Question 1

A situation in which a borrower agrees to a court's jurisdiction and cooperates with the lender during litigation to resolve the situation:

Accepted Answer

A)  Prepackaged bankruptcy
B)  Judicial foreclosure
C)  Friendly foreclosure
D)  Voluntary conveyanceE) A) and D)
F) None of the above

Question 2

A clause which specifies that the mortgagee will obtain and maintain property insurance is typically included in a mortgage.

Accepted Answer

A) True 
 B)False

Question 3

The process of confirming a plan of reorganization under Chapter 11,even if one or more creditor classes dissent,is known as a "cramdown."

Accepted Answer

A) True 
 B)False

Question 4

What term BEST describes the borrower who is personally liable for a debt obligation related to the purchase of a home?

Accepted Answer

A)  Mortgagor
B)  Grantor
C)  Mortgagee
D)  GranteeE) B) and D)
F) None of the above

Question 5

Which of the following gives the lender the right or option to demand the loan balance owed if a default occurs.

Accepted Answer

A)  Nonrecourse clause
B)  Assignment clause
C)  Acceleration clause
D)  Default clauseE) A) and B)
F) B) and D)

Question 6

Which of the following solutions is LEAST likely to be acceptable to a mortgagee when discussing alternatives to foreclosing a property?

Accepted Answer

A)  Permanently extending the amortization period
B)  Finding someone else to assume the mortgage
C)  Providing a temporary grace period during which principal and interest are not paid
D)  Permanently reducing the interest rateE) B) and C)
F) All of the above

Question 7

When would seller financing NOT be used?

Accepted Answer

A)  The seller desires to take advantage of the installment method of reporting the gain from sale
B)  The buyer does not qualify for long term mortgage credit because of low down payment or difficulty meeting monthly payments
C)  Third-party mortgage financing is less expensive or easily available
D)  The seller desires to artificially raise the price of the property by offering a lower-than-market interest rate on the mortgageE) All of the above
F) B) and C) C

Question 8

Which of the following statements is FALSE regarding foreclosure?

Accepted Answer

A)  In judicial foreclosure,property subject to attachment and execution is limited to the mortgaged property
B)  If the sale of the mortgaged property realizes a price above the claims of the mortgage and expense of the sale,the balance goes to the mortgagor
C)  Redemption can be accomplished by paying 95% of the debt,interest and costs due to mortgage
D)  All of the aboveE) B) and C)
F) A) and D)

Question 9

A non-recourse loan is one in which the borrower is personally liable for payment of all amounts due under the terms of the note.

Accepted Answer

A) True 
 B)False

Question 10

A second mortgage is a junior lien mortgage that is sometimes used to bridge the gap between the price of a property and the sum of the first mortgage and down payment.

Accepted Answer

A) True 
 B)False

Question 11

Under lien theory,title and the right to possession pass from the mortgagor to the mortgagee when the mortgage is executed.

Accepted Answer

A) True 
 B)False  False

Question 12

When a purchaser takes a property "subject to" an existing mortgage,the purchaser becomes personally liable for repaying the debt.

Accepted Answer

A) True 
 B)False

Question 13

A mortgage is the same thing as a note.

Accepted Answer

A) True 
 B)False

Question 14

A transaction in which a borrower sells a property for less than the current balance of the loan and then provides all of the proceeds to the sale to the lender,typically in full satisfaction of the loan.

Accepted Answer

A)  Prepackaged bankruptcy
B)  Short sale
C)  Judicial foreclosure
D)  Friendly foreclosureE) B) and C)
F) B) and D)

Question 15

A due on sale clause which specifies that the mortgage can accelerate the debt if the property is sold without the mortgagee's permission is a typical clause in a mortgage document.

Accepted Answer

A) True 
 B)False

Question 16

A purchaser at a tax sale receives a deed to the property at the time of the sale in nearly all states.

Accepted Answer

A) True 
 B)False  False

Question 17

A mortgage default can result from failure to pay property taxes.

Accepted Answer

A) True 
 B)False

Question 18

In jurisdictions where a deed of trust is used to finance real estate,there are three parties to the loan secured by the deed of trust.Which of the following is NOT one of those three parties?

Accepted Answer

A)  Borrower
B)  Trustee
C)  Holder of the note
D)  GrantorE) A) and C)
F) C) and D)

Question 19

What is usually executed at the same time as a mortgage and creates the obligation to repay the loan in accordance with its terms?

Accepted Answer

A)  Recording acts
B)  Ownership interests
C)  Method of payment
D)  Promissory noteE) All of the above
F) C) and D)

Question 20

A remainder cannot be mortgaged.

Accepted Answer

A) True 
 B)False

Exam 2: Real Estate Financing: Notes and Mortgages

A situation in which a borrower agrees to a court's jurisdiction and cooperates with the lender during litigation to resolve the situation:

Correct AnswerverifiedShow Answer

A clause which specifies that the mortgagee will obtain and maintain property insurance is typically included in a mortgage.

Correct AnswerverifiedShow Answer

The process of confirming a plan of reorganization under Chapter 11,even if one or more creditor classes dissent,is known as a "cramdown."

Correct AnswerverifiedShow Answer

What term BEST describes the borrower who is personally liable for a debt obligation related to the purchase of a home?

Correct AnswerverifiedShow Answer

Which of the following gives the lender the right or option to demand the loan balance owed if a default occurs.

Correct AnswerverifiedShow Answer

Which of the following solutions is LEAST likely to be acceptable to a mortgagee when discussing alternatives to foreclosing a property?

Correct AnswerverifiedShow Answer

When would seller financing NOT be used?

Correct AnswerverifiedC

Which of the following statements is FALSE regarding foreclosure?

Correct AnswerverifiedShow Answer

A non-recourse loan is one in which the borrower is personally liable for payment of all amounts due under the terms of the note.

Correct AnswerverifiedShow Answer

A second mortgage is a junior lien mortgage that is sometimes used to bridge the gap between the price of a property and the sum of the first mortgage and down payment.

Correct AnswerverifiedShow Answer

Under lien theory,title and the right to possession pass from the mortgagor to the mortgagee when the mortgage is executed.

Correct AnswerverifiedFalse

When a purchaser takes a property "subject to" an existing mortgage,the purchaser becomes personally liable for repaying the debt.

Correct AnswerverifiedShow Answer

A mortgage is the same thing as a note.

Correct AnswerverifiedShow Answer

A transaction in which a borrower sells a property for less than the current balance of the loan and then provides all of the proceeds to the sale to the lender,typically in full satisfaction of the loan.

Correct AnswerverifiedShow Answer

A due on sale clause which specifies that the mortgage can accelerate the debt if the property is sold without the mortgagee's permission is a typical clause in a mortgage document.

Correct AnswerverifiedShow Answer

A purchaser at a tax sale receives a deed to the property at the time of the sale in nearly all states.

Correct AnswerverifiedFalse

A mortgage default can result from failure to pay property taxes.

Correct AnswerverifiedShow Answer

In jurisdictions where a deed of trust is used to finance real estate,there are three parties to the loan secured by the deed of trust.Which of the following is NOT one of those three parties?

Correct AnswerverifiedShow Answer

What is usually executed at the same time as a mortgage and creates the obligation to repay the loan in accordance with its terms?

Correct AnswerverifiedShow Answer

A remainder cannot be mortgaged.

Correct AnswerverifiedShow Answer

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C

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False

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False

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