Chapter 10 Questions

Chapter 10 Questions
By Michael McMinassian

True Or False

1.)    A prepayment clause is when the borrower’s has the right but not an obligation to prepay the entire loan balance without a penalty.

2.)    A secured debt involves a personal promise to pay the loan back but the loan is backed by a collateral.

3.)    An acceleration clause is good for the borrower.

4.)    The tenant is the lessor.

5.)    Amortization is the gradual reduction of a debt through systematic principal repayments over the life of the loan.

6.)    This theory involves a Mortgagor to give legal title to a Trustee and once the Mortgagee pays the loan off the Trustee returns the Legal Title back to the Mortgagor to give to title to the Mortgagee.  

a.      Lien Theory

b.      Title Theory

c.       Title Theory with Deed of Trust

d.      All of the above.

7.)    Monthly Debt service=______________+Monthly Principal

a.      Monthly Tax

b.      Monthly Interest

c.       Monthly Dividend

d.      Net Operating Income

8.)    This point is a charge that is paid by the mortgagor at origination to reduce or buy down the mortgage contract rate.

a.      Discount Point

b.      Origination Point

c.       Point  Point

d.      Entrepreneur Point

Key

1.T
2. T
3. F
4.F
5.T
6.C
7.B
8,A