REE 3043 Final Exam and Answers.
What is ARMS - Answer adjustable-rate mortgages
ARMS features - Answer - initial teaser rate
- initial adjustment period
- adjustment interval (1 year is most common)
Fully indexed rate - Answer Index plus Margin
Capped rate - Answer Initial plus Cap
Lender's yield cash flow - Answer amount disbursed by lender = LA - Lender fees
APR cash flow - Answer Amount Financed= LA - Broker fees
Effective borrowing cost cash flow - Answer amount received by borrower= LA - lender fees -
all third party fees
Finding the RMB after m payments - Answer 1. Calculate PMT
2. Find PV of remaining pmts discounted at interest rate
How to calculate the ARM payment at adjustment - Answer 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: - Answer 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: - Answer 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? - Answer 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: - Answer 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)? - Answer
Truth-in-Lending (TILA)
Which of the following types of loans is the most likely to contain a due-on-sale clause? -
Answer 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?` - Answer 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: - Answer
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
D. The net recovery by a lender from a foreclosed loan seldom exceeds 80 percent of the
outstanding loan balance and commonly is much less than this amount - Answer C. When a
lender foreclosures on a property, it extinguishes all superior liens, bringing about a free and
clear sale of the property
Promissory note - Answer A promise to pay a debt at agreed upon terms
Mortgage or Deed of trust - Answer Pledges property as security (collateral) for the loan
Components of a promissory note - Answer Term
Interest rates
Payments
Prepayment
What is ARMS - Answer adjustable-rate mortgages
ARMS features - Answer - initial teaser rate
- initial adjustment period
- adjustment interval (1 year is most common)
Fully indexed rate - Answer Index plus Margin
Capped rate - Answer Initial plus Cap
Lender's yield cash flow - Answer amount disbursed by lender = LA - Lender fees
APR cash flow - Answer Amount Financed= LA - Broker fees
Effective borrowing cost cash flow - Answer amount received by borrower= LA - lender fees -
all third party fees
Finding the RMB after m payments - Answer 1. Calculate PMT
2. Find PV of remaining pmts discounted at interest rate
How to calculate the ARM payment at adjustment - Answer 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: - Answer 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: - Answer 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? - Answer 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: - Answer 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)? - Answer
Truth-in-Lending (TILA)
Which of the following types of loans is the most likely to contain a due-on-sale clause? -
Answer 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?` - Answer 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: - Answer
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
D. The net recovery by a lender from a foreclosed loan seldom exceeds 80 percent of the
outstanding loan balance and commonly is much less than this amount - Answer C. When a
lender foreclosures on a property, it extinguishes all superior liens, bringing about a free and
clear sale of the property
Promissory note - Answer A promise to pay a debt at agreed upon terms
Mortgage or Deed of trust - Answer Pledges property as security (collateral) for the loan
Components of a promissory note - Answer Term
Interest rates
Payments
Prepayment
