Exam 9: Real Estate Finance: The Laws and Contracts

When a borrower defaults on the payment requirements of a loan,there are several options that the lender has at its disposal.When the lender allows the borrower simply to convey the property to the lender rather than pursuing a court supervised process of terminating all of the borrower's claims of ownership of the property,this is commonly referred to as:

Most Adjustable Rate Mortgage (ARM)loans have been marketed with a temporarily reduced interest rate commonly referred to as a:

Foreclosure is considered the ultimate recourse of the lender because it allows the lender to bring about sale of the property to recover the outstanding indebtedness.All of the following statements regarding foreclosure are true EXCEPT:

In a mortgage agreement,the borrower conveys to the lender a security interest in the mortgage property.The lender,i.e.the individual who receives the mortgage claim,is known as the:

Violations of the requirements of a note that do not disrupt the payments on the loan tend to be viewed as "technical" defaults.In practice,how many days must a payment be overdue in order for lenders to treat a default as serious (i.e. ,a substantive default)?

A special contract in which the borrower pledges the mortgaged property as security to the lender is commonly referred to as the:

In a mortgage loan,the borrower always creates two documents: a note and a mortgage.Which of the following pieces of information is provided in the mortgage?

Assume that an individual has just lost his job and has been consistently late paying his bills.The bank recognizes deterioration in the individual's credit score and has notified him that he must pay his home equity line of credit in full.The mortgage clause that makes this possible is known as the:

The ability of homeowners to prepay the principal on their outstanding mortgage balance creates cash flow uncertainty for the lender.As a result,the lender may wish to prohibit prepayment on a mortgage loan for a specified period of time after its origination.This is accomplished through which of the following?

With most standard home loans,the lender can hold the borrower personally liable in the event of a default.Such loans are commonly referred to as:

Even after a property goes into foreclosure,it is still possible for the borrower to reclaim the property as long as they produce the outstanding mortgage balance and all foreclosure costs incurred to that point.In a state such as Florida,this right may even extend beyond the date of the foreclosure sale.When this occurs,this right is more commonly referred to as:

A significant number of mortgage loans use adjustable interest rates,in which the interest rate of the loan is tied to an index rate that fluctuates over time.For income-producing property,the most common index rate is the:

The difference between judicial foreclosure and power of sale in the treatment of defaulted mortgages can be significant.All of the following statements regarding power of sale are true EXCEPT:

If a homeowner in mortgage distress owes more than the value of the home,and is unable make the loan manageable by refinancing or modifying the mortgage,the next recourse often is a short sale of the property.All of the following statements are true regarding a short sale EXCEPT:

The risk of bankruptcy tends to travel with the risk of foreclosure since both can result from financial distress.Known popularly by its section in the Federal Bankruptcy Code,which of the following types of bankruptcy is a court-supervised workout for a troubled business?

Certain mortgage loans contain a due-on-sale clause,which gives the lender the right to terminate the loan at sale of the property.Which of the following types of loans is the most likely to contain a due-on-sale clause?

Congress has enacted a number of regulations that have established criteria for evaluating home loan applicants and mandating disclosures in the origination of home loans.Which of the following congressional acts requires important disclosures concerning the cost of consumer credit,including the computation of the annual percentage rate (APR)?

It is possible to have a secured real estate loan without a mortgage through the use of a Contract for deed.In contrast to the standard real estate sale,which of the following events occurs after the closing when dealing with a contract for deed?

For most mortgage loans on commercial real estate,the right of prepayment is constrained through a prepayment penalty.Which of the following types of prepayment penalties requires a borrower to provide the lender with some combination of U.S.Treasury securities that will serve to replace the cash flows of the loan being paid off?

Added to the index of the adjustable rate is a margin,which is the lender's "markup." For standard Adjustable Rate Mortgage (ARM)loans,the average industry margin has been stable at approximately: