Deck 2: Vocabulary

Question 1

In a condominium hotel you would find the following:

A)Rental or registrations desks
B)Daily cleaning services
C)No individual ownership
D)None of the above

Answer 1

Rental or registrations desks
Daily cleaning services

Question 2

Which is true of the cost of funds index (COFI)?

A)It represents the weighted-average cost of savings, borrowings, and advances of the financial institutions such as banks and savings & loans in the 11th District of the Federal Home Loan Bank
B)It is one of the indexes used to determine interest rate changes for certain government fixed rate mortgages
C)It is an index used to determine interest rate changes for certain adjustable-rate mortgages
D)Both A and C

Answer 2

Both A and C

Question 3

Once you buy a house, the amount you pay each month includes an extra amount above principal and interest. This extra money is held in a special account to pay your taxes and homeowners insurance when it comes due. This account is called:

A)an escrow account
B)a savings account
C)a regular checking account
D)both B and C

Answer 3

an escrow account

Question 4

Which of the following does the Federal Housing Administration do?

A)Lends money and plans and constructs housing
B)Insures residential mortgage loans made by government lenders
C)Sets standards for construction and underwriting
D)None of the above

Question 5

If you purchase a type of insurance called homeowner's warranty, you would do so because:

A)It will cover repairs to certain items, such as heating or air conditioning if they break down within the coverage period
B)The seller will sometimes pay for it
C)Both A and B
D)Neither A nor B

Question 6

A type of foreclosure proceeding used in some states that is handled as a civil lawsuit and conducted entirely under the auspices of a court is called:

A)a legal foreclosure
B)a court-appointed foreclosure
C)a judicial foreclosure
D)a civil foreclosure

Question 7

Which of the following is not part of loan servicing?

A)Processing payments and sending statements
B)Managing the escrow account
C)Handling pay-offs and assumptions
D)All of the above are aspects of loan servicing

Question 8

A period payment cap applies to:

A)Any mortgage taken out in the U.S.
B)Adjustable rate mortgages
C)Fixed-rate loans
D)Government loans

Question 9

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:

A)a rate lock
B)under lock and key
C)a promissory note
D)a deed of trust

Question 10

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:

A)A capital improvements fund
B)A replacement reserve fund
C)A savings fund
D)A contingency fund

Question 11

The term "servicing" describes:

A)the collection of mortgage payments from borrowers
B)what the mechanic does to your car
C)duties of a loan servicer
D)both A and C

Question 12

A two- to-four family property:

A)consists of a structure that provides living space for two to four families and ownership is evidenced by two to four deeds
B)consists of a structure that provides living space for two to four families and ownership is evidenced by a single deed
C)is not a deeded property
D)is an illegal form of ownership

Question 13

A home inspection is:

A)a thorough inspection by a professional which evaluates the structural and mechanical condition of a property
B)not required by law
C)often a contingency in a contract that it turns out satisfactorily
D)both A and C