PSI REAL ESTATE EXAM: FINANCING WITH ALL CORRECT
& 100% VERIFIED ANSWERS|ACTUAL COMPLETE EXAM
|ALREADY GRADED A+
A contract clause that gives the lender the right to declare the entire loan amount due immediately
because of borrower's default, or other reasons as stated in the contract. ✔Correct Answer-
Acceleration Clause
A mortgage that permits the lender to periodically adjust the interest rate so that the rate reflects
fluctuations in the cost of money. ✔Correct Answer-Adjustable-Rate (ARM) Mortgage
A contract clause that gives the lender certain stated rights when there's a transfer of ownership in
property. (Often called a Due-On-Sale Clause.) ✔Correct Answer-Alienation Clause
The system of land ownership where anyone can own land. ✔Correct Answer-Allodial System
When a loan a loan balance decreases because of periodic installments that pay principal and
interest. ✔Correct Answer-Amortization
A final payment at the end of a loan term to pay off the entire remaining balance of principal and
interest not covered by payments during the loan term. ✔Correct Answer-Balloon Payment
1. Mortgage that covers more than one parcel of real estate. 2. Mortgage that covers an entire
building or development, rather than an individual unit or lot. ✔Correct Answer-Blanket Mortgage
Mortgage backed securities issued by GNMA, which are long-term, pay interest semi-annually, and
provide for repayment at a specified date. ✔Correct Answer-Bond-Type Securities
When additional funds in the form of points are paid to a lender at the beginning of a loan to lower
the interest rate and monthly payments on the loan. ✔Correct Answer-Buydown
Property pledged as security for a debt. ✔Correct Answer-Collateral
Loans that meet FNMA/FHLMC standards, and thus can be sold on the secondary market.
✔Correct Answer-Conforming Loans
A listing of a borrower's credit history, including amount of debt, record of repayment, job info,
address info, etc. ✔Correct Answer-Credit Report
A means by which the lender makes certain determinations regarding the creditworthiness of
potential borrowers. This involves a lender assigning specified numerical values to different aspects
of a borrower. ✔Correct Answer-Credit Scoring
Financial institutions that are a type of cooperative organization where members share something in
common (e.g. an employer), pool their deposits together, pay members better interest rates, and
loan money to fellow members. ✔Correct Answer-Credit Unions
, An instrument held by a third party as security for the payment of a note (rarely used in Ohio). Like a
mortgage, it creates a voluntary lien on real property to secure repayment of a debt. The parties to a
deed of trust are the grantor or trustor (borrower), benficiary (lender), and trustee (neutral third
party). Unlike a mortgage, a deed of trust includes a power of sale, allowing the trustee to foreclose
non-judicially, ✔Correct Answer-Deed of Trust
Failure to fulfill an obligation, duty, or promise, as when borrower fails to make pay-ments, tenant
fails to pay rent, or party fails to perform a contract. Mortgage, note or other document will define
what constitutes this ✔Correct Answer-Default
The difference between the stated amount of an obligation and the amount paid. ✔Correct
Answer-Discount
The interest rate charged by the Federal Reserve Banks on loans to member commercial banks.
✔Correct Answer-Discount Rate
Mortgage clause which prohibits assignment by making the entire mortgage balance due when
property is sold. ✔Correct Answer-Due on Sale Clause
Potential gross income, less a figure for vacancy and collection losses. ✔Correct Answer-Effective
Gross Income
Federal law that prohibits discrimination in granting credit to people based on sex, age, marital
status, race, color, religion, national origin or receipt of public assistance. ✔Correct Answer-Equal
Credit Opportunity Act (ECOA)
An interest created in property upon the execution of a valid sales contract, whereby actual title will
be transferred by deed at a future date (closing). Also, the vendee's (buyer's) interest in property
under a land contract. Also called an ________ interest. ✔Correct Answer-Equitable Title
The nation's largest, and privately owned, investor in residential mortgages. ✔Correct Answer-
Fannie Mae (Federal National Mortgage Association)
The Federal Reserve's target for short term interest rates. ✔Correct Answer-Federal Funds Rate
Government agency that insures mortgage loans. ✔Correct Answer-Federal Housing
Administration (FHA)
Banks that provide services to financial institutions, e.g. check clearing. (One main office in each
Federal Reserve district.) All nationally chartered commercial banks must join Federal Reserve and
buy stock in its district reserve bank. ✔Correct Answer-Federal Reserve Banks
The system of land ownership where a king or queen owns all of the land and all other people are
merely tenants. ✔Correct Answer-Feudal System
A type of credit scoring, where a number from 400-900 is assigned to a credit report. The lower the
score, the greater the risk of default. Above 660 is an acceptable risk, 620-660 is a marginal risk,
below 620 is a high risk. Also referred to as Beacon Score. ✔Correct Answer-FICO Score
When a lienholder causes property to be sold, so that the unpaid debt secured by the lien can be
satisfied from the sale proceeds. ✔Correct Answer-Foreclosure
& 100% VERIFIED ANSWERS|ACTUAL COMPLETE EXAM
|ALREADY GRADED A+
A contract clause that gives the lender the right to declare the entire loan amount due immediately
because of borrower's default, or other reasons as stated in the contract. ✔Correct Answer-
Acceleration Clause
A mortgage that permits the lender to periodically adjust the interest rate so that the rate reflects
fluctuations in the cost of money. ✔Correct Answer-Adjustable-Rate (ARM) Mortgage
A contract clause that gives the lender certain stated rights when there's a transfer of ownership in
property. (Often called a Due-On-Sale Clause.) ✔Correct Answer-Alienation Clause
The system of land ownership where anyone can own land. ✔Correct Answer-Allodial System
When a loan a loan balance decreases because of periodic installments that pay principal and
interest. ✔Correct Answer-Amortization
A final payment at the end of a loan term to pay off the entire remaining balance of principal and
interest not covered by payments during the loan term. ✔Correct Answer-Balloon Payment
1. Mortgage that covers more than one parcel of real estate. 2. Mortgage that covers an entire
building or development, rather than an individual unit or lot. ✔Correct Answer-Blanket Mortgage
Mortgage backed securities issued by GNMA, which are long-term, pay interest semi-annually, and
provide for repayment at a specified date. ✔Correct Answer-Bond-Type Securities
When additional funds in the form of points are paid to a lender at the beginning of a loan to lower
the interest rate and monthly payments on the loan. ✔Correct Answer-Buydown
Property pledged as security for a debt. ✔Correct Answer-Collateral
Loans that meet FNMA/FHLMC standards, and thus can be sold on the secondary market.
✔Correct Answer-Conforming Loans
A listing of a borrower's credit history, including amount of debt, record of repayment, job info,
address info, etc. ✔Correct Answer-Credit Report
A means by which the lender makes certain determinations regarding the creditworthiness of
potential borrowers. This involves a lender assigning specified numerical values to different aspects
of a borrower. ✔Correct Answer-Credit Scoring
Financial institutions that are a type of cooperative organization where members share something in
common (e.g. an employer), pool their deposits together, pay members better interest rates, and
loan money to fellow members. ✔Correct Answer-Credit Unions
, An instrument held by a third party as security for the payment of a note (rarely used in Ohio). Like a
mortgage, it creates a voluntary lien on real property to secure repayment of a debt. The parties to a
deed of trust are the grantor or trustor (borrower), benficiary (lender), and trustee (neutral third
party). Unlike a mortgage, a deed of trust includes a power of sale, allowing the trustee to foreclose
non-judicially, ✔Correct Answer-Deed of Trust
Failure to fulfill an obligation, duty, or promise, as when borrower fails to make pay-ments, tenant
fails to pay rent, or party fails to perform a contract. Mortgage, note or other document will define
what constitutes this ✔Correct Answer-Default
The difference between the stated amount of an obligation and the amount paid. ✔Correct
Answer-Discount
The interest rate charged by the Federal Reserve Banks on loans to member commercial banks.
✔Correct Answer-Discount Rate
Mortgage clause which prohibits assignment by making the entire mortgage balance due when
property is sold. ✔Correct Answer-Due on Sale Clause
Potential gross income, less a figure for vacancy and collection losses. ✔Correct Answer-Effective
Gross Income
Federal law that prohibits discrimination in granting credit to people based on sex, age, marital
status, race, color, religion, national origin or receipt of public assistance. ✔Correct Answer-Equal
Credit Opportunity Act (ECOA)
An interest created in property upon the execution of a valid sales contract, whereby actual title will
be transferred by deed at a future date (closing). Also, the vendee's (buyer's) interest in property
under a land contract. Also called an ________ interest. ✔Correct Answer-Equitable Title
The nation's largest, and privately owned, investor in residential mortgages. ✔Correct Answer-
Fannie Mae (Federal National Mortgage Association)
The Federal Reserve's target for short term interest rates. ✔Correct Answer-Federal Funds Rate
Government agency that insures mortgage loans. ✔Correct Answer-Federal Housing
Administration (FHA)
Banks that provide services to financial institutions, e.g. check clearing. (One main office in each
Federal Reserve district.) All nationally chartered commercial banks must join Federal Reserve and
buy stock in its district reserve bank. ✔Correct Answer-Federal Reserve Banks
The system of land ownership where a king or queen owns all of the land and all other people are
merely tenants. ✔Correct Answer-Feudal System
A type of credit scoring, where a number from 400-900 is assigned to a credit report. The lower the
score, the greater the risk of default. Above 660 is an acceptable risk, 620-660 is a marginal risk,
below 620 is a high risk. Also referred to as Beacon Score. ✔Correct Answer-FICO Score
When a lienholder causes property to be sold, so that the unpaid debt secured by the lien can be
satisfied from the sale proceeds. ✔Correct Answer-Foreclosure
