Deck 13: Other Financing Practices

Question 1

While the Securities and Exchange Commission does not directly regulate real estate sales, it can become involved under which of the following circumstances?

A) Whenever any sale of land is across state lines
B) If it suspects mishandling of an escrow account
C) If paper is sold for development without a specific commitment for conveyance of property
D) A sale where payment is made by installment notes

Answer 1

If paper is sold for development without a specific commitment for conveyance of property

Question 2

Which of the following is NOT an acceptable procedure for proving title to land?

A) An attorney's opinion based on research of an abstract
B) An accurate survey made by a state-licensed surveyor
C) Purchase of title insurance
D) A Torrens registration system

Answer 2

An accurate survey made by a state-licensed surveyor

Question 3

The loan to value ratio is a measure used by lenders for all the following purposes EXCEPT:

A) to determine acceptability of the property as loan collateral
B) as a basis for pricing the loan
C) to determine the need for private mortgage insurance
D) to protect against exceeding legal loan limits

Answer 3

to determine acceptability of the property as loan collateral

Question 4

To create a land syndicate, the most common form of business organization used is the:

A) syndicate itself
B) limited partnership
C) S Corporation
D) land trust

Question 5

All of the following are true of maximum and minimum limits for conventional loans EXCEPT:

A) Fannie Mae/Freddie Mace set new limits each year for their conventional/conforming loans
B) if a prospective loan exceeds an institution's in-house limit, other lenders may join in a participation loan
C) setting minimum limits for loan amounts is a possible violation of the Fair Housing Act
D) all states set limits on the maximum amount for residential loans within the state

Question 6

Which of the following is a FALSE statement in regard to refinancing a home loan?

A) Lenders are free to set their own requirements for refinancing a loan
B) Income tax laws may affect the savings in refinancing
C) A 2 percent reduction in interest rate is a profitable refinancing in every case
D) A major problem is the appraised value of the property may be less than the balance due on the existing mortgage loan

Question 7

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) was enacted to make it more __________________________________

A) difficult for unsecured creditors to obtain payments in Chapter 7
B) structured for lenders to obtain releases from Chapter 11 filings
C) difficult for well off borrowers to file for Chapter 7 by having to go through a means test
D) extends the 60 month payment settlement period for Chapter 13 to 72 months

Question 8

In a non-judicial foreclosure, the power of sale clause in a mortgage grants the right to take the action to the:

A) Court
B) Mortgagor
C) Trustee
D) New buyer

Question 9

The private mortgage insurance required by regulated depository financial institutions states that for residential mortgage loans with LTV's higher than _______%must have private insurance coverage.

A) 75
B) 80
C) 85
D) 90

Question 10

If a builder holds an unsubordinated leasehold interest in land, it means that a building constructed on the land

A) would pass to the landowner if the land rent is not paid
B) would pass to the mortgagee if the land rent is not paid
C) the builder would only forfeit ownership if the mortgage loan is not paid
D) would remain in possession of the builder as long as the land rent if paid

Question 11

Which of the following is correct in regard to an owner's title insurance policy?

A) It is transferable to a new property owner
B) The policy terminates when the mortgage loan is paid off
C) The policy terminates when the property is transferred to a new owner
D) It protects the policy holder against adverse claims even beyond the term of property ownership