15 free questions from the Cinna RE financing bank (104 in the app). Tap an answer to check it. The rationale opens right away.
The borrower's right to pay the debt and reclaim the property before a foreclosure sale is the:
Answer: A. Equity of redemption
Equity of redemption lets the borrower cure the default and redeem the property before the sale; some states also allow statutory redemption after.
A homeowner owes $180,000 on a mortgage. At the foreclosure sale the property sells for $155,000, and allowable foreclosure costs total $5,000. If the lender pursues a deficiency judgment, what amount would it generally seek?
Answer: B. $30,000
The deficiency is the debt plus costs minus sale proceeds: ($180,000 + $5,000) - $155,000 = $30,000.
On an adjustable-rate mortgage, the fixed percentage the lender adds to the index to determine the interest rate is called the:
Answer: B. Margin
The margin is the lender's fixed markup added to the variable index; index plus margin equals the fully indexed interest rate on an ARM.
When a borrower pays off a loan secured by a deed of trust, the trustee executes which document to clear the lien?
Answer: A. A deed of reconveyance
Under a deed of trust, when the debt is paid the trustee delivers a deed of reconveyance that returns full title to the borrower; with a mortgage, the lender records a satisfaction of mortgage.
The Equal Credit Opportunity Act (ECOA) prohibits discrimination in lending based on all of the following EXCEPT:
Answer: D. The applicant's credit score and income
ECOA prohibits discrimination based on race, color, religion, national origin, sex, marital status, age, and receipt of public assistance; a lender may still legally evaluate creditworthiness factors like credit score and income.
Under TRID, the lender revises the Closing Disclosure two days before the scheduled closing because the APR increased by 0.5%. What happens?
Answer: C. A new 3-business-day review period starts before consummation
An APR increase beyond tolerance (also a loan-product change or added prepayment penalty) RESTARTS the 3-business-day Closing Disclosure clock. Ordinary corrections don't; these three do.
On a $200,000 loan, the lender charges 2 discount points. How much will the borrower pay in points at closing?
Answer: B. $4,000
One point equals 1% of the loan amount. 2 points on $200,000 = 0.02 × $200,000 = $4,000.
What is the key advantage of a deed of trust over a standard mortgage for a lender in many states?
Answer: B. It permits nonjudicial foreclosure through the trustee's power of sale, which is typically faster than court foreclosure
A deed of trust usually contains a power-of-sale clause that lets the trustee foreclose nonjudicially without a court action, generally making foreclosure faster and less costly than a judicial mortgage foreclosure.
A buyer takes title and keeps making payments on the seller's existing mortgage, but the lender does NOT release the seller from liability. The buyer took title:
Answer: B. Subject to the existing mortgage
Taking title 'subject to' means the buyer pays the loan but the original borrower stays liable. An assumption WITH novation releases the seller.
The Consumer Financial Protection Bureau (CFPB) combined the disclosures formerly required separately under TILA and RESPA into which integrated forms?
Answer: B. The Loan Estimate and the Closing Disclosure (TRID)
The TRID rule (TILA-RESPA Integrated Disclosure) replaced the older Good Faith Estimate and HUD-1/Truth-in-Lending forms with the Loan Estimate and the Closing Disclosure.
A buyer is comparing a fixed-rate loan and an ARM with a lower introductory rate. The lower initial ARM rate offered to attract borrowers is commonly called the:
Answer: C. Teaser (introductory) rate
The teaser rate is the discounted introductory interest rate on an ARM; after the introductory period, the rate adjusts to the fully indexed rate (index plus margin).
Under lien theory, which best describes who holds legal title during the term of the mortgage loan?
Answer: C. The borrower retains legal title, and the lender holds only a lien against the property
In a lien-theory state the borrower keeps legal title and the lender's mortgage is merely a lien (security interest) against the property until the debt is satisfied.
Which entity is a government-owned corporation (part of HUD) that guarantees mortgage-backed securities backed by FHA and VA loans?
Answer: C. Ginnie Mae
Ginnie Mae (Government National Mortgage Association) is a wholly government-owned corporation within HUD that guarantees mortgage-backed securities composed of government-insured or guaranteed loans (FHA, VA).
The annual percentage rate (APR) disclosed under Regulation Z differs from the note's nominal interest rate because the APR:
Answer: B. Includes certain finance charges and fees, reflecting the total cost of credit
The APR reflects the total cost of credit by including the interest rate plus certain finance charges and fees, so it is typically higher than the note's nominal rate.
Instead of monthly mortgage insurance, a VA loan typically requires the veteran to pay a one-time:
Answer: B. VA funding fee
VA loans do not require PMI or MIP; instead the borrower usually pays a one-time VA funding fee (which can be financed), helping sustain the program.
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