Champions Real Estate Finance Exam
(2025) || Questions & Answers (Rated A+)
Prepayment Clause - ANSWER - A clause stating that the borrower can pay the entire
amount or the stated amount prior to the due date in the note and whether there will be
a penalty associated with that prepayment.
Subordination Clause - ANSWER - A clause allowing a lender to move to or take a
lower lien position
Assumption Clause - ANSWER - A clause outlining the obligations of the original
borrower and a new borrower in the event the loan is assumed
Straight Assumption - ANSWER - A new borrower assumes the payments and liability
on an existing loan and usually releasing the original borrower from liability
Assumption "subject to" - ANSWER - A new borrower assumes the payments but not
the liability on an existing loan - the original borrower remains liable
FHA - ANSWER - Federal Housing Administration - aids in home financing by insuring
high LTV loans with more lenient qualifying ratios.
MIP - ANSWER - Mortgage Insurance Premium - insurance on the FHA loan - insures
the whole loan
VA - ANSWER - Veterans Admin - assists veterans in the purchase of housing by
guaranteeing loans.
DD 214 - ANSWER - Veterans discharge papers - provided to demonstrate eligibility for
a VA loan
Certificate of Eligibility - ANSWER - Evidence of VA approval of a qualified veteran for a
VA loan
CRV - ANSWER - VA appraisal - Certificate of Reasonable Value
Funding Fee - ANSWER - A fee required to be paid by the buyer, seller or included in
the loan at closing on all VA loans
Amortization - ANSWER - The repayment or satisfaction of a debt by installment
payments of principal and interest on a regular basis
, Conventional Loan - ANSWER - A loan that is neither federally insured nor guaranteed -
a private sector loan
Mortgage - ANSWER - A pledge of real property as security for a debt.
Deed of Trust - ANSWER - A three party loan instrument - borrower, lender and trustee.
Note, Promissory Note - ANSWER - A personal promise to repay a debt.
Mortgagor - ANSWER - Borrower under a mortgage
Mortgagee - ANSWER - Lender under a mortgage
Beneficiary - ANSWER - Lender under a deed of trust
Trustor - ANSWER - Borrower under a deed of trust
Trustee - ANSWER - A third party under a deed of trust who acts as an agent for the
lender
Power of Sale - ANSWER - A clause in a deed of trust allowing non-judicial foreclosure
Non-judicial foreclosure - ANSWER - Foreclosure that does not require court
proceedings or a judgment of foreclosure - the result of power of sale clause in a deed
of trust
Hypothecation - ANSWER - The action of pledging real property as security for a debt
Acceleration Clause - ANSWER - A clause in a mortgage allowing the lender to declare
the whole amount of the principal due and payable in the event of default by the
borrower.
Alienation Clause - ANSWER - "Due on Sale" clause stating that the balance of the debt
becomes due if the property is sold by the mortgagor
Defeasance Clause - ANSWER - A clause stating that the lien on the property is
defeated when the debt is repaid
Escalation Clause - ANSWER - A clause allowing the lender to raise the existing
interest rate - although most often associated with an Adjustable Rate Mortgage, it can
be used to overcome an alienation clause
Fixed Rate Amortized Loan - ANSWER - A loan with equal regular payments of
principal and interest until the debt is fully repaid or amortized
(2025) || Questions & Answers (Rated A+)
Prepayment Clause - ANSWER - A clause stating that the borrower can pay the entire
amount or the stated amount prior to the due date in the note and whether there will be
a penalty associated with that prepayment.
Subordination Clause - ANSWER - A clause allowing a lender to move to or take a
lower lien position
Assumption Clause - ANSWER - A clause outlining the obligations of the original
borrower and a new borrower in the event the loan is assumed
Straight Assumption - ANSWER - A new borrower assumes the payments and liability
on an existing loan and usually releasing the original borrower from liability
Assumption "subject to" - ANSWER - A new borrower assumes the payments but not
the liability on an existing loan - the original borrower remains liable
FHA - ANSWER - Federal Housing Administration - aids in home financing by insuring
high LTV loans with more lenient qualifying ratios.
MIP - ANSWER - Mortgage Insurance Premium - insurance on the FHA loan - insures
the whole loan
VA - ANSWER - Veterans Admin - assists veterans in the purchase of housing by
guaranteeing loans.
DD 214 - ANSWER - Veterans discharge papers - provided to demonstrate eligibility for
a VA loan
Certificate of Eligibility - ANSWER - Evidence of VA approval of a qualified veteran for a
VA loan
CRV - ANSWER - VA appraisal - Certificate of Reasonable Value
Funding Fee - ANSWER - A fee required to be paid by the buyer, seller or included in
the loan at closing on all VA loans
Amortization - ANSWER - The repayment or satisfaction of a debt by installment
payments of principal and interest on a regular basis
, Conventional Loan - ANSWER - A loan that is neither federally insured nor guaranteed -
a private sector loan
Mortgage - ANSWER - A pledge of real property as security for a debt.
Deed of Trust - ANSWER - A three party loan instrument - borrower, lender and trustee.
Note, Promissory Note - ANSWER - A personal promise to repay a debt.
Mortgagor - ANSWER - Borrower under a mortgage
Mortgagee - ANSWER - Lender under a mortgage
Beneficiary - ANSWER - Lender under a deed of trust
Trustor - ANSWER - Borrower under a deed of trust
Trustee - ANSWER - A third party under a deed of trust who acts as an agent for the
lender
Power of Sale - ANSWER - A clause in a deed of trust allowing non-judicial foreclosure
Non-judicial foreclosure - ANSWER - Foreclosure that does not require court
proceedings or a judgment of foreclosure - the result of power of sale clause in a deed
of trust
Hypothecation - ANSWER - The action of pledging real property as security for a debt
Acceleration Clause - ANSWER - A clause in a mortgage allowing the lender to declare
the whole amount of the principal due and payable in the event of default by the
borrower.
Alienation Clause - ANSWER - "Due on Sale" clause stating that the balance of the debt
becomes due if the property is sold by the mortgagor
Defeasance Clause - ANSWER - A clause stating that the lien on the property is
defeated when the debt is repaid
Escalation Clause - ANSWER - A clause allowing the lender to raise the existing
interest rate - although most often associated with an Adjustable Rate Mortgage, it can
be used to overcome an alienation clause
Fixed Rate Amortized Loan - ANSWER - A loan with equal regular payments of
principal and interest until the debt is fully repaid or amortized
