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Exam 33: Mortgages

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Question 31

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A lender that fails to record a mortgage could find itself in the position of an unsecured creditor.

A) True
B) False

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Question 32

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Sierra borrows $175,000 from Regional Home Finance Corporation to buy a home. The loan is a twenty-year, 3/1 ARM, with an initial interest rate of 3.0 percent for three years and potential annual increases of up to 3.0 percent to a cap of 11.0 percent. Ten days before the loan is finalized, the lender discloses the amount of the loan principal, the initial interest rate, the initial annual percentage rate, and associated fees and costs. Before the first increase takes effect, Sierra decides that she wants to rescind the loan. What is a twenty-year, 3/1 ARM? Can Sierra rescind this loan? Why or why not?

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Any loan, including a mortgage, can have...

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Question 33

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To purchase a house, Clyde obtains a mortgage loan from Debit Bank. Clyde defaults on the payments on the loan. The bank has

To buy a house, Tom obtains a mortgage loan with Universal Credit Union. Later, Tom defaults on the loan. Universal informs him that the property will be sold in a foreclosure proceeding. Before the sale, to gain title and regain possession, Tom can

To purchase a house, Becky obtains a mortgage loan from Countywide Bank. The lender should record the mortgage to

Kelly applies for a mortgage loan at Lakeside Bank. Kelly qualifies for a fixed-rate mortgage, but the bank convinces her to take an ARM. This is

The borrower need not obtain the lender's permission for a short sale.

To buy a house, Abby obtains a mortgage loan with Beneficial Bank. Later, Abby misses six payments on the loan. To initiate a foreclosure, the bank must

Louis applies for a mortgage loan at Market Lending LLC. The lender does not disclose all terms of the loan. This is

Fact Pattern 33-1 To buy a house, Mary obtains a thirty-year mortgage with an interest rate that is fixed for three years and then adjusts annually. Refer to Fact Pattern 33-1. Mary's mortgage is

With a fixed-rate mortgage, the interest rate will

Art obtains a mortgage loan from Bayside Bank so that he can purchase a house. The house costs $200,000. Art makes a down payment of $20,000. Based on the amount of the price paid up front, Bayside will likely require Art to

Recording a mortgage ensures that the creditor is officially on record as holding an interest in the property.

A notice of sale is a formal notice to a borrower who is in default that the mortgaged property has been sold in a foreclosure proceeding.

To purchase a house, Denise obtains a mortgage loan with Employees Credit Union. Denise defaults on the payments on the loan. She agrees to submit to a court's jurisdiction, to waive any defenses as well as the right to appeal, and to cooperate with the lender. This is

The borrower is typically required to pay all property taxes, assessments, and other claims against the property.

To initiate a foreclosure, a lender must record a notice of default with the appropriate county office.

A prepayment penalty clause helps to protect the borrower should the lender sell the loan within a short time after issuing a mortgage.

To protect the lender's investment, a mortgage typically requires the borrower to

The Truth-in-Lending Act requires that disclosures of a loan's major terms be made on standard forms, using uniform formulas of calculation.