Tuesday, November 19, 2013
Chapter 10 Extra Credit
1) An unsecured debt is a personal promise to pay back a loan; whereas, a secured debt is a personal promise to repay a loan and is backed by collateral.
2) In the underwriting process, qualifying an applicant is considered and property qualification is not important.
3) A charge paid by the mortgagor at origination to reduce or buy down the mortgage contract rate is called a discount point.
4) Mortgage origination happens when a mortgage payment has two components: the interest and the principal.
5) An equitable title is the right to legal title if all obligations of the promissory note are fulfilled.
6) The risk that interest rates will change and negatively affect the interest rate spread is called ________.
a. Teaser rate
b. Interest rate risk
c. Adjustable rate mortgage
d. Period cap
7) If a borrower defaults on one mortgage payment, the entire loan balance must be paid immediately. This can be found in a __________.
a. Prepayment clause
b. Due on sale clause
c. Acceleration clause
d. Mortgage documentation
8) Recognizable secondary income includes which of the following:
c. Overtime pay
d. Child support
e. All of the above
Answers: 1)T 2)F 3)T 4)F 5)T 6)B 7)C 8)E