Exam 33: Mortgages

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

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

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

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

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

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

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

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

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

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

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

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

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

With an adjustable-rate mortgage, the interest rate will

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.

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

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

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

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.

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