If the purchaser is required to sign a security deed at a closing, he would not be required to sign a:

A. mortgage.

B. note.

C. purchaser’s affidavit.

D. closing disclosure.

Don contracts to purchase a property from Carol and is obtaining a loan from ABC Mortgage. Don is paying all costs of closing. The closing attorney most likely represents:

A. Don because he is paying.

B. Carol because she is the seller.

C. ABC Mortgage.

D. All three.

Which of the following is TRUE in respect to RESPA?

A. The Act applies to any property closing with a new loan. B. RESPA puts a limit on the interest rate a lender can charge.

C. Some aspects of the RESPA have been overridden by TRID.

D. Kickbacks are allowed with disclosure

Evidence of the amount and terms of a borrower’s debt to a lender is provided by means of a:

A. mortgage.

B. promissory note

C. security deed.

D. trust deed.

A buyer bought a home from an owner. The owners agreed to owner-finance the property. The parties agreed to amortize the loan over a 15-year period. The buyer became the owner of record of the property, and the seller had a lien against the property. What type of instrument was used to purchase the property?

A. A loan assumption.

B. A land contract.

C. A reverse annuity mortgage.

D. A purchase money mortgage.

D. A purchase money mortgage.

note: a purchase money mortgage= A note secured by a mortgage or deed of trust given by a buyer, as borrower, to a seller, as lender, as part of the purchase price of the real estate. 

If a lender sells a loan to an investor at a discounted price, this would have the effect of:

A. increasing the investors yield.

B. increasing the lenders yield.

C. decreasing the interest rate on the loan.

D. increasing the interest rate on the loan. 

Cathy purchased a property for $150,000 and received a 90% loan. The lender charged 3 points to cover loan application fees and 1 point discount. The total cost of the loan is:

A. $5,400

B. $6,000

C. $4,500

D. $4,050 

A. $5,400

3+1points= 4%

$150,000 x 90%= $135,000

$135,000x 4%= 5,400

Which of the following is TRUE in regards to an adjustable rate mortgage?

A. The interest rate is usually adjusted monthly.

B. The interest rate does not change but the payments may.

C. The interest rate is tied to an index controlled by the lender.

D. The payments may increase or decrease. 

D. The payments may increase or decrease.

note: The adjustable-rate mortgage (ARM) begins at one rate of interest, then fluctuates up or down during the loan term, based on a specified economic indicator. Because the interest rate may change, the mortgagor’s loan payment may change. 

The primary purpose of the Veteran’s Administration in residential lending is to:

A. make loans to qualified veterans.

B. take the risk out of borrowing to veterans.

C. guarantee loans made by approved lenders.

D. insure loans to qualified lenders.

In Georgia, what document is used most commonly as security for a loan?

A. A security deed.

B. A mortgage.

C. A note.

D. A trust deed.

Truth In Lending / Regulation Z applies to which of the following real estate transactions?

A. Business.

B. Commercial.

C. Residential.

D. Agricultural

C. Residential.

Note: Truth In Lending/ Regulation Z covers all residential real estate transactions involving credit, regardless of the amount ( slide 135).

 Discount points on a loan are used by the lender to:

A. Pay the loan application fee.

B. Increase the yield on the loan.`

C. Increase the loan to value ratio.

D. Reduce the down payment.

A builder purchased several parcels of property with a mortgage containing a release clause. Which of the following mortgages would accomplish this?

A. Package mortgage.

B. Blanket mortgage.

C. Open end mortgage.

D. Purchase money mortgage.

B. Blanket mortgage.

note: by definition Blanket mortgages secure more than one parcel and usually contain a partial release clause (slide: 121 & 122)

The interest or value remaining in property after payment of all terms or other charges on the property is called:

A. appreciation.

B. equity.

C. interest.

D. principal.

Five years ago, an owner purchased a parcel of property for $200,000 and financed the purchase with a $150,000 6% conventional loan. Today the value of the property is estimated at $239,000 and the loan balance is $146,000. The owner’s equity is?

A. $50,000

B. $89,000

C. $93,000

D. $239,000 

C. $93,000

$239,000 (property value)-$146,000 (loan balance)= $93,000

Which of the following is a similar characteristic of both a FHA and VA loan?

A. Both are government backed loans and non-assumable. B. Both loans require down payments which can be financed.

C. Both loans have prepayment privileges and cannot be charged a prepayment penalty.

D. These loans must be paid within 20 years

Under the TILA-RESPA Integrated Disclosure Rule (TRID), the Loan Estimate form is required to be provided to the consumer/borrower no later than how many days after they submit a loan application?

A. 3 days.

B. 3 business days.

C. 7 days.

D. 7 business days

In a loan assumption, a seller may be released from the debt and a new buyer substituted as the party permanently liable for the mortgage debt. Who releases the seller?

A. Mortgagor.

B. Mortgagee.

C. Buyer.

D. Seller

Which of the following is a characteristic of FHA?

A. Lends money to approved lenders.

B. Builds homes that meet HUD specifications.

C. Insures loans on real property including condominiums made by approved lenders.

D. Guarantees loans made for purchasing or constructing homes by eligible borrowers. 

The maximum term of a residential VA or FHA loan is?

A. 10 years.

B. 20 years.

C. 30 years.

D. 40 years

Which of the following is NOT a purpose of the Truth-In-Lending Act (Regulation Z)?

A. To give borrowers meaningful information with respect to the cost of credit.

B. To disclosure of the annual percentage rate.

C. To set maximum interest rates.

D. To provide the borrower the limited right to rescind or cancel a credit transaction.

A title insurance agency pays a referral fee to a lender for referring one of the lender’s recent loan customers to them. This would be a violation of:

A. Truth-In-Lending Act.

B. Real Estate Settlement Procedures Act.

C. Usury Laws.

D. Equal Credit Opportunity Act. 

B. Real Estate Settlement Procedures Act.

note: RESPA= The federal law that requires certain disclosures to consumers about mortgage loan settlements. The law also prohibits the payment or receipt of kickbacks and certain kinds of referral fees.

Under the TILA-RESPA Integrated Disclosure Rule (TRID), the HUD-1 and final truth-inlending forms have been combined into the:

A. loan estimate.

B. closing disclosure.

C. HUD Uniform Settlement Statement.

D. warranty deed.

A buyer puts a down payment of $20,000 on an $80,000 house. The loan to value ratio would be:

A. 25%.

B. 50%.

C. 75%.

D. 80%

C. 75%.

$80,000-$20,000= $60,000

$60,000/$80,000= 0.75

=75%

A property is appraised for $100,000 and the lender will give the buyer a mortgage with an 80% loan-to-value ratio. If the lender charges three points, the total amount of cash the buyer would need to provide is:

A. $6,000.

B. $2,400.

C. $20,000.

D. $22,400.

D. $22,400.

$100,000x20%= $20,000 (Down Payment)

$100,000x80%= $80,000

$80,000x3%= $2,400

$20,000+$2,400= $22,400