REE 3043 Final EXAM PREP ALREADY
What is ARMS - =adjustable rate mortgages
ARMS features - =- initial teaser rate
- initial adjustment period
- adjustment interval (1 year is most common)
Fully indexed rate - =Index plus Margin
Capped rate - =Initial plus Cap
Lender's yield cash flow - =amount disbursed by lender = LA - Lender fees
APR cash flow - =Amount Financed= LA - Broker fees
Effective borrowing cost cash flow - =amount received by borrower= LA - lender fees - all third
party fees
Finding the RMB after m payments - =1. Calculate PMT
2. Find PV of remaining pmts discounted at interest rate
How to calculate the ARM payment at adjustment - =1. Determine adjusted rate
2. Determine payment at adjusted rate with RMB as PV
The element of an adjustable interest rate that is the "moving part is the: - =Index
Suppose a bank recognizes substantial deterioration in a borrower's credit score and notifies him
that he must pay his home equity line of credit in full. The mortgage clause that makes this
possible is known as the: - =Demand clause
, If a homeowner in mortgage distress owes more than the value of the home, and is unable make
the loan manageable by refinancing or financing or modifying the mortgage, the next recourse
often is a short sale of the property. Which of the following statements regarding short sale is
FALSE? - =A short sale relieves the seller of any other outstanding obligations on the home such
as owner association fees or a second mortgage
Even after a property goes into foreclosure it is still possible for the borrower to reclaim the
property as long as he or she produces the outstanding mortgage balance and all foreclosure costs
incurred to that point. This may even extend beyond the date of the foreclosure sale. This right is
referred to as: - =Statutory redemption
Which of the following acts of congress requires important disclosures concerning the cost of
consumer credit, including the computation of the annual percentage rate (APR)? - =Truth-in-
Lending (TILA)
Which of the following types of loans is the most likely to contain a due-on-sale clause? -
=Conventional home loan
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?` - =An unambiguous
description of the property that is being pledged as collateral for the loan
When a buyer of a property with an existing FHA mortgage loan acquires a property by putting
her signature on the note for the existing loan, the buyer is acquiring the property: - =By
assumption
All of the following statements regarding foreclosure are true except:
A. Foreclosure is a costly process for all the parties involved
B. Only claimants who are properly notified in the foreclosure suit can lose their claims to the
property
C. When a lender foreclosures on a property, it extinguishes all superior liens, bringing about a
free and clear sale of the property
What is ARMS - =adjustable rate mortgages
ARMS features - =- initial teaser rate
- initial adjustment period
- adjustment interval (1 year is most common)
Fully indexed rate - =Index plus Margin
Capped rate - =Initial plus Cap
Lender's yield cash flow - =amount disbursed by lender = LA - Lender fees
APR cash flow - =Amount Financed= LA - Broker fees
Effective borrowing cost cash flow - =amount received by borrower= LA - lender fees - all third
party fees
Finding the RMB after m payments - =1. Calculate PMT
2. Find PV of remaining pmts discounted at interest rate
How to calculate the ARM payment at adjustment - =1. Determine adjusted rate
2. Determine payment at adjusted rate with RMB as PV
The element of an adjustable interest rate that is the "moving part is the: - =Index
Suppose a bank recognizes substantial deterioration in a borrower's credit score and notifies him
that he must pay his home equity line of credit in full. The mortgage clause that makes this
possible is known as the: - =Demand clause
, If a homeowner in mortgage distress owes more than the value of the home, and is unable make
the loan manageable by refinancing or financing or modifying the mortgage, the next recourse
often is a short sale of the property. Which of the following statements regarding short sale is
FALSE? - =A short sale relieves the seller of any other outstanding obligations on the home such
as owner association fees or a second mortgage
Even after a property goes into foreclosure it is still possible for the borrower to reclaim the
property as long as he or she produces the outstanding mortgage balance and all foreclosure costs
incurred to that point. This may even extend beyond the date of the foreclosure sale. This right is
referred to as: - =Statutory redemption
Which of the following acts of congress requires important disclosures concerning the cost of
consumer credit, including the computation of the annual percentage rate (APR)? - =Truth-in-
Lending (TILA)
Which of the following types of loans is the most likely to contain a due-on-sale clause? -
=Conventional home loan
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?` - =An unambiguous
description of the property that is being pledged as collateral for the loan
When a buyer of a property with an existing FHA mortgage loan acquires a property by putting
her signature on the note for the existing loan, the buyer is acquiring the property: - =By
assumption
All of the following statements regarding foreclosure are true except:
A. Foreclosure is a costly process for all the parties involved
B. Only claimants who are properly notified in the foreclosure suit can lose their claims to the
property
C. When a lender foreclosures on a property, it extinguishes all superior liens, bringing about a
free and clear sale of the property
