REE3043 Exam UPDATED ACTUAL Exam
Questions and CORRECT Answers
What two contracts are always involved in a mortgage loan? - CORRECT ANSWER -A
note and a mortgage
The two most common types of caps in an adjustable rate mortgage are: - CORRECT
ANSWER - Periodic and overall
What happens to the balance of a loan with negative amortization? - CORRECT
ANSWER - It increases
What is a Balloon Loan? - CORRECT ANSWER - A loan with an amortization term that
determines interest and principle payments as if it were a fully amortized loan and a shorter term
for maturity at which the remaining loan balance must be paid in full
Of these types of loans, which typically have prepayment restrictions or penalties?
a. Standard home loan.
b. Large home loan.
c. Subprime loan.
d. Commercial property mortgage loan. - CORRECT ANSWER - Large home loans,
subprime loans, and commercial mortgage loans
Why does a mortgage lender want to be able to pay the property taxes on behalf of a mortgage
borrower? - CORRECT ANSWER - The property tax lien is superior to the mortgage and
can preempt it in default.
What types of standard home loans are assumable? - CORRECT ANSWER - Federal
Housing Administration (FHA) and Veterans Affairs (VA)
,In practice, lenders commonly define default as occurring when a loan ism____ days overdue. -
CORRECT ANSWER - 90
Depending on the state, the process of foreclosure sale is either by___ or by___ . The method
most favorable to a lender is___ . - CORRECT ANSWER - Judicial foreclosure; power of
sale; power of sale
What law prohibits discrimination in lending by race, sex, religion, and national origin? What
types of income discrimination does it prohibit? - CORRECT ANSWER - The Equal
Credit Opportunity Act
The element of an adjustable interest rate that is the "moving part" is the: - CORRECT
ANSWER - Index
A mortgage loan always creates two documents: a note and a security instrument (the mortgage
or deed of trust). Which of the following items is covered in the security instrument? -
CORRECT ANSWER - An unambiguous (legal) description of the property that is being
pledged as collateral for the loan
Which of the following types of loans is the most likely to contain a due-on-sale clause? -
CORRECT ANSWER - Conventional home loan
When, as part of a purchase transaction, a buyer adds her signature to an existing government
(FHA, VA) note, the buyer is said to have acquired the property: - CORRECT ANSWER -
By assumption
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)? - CORRECT
ANSWER - Truth-in-Lending Act (TILA)
Which of these points in a mortgage loan would be addressed in the mortgage (possibly in the
note as well)? - CORRECT ANSWER - Escrows
, If the lender in a standard first mortgage wishes to foreclose cost effectively; it is crucial to have
which clause in the mortgage? - CORRECT ANSWER - Acceleration clause
The characteristics of a borrower that can be considered by a lender in a mortgage loan
application are limited by the: - CORRECT ANSWER - Require use of a standard
settlement statement available prior to closing
Prohibits kickbacks between vendors of closing-relate services and lenders
Requires borrowers receive a good faith estimate of closing costs soon after applying
A partially amortizing loan always will have - CORRECT ANSWER - A Ballon Payment
Foreclosure trends to be quickest in states that - CORRECT ANSWER - Have Power of
sale
Which of these statements is true about mortgage loans for income-producing real estate? -
CORRECT ANSWER - They usually are partially amortizing loans.
With what type of loan security arrangement is the deed held by a neutral third party and
returned upon payment of the mortgage in full? - CORRECT ANSWER - Deed of Trust
The Truth-in-Lending Act gives some mortgage borrower show long to rescind a mortgage loan?
- CORRECT ANSWER - 3 days
Which statement is correct about the right of prepayment of a home mortgage loan? - CORRECT
ANSWER - Most home mortgage loans have the right of prepayment without charge, but
not all, and the borrower should check the loan carefully.
Partially amortizing mortgage loans require periodic payments of principal, but are not paid off
completely over the loan's term to maturity. Instead, the balance of the principal amount is paid
at maturity in what is commonly referred to as a: - CORRECT ANSWER - Balloon
Payment
Questions and CORRECT Answers
What two contracts are always involved in a mortgage loan? - CORRECT ANSWER -A
note and a mortgage
The two most common types of caps in an adjustable rate mortgage are: - CORRECT
ANSWER - Periodic and overall
What happens to the balance of a loan with negative amortization? - CORRECT
ANSWER - It increases
What is a Balloon Loan? - CORRECT ANSWER - A loan with an amortization term that
determines interest and principle payments as if it were a fully amortized loan and a shorter term
for maturity at which the remaining loan balance must be paid in full
Of these types of loans, which typically have prepayment restrictions or penalties?
a. Standard home loan.
b. Large home loan.
c. Subprime loan.
d. Commercial property mortgage loan. - CORRECT ANSWER - Large home loans,
subprime loans, and commercial mortgage loans
Why does a mortgage lender want to be able to pay the property taxes on behalf of a mortgage
borrower? - CORRECT ANSWER - The property tax lien is superior to the mortgage and
can preempt it in default.
What types of standard home loans are assumable? - CORRECT ANSWER - Federal
Housing Administration (FHA) and Veterans Affairs (VA)
,In practice, lenders commonly define default as occurring when a loan ism____ days overdue. -
CORRECT ANSWER - 90
Depending on the state, the process of foreclosure sale is either by___ or by___ . The method
most favorable to a lender is___ . - CORRECT ANSWER - Judicial foreclosure; power of
sale; power of sale
What law prohibits discrimination in lending by race, sex, religion, and national origin? What
types of income discrimination does it prohibit? - CORRECT ANSWER - The Equal
Credit Opportunity Act
The element of an adjustable interest rate that is the "moving part" is the: - CORRECT
ANSWER - Index
A mortgage loan always creates two documents: a note and a security instrument (the mortgage
or deed of trust). Which of the following items is covered in the security instrument? -
CORRECT ANSWER - An unambiguous (legal) description of the property that is being
pledged as collateral for the loan
Which of the following types of loans is the most likely to contain a due-on-sale clause? -
CORRECT ANSWER - Conventional home loan
When, as part of a purchase transaction, a buyer adds her signature to an existing government
(FHA, VA) note, the buyer is said to have acquired the property: - CORRECT ANSWER -
By assumption
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)? - CORRECT
ANSWER - Truth-in-Lending Act (TILA)
Which of these points in a mortgage loan would be addressed in the mortgage (possibly in the
note as well)? - CORRECT ANSWER - Escrows
, If the lender in a standard first mortgage wishes to foreclose cost effectively; it is crucial to have
which clause in the mortgage? - CORRECT ANSWER - Acceleration clause
The characteristics of a borrower that can be considered by a lender in a mortgage loan
application are limited by the: - CORRECT ANSWER - Require use of a standard
settlement statement available prior to closing
Prohibits kickbacks between vendors of closing-relate services and lenders
Requires borrowers receive a good faith estimate of closing costs soon after applying
A partially amortizing loan always will have - CORRECT ANSWER - A Ballon Payment
Foreclosure trends to be quickest in states that - CORRECT ANSWER - Have Power of
sale
Which of these statements is true about mortgage loans for income-producing real estate? -
CORRECT ANSWER - They usually are partially amortizing loans.
With what type of loan security arrangement is the deed held by a neutral third party and
returned upon payment of the mortgage in full? - CORRECT ANSWER - Deed of Trust
The Truth-in-Lending Act gives some mortgage borrower show long to rescind a mortgage loan?
- CORRECT ANSWER - 3 days
Which statement is correct about the right of prepayment of a home mortgage loan? - CORRECT
ANSWER - Most home mortgage loans have the right of prepayment without charge, but
not all, and the borrower should check the loan carefully.
Partially amortizing mortgage loans require periodic payments of principal, but are not paid off
completely over the loan's term to maturity. Instead, the balance of the principal amount is paid
at maturity in what is commonly referred to as a: - CORRECT ANSWER - Balloon
Payment
