What is the role of Ginnie Mae in the secondary mortgage market?

It sells mortgage-backed securities backed by FHA and VA loans.

It purchases mortgage loans from primary lenders.

It provides insurance for mortgage loans.

It offers direct loans to homebuyers.

What is a mortgage in the context of mortgage law?

A voluntary, specific lien on real estate.

A negotiable instrument like a check.

A government grant for homebuyers.

A type of insurance for property.

What is a promissory note?

A borrower's personal promise to repay a debt.

A document that creates a lien on the property.

A type of insurance for mortgage loans.

What are discount points used for in loan charges?

To reduce the loan origination fee

To eliminate prepayment penalties

What is a loan origination fee?

A fee charged by the lender for making a mortgage loan

A fee charged for early repayment of a loan

A fee for reducing the interest rate

A fee for extending the loan term

What is a prepayment penalty?

A charge for paying off the loan principal early

A charge for late payment of a loan

A charge for increasing the loan amount

A charge for changing the loan terms

What is a straight loan?

A loan where only interest is paid during the term

A loan where only the principal is paid during the term

A loan where both principal and interest are paid monthly

A loan with no interest charges

What is an acceleration clause in a mortgage?

A clause that can enforce the entire debt immediately if the mortgagor defaults.

A clause that allows the borrower to skip payments without penalty.

A clause that reduces the interest rate if payments are made on time.

A clause that extends the loan term if the borrower requests it.

What is the purpose of a defeasance clause in a mortgage?

To cancel a specified right upon the occurrence of a certain condition.

To increase the interest rate after a certain period.

To allow the borrower to change the loan terms at any time.

To require additional collateral from the borrower.

What happens when a mortgage lien is released?

The mortgage lien is removed from the property.

The borrower must pay additional fees.

The lender gains more interest in the property.

The borrower must refinance the loan.

What does the borrower's monthly payment include according to the tax and insurance reserves section?

Principal, interest, taxes, and insurance reserves (PITI).

Taxes and insurance reserves only.

What is an alienation clause in a mortgage?

A clause that requires the seller to pay off the debt immediately upon sale.

A clause that allows the lender to change the interest rate at any time.

A clause that allows the buyer to assume the loan without any conditions.

A clause that prevents the lender from selling the mortgage.

What is judicial foreclosure?

A process where the property is sold by court order after sufficient notice.

A process where the lender takes possession without court involvement.

A process where the borrower can reclaim the property without payment.

A process where the lender forgives the remaining debt.

What is a deed in lieu of foreclosure?

A deed given to the lender to avoid foreclosure when the borrower is in default.

A deed that transfers property to a new buyer without any debt.

A deed that allows the borrower to sell the property at a higher price.

A deed that cancels all existing debts on the property.

What is a short sale in real estate?

A sale where the proceeds are less than the amount needed to pay off the mortgage.

A sale where the property is sold for more than the mortgage balance.

A sale that occurs within a short period after listing.

A sale that involves only a portion of the property.

What are equitable rights of redemption?

The right to recover the property before foreclosure by paying fees and charges.

The right to sell the property at any time.

The right to transfer the mortgage to another party.

The right to increase the mortgage amount.

What is a deficiency judgment?

A judgment that requires the borrower to pay the remaining debt after foreclosure.

A judgment that forgives the remaining mortgage debt.

A judgment that allows the borrower to keep the property without payment.

A judgment that increases the interest rate on the mortgage.

What is the purpose of a balloon payment in a mortgage?

To make a large final payment at the end of the loan term

To increase the loan term automatically

To reduce the interest rate over time

To pay off the loan early without penalty

What is the function of private mortgage insurance (PMI)?

To protect the lender in case of borrower default

To insure the property against natural disasters

To cover the borrower's personal belongings

To provide health insurance for the borrower

What is an adjustable-rate mortgage (ARM)?

A mortgage with an interest rate that changes periodically

A mortgage with a fixed interest rate for the entire term

A mortgage that requires no down payment

A mortgage that is only available to first-time homebuyers

What is the primary purpose of an escrow account in real estate transactions?

To hold funds for property taxes and insurance premiums

To insure the property against damage

To provide a loan to the borrower

To manage the sale of the property

What is the function of a loan-to-value (LTV) ratio in mortgage lending?

To assess the risk of the loan by comparing the loan amount to the property's value

To calculate the monthly mortgage payment

To set the term length of the mortgage

To determine the interest rate of the loan

Chapter 11- Study Guide

Authored by Foretta Byles

Other

Professional Development

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32 questions

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MULTIPLE CHOICE QUESTION

3 mins • 1 pt

What are the three components of the real estate financing market?

Governmental influence, primary mortgage market, secondary mortgage market

Federal Reserve System, commercial banks, savings associations

Interest rates, loan origination, mortgage brokers

Borrowers, lenders, investors

MULTIPLE CHOICE QUESTION

3 mins • 1 pt

What is the role of the Federal Reserve System (FED) in the real estate financing market?

It sets the interest rates and helps create a favorable economic climate

It originates loans and interacts with borrowers

It purchases mortgage loans and assembles them into packages

It provides direct loans to homebuyers

MULTIPLE CHOICE QUESTION

3 mins • 1 pt

Which of the following is true about the primary mortgage market?

It is where loans are originated and involves interactions with borrowers and lenders

It purchases and sells existing mortgages

It does not interact with borrowers

It only involves governmental agencies

MULTIPLE CHOICE QUESTION

3 mins • 1 pt

What is the function of mortgage brokers in the primary mortgage market?

They bring borrowers and lenders together but do not lend money themselves

They set interest rates and regulate the supply of money

They purchase mortgage loans and sell them to investors

They provide direct loans to borrowers

MULTIPLE CHOICE QUESTION

3 mins • 1 pt

Which institutions are part of the secondary mortgage market?

Frannie Mae, Freddie Mac, Ginnie Mae

Commercial banks, savings associations, mutual savings banks

Federal Reserve System, mortgage brokers, loan officers

Borrowers, lenders, investors

MULTIPLE CHOICE QUESTION

3 mins • 1 pt

Which government-sponsored enterprise deals with conventional and Federal Housing Administration (FHA) loans?

Freddie Mac

Ginnie Mae

Frannie Mae

Sallie Mae

MULTIPLE CHOICE QUESTION

3 mins • 1 pt

Which government-sponsored enterprise deals primarily with conventional loans?

Freddie Mac

Ginnie Mae

Frannie Mae

Sallie Mae

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Chapter 11- Study Guide

What are the three components of the real estate financing market?

What is the role of the Federal Reserve System (FED) in the real estate financing market?

Which of the following is true about the primary mortgage market?

What is the function of mortgage brokers in the primary mortgage market?

Which institutions are part of the secondary mortgage market?

Which government-sponsored enterprise deals with conventional and Federal Housing Administration (FHA) loans?

Which government-sponsored enterprise deals primarily with conventional loans?

What is the role of Ginnie Mae in the secondary mortgage market?

What is a mortgage in the context of mortgage law?

Who is the mortgagor in a mortgage loan transaction?

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