Chapter 9 Quiz - Principles of California Real Estate

Principles of California Real Estate Instructor Materials Chapter 9 Quiz 1. What document is used to hypothecate title to   :KLFKSDUW\WRDGHHGRIWUXVWZRXOGH[HFXWH personal property, as opposed to real property? a deed of reconveyance? A....

Principles of California Real Estate Instructor Materials Chapter 9 Quiz 1. What document is used to hypothecate title to   :KLFKSDUW\WRDGHHGRIWUXVWZRXOGH[HFXWH personal property, as opposed to real property? a deed of reconveyance? A. Bill of sale  $ 0RUWJDJRU  % &KDWWHOPRUWJDJH  % %HQH¿FLDU\  & 6HFXULW\DJUHHPHQW  & 7UXVWHH  ' &HUWL¿FDWHRIFOHDUDQFH  ' 7UXVWRU   7KH)HGHUDO5HVHUYHFRXOGFUHDWHDWLJKWPRQH\   ,I D OHQGHU ³FDOOV´ D QRWH WKDW PHDQV WKH market by: lender:  $ ORZHULQJWKHGLVFRXQWUDWH A. forecloses on the property B. raising the discount rate and buying B. demands payment of delinquent loan in- bonds stallments  & EX\LQJERQGV  & DOORZVDSXUFKDVHUWRWDNHWLWOHVXEMHFWWR  ' UDLVLQJWKHGLVFRXQWUDWHDQGVHOOLQJERQGV the loan  ' DFFHOHUDWHVWKHORDQ   $ SXUFKDVH PRQH\ ¿UVW PRUWJDJH ZLOO WDNH priority over:   :KLFKRIWKHIROORZLQJLVDW\SHRIQRWHZKHUH A. real property tax liens only interest is paid during its term? B. all liens against a property at the time of A. Straight note sale  % $PRUWL]HGQRWH  & DQ\VXEVHTXHQWO\UHFRUGHGOLHQVDJDLQVWWKH  & ,QVWDOOPHQWQRWH property  ' &RJQRYLWQRWH  ' DFRQVWUXFWLRQORDQZKHUHWKHSURMHFWEHJDQ DIWHUWKH¿UVWPRUWJDJHZDVUHFRUGHG 9. Which loan names are synonymous? A. Interim loan/takeout loan 4. If a lender charges an interest rate greater than B. Takeout loan/standby loan WKDWDOORZHGE\ODZLWLVNQRZQDV  & &RQVWUXFWLRQORDQLQWHULPORDQ A. penury  ' &RQVWUXFWLRQ ORDQSURJUHVVLYH SD\PHQW B. usury loan  & SORWWDJH  ' H[WRUWLRQ 10. A land contract may be described as a substitute IRUDQRWHDQGDGHHGRIWUXVW,QWKLVZD\DODQG   :KLFKRIWKHIROORZLQJLVWKHEHVWGH¿QLWLRQRI contract is: a prepayment penalty? A. an option agreement  $ $IHHSDLGE\DWUXVWRUZKHQKHSD\VVRPH B. a three-party instrument of the debt in advance  & DVHFXULW\GHYLFH  % $IHHSDLGE\DWUXVWRUZKHQKHLVODWHLQ  ' LGHQWLFDOWRDPRUWJDJH paying his monthly payment  & $IHHSDLGE\DWUXVWRUWRORFNLQDQLQWHUHVW rate on a loan until closing  ' $IHHSDLGE\DEX\HULQRUGHUWRDVVXPHDQ existing loan 12  Chapter 9: Principles of Real Estate Financing  $VXERUGLQDWLRQFODXVHLQDGHHGRIWUXVWZLOO A. prohibit the trustor from obtaining another loan before the existing loan is paid in full  % SHUPLWWKHWUXVWRUWRSD\R൵WKHORDQLQIXOO before the end of the loan term  & UHTXLUHWKHDFFHOHUDWLRQRIWKHORDQLQWKH event the property is sold  ' JLYHSULRULW\WRVXEVHTXHQWORDQVRYHUWKH existing loan 12. A mortgage contains a provision requiring the lender’s approval before the loan can be as- sumed. Such a provision is: A. unenforceable B. valid  & YRLG  ' YRLGDEOH  $VWDWHPHQWREWDLQHGIURPDSURSHUW\RZQHU regarding a promissory note that lists the prin- cipal balance, interest rate, and amount and schedule of payments, is a/an:  $ EHQH¿FLDU\VWDWHPHQW  % R൵VHWVWDWHPHQW  & FHUWL¿FDWHRIGLVFKDUJH  ' VXERUGLQDWLRQFODXVH 14. If a trustor defaults on a deed of trust, the most H[SHGLHQWUHPHG\DYDLODEOHWRWKHEHQH¿FLDU\ is a/an: A. judicial foreclosure  % VKHUL൵¶VVDOH  & WUXVWHH¶VVDOH  ' XQODZIXOGHWDLQHUDFWLRQ 15. A buyer purchased a property for $700,000 DQG PDGH D GRZQSD\PHQW RI  +H ERUURZHGWKHUHPDLQGHURIWKHSXUFKDVHSULFH 7KLVZRXOGEHFRQVLGHUHGDSXUFKDVHPRQH\ mortgage if it came from: A. the seller B. a conventional lender  & WKHEX\HU¶VVLVWHULQODZ  ' $OORIWKHDERYH 13  Principles of California Real Estate Instructor Materials Answer Key  & $VHFXULW\DJUHHPHQWLVWKHVHFXULW\LQ- 8. A. A straight note is an interest-only note, strument used to secure a loan for the ZKHUHWKHERUURZHUZLOOSD\R൵WKH purchase of personal property. A bill interest during the loan term and then of sale is the instrument that actually pay the entire principal balance as a transfers title to personal property. balloon payment at the end of the loan term.  ' 7RFUHDWHDWLJKWPRQH\PDUNHWWKH )HGHUDO5HVHUYHZRXOGWDNHDFWLRQV  & $FRQVWUXFWLRQORDQLVDWHPSRUDU\ that reduce the amount of funds avail- ORDQVRLW¶VDOVRNQRZQDVDQLQWHULP DEOHWROHQG,WZRXOGGRVRE\UDLVLQJ ORDQ$WDNHRXWORDQLVSHUPDQHQW¿- NH\LQWHUHVWUDWHV WKHGLVFRXQWUDWHDQG nancing obtained once construction is the federal funds rate), raising reserve complete. requirements, and selling bonds. & :KHQLWLVXVHGDVDQDOWHUQDWLYH¿-  & $SXUFKDVHPRQH\PRUWJDJHLVDQ\ nancing arrangement, a land contract ORDQWDNHQRXWWR¿QDQFHWKHSXUFKDVH is a security device. Under a land RIUHDOSURSHUW\WKDWZLOOEHVHFXUHGE\ contract, the vendor continues to hold that property. Therefore, it can’t take legal title to the property during the SULRULW\RYHUOLHQVWKDWZHUHSUHYLRXVO\ repayment period. UHFRUGHG XQOHVVWKH\KDGDVXERUGLQD- tion clause) or over tax liens. ' $VXERUGLQDWLRQFODXVHSODFHVWKHH[- isting loan in a lien priority position  % 8VXU\ODZVDUHVWDWHODZVWKDWPDNHLW inferior to that of subsequent loans. illegal to charge more than a maximum interest rate on certain loans. % $OLHQDWLRQFODXVHVZKLFKDOORZWKH lender to call the loan if the property 5. A. A prepayment penalty is paid by a bor- is sold, are common in conventional URZHUZKRSD\VR൵GHEWLQDGYDQFH loans. Under an alienation clause, a Prepayment penalties are uncommon lender may approve an assumption of in residential mortgages. the loan by a proposed buyer.  & 7KHWUXVWHHZLOOVLJQWKHGHHGRIUHFRQ- % $QR൵VHWVWDWHPHQWLVREWDLQHGIURP veyance and deliver it to the trustor. DSURSHUW\RZQHUZKHQDPRUWJDJHRU The trustee should also record the deed deed of trust is assigned to an inves- of reconveyance to release the prop- WRU'RQ¶WFRQIXVHLWZLWKDEHQH¿FLDU\ erty from the lien. VWDWHPHQWZKLFKFRQWDLQVVLPLODULQIRU- mation but is obtained from a lender.  ' ,IDOHQGHUGHIDXOWVRQDQRWHVXEMHFWWR an acceleration clause in the mortgage RUGHHGRIWUXVWWKHOHQGHUZLOO³FDOO´ WKHORDQ7KLVZLOOUHTXLUHWKHERUURZHU to pay the loan amount in full. 14  Chapter 9: Principles of Real Estate Financing & 7KHSULQFLSDODGYDQWDJHRIGHHGRI trust foreclosure is that a trustee’s VDOHPD\EHKHOGZLWKLQPRQWKVRIWKH GHIDXOWUDWKHUWKDQZDLWLQJWKURXJKD MXGLFLDOIRUHFORVXUHVKHUL൵¶VVDOHDQG redemption period. ' ,QLWVEURDGHVWVHQVHDSXUFKDVH money mortgage is any loan used WRSXUFKDVHUHDOSURSHUW\ZKHUHWKH SURSHUW\ZLOOEHXVHGDVVHFXULW\,W can come from any source: the seller, a bank, even a friend or relative. 15