1. Globalization of the real estate capital market has resulted in
A. higher interest rates due to more risk.
B. capital flowing out of the US into Chinese real estate.
C. more capital availability in the US mortgage market.
D. non-performing loans.
2. 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:
A. 1-5 years
B. 5-7 years
C. 7-15 years
D. 15-30 years
3. Created by Congress to promote an active secondary market for home mortgages, Fannie Mae and Freddie Mac purchase loans that meet specific underwriting standards such as loan size, documentation, and payment to income ratio. The loans that Fannie Mae and Freddie Mac are eligible to purchase are referred to as:
A. conventional loans
B. conforming conventional loans
C. nonconforming conventional loans
D. jumbo conventional loans
4. Since conforming loans can be much more readily bought and sold in the secondary mortgage market, they carry a _______ interest rate than comparable nonconforming loans.
A. lower
B. equal
C. higher
D. more volatile
5. Standard mortgage loans require 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:
A. fully amortizing
B. partially amortizing
C. negatively amortizing
D. non amortizing
6. Because the mortgage conveys a complex claim for a long period of time, clauses are included in anticipation of possible future complications. Which 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?
A. Escrow Clause
B. Insurance clause
C. Demand Due clause
D. Exculpatory clause
7. Lenders generally require private mortgage insurance (PMI) for conventional loans over 80 percent of the value of the security property. PMI protects a lender against which of the following?
A. Losses due to default on the loan
B. Legal threat to the lender's mortgage claim
C. Physical hazards
D. Changes in the index rate associated with an adjustable rate mortgage
8. Mortgage originators can either hold loans in their portfolios or sell them to investors. When a mortgage originator decides to sell mortgages to an institution, for example, this transaction occurs in what is commonly referred to as the:
A. primary mortgage market
B. over the counter market
C. secondary mortgage market
D. loan origination market
9. Violations of the requirements of a note that do not disrupt 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?
A. One day
B. 90 days
C. 60 days
D. 30 days
10. The acceleration clause increases risk for the lender.
True/False
11. A 10/1 mortgage has a variable rate for the first 10 years and then the rate is fixed.
True/False
12. The mortgage serves as a security for the promissory note.
True/False