Real Estate Principles
Quiz #7            March 21, 2000
Mr. Vice      Copyright©2000 by Glenn Vice

_____ 1. An alienation clause

a. prohibits the sale of real property to undocumented aliens
b. transfers property from one spouse to the other in a divorce
c. gives the lender the right to call the loan due and payable if the borrower transfers ownership
d. gives the lender the right to call all sums due and payable if the borrower fails to make the payments

_____ 2. A subordination clause is most frequently included in

a. loans that are secured by existing homes
b. loans on bare land
c. loans that contain a prepayment clause
d. all of the above

_____ 3. Seeing that the lender makes the expected yield on the loan by promptly collecting and processing the loan payments with minimum cost is the goal of:

a. the loan application
b. the loan analysis
c. loan processing
d. loan servicing

_____ 4. A clause that gives the lender the right to call the loan (the full amount of the loan is immediately due and payable) upon the occurrence of certain events, such as nonpayment of the monthly payments or nonpayment of property taxes is called

a. an acceleration clause
b. the speedy sale clause
c. the alienation clause
d. subordination clause

_____ 5. In today's real estate finance market,

a. most loans do NOT have a prepayment penalty
b. most loans have a due-on-sale clause
c. most loans have an alienation clause
d. all of the above are true

_____ 6. Which of the following is correct?

a. ARMs usually have a higher initial interest rate than fixed rate loans
b. a straight note includes regular payments of both principal and interest
c. a Deed of Trust is the same as a Grant Deed
d. a Deed of Trust tends to favor the lender over the borrower

_____ 7. In today's real estate finance market, most loans

a. allow prepayment without a penalty
b. have a due-on-sale clause
c. have an alienation clause
d. have each of the above

_____ 8. The "reinstatement period," during which a loan can be brought current by paying all of the back payments plus late fees and other costs including the trustee's costs, runs until

a. one-year after the Trustee's sale
b. the last business day before the Trustee's Sale
c. 30 days after the filing of the Notice of Default
d. five business days prior to the Trustee's Sale

_____ 9. A deficiency judgment on an owner occupied residential dwelling

a. is almost always obtained when a foreclosure takes place and the net proceeds from the Trustee's sale are less than the amount of the loan
b. is automatically created when there is a foreclosure
c. is prohibited by Federal law
d. is difficult to obtain on non-FHA and non-VA loans in California because of special laws protecting homeowners

_____ 10. An Installment Sales Contract ( Land Contract)

a. does not transfer title from the seller to the buyer until all or an agreed portion of the loan is paid
b. makes it very difficult for the seller (lender) to remove a non-paying buyer, as a result of recent court cases.
c. is no longer popular in California because of the potential problems for both buyer and seller
d. is all of the above

_____ 11. When a borrower has failed to make the agreed payments on a note secured by a deed of trust, the first step is

a. the trustee records and publishes a notice of sale (NOS)
b. the trustee records a notice of default (NOD)
c. the Lender files a court action to begin the foreclosure process
d. the trustee files a court action to begin the foreclosure process

_____ 12. The foreclosure process

a. takes a minimum of 111 days
b. takes a minimum of six months
c. terminates with a trustee's sale, after which, the trustor has six months to redeem the property
d. cannot be stopped, once it has begun

_____ 13. The Truth-in-Lending Law

a. requires lenders to quote the cost of borrowing as an Annual Percentage Rate (APR)
b. is also called Regulation Z
c. provides that certain loans (refinance, home improvement, junior loans) are rescindable within three business days
d. is or does all of the above

_____ 14. Real Estate Settlement Procedures Act (RESPA)

a. applies to purchases of owner occupied residences using funds obtain from a federally regulated institutional lender
b. excludes loans made by private parties
c. requires use of a Uniform Settlement Statement (HUD-1) which itemizes all final charges
d. is or does all of the above

_____ 15. The Usury law in California

a. applies to all loans
b. limits the interest rate to 10% or 5 percentage points above the Federal Reserve discount rate.
c. exempts loans that are secured by real property and made or arranged by a California real estate broker
d. is both "b" and "c" above

_____ 16. The Mortgage Loan Broker Law

a. applies to junior trust deeds when the principal amount is $20,000 or more
b. applies to "seller carry back" financing when the loan is part of the sale price
c. limits the amount of commission that the mortgage loan broker can charge
d. applies to or does all of the above

Real Estate Principles             Quiz 7 - Answers

1.  C

2.  B

3.  D

4.  A

5.  D

6.  D

7.  D

8.  D

9.  D

10.  D

11.  B

12.  A

13.  D

14.  D

15.  D

16.  C