Tuesday, May 17, 2011

Chapter 10 questions

Chapter 10
1. A variable rate or payment mortgage that adjust to a specified index periodically is known as
A. Acceleration clause
B. Adjustable rate mortgage
C. Amortization
D. Annuity

Answer is B- Adjustable Rate Mortgage

2. A document transferring legal title to a trustee is known as
A. Deed of reconveyance
B. Equitable title
C. Deed of trust
D. Title theory

Answer is C- Deed of trust

3. A personal promise to bay back a loan is known as
A. Secured debt
B. Unsecured debt
C. Lien theory
D. Hypothecation

Answer is B-Unsecured Debt

1. A mortgage product that acts like a standard constant payment mortgage for a specified number of years and then turns into an ARM product thereafter is known as a hybrid mortgage.

2. The initial low rate offered by mortgagee as enticement, or tease for a mortgagor is known as a fixed rate.

Answer: False- Known as Teaser rate

3. A fee that the mortgagor agrees to pay, in addition to the outstanding mortgage balance, when a loan is prepaid and the mortgage does not have a prepayment clause is known as a point.

Answer: False- Known as a prepayment penalty

4. The risk that interest rates will change and negatively affect the interest rate spread is known as the lenders effective yield.

Answer: False- Known as interest rate risk.

5. A ceiling of the interest rate change over the life of the mortgage is known as an overall cap.

Answer: True

No comments:

Post a Comment