Principles of Real Estate Ch.8 (Quiz 8)

A real estate promissory note that reads "$50,000 principal payable interest only monthly at a rate of 8%" is what type of promissory note?

1) straight

2) installment

3) principal and interest

4) accommodation

1) straight

A real estate promissory note reads "$557.50 per month for 239 payments, then a final monthly payment of $2,011.19." This is an example of a/an:

1) balloon payment

2) alienation payment

3) prepayment

4) amortized payment

1) balloon payment

Under a trust deed (deed of trust) the:

1) trustor deeds to trustee

2) trustor deeds to the beneficiary

3) trustee deeds to trustor

4) trustee deeds to beneficiary

1) trustor deeds to trustee

An enforceable due-on-sale clause is correctly called a/an:

1) alienation clause

2) acceleration clause

3) wrap around clause

4) prepay clause

1) alienation clause

A negative amortized ARM means:

1) all of these

2) the unpaid interest is added to the principal.

3) the payments may not cover the annual interest.

4) it can cause some problems in later years.

1) all of these

Late charges on a loan:

1) may not exceed five dollars or 10 percent of the principal and interest part of an installment payment, whichever is greater

2) added to the balance of the loan

3) cannot legally be charged

4) are charged at a standard $50.00 per month

1) may not exceed five dollars or 10 percent of the principal and interest part of an installment payment, whichever is greater

A type of financing instrument in which the owner (vendor) retains the legal title until the buyer (vendee) fulfills the terms of the purchase contract:

1) installment sales contract

2) lease contract

3) wraparound contract

4) junior lien contract

1) installment sales contract

Under the Trustee's Sale procedure, after a Notice of Default has been recorded, a borrower has how long to reinstate by making up past due payments, penalties, late charges, and trustee expenses?

1) 5 days prior to trustee's sale date

2) 90 days

3) 3 months

4) 1 year

1) 5 days prior to trustee's sale date

The Equal Credit Opportunity Act requires a lender to:

1) not discriminate on the basis of race, creed, color, sex, origin, plus other protected categories

2) use a HUD approved uniform closing statement

3) disclose all closing costs

4) quote interest rates as annual percentage rates (APR)

1) not discriminate on the basis of race, creed, color, sex, origin, plus other protected categories

The successful bidder at a Trustee's Sale (foreclosure) receives what type of deed?

1) trustee’s

2) grant

3) quitclaim

4) sheriff’s

1) trustee’s

If a real estate loan is paid off in advance of the due date, some lenders are legally allowed to charge a penalty. This is called what type of penalty?

1) prepayment

2) balloon

3) alienation

4) acceleration

1) prepayment

A lender foreclosed on a California home that had a VA loan. The proceeds from the sale were not enough to cover the outstanding loan amount. Which of the following statements are true?

1) The lender can sue for a deficiency judgment

2) The lender cannot sue because California is an anti-deficiency judgment state.

3) The lender can sue the seller who sold the home to the veteran.

4) The lender takes the loss and cannot do anything about it.

1) The lender can sue for a deficiency judgment

The Real Property Loan Law does not apply to first loans of $30,000 or more and second deed of trust loans of:

1) $20,000 or more

2) $19,500 or more

3) $17,500 or more

4) $5,000 or more

1) $20,000 or more

RESPA stands for:

1) Real Estate Settlement Procedures Act

2) Real Estate Salesperson Association

3) Real Estate Syndication Planning Act

4) Real Estate Settlement Program Act

1) Real Estate Settlement Procedures Act

Which of the following regarding a Trustee's Sale is false?

1) after the sale, the dispossessed owner has a one-year right of redemption

2) the sale must be advertised in a newspaper of general circulation in the area

3) the sale must be held in a public place

4) the beneficiary doing the foreclosing is allowed to submit the loan balance and foreclosure costs instead of cash

1) after the sale, the dispossessed owner has a one-year right of redemption

An owner sells and the buyer takes over the existing loan. To relieve the seller of primary liability, the buyer must:

1) assume the note and trust deed

2) take title subject to the note and trust deed

3) take title contingent upon the note and trust deed

4) sign a non-recourse agreement

1) assume the note and trust deed

An annual percentage rate (APR):

1) is not an interest rate but rather a percentage rate that reflects the effective interest rate on the loan.

2) is an interest rate that includes tax service fees.

3) is not an interest rate; it is a fee for lending.

4) is an interest rate that only applies to refinancing.

1) is not an interest rate but rather a percentage rate that reflects the effective interest rate on the loan.

In a trustee's sale, the proceeds of the sale were sufficient to pay the demands of the first and second trust deed holders, foreclosure costs, and provide a small cash surplus. What is the priority schedule for the distribution of the cash proceeds?

1) first trust deed; second trust deed; foreclosure costs; trustor

2) second trust deed; first trust deed; foreclosure costs; trustor

3) trustor; first trust deed; second trust deed; foreclosure costs

4) foreclosure costs; trustor; first trust deed; second trust deed

$300,000 loan at 8% payable $2,000 per month is what type of note?

1) straight

2) installment

3) wraparound

4) amortized

If a broker negotiated a third trust deed for $12,000 payable in five semi-annual installments, the maximum rate of commission allowed by the Mortgage Loan Brokerage Law would be:

1) 10%

2) 15%

3) 5%

4) no rate is established for third trust deeds

In an ARM loan, the distance between the borrower's rate and the index is called the:

1) margin

2) adjustmnet

3) cap

4) teaser

1) margin

A copy of a Mortgage Loan Disclosure Statement prepared by the broker and signed by the borrower must be retained by the broker for at least:

1) 4 years

2) 5 years

3) 3 years

4) 2 years

A clause in a trust deed that states that the lender's rights shall become secondary to a new trust deed is called:

1) a subordination clause

2) an alienation clause

3) a submortgage

4) an escalation clause

1) a subordination clause

Under the Real Property Loan Law, the maximum amount a borrower can pay for closing costs, excluding commission, regardless of the size of the loan, is:

1) $700

2) $900

3) $390

4) 5%

1) $700

Real estate advertisements must comply with:

1) Reg Z

2) APR p. 207 Annual Percentage Rate is an effective interest rate on the loan.

3) GPM p. 198 Graduated Payment Mortgage is a type of loan.

4) ECOA p. 207 Equal Credit Opportunity Act prohibits lenders from discriminating.

3) GPM p. 198 Graduated Payment Mortgage is a type of loan.

Which of the following words expresses a meaning most completely opposite to the term "alienation"?

1) acquisition

2) amortization

3) ad valorem

4) acceleration

1) acquisition

For loans that under the California usury law, the maximum interest rate is:

1) 10% or 5% above the Federal Reserve Discount Rate, whichever is greater

2) 5% above the Federal Funds Rate

3) 10% or 5% above the Federal Reserve Discount Rate, whichever is lesser

4) 10% above the Prime Rate

1) 10% or 5% above the Federal Reserve Discount Rate, whichever is greater

The loan-to-value ratio on a mortgage is defined as the:

1) loan amount as a percentage of appraised value

2) monthly payments as a percentage of the face amount of the loan

3) loan amount as a percentage of sales price

4) loan amount as a percentage of assessed value

1) loan amount as a percentage of appraised value

A property is usually appraised in what phase of the financing process?

1) analysis

2) application

3) processing

4) closing

3) processing

Any loan payment twice as large as a regular payment is called a:

1) balloon

2) wrap

3) teaser

4) cap

1) balloon