front 1 FICO | back 1 Developed software to create credit scores |
front 2 LTV | back 2 Percentage of a homebuyer’s income used to repay debt |
front 3 PITI | back 3 Homeowner’s expenses |
front 4 DTI | back 4 Percentage of the property’s value that the lender is willing to lend |
front 5 FHA | back 5 Government-sponsored loan program |
front 6 The costs of owning a home include principal, interest, taxes, and insurance. | back 6 true |
front 7 The payments on all debts—normally including long-term debt such as car payments, student loans, or other mortgages—should not exceed 36% of monthly income. | back 7 true |
front 8 Loan origination fee | back 8 A charge by the lender to cover the expenses involved in generating the loan |
front 9 Promissory note | back 9 A borrower’s written commitment to pay a debt |
front 10 Usury | back 10 Charging interest in excess of the maximum rate allowed by law |
front 11 Discount point | back 11 A charge to increase the lender’s yield (rate of return) on its investment |
front 12 Prepayment Penalty | back 12 A fee assessed against the unearned portion of the interest for any payments made ahead of schedule |
front 13 Lenders may charge prepayment penalties on mortgage loans insured or guaranteed by the federal government. | back 13 False |
front 14 The promissory note is called the note or financing instrument. | back 14 True |
front 15 Mortgage | back 15 If the borrower defaults, the lender must go through a formal foreclosure proceeding to obtain legal title. The borrower retains both legal and equitable title. |
front 16 Deed of trust | back 16 The lender has the right to immediate possession of and rents from the property if the borrower defaults The borrower gives legal title to a designated individual and retains equitable title. |
front 17 Beneficiary | back 17 Lender under a deed of trust |
front 18 Acceleration clause | back 18 Statement that allows lender to declare the entire debt due and payable immediately |
front 19 Trustor | back 19 Borrower under a deed of trust |
front 20 Assignment of Mortgage | back 20 Clause that allows the note to be sold to a third party |
front 21 Defeasance clause | back 21 Provision that requires lender to execute a satisfaction (release or discharge) when the note has been fully paid |
front 22 Under a deed of trust, the trustor retains equitable title. | back 22 True |
front 23 In a lien theory state, a mortgagor actually gives legal title to the mortgagee (or some other designated individual) and retains equitable title. | back 23 False |
front 24 Which mortgage loan appears to offer the best option for Molly? | back 24 Fixed-rate |
front 25 What factor could make the adjustable-rate mortgage (ARM) the better option? | back 25 If the interest rate went down, the payment on the ARM would go down as well. |
front 26 Reverse mortgage | back 26 For homeowners 62 or older to borrow against home equity |
front 27 ARM | back 27 Begins at one rate of interest and adjusts during loan term |
front 28 Amortized | back 28 Mortgagor pays the same amount each month with some going to principal and some to interest |
front 29 Straight | back 29 Interest-only loan |
front 30 Balloon | back 30 Final payment is larger than others |
front 31 GEM | back 31 Rapid-payoff mortgage |
front 32 A straight loan is also called a fully amortized loan. | back 32 False |
front 33 A balloon payment will be required in a partially amortized loan. | back 33 True |
front 34 Strict | back 34 A court-ordered deadline for payment of the defaulted debt passes with the debt unpaid, allowing the title to be awarded to the lender; no sale is required. |
front 35 Nonjudicial | back 35 The security instrument contains a power-of-sale clause. |
front 36 Judicial | back 36 The property may be ordered sold to the highest bidder following a court hearing |
front 37 Nonjudicial foreclosure procedures may be used when the security instrument contains a power-of-sale clause. | back 37 True |
front 38 Judicial foreclosure allows property to be sold without a court order after the mortgagee has given sufficient public notice. | back 38 False |
front 39 Broad Form | back 39 Collapse of the building Falling objects Damage to plumbing |
front 40 Basic Form | back 40 Damage from smoke Damage by aircraft Fire and lightning Vandalism and theft |
front 41 Federal Emergency Management Agency | back 41 Administers the flood program |
front 42 Congress | back 42 Prepared maps identifying flood-prone areas |
front 43 Army Corps of Engineers | back 43 Established the National Flood Insurance Program |
front 44 The MOST common homeowners insurance policy is called a broad form. | back 44 False |
front 45 The Federal Emergency Management Agency (FEMA) administers the National Flood Insurance Program. | back 45 True |
front 46 What type of foreclosure is sometimes called friendly foreclosure? | back 46 Deed in lieu of foreclosure |
front 47 Parties to lending agreements are referred to by different terms. Which of these refers to the same party? | back 47 Borrower = mortgagor |
front 48 A promissory note used as a debt instrument without any related collateral is called | back 48 an unsecured note. |
front 49 When a borrower defaults, a mortgage lender acquires full legal title to the property using | back 49 strict foreclosure. |
front 50 After a foreclosure sale, the borrower who has defaulted on the loan may seek to pay off the mortgage debt plus any accrued interest and costs under what right? | back 50 Statutory redemption |
front 51 A $2,400 term loan has a 10% annual interest rate. What is the monthly payment? | back 51 $20 |
front 52 A home is purchased using a fixed-rate, fully amortized mortgage loan. Which statement regarding this mortgage is TRUE? | back 52 Each mortgage payment amount is the same. |
front 53 In a mortgage or lien theory state, the mortgagor retains | back 53 both legal and equitable title. |
front 54 At closing, the buyer paid discount points totaling $6,187.50 on a loan of $225,000. How many points did the buyer pay? | back 54 2.75 |
front 55 A type of foreclosure that allows the property to be sold by court order is | back 55 judicial foreclosure. |
front 56 A prospective buyer needs to borrow money to buy a house. The buyer applies for and obtains a real estate loan from a mortgage company. Then the buyer signs a note and a mortgage. In this example, the mortgage company is | back 56 the mortgagee. |
front 57 The clause that appears in both the promissory note and the mortgage, and allows the lender to call the balance due and payable in full upon default, is known as | back 57 the acceleration clause. |
front 58 A promissory note | back 58 makes the borrower personally liable for the debt. |
front 59 The borrower of the note is called | back 59 payor. |
front 60 In one state, a mortgagee holds legal title to real property offered as collateral for a loan, and the mortgagor retains the rights of possession and use. If the borrower defaults, the lender is entitled to immediate possession and rents. This state can be BEST characterized as what kind of state? | back 60 Title theory |
front 61 Which characteristic of a fixed-rate home loan that is amortized according to the original payment schedule is TRUE? | back 61 The amount of interest to be paid is predetermined. |
front 62 Which of the following is TRUE about a note? | back 62 It is a negotiable instrument. |
front 63 A mortgagor is the one who | back 63 gives a promissory note and mortgage to the lender in exchange for a loan. |
front 64 The mortgage disclosure rules issued by the Consumer Financial Protection Bureau, which took effect in 2014, require a mortgage lender to do all of the following EXCEPT | back 64 require maximum insurance coverage by the borrower. |
front 65 A homeowner's equity in the property is | back 65 the difference between the property’s market value and the amount still owed on it. |
front 66 A borrower wants to obtain a loan that will allow regular payments of principal and interest for five years and then a final balloon payment to pay off the remaining principal balance. This type of loan is known as | back 66 a partially amortized loan. |
front 67 The amount of the loan as a percentage of the purchase price of a property is known as | back 67 loan-to-value ratio. |
front 68 Most adjustable-rate mortgages (ARMs) have two types of rate caps called | back 68 periodic and life of the loan. |
front 69 Which of the following allows a mortgagee to proceed to a foreclosure sale without going to court first? | back 69 Power of sale |
front 70 Lenders usually look at a loan applicant's percentage of | back 70 debt to income. |
front 71 As directed by the Dodd-Frank Act, new mortgage disclosure rules were issued in 2014 by | back 71 the Consumer Financial Protection Bureau. |
front 72 A lender uses which of the following to make a lending decision for a mortgage loan? | back 72 Borrower's debt-to-income ratio Borrower's credit score Borrower's credit report |
front 73 The database of consumer claims history available to insurance companies is the | back 73 Comprehensive Loss Underwriting Exchange. |
front 74 What is the term that refers to a lender charging an interest rate that is higher than that permitted by law? | back 74 Usury |
front 75 If the lender wants to call the entire note due and payable if the borrower stops making payments, the security instrument must include | back 75 an acceleration clause. |