Question 1

Kenton borrows $150,000 from Liberty Home Finance Corporation to buy a home. Federal law concerns primarily

Accepted Answer

A)  borrowers' ability to avoid clear terms in financing documents when the effect may be harsh. 
B)  how many loans a specific lender can make. 
C)  the highest prices for which real property can be sold. 
D)  what must be disclosed with respect to a mortgage. 
A)  borrowers' ability to avoid clear terms in financing documents when the effect may be harsh. 
B)  how many loans a specific lender can make. 
C)  the highest prices for which real property can be sold. 
D)  what must be disclosed with respect to a mortgage. D

Question 2

There are additional disclosure requirements for a higher-priced mortgage loan.

Accepted Answer

A) True 
 B)False  True

Question 3

Fact Pattern 31-1A
24-Hour Credit Corporation issues high-cost and high-fee mortgage products to people, including Benny, who could not easily obtain credit under other loan programs.
-Refer to Fact Pattern 31-1A. Under federal law, if 24-Hour Credit fails to provide certain material disclosures with respect to the loan, Benny's right to rescind the loan

Accepted Answer

A)  expires at midnight on the day the loan is finalized. 
B)  is immediately revoked. 
C)  is extended for up to three years. 
D)  is tolled for the duration of the loan payments. 
A)  expires at midnight on the day the loan is finalized. 
B)  is immediately revoked. 
C)  is extended for up to three years. 
D)  is tolled for the duration of the loan payments. C

Question 4

Seymour borrows $350,000 from Reliable Bank to buy a home. Seymour stops making payments on the loan ten months later. After the bank repossesses the property securing the loan but before it is sold, Seymour wants to buy it. This is

Accepted Answer

A)  a deficiency judgment. 
B)  a reverse mortgage. 
C)  a violation of the law. 
D)  the right of redemption. 
A)  a deficiency judgment. 
B)  a reverse mortgage. 
C)  a violation of the law. 
D)  the right of redemption.

Question 5

A lender's failure to comply with federal mortgage disclosure requirements extends the borrower's right to rescind the loan to no more than seven days.

Accepted Answer

A) True 
 B)False

Question 6

Kim's home is valued at $250,000. Kim has paid the mortgage-she has 100 percent equity in the property. She wants to start a new business with Lloyd. To obtain funds, Kim refinances the loan through Metro Bank, borrowing $200,000 for fifteen years at an interest rate of 4.85 percent. Before the loan is completed, Metro provides Kim with all of the required disclosures. On the day of the loan, a fifteen-year Treasury bond is yielding 2.85 percent. Kim pays $7,500 in fees to the bank. Less than a month later, she sells her interest in the new business to Lloyd and wants to rescind the loan. Which federal law covers this loan-TILA, HOEPA, HPML, or HAMP Can Kim rescind the deal Explain.

Accepted Answer

With respect to real estate transactions

Question 7

If a homeowner defaults, the lender has the right to foreclose on the mortgaged property.

Accepted Answer

A) True 
 B)False

Question 8

The initial interest rate is the part of a purchase price that is paid up front in cash.

Accepted Answer

A) True 
 B)False

Question 9

Steering and targeting occur when a lender manipulates a borrower into accepting a loan product that benefits the lender but is not the best loan for the borrower.

Accepted Answer

A) True 
 B)False

Question 10

Consumer Mortgage Loans provides Demi with a mortgage to buy a home. Under the terms, Demi can choose to pay only the interest portion of the monthly payments and forgo paying of the principal for five years. This is

Accepted Answer

A)  a fixed-rate mortgage. 
B)  an adjustable-rate mortgage. 
C)  an interest-only mortgage. 
D)  a violation of the law. 
A)  a fixed-rate mortgage. 
B)  an adjustable-rate mortgage. 
C)  an interest-only mortgage. 
D)  a violation of the law.

Question 11

Ridgeline Bank provides Stanley with a mortgage to buy a home. The rate of interest is fixed for three years and then adjusts annually. This is

Accepted Answer

A)  a fixed-rate mortgage. 
B)  an adjustable-rate mortgage. 
C)  an interest-only mortgage. 
D)  a violation of the law. 
A)  a fixed-rate mortgage. 
B)  an adjustable-rate mortgage. 
C)  an interest-only mortgage. 
D)  a violation of the law.

Question 12

Federal law encourages private lenders to modify mortgages so as to lower the monthly payments of borrowers who are in default.

Accepted Answer

A) True 
 B)False

Question 13

Harbor Bay Bank has made mortgage loans to consumers that qualify for the Home Affordable Modification Program (HAMP), which offers incentives to lenders to change the terms of certain loans. The purpose of HAMP is to

Accepted Answer

A)  convey property through lenders to consumers who can afford it. 
B)  force lenders to forgive all high-risk mortgages. 
C)  reduce monthly payments to levels that homeowners can pay. 
D)  transfer affordable property to investors to lease to consumers. 
A)  convey property through lenders to consumers who can afford it. 
B)  force lenders to forgive all high-risk mortgages. 
C)  reduce monthly payments to levels that homeowners can pay. 
D)  transfer affordable property to investors to lease to consumers.

Question 14

For most purposes, a mortgage assignee of a high-cost or high-fee mortgage product does not acquire the status of a holder in due course.

Accepted Answer

A) True 
 B)False

Question 15

A borrower has a right to rescind a mortgage within three business days.

Accepted Answer

A) True 
 B)False

Question 16

Foreclosure is the postponement, for a limited time, of part or all of the payments on a loan in jeopardy of repossession and sale.

Accepted Answer

A) True 
 B)False

Question 17

Hubert borrows $100,000 from Integrity Mortgage Mart to buy a home. Soon after obtaining the mortgage, Integrity convinces Hubert to refinance. This is

Accepted Answer

A)  a short sale. 
B)  a subprime mortgage. 
C)  loan flipping. 
D)  steering and targeting. 
A)  a short sale. 
B)  a subprime mortgage. 
C)  loan flipping. 
D)  steering and targeting.

Question 18

Milo borrows $125,000 from North State Bank to buy a home. To comply with the Statute of Frauds, the mortgage must be

Accepted Answer

A)  a highly formal document. 
B)  a particular form. 
C)  in the same format as the lender's other loans. 
D)  in writing. 
A)  a highly formal document. 
B)  a particular form. 
C)  in the same format as the lender's other loans. 
D)  in writing.

Question 19

Lorna borrows $175,000 from Mountainside Credit Union to buy a home. Among the terms that must be disclosed under federal law is the annual percentage rate. This is

Accepted Answer

A)  the actual cost of the loan on a yearly basis. 
B)  the average prime offer rate. 
C)  the interest rate at which the loan is made. 
D)  the loan principal. 
A)  the actual cost of the loan on a yearly basis. 
B)  the average prime offer rate. 
C)  the interest rate at which the loan is made. 
D)  the loan principal.

Question 20

Great Plains Bank provides a loan to enable Helene to buy real property. This loan is

Accepted Answer

A)  a down payment. 
B)  a mortgage. 
C)  a short sale. 
D)  a workout agreement. 
A)  a down payment. 
B)  a mortgage. 
C)  a short sale. 
D)  a workout agreement.

Exam 31: Mortgages Foreclosures After the Recession

Kenton borrows $150,000 from Liberty Home Finance Corporation to buy a home. Federal law concerns primarily

There are additional disclosure requirements for a higher-priced mortgage loan.

Seymour borrows $350,000 from Reliable Bank to buy a home. Seymour stops making payments on the loan ten months later. After the bank repossesses the property securing the loan but before it is sold, Seymour wants to buy it. This is

A lender's failure to comply with federal mortgage disclosure requirements extends the borrower's right to rescind the loan to no more than seven days.

If a homeowner defaults, the lender has the right to foreclose on the mortgaged property.

The initial interest rate is the part of a purchase price that is paid up front in cash.

Steering and targeting occur when a lender manipulates a borrower into accepting a loan product that benefits the lender but is not the best loan for the borrower.

Consumer Mortgage Loans provides Demi with a mortgage to buy a home. Under the terms, Demi can choose to pay only the interest portion of the monthly payments and forgo paying of the principal for five years. This is

Ridgeline Bank provides Stanley with a mortgage to buy a home. The rate of interest is fixed for three years and then adjusts annually. This is

Federal law encourages private lenders to modify mortgages so as to lower the monthly payments of borrowers who are in default.

Harbor Bay Bank has made mortgage loans to consumers that qualify for the Home Affordable Modification Program (HAMP), which offers incentives to lenders to change the terms of certain loans. The purpose of HAMP is to

For most purposes, a mortgage assignee of a high-cost or high-fee mortgage product does not acquire the status of a holder in due course.

A borrower has a right to rescind a mortgage within three business days.

Foreclosure is the postponement, for a limited time, of part or all of the payments on a loan in jeopardy of repossession and sale.

Hubert borrows $100,000 from Integrity Mortgage Mart to buy a home. Soon after obtaining the mortgage, Integrity convinces Hubert to refinance. This is

Milo borrows $125,000 from North State Bank to buy a home. To comply with the Statute of Frauds, the mortgage must be

Lorna borrows $175,000 from Mountainside Credit Union to buy a home. Among the terms that must be disclosed under federal law is the annual percentage rate. This is

Great Plains Bank provides a loan to enable Helene to buy real property. This loan is

Introduction to Law and Legal Reasoning

Courts and Alternative Dispute Resolution

Court Procedures

Constitutional Authority to Regulate Business

Ethics and Business Decision Making

Intentional Torts and Privacy

Negligence and Strict Liability

Intellectual Property and Internet Law

Criminal Law and Cyber Crime

Nature and Terminology

Agreement in Traditional and E-Contracts

Consideration

Capacity and Legality

Mistakes, Fraud, and Voluntary Consent

The Statute of Frauds

Third Party Rights

Performance and Discharge

Breach of Contract and Remedies

The Formation of Sales and Lease Contracts

Title, Risk, and Insurable Interest

Performance Breach of Sales Lease Contracts

Warranties and Product Liability

International Law in a Global Economy

The Function Creation of Negotiable Instruments

Transferability and Holder in Due Course

Liability, Defenses, and Discharge

Checks and Banking in the Digital Age

Creditors Rights and Remedies

Secured Transactions

Bankruptcy Law

Agency Formation and Duties

Agency Liability and Termination

Employment, Immigration, and Labor Law

Employment Discrimination

Sole Proprietorships and Franchises

Partnerships and Limited Liability Partnerships

Limited Liability Companies Special Business Forms

Corporate Formation and Financing

Corporate Directors, Officers, Shareholders

Corporate Merger, Consolidation, Termination

Securities Law Corporate Governance

Law for Small Business

Administrative Law

Consumer Law

Environmental Law

Antitrust Law

Professional Liaility and Accountability

Personal Property and Bailments

Real Property Landlord-Tenant Relationships

Insurance

Wills and Trusts

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