Principles of Real Estate 2 Exam with
Questions and Correct Answers 2025
Mortgagor ,is ,the ,- ,CORRECT ,ANSWER-Borrower
Mortgagee ,is ,the ,- ,CORRECT ,ANSWER-Lender
Primary ,mortgage ,market ,is ,- ,CORRECT ,ANSWER-The ,market ,in ,which ,borrowers
,and ,lenders ,come ,together ,to ,create ,and ,negotiate ,the ,terms ,of ,a ,mortgage
,transaction
Promissory ,note ,is ,- ,CORRECT ,ANSWER-The ,borrowers ,unconditional ,promise ,to
,repay ,and ,includes ,the ,amount ,borrowed, ,payment ,amount, ,due ,date, ,and ,rate ,of
,interest. ,Also ,known ,as ,a ,real ,estate ,lien ,note. ,Not ,generally ,recorded
A ,mortgage ,package ,actually ,consists ,of ,two ,major ,documents: ,- ,CORRECT
,ANSWER-Promissory ,note ,and ,mortgage
What ,happens ,when ,a ,property ,fails ,to ,sell ,at ,auction ,after ,a ,foreclosure? ,-
,CORRECT ,ANSWER-Ownership ,transfers ,to ,the ,lender. ,It ,is ,entered ,on ,the ,books
,as ,an ,asset ,under ,an ,accounting ,category ,called ,real ,estate ,owned ,(REO). ,The
,unpaid ,note ,is ,written ,off ,as ,a ,loss
Two ,theories ,of ,ownership ,of ,mortgaged ,properties ,- ,CORRECT ,ANSWER-1. ,Title
,theory ,State: ,title ,remains ,with ,Linda ,until ,loan ,is ,paid
2. ,Lien ,Theory ,State: ,Borrower ,retains ,ownership ,of ,the ,property, ,subject ,to ,the ,lien
,that ,secures ,repayment ,of ,the ,loan
Major ,shift ,in ,residential ,lending ,- ,CORRECT ,ANSWER-Loans ,moved ,from ,regulated
,depository ,institutions ,to ,the ,sale ,of ,mortgage-backed ,securities ,sold ,in ,financial
,markets
Mortgage ,companies ,are ,not ,- ,CORRECT ,ANSWER-License ,or ,regulated ,as ,banks
The ,money ,that ,mortgage ,companies ,use ,to ,make ,loans ,comes ,from ,the ,sale ,of ,-
,CORRECT ,ANSWER-Bonds
,Major ,difference ,between ,mortgage ,companies ,and ,regulated ,lenders ,- ,CORRECT
,ANSWER-Mortgage ,companies ,rely ,on ,commercial ,banks ,that ,grant ,a ,warehouse
,line ,of ,credit ,to ,them. ,The ,loans ,are ,short ,term ,and ,are ,normally ,repay ,through ,the
,sale ,of ,these ,notes ,to ,the ,secondary ,market
Mortgage ,loan ,originators ,can ,be ,broken ,down ,into ,three ,categories ,- ,CORRECT
,ANSWER-Mortgage ,bankers, ,mortgage ,brokers, ,and ,correspondent ,lenders
Mortgage ,banker ,- ,CORRECT ,ANSWER-Provides ,own ,funds ,for ,mortgage ,financing.
,Most ,specialize ,in ,short ,term ,financing. ,With ,residential ,loans, ,usually ,borrows ,money
,from ,commercial ,bankers ,or ,warehouse ,line ,of ,credit ,to ,fund ,the ,loan. ,Sells ,loans ,to
,investors.
Mortgage ,brokers ,- ,CORRECT ,ANSWER-Specialize ,as ,the ,middleman ,between ,the
,borrower ,and ,the ,lender. ,Loans ,are ,placed ,in ,loan ,pools ,as ,collateral. ,At ,one ,time
,originated ,up ,to ,80% ,of ,all ,mortgage ,loans, ,regulations ,have ,lessened ,this ,and
,brokers ,have ,moved ,to ,correspondent ,lender ,status.
Correspondent ,lender ,- ,CORRECT ,ANSWER-Recent ,classification ,of ,a ,mortgage
,loan ,originator. ,Somewhat ,of ,a ,hybrid ,between ,mortgage ,brokers ,(wide ,array ,of
,products ,and ,extension ,of ,large ,lenders) ,and ,mortgage ,bankers ,(processes,
,underwrites, ,etc)
Origination ,- ,CORRECT ,ANSWER-The ,process ,of ,creating ,a ,new ,mortgage ,loan
Mortgage ,products ,- ,CORRECT ,ANSWER-Fixed ,rate, ,adjustable ,rate, ,FHA, ,VA, ,RHS
,mortgage ,loans
Underwriting ,- ,CORRECT ,ANSWER-The ,detailed ,process ,of ,evaluating ,a ,borrowers
,loan ,application ,to ,determine ,the ,risk ,involved ,for ,the ,lender
Funding ,- ,CORRECT ,ANSWER-The ,process ,of ,transferring ,funds ,to ,a ,title ,or ,escrow
,company ,for ,disbursement
Servicing ,- ,CORRECT ,ANSWER-Sending ,monthly ,payment ,statements, ,collecting
,monthly ,payments, ,maintaining ,records, ,collecting ,and ,paying ,taxes ,and ,insurance,
,following ,up ,on ,delinquencies. ,Mortgage ,bankers ,charge ,investors ,for ,servicing,
,usually ,.25 ,to ,.50% ,of ,the ,loan ,balance, ,Normally ,added ,to ,the ,interest ,rate ,that ,the
,borrower ,pays ,for ,the ,loan, ,Very ,lucrative ,for ,big ,banks.
The ,term ,RMLO ,is ,mandated ,by ,the ,- ,CORRECT ,ANSWER-SAFE ,act
SAFE ,act ,- ,CORRECT ,ANSWER-The ,Secure ,and ,Fair ,Enforcement ,for ,Licensing
,Act. ,Was ,designed ,to ,enhance ,consumer ,protection ,and ,reduce ,fraud
, All ,mortgage ,loan ,originators ,must ,now ,- ,CORRECT ,ANSWER-Be ,registered ,with ,the
,NMLSR ,(nationwide ,mortgage ,licensing ,system ,and ,registry)
The ,Dodd ,Frank ,act ,transferred ,roll ,making ,authority ,for ,the ,SAFE ,act ,to ,the ,-
,CORRECT ,ANSWER-Consumer ,financial ,protection ,bureau
TILA ,- ,CORRECT ,ANSWER-Truth ,in ,Lending ,Act
FCRA ,- ,CORRECT ,ANSWER-Fair ,Credit ,Reporting ,Act
RESPA ,stands ,for ,- ,CORRECT ,ANSWER-Real ,Estate ,Settlement ,Procedures ,Act
ECOA ,stands ,for ,- ,CORRECT ,ANSWER-Equal ,Credit ,Opportunity ,Act
Community ,reinvestment ,act ,- ,CORRECT ,ANSWER-A ,significant ,federal ,law ,that
,affects ,lenders, ,passed ,to ,ensure ,that ,banks ,serve ,the ,needs ,of ,the ,community ,in
,which ,they ,were ,chartered ,to ,do ,business. ,Prohibits ,redlining
ECOA ,stands ,for ,- ,CORRECT ,ANSWER-Equal ,Credit ,Opportunity ,Act,1974, ,covers
,all ,creditors ,who ,regularly ,extend ,credit, ,such ,as ,mortgage ,originators. ,Provide
,protection ,for ,consumers ,by ,prohibiting ,discrimination
TILAS ,stands ,for ,- ,CORRECT ,ANSWER-Truth ,in ,lending ,act. ,Designed ,to ,protect
,consumers ,in ,credit ,transactions ,by ,requiring ,clear ,disclosure ,of ,terms ,of ,the ,lending
,arrangements ,and ,all ,costs
Triggering ,terms ,- ,CORRECT ,ANSWER-The ,truth ,in ,lending ,act ,advertising
,provisions. ,Specified ,terms ,and ,advertising ,trigger ,disclosures. ,Example, ,10% ,down
Required ,disclosures ,- ,CORRECT ,ANSWER-Closed ,end ,credit ,ads ,using ,a ,triggering
,term ,must ,also ,include ,the ,amount ,or ,percentage ,of ,the ,down ,payment, ,the ,terms,
,and ,the ,APR.
Terms ,that ,do ,not ,trigger ,disclosures ,- ,CORRECT ,ANSWER-No ,down ,payment, ,easy
,monthly ,payments, ,loans ,available ,at ,5% ,below ,our ,standard ,APR, ,pay ,weekly,
,terms ,to ,fit ,your ,budget
Secondary ,mortgage ,market ,- ,CORRECT ,ANSWER-marketplace ,for ,the ,sale ,and
,purchase ,of ,existing ,mortgages ,which ,originated ,in ,primary ,market
Net ,yield ,- ,CORRECT ,ANSWER-Return ,on ,investment ,that ,investor ,receives ,over
,time
Fannie ,Mae ,- ,CORRECT ,ANSWER-Federal ,National ,Mortgage ,Association, ,Privately
,owned ,since ,1968. ,Operates ,exclusively ,in ,the ,secondary ,market, ,the ,largest
,investor ,in ,home ,mortgages ,today. ,Makes ,funds ,available ,to ,capital ,deficient ,areas,
Questions and Correct Answers 2025
Mortgagor ,is ,the ,- ,CORRECT ,ANSWER-Borrower
Mortgagee ,is ,the ,- ,CORRECT ,ANSWER-Lender
Primary ,mortgage ,market ,is ,- ,CORRECT ,ANSWER-The ,market ,in ,which ,borrowers
,and ,lenders ,come ,together ,to ,create ,and ,negotiate ,the ,terms ,of ,a ,mortgage
,transaction
Promissory ,note ,is ,- ,CORRECT ,ANSWER-The ,borrowers ,unconditional ,promise ,to
,repay ,and ,includes ,the ,amount ,borrowed, ,payment ,amount, ,due ,date, ,and ,rate ,of
,interest. ,Also ,known ,as ,a ,real ,estate ,lien ,note. ,Not ,generally ,recorded
A ,mortgage ,package ,actually ,consists ,of ,two ,major ,documents: ,- ,CORRECT
,ANSWER-Promissory ,note ,and ,mortgage
What ,happens ,when ,a ,property ,fails ,to ,sell ,at ,auction ,after ,a ,foreclosure? ,-
,CORRECT ,ANSWER-Ownership ,transfers ,to ,the ,lender. ,It ,is ,entered ,on ,the ,books
,as ,an ,asset ,under ,an ,accounting ,category ,called ,real ,estate ,owned ,(REO). ,The
,unpaid ,note ,is ,written ,off ,as ,a ,loss
Two ,theories ,of ,ownership ,of ,mortgaged ,properties ,- ,CORRECT ,ANSWER-1. ,Title
,theory ,State: ,title ,remains ,with ,Linda ,until ,loan ,is ,paid
2. ,Lien ,Theory ,State: ,Borrower ,retains ,ownership ,of ,the ,property, ,subject ,to ,the ,lien
,that ,secures ,repayment ,of ,the ,loan
Major ,shift ,in ,residential ,lending ,- ,CORRECT ,ANSWER-Loans ,moved ,from ,regulated
,depository ,institutions ,to ,the ,sale ,of ,mortgage-backed ,securities ,sold ,in ,financial
,markets
Mortgage ,companies ,are ,not ,- ,CORRECT ,ANSWER-License ,or ,regulated ,as ,banks
The ,money ,that ,mortgage ,companies ,use ,to ,make ,loans ,comes ,from ,the ,sale ,of ,-
,CORRECT ,ANSWER-Bonds
,Major ,difference ,between ,mortgage ,companies ,and ,regulated ,lenders ,- ,CORRECT
,ANSWER-Mortgage ,companies ,rely ,on ,commercial ,banks ,that ,grant ,a ,warehouse
,line ,of ,credit ,to ,them. ,The ,loans ,are ,short ,term ,and ,are ,normally ,repay ,through ,the
,sale ,of ,these ,notes ,to ,the ,secondary ,market
Mortgage ,loan ,originators ,can ,be ,broken ,down ,into ,three ,categories ,- ,CORRECT
,ANSWER-Mortgage ,bankers, ,mortgage ,brokers, ,and ,correspondent ,lenders
Mortgage ,banker ,- ,CORRECT ,ANSWER-Provides ,own ,funds ,for ,mortgage ,financing.
,Most ,specialize ,in ,short ,term ,financing. ,With ,residential ,loans, ,usually ,borrows ,money
,from ,commercial ,bankers ,or ,warehouse ,line ,of ,credit ,to ,fund ,the ,loan. ,Sells ,loans ,to
,investors.
Mortgage ,brokers ,- ,CORRECT ,ANSWER-Specialize ,as ,the ,middleman ,between ,the
,borrower ,and ,the ,lender. ,Loans ,are ,placed ,in ,loan ,pools ,as ,collateral. ,At ,one ,time
,originated ,up ,to ,80% ,of ,all ,mortgage ,loans, ,regulations ,have ,lessened ,this ,and
,brokers ,have ,moved ,to ,correspondent ,lender ,status.
Correspondent ,lender ,- ,CORRECT ,ANSWER-Recent ,classification ,of ,a ,mortgage
,loan ,originator. ,Somewhat ,of ,a ,hybrid ,between ,mortgage ,brokers ,(wide ,array ,of
,products ,and ,extension ,of ,large ,lenders) ,and ,mortgage ,bankers ,(processes,
,underwrites, ,etc)
Origination ,- ,CORRECT ,ANSWER-The ,process ,of ,creating ,a ,new ,mortgage ,loan
Mortgage ,products ,- ,CORRECT ,ANSWER-Fixed ,rate, ,adjustable ,rate, ,FHA, ,VA, ,RHS
,mortgage ,loans
Underwriting ,- ,CORRECT ,ANSWER-The ,detailed ,process ,of ,evaluating ,a ,borrowers
,loan ,application ,to ,determine ,the ,risk ,involved ,for ,the ,lender
Funding ,- ,CORRECT ,ANSWER-The ,process ,of ,transferring ,funds ,to ,a ,title ,or ,escrow
,company ,for ,disbursement
Servicing ,- ,CORRECT ,ANSWER-Sending ,monthly ,payment ,statements, ,collecting
,monthly ,payments, ,maintaining ,records, ,collecting ,and ,paying ,taxes ,and ,insurance,
,following ,up ,on ,delinquencies. ,Mortgage ,bankers ,charge ,investors ,for ,servicing,
,usually ,.25 ,to ,.50% ,of ,the ,loan ,balance, ,Normally ,added ,to ,the ,interest ,rate ,that ,the
,borrower ,pays ,for ,the ,loan, ,Very ,lucrative ,for ,big ,banks.
The ,term ,RMLO ,is ,mandated ,by ,the ,- ,CORRECT ,ANSWER-SAFE ,act
SAFE ,act ,- ,CORRECT ,ANSWER-The ,Secure ,and ,Fair ,Enforcement ,for ,Licensing
,Act. ,Was ,designed ,to ,enhance ,consumer ,protection ,and ,reduce ,fraud
, All ,mortgage ,loan ,originators ,must ,now ,- ,CORRECT ,ANSWER-Be ,registered ,with ,the
,NMLSR ,(nationwide ,mortgage ,licensing ,system ,and ,registry)
The ,Dodd ,Frank ,act ,transferred ,roll ,making ,authority ,for ,the ,SAFE ,act ,to ,the ,-
,CORRECT ,ANSWER-Consumer ,financial ,protection ,bureau
TILA ,- ,CORRECT ,ANSWER-Truth ,in ,Lending ,Act
FCRA ,- ,CORRECT ,ANSWER-Fair ,Credit ,Reporting ,Act
RESPA ,stands ,for ,- ,CORRECT ,ANSWER-Real ,Estate ,Settlement ,Procedures ,Act
ECOA ,stands ,for ,- ,CORRECT ,ANSWER-Equal ,Credit ,Opportunity ,Act
Community ,reinvestment ,act ,- ,CORRECT ,ANSWER-A ,significant ,federal ,law ,that
,affects ,lenders, ,passed ,to ,ensure ,that ,banks ,serve ,the ,needs ,of ,the ,community ,in
,which ,they ,were ,chartered ,to ,do ,business. ,Prohibits ,redlining
ECOA ,stands ,for ,- ,CORRECT ,ANSWER-Equal ,Credit ,Opportunity ,Act,1974, ,covers
,all ,creditors ,who ,regularly ,extend ,credit, ,such ,as ,mortgage ,originators. ,Provide
,protection ,for ,consumers ,by ,prohibiting ,discrimination
TILAS ,stands ,for ,- ,CORRECT ,ANSWER-Truth ,in ,lending ,act. ,Designed ,to ,protect
,consumers ,in ,credit ,transactions ,by ,requiring ,clear ,disclosure ,of ,terms ,of ,the ,lending
,arrangements ,and ,all ,costs
Triggering ,terms ,- ,CORRECT ,ANSWER-The ,truth ,in ,lending ,act ,advertising
,provisions. ,Specified ,terms ,and ,advertising ,trigger ,disclosures. ,Example, ,10% ,down
Required ,disclosures ,- ,CORRECT ,ANSWER-Closed ,end ,credit ,ads ,using ,a ,triggering
,term ,must ,also ,include ,the ,amount ,or ,percentage ,of ,the ,down ,payment, ,the ,terms,
,and ,the ,APR.
Terms ,that ,do ,not ,trigger ,disclosures ,- ,CORRECT ,ANSWER-No ,down ,payment, ,easy
,monthly ,payments, ,loans ,available ,at ,5% ,below ,our ,standard ,APR, ,pay ,weekly,
,terms ,to ,fit ,your ,budget
Secondary ,mortgage ,market ,- ,CORRECT ,ANSWER-marketplace ,for ,the ,sale ,and
,purchase ,of ,existing ,mortgages ,which ,originated ,in ,primary ,market
Net ,yield ,- ,CORRECT ,ANSWER-Return ,on ,investment ,that ,investor ,receives ,over
,time
Fannie ,Mae ,- ,CORRECT ,ANSWER-Federal ,National ,Mortgage ,Association, ,Privately
,owned ,since ,1968. ,Operates ,exclusively ,in ,the ,secondary ,market, ,the ,largest
,investor ,in ,home ,mortgages ,today. ,Makes ,funds ,available ,to ,capital ,deficient ,areas,
