree to carry back a second trust deed from the buyer to help complete the financing for the sale. This is most likely due to:
(a) The first trust deed is a VA loan.
(b) The money market is tight.
(c) The buyer has no cash.
(d) The seller doesn't need the immediate cash.
57. A buyer has monthly gross income of $5,000; total mortgage payments of $1,171; and total long-term debts of $325 per month. The back-end ratio is:
(a) 23%
(b) 28%
(c) 30%
(d) 36%
58. The FHA was created primarily to provide:
(a) a primary market for home mortgages.
(b) insurance for home loans from qualified lenders.
(c) insurance for depositors in banks.
(d) a flow of money and credit.
59. A package mortgage is a loan in which:
(a) more than one parcel of land in a subdivision is covered.
(b) the first and second trust deeds are included in one instrument.
(c) personal property is included in the real estate loan.
(d) additional financing is secured from a lender at a later date.
60. The seller (vendor) under a real property sales contract CANNOT:
(a) sell his or her interest.
(b) encumber the property.
(c) use something other than a legal description.
(d) All of the above
61. The Real Estate Settlement Procedures Act provides for violation penalties of:
(a) a fine of up to $10,000.
(b) up to one year in jail.
(c) loss of real estate license.
(d) both (a) and (b) .
62. A deficiency judgment is possible:
(a) where foreclosure is by sale.
(b) where foreclosure is by court action.
(c) on a purchase-money mortgage.
(d) All of the above
64. The government actually lends the money for a(n):
(a) FHA loan.
(b) Cal-Vet loan.
(c) VA loan.
(d) All of the above
65. Buyer B has purchased under a contract of sale from Seller A. "A" is one month behind in his mortgage payments on the property which is the same amount that "B" pays each month to "A". With regard to the current payment "B" makes to "A":
(a) it must be immediately applied to A
(b) it need not be applied unless A is three months delinquent.
(c) "A" should not have sold his property with an outstanding loan balance.
(d) a buyer on a land contract should check on encumbrances before entering into a contract of sale.
67. A man bought a small apartment building. He put a down payment on the property and financed the rest with a loan. One year later the property was appraised. His equity had increased 300%. This is an example of:
(a) leverage.
(b) inflation.
(c) anticipation.
(d) regression.
68. A first trust deed can be distinguished from a second trust deed by:
(a) the way the documents look.
(b) the specifics of the note.
(c) the time and date of recording.
(d) None of the above
69. All of the following are considered advantages of FHA financing EXCEPT:
(a) low down payment.
(b) long-term loans with lower payments.
(c) easy to qualify for.
(d) buyer is protected with FHA insurance.
70. Who enforces the Truth-in-Lending Act?
(a) local government
(b) state governor
(c) Federal Trade Commission
(d) Fair Housing Administration
71. What loan has negative amortization for the first few years?
(a) Interest only
(b) Graduated Payment Mortgage
(c) FHA
(d) VA
72. For FHA purposes, acquisition costs include nonrecurring closing expenses. Which of the following would NOT be included:
(a) Discount points
(b) FHA appraisal fee
(c) Credit report fee
(d) Impounds for property taxes
73. Title I FHA loans are for:
(a) purchases of homes only.
(b) property improvement loans.
(c) purchases of multiple units.
(d) None of the above
74. A legal act to bring about a trust deed sale can be:
(a) judicial.
(b) judicial or trustee.
(c) trustee.
(d) public taking.
75. Which of the following best describes "Cash-On-Cash" return?
(a) Annual dollar income
(b) Total amount of investment
(c) Total amount of distributions
(d) Income earned on investment
76. When the FED takes measures to implement a "tight money" market, the net effect usually results in an increase in the:
(a) loan funds for new home construction.
(b) use of second trust deeds in real estate financing.
(c) sales volume of single family residence.
(d) use of new first trust deed financing in real estate transactions.
77. The conscious charging by a private lender of more than the maximum amount of interest allowed by law is known as:
(a) penury.
(b) leverage.
(c) usury.
(d) assemblage.
78. Prepayments is permissible on a Land Contract, however, the seller may prohibit prepayment for up to:
(a) 12 months following the sale.
(b) 24 months following the sale.
(c) 36 months following the sale.
(d) five years following the sale.
79. Who funds private mortgage companies?
(a) Government National Mortgage Association
(b) Federal Deposit Insurance Corporation
(c) Private premiums of insurance and pools of insurance policies
(d) Federal Home Loan Mortgage Corporation
80. A purchaser of a home five years ago is now interested in securing an FHA loan. A salesperson would most likely introduce the homeowner to:
(a) a conventional bank or savings & loan.
(b) an appraiser.
(c) the FHA.
(d) the Federal Home Loan Bank.
81. Who would most likley pay a premium for mutual mortgage insurance?
(a) The homeowner who assures an FHA loan.
(b) A buyer with a Cal-Vet loan.
(c) A home buyer with a conventional loan from a life insurance company.
(d) A home buyer who wants to insure real and personal property.
82. Which of the following statements is most nearly true concerning the activities of mortgage companies?
(a) They are organized under federal laws and thus are not subject to state regulations.
(b) They never service the loans they create.
(c) They prefer negotiating loans which are saleable in the secondary market.
(d) They are not active in the field of government insured loans.
83. If there has not been an agreement to the contrary, all of the following would qualify as a negotiable instrument EXCEPT:
(a) installment note
(b) personal check
(c) mortgage or trust deed
(d) bank draft
84. Which of the following hold title under a Cal-Vet loan?
(a) trustor
(b) buyer
(c) Veterans Administration
(d) State of California
85. The nominal rate of interest is the:
(a) legal rate.
(b) rate set forth in the note.
(c) maximum rate allowed by law.
(d) discount rate.
86. Which of the following is the most commonly used credit rating system?
(a) DACO
(b) RESPA
(c) FICO
(d) FDIC
87. Deregulation of financial institutions most nearly means:
(a) government controls no longer apply to financial institutions.
(b) the amount of interest paid on savings accounts is no longer regulated.
(c) financial institutions can no longer respond to market conditions.
(d) examining the enforcement responsibilities of regulators have been relaxed.
88. When lenders use the term "mortgage yield," they are describing:
(a) an increase in the value of a property which has a mortgage.
(b) the effective interest return obtained from a first trust deed by an investor.
(c) all of the money received by a lender after deducting closing costs and loan fees.
(d) what the lender receives when a mortgage is paid off.
89. The Irwin's made an offer to purchase the Grey's property. As part of the offer, the Irwin's agreed to take title "subject to" an existing VA loan which the Greys obtained when they purchased the property in the approximate amount of $39,000. If the Greys sell to the Irwins under these conditions, which of the following is true concerning liability for a loss suffered by the government after a foreclosure on the VA loan:
(a) The Irwins will be primarily liable.
(b) The Greys and Irwins will be equally liable.
(c) The Greys will be primarily liable.
(d) Neither couple is liable because the Irwins took title "subject to" the existing loan.
90. The beneficiary of a second trust deed sold his interest in the property for less than the unpaid balance of the note. This action is most commonly described as:
(a) leveraging.
(b) liquidating.
(c) discounting.
(d) subrogating.
91. Which of the following acts by the trustor requires the beneficiary's consent?
(a) establishing land use restrictions
(b) creating an easement on the property
(c) settle a property line dispute
(d) All of the above
92. How much is the borrower paying if a lender charges 3 points on a $100,000 loan?
(a) $1,000
(b) $3,000
(c) $6,000
(d) $12,000
93. When a loan is fully amortized by equal monthly payments of principal and interest, the amount applied to principal:
(a) and interest remain constant.
(b) decreases while the interest payment increases.
(c) increases while the interest payment decreases.
(d) increases by a constant amount.
94. The trustor under a trust deed is the party who:
(a) signs the note as maker.
(b) holds the title to the property in trust.
(c) acknowledges the note for recording.
(d) lends the money.
95. Which of the following is the purpose of the Federal Truth-In-Lending Act?
(a) To limit interest rates
(b) To regulate fees charged by lenders
(c) To assure a meaningful disclosure of credit terms
(d) All of the above
96. An adjustable-rate loan has an index that has risen from 5% to 10% with a margin of 2%, but the lender is still charging only 11% interest on the loan. This lower interest rate is most likey due to:
(a) negative amortization.
(b) usury.
(c) the cap rate.
(d) Regulation Z.
97. Why would a lender be interested in making a government-insured or government-guaranteed loan over a traditional conventional loan?
(a) faster repayment
(b) lower risk
(c) easier qualification
(d) faster foreclosure
98. In purchasing a home, the purchaser generally gives a note secured by a first deed of trust to a lending institution. In addition, he may give the seller cash and a note secured by a second deed of trust on the property. A "request for notice" would be filed for the benefit of the:
(a) mortgagor.
(b) holder of the second.
(c) trustor.
(d) holder of the first.
99. If a broker's advertisement contains a number of "triggering terms" about how the sale could be financed, it must also include:
(a) certain prescribed disclosures related to the cost of credit.
(b) the broker
(c) the lender's fee as a percentage of the loan.
(d) at least two competitive loan quotes.
100. The instrument used to secure a loan on personal property is called a:
(a) bill of sale.
(b) trust deed.
(c) security agreement.
(d) bill of transfer.
101. Mortgages and trust deeds are both considered:
(a) three-party documents.
(b) real property.
(c) personal property.
(d) All of the above
102. An insurance company is LEAST LIKELY to make a loan on a(n):
(a) shopping center.
(b) apartment complex.
(c) factory building.
(d) older home.
103. The Gonzales family wanted to purchase a property and assume the seller's VA loan, "subject to". Which of the following is correct?
(a) The seller will be relieved of all liability for the loan.
(b) Both the buyer and seller will be liable for the loan.
(c) The seller will remain liable for the loan.
(d) None of the above.
104. Foreclosure by sale would NOT involve a:
(a) publication period.
(b) deed of reconveyance.
(c) notice of default.
(d) Any of the above
105. Under which of the following types of financing is the borrower required to purchase term life insurance?
(a) conventional
(b) VA
(c) FHA
(d) Cal-Vet
106. A GPAM is what kind of loan:
(a) Adjustable rate mortgage
(b) Amortized loan
(c) Straight loan
(d) Partial loan
107. A homeowner would be least likely to obtain a $50,000 home improvement loan from a(n):
(a) savings and loan association.
(b) credit union.
(c) commercial bank.
(d) insurance company.
108. A veteran may purchase a home under Cal Vet by a:
(a) contract of sale.
(b) trust deed.
(c) mortgage.
(d) Any of the above
109. All of the following are characteristics of VA loans EXCEPT:
(a) used for housing or farm property
(b) lower interest rates than conventional loans
(c) okay to use for the purchase of rental units
(d) guaranteed by the VA
110. The ratio of a loan's principal to the property's appraised value is called the:
(a) income-to-value ratio.
(b) loan-to-value ratio.
(c) loan-to-appraisal ratio.
(d) payment-to-loan ratio.
111. The purchasing power of a dollar is measured:
(a) by reference to price indexes.
(b) by the interest paid on savings.
(c) by the Federal Reserve Board.
(d) by reference to the local real estate market.
112. Mr. Johnson agrees to assume a trust deed from Mr. Jones. Which of the following is correct?
(a) Mr. Johnson is solely liable.
(b) Mr. Johnson is primarily liable and Mr. Jones would remain secondary liable.
(c) Mr. Jones would remain primarily liable.
(d) Mr. Johnson and Mr. Jones would agree to liability.
113. A trust deed foreclosed as a mortgage would be foreclosed by:
(a) municipal court.
(b) superior court.
(c) court of appeals.
(d) None of the above.
114. The functions of Ginnie Mae include all of the following EXCEPT:
(a) guarantee for mortgage-backed securities.
(b) special programs for low-interest home loans.
(c) liquidation of government owned mortgages.
(d) insuring home loans.
115. Which of the following would NOT be illustrative of an institutional lender?
(a) insurance company
(b) savings and loan
(c) commercial bank
(d) mortgage company
116. At the close of a Land Contract, the vendee is entitled to:
(a) legal title.
(b) equitable title.
(c) naked title.
(d) nothing.
117. Upon receiving notification of default on the first trust deed, the holder of a second trust deed would most likely:
(a) wait until the sale to buy the property at a bargain price.
(b) redeem the first mortgage and foreclose under the second.
(c) foreclose on the first to eliminate the second.
(d) None of the above
118. The type of mortgage loan which permits borrowing additional funds at a later date is called a(n):
(a) equitable mortgage.
(b) junior mortgage.
(c) open-end mortgage.
(d) extendible mortgage.
119. A construction loan would most likely be made by a(n):
(a) bank.
(b) insurance company.
(c) private individual.
(d) mortgage broker.
120. An adjustable-rate loan stabilizes at an interest rate above the loan index. This increase above the index rate is known as the:
(a) cap.
(b) overage.
(c) margin.
(d) annual percentage rate.
121. The Federal National Mortgage Association (FNMA) was primarily created to:
(a) increase the availability of secondary financing.
(b) standardize construction guidelines.
(c) serve as a secondary mortgage market.
(d) subsidize low income housing.
122. A loan to be completely repaid, principal and interest, by a series of regular equal installments is a:
(a) straight note.
(b) balloon payment loan.
(c) fully amortized note.
(d) variable rate mortgage loan.
123. The Truth-in-Lending Act is part of the:
(a) Business and Professions Code.
(b) Federal Consumer Protection Act.
(c) Uniform Commercial Code.
(d) None of the above.
124. An assignment of a rent's clause in a trust deed benefits the:
(a) trustor.
(b) trustee.
(c) beneficiary.
(d) buyer.
125. During the one-year redemption period of a mortgagor in default:
(a) the mortgagee can sue for rent.
(b) the mortgagee is not entitled to possession.
(c) both (a) and (b)
(d) neither (a) nor (b)
126. The relationship of the trustor to the beneficiary in a deed of trust is comparable to:
(a) grantor to grantee
(b) lessor to lessee
(c) optionor to optionee
(d) borrower to lender
127. A document used to transfer legal title from the trustee back to the borrower (trustor) after the debt has been repaid is called a:
(a) quitclaim deed.
(b) deed of reconveyance.
(c) payoff deed.
(d) deed of confirmation.
128. Under the "power of sale" clause in a trust deed, the authority to sell is placed with the:
(a) County Sheriff by court order.
(b) clerk of the County Court by court order.
(c) trustee by trustor.
(d) beneficiary by trustee.
129. A subordination clause would be found in a:
(a) grant deed.
(b) quitclaim deed.
(c) trust deed.
(d) None of the above.
130. Which of the following would be security for a note and deed of trust?
(a) credit of borrower
(b) value of property
(c) stability of the money market
(d) All of the above
131. Funds for Cal-Vet loans come from:
(a) state bonds.
(b) property taxes.
(c) surplus funds.
(d) federal grants.
132. The term mortgage warehousing refers to:
(a) long-term loans.
(b) selling loans.
(c) low interest rate loans.
(d) unsecured loans.
133. Who would be responsible for paying the 1% origination fee on an FHA loan?
(a) Escrow officer
(b) The seller
(c) The buyer
(d) The lender
134. If the payments of the buyer under a Land Contract include taxes and insurance, the seller must:
(a) pay the insurance company and the IRS on behalf of the buyer.
(b) hold this money in a trust account for this purpose.
(c) hold this money in his or her personal checking account.
(d) cash the buyer's check within three working days of receipt.
135. The clause in a mortgage note which permits the lender to declare the unpaid balance due and payable upon default by the borrower is called a(n):
(a) defeasance clause.
(b) acceleration clause.
(c) due on sale clause.
(d) None of the above
136. During periods of tight money:
(a) interest rates go down.
(b) interest rates stay the same.
(c) interest rates go up.
(d) None of the above
137. An agent places an ad in the newspaper saying that he will give $50 to anyone who sells or buys a property through him. Which of the following is TRUE?
(a) The broker cannot give $50 to the buyer or seller.
(b) The broker cannot give $50 to the buyer only.
(c) This would violate the real estate law concerning compensation of unlicensed persons performing real estate acts.
(d) The agent can give $50 to the buyer or seller.
138. Which of the following would most likely charge the highest interest rate?
(a) commercial banks
(b) savings and loan associations
(c) insurance companies
(d) individual lenders for cash
139. The practice of charging discount points on FHA insured loans is because the lender desires to:
(a) equalize the yield on FHA loans to the yield on conventional loans.
(b) create a competitive environment between FHA loans and conventional loans.
(c) close the gap between FHA loans and conventional loans on the secondary market.
(d) all of the above.
140. When comparing mortgage bankers and mortgage brokers, which of the following is true?
(a) Both deal exclusively in the primary mortgage market
(b) Mortgage bankers usually lend their own funds while mortgage brokers arrange loans
(c) Both are corporations
(d) All of the above
141. Regarding a promissory note:
(a) a promissory note secures the deed of trust.
(b) the deed of trust secures the promissory note.
(c) the promissory note is not part of the deed of trust.
(d) the grant deed secures the promissory note.
142. If a real estate licensee sells a real property sales contract for a seller (vendor), the licensee is responsible for making sure the contract is recorded:
(a) immediately.
(b) as soon as practical.
(c) within 10 working days.
(d) within one year.
143. On a fully amortized loan, principal _________ as interest _________.
(a) increases, increases
(b) decreases, increases
(c) decreases, decreases
(d) increases, decreases
144. Which of the following would not require a down payment?
(a) Cal Vet
(b) FHA
(c) VA
(d) Conventional
145. The owner of a property encumbered with a first and second trust deed wants to refinance the first trust deed. What should the second trust deed contain?
(a) a subordination clause
(b) an exculpatory clause
(c) a release clause
(d) an acceleration clause
146. A request for notice of default would be of most help to the:
(a) beneficiary of a second trust deed.
(b) trustor.
(c) beneficiary of a first trust deed.
(d) trustee.
147. Equity financing refers to:
(a) purchase-money loans.
(b) financing that is fair.
(c) cash purchases.
(d) borrowing on the difference between property value and liens.
148. Total foreclosure time under a trust deed most nearly approaches:
(a) one year.
(b) 18 months.
(c) three months.
(d) four months.
149. Which of the following would have the least impact on evaluating a prospective borrower's income for a loan?
(a) his spouse
(b) stock investments
(c) overtime earnings
(d) salary from second job
150. Which of the following would contribute the most in creating a period of inflation?
(a) Declining dollar value
(b) Appreciation
(c) Lack of investment
(d) Rising rent costs
152. A loan that requires a balloon payment at its maturity is called a(n):
(a) partially amortized loan.
(b) fully amortized loan.
(c) amortized loan.
(d) hard money loan.
153. To pledge a thing as security for an obligation without surrendering possession of it refers to:
(a) hypothecation
(b) alienation
(c) transformation
(d) substitution
155. Why are housing prices so heavily weighted when calculating the Consumer Price Index?
(a) Increasing down payment amounts contribute significantly to inflation.
(b) The most significant portion of the CPI is building costs.
(c) Housing prices and the associated interest costs form the bulk of most homeowner.
(d) All of the above.
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