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Exam 33: Mortgages

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Question 21

Multiple Choice

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With an adjustable-rate mortgage, the interest rate will

A) not change.
B) change periodically.
C) increase over time.
D) decrease over time.

E) All of the above
F) A) and B)

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Question 22

Multiple Choice

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Ridgeline Mortgage Company fails to provide Sam, a mortgage loan applicant, with the required disclosures. Under the applicable statute, Sam has the right to cancel the mortgage

A) at any time.
B) within the term of the loan.
C) within three years.
D) at no time.

E) B) and D)
F) C) and D)

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Question 23

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The Truth-in-Lending Act disclosure requirements apply to written materials and to oral representations.

To purchase a house for $600,000, Grant applies for a mortgage loan at Home Bank. The bank requires a 20-percent down payment. Grant agrees to pay $60,000 and obtain insurance to cover the remaining 10 percent. Later, Grant defaults on the loan. The insurer must reimburse

To buy a house, Terry obtains a mortgage loan with Urban Bank. Later, Terry misses a payment. The bank can foreclose on the entire amount of the loan if the loan documents include

If a lender provides the required Truth-in-Lending Act disclosures, a borrower who fails to read the documents cannot claim fraud.

To buy a house, Kent obtains a mortgage loan with Loan Store Inc. Later, Kent misses six payments on the loan and is notified of a possible foreclosure. He continues to miss payments. Most likely, within a reasonable time, Kent will

Galen has a mortgage loan with Eagle Bank that includes a prepayment penalty clause. If Galen repays his mortgage in full within the period specified in the clause, he most likely will be

To purchase a house, Nora obtains a mortgage loan from Oak Tree Loans LLC. Later, Nora informs Oak Tree that she may default on the payments. The lender agrees to delay taking possession of the property and selling it. The parties negotiate a payment plan for the amount due on the loan. This is

Steering and targeting occurs when a lender convinces a homeowner to refinance soon after obtaining a mortgage.

Every state allows a defaulting borrower to redeem the property before the foreclosure sale.

To purchase a house, Beth obtains a mortgage loan with Community Bank. Beth defaults on the payments on the loan. She agrees to convey the property to the bank in satisfaction of the mortgage. This is

A deficiency judgment will amount to the difference between the borrower's outstanding debt and lender's asking price at the foreclosure sale.

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 can be described best as

A fixed-rate mortgage is a mortgage with an interest rate that is fixed for six months and then changes every six months after that.

Homeowners' insurance does not protect the lender's interest in the event of a loss due to certain hazards, such as fire or storm damage.

A lender can require a borrower to maintain the property in such a way that the lender's investment is protected.

An individual who borrows funds from a financial institution to purchase real property by taking out a mortgage is a mortgagee .

Kevin applies for a mortgage loan from Liberty Bank. The bank provides all of the required disclosures, but orally misrepresents the terms of the loan. Kevin does not read the documents. Later, Kevin can

Seaside Bank agrees to lend Toby the funds to buy a house. In this deal, the lender is