REE Final Exam Questions With Correct
Answers
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? - answerAn
unambiguous description of the property that is being pledged as collateral fo...
EXAM STUDY MATERIALS July 30, 2024 11:26 AM REE Final Exam Questions With Correct Answers 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 mortga ge? - answer✔✔An unambiguous description of the property that is being pledged as collateral for the loan. A significant number of mortgage loans use adjustable interest rates, in which the interest rate of the loan is tied to an index rate that fluctuates over time. For income -producing property, the most common index rate is the: - answer✔✔London Interbank Offered Rate (LIBOR) Added to the index of the adjustable rate is a margin, which is the lender's "markup." For standard Adjustable Rate Mortgage (ARM) loans, the average industry margin has been stable at approximately: - answer✔✔275 basis points Most Adjustable Rate Mortgage (ARM) loans have been marketed with a temporarily reduced interest rate commonly referred to as a: - answer✔✔teaser rate For most mortgage loans on commercial real estate, the right of prepayment is constrained through a prepayment penalty. Which of the following types of prepayment penalties requires a borrower to provide the lender with some combination of U.S. Treasury securities that will serve to replace the cash flows of the loan being paid off? - answer✔✔Defeasance prepayment penalty Because the mortgage conveys a complex claim for a long period of time, clauses are included in anticipation of possible future complications. Wh ich of the following clauses requires a borrower to make monthly deposits into an account in order to pay obligations such as property taxes, community association fees, or causality insurance premiums? - answer✔✔Escrow clause Certain mortgage loans contai n a due -on-sale clause, which gives the lender the right to terminate the loan at sale of the property. Which of the following types of loans is the most likely to contain a due -on-sale clause? - answer✔✔Conventional home loan Standard mortgage loans requi re monthly payments typically composed of two components: interest and principal repayments. When scheduled mortgage payments are insufficient to pay all of the accumulating interest, causing some interest to be added to the outstanding balance after each payment shortfall, the loan is said to be: - answer✔✔negatively amortizing With most standard home loans, the lender can hold the borrower personally liable in the event of a default. Such loans are commonly referred to as: - answer✔✔recourse loans EXAM STUDY MATERIALS July 30, 2024 11:26 AM In a mo rtgage agreement, the borrower conveys to the lender a security interest in the mortgage property. The lender, i.e. the individual who receives the mortgage claim, is known as the: - answer✔✔mortgagee Violations of the requirements of a note that do not di srupt the payments on the loan tend to be viewed as "technical" defaults. In practice, how many days must a payment be overdue in order for lenders to treat a default as serious (i.e., a substantive default)? - answer✔✔90 days When a borrower defaults on t he payment requirements of a loan, there are several options that the lender has at its disposal. When the lender allows the borrower simply to convey the property to the lender rather than pursuing a court supervised process of terminating all of the borr ower's claims of ownership of the property, this is commonly referred to as: - answer✔✔Deed in lieu of foreclosure Foreclosure is considered the ultimate recourse of the lender because it allows the lender to bring about sale of the property to recover the outstanding indebtedness. All of the following statements regarding foreclosure are true EXCEPT: - answer✔✔When a lender forecloses on a property, it extinguishes all superior liens, bringing about a free and clear sale of the property The difference between judicial foreclosure and power of sale in the treatment of defaulted mortgages can be significant. All of the f ollowing statements regarding power of sale are true EXCEPT: - answer✔✔The foreclosed property is typically sold through a public auction administered by the court. The risk of bankruptcy tends to travel with the risk of foreclosure since both can result f rom financial distress. Known popularly by its section in the Federal Bankruptcy Code, which of the following types of bankruptcy is a court -supervised workout for a troubled business? - answer✔✔Chapter 11 bankruptcy When a buyer acquires a property having an existing mortgage loan, a decision must be made as to whether or not the subsequent owner of the property can preserve the loan. If the buyer does not add his or her signature to the note, the buyer does not take on any personal liability. In this case, the buyer is said to: - answer✔✔purchase the property subject to the existing loan Most real estate loans have a definite term to maturity, stated in years. The majority of home loans will typically have a term to maturity between: - answer✔✔15-30 years It is possible to have a secured real estate loan without a mortgage through the use of a contract for deed. In contrast to the standard real estate sale, which of the following events occurs after the closing when dealing with a contract for deed? - answ er✔✔Title to the property passes to the buyer Congress has enacted a number of regulations that have established criteria for evaluating home loan applicants and mandating disclosures in the origination of home loans. Which of the following congressional a cts requires important disclosures concerning the cost of consumer
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