Question 1

What was the primary early selling point of a borrower being offered a piggyback mortgage from a financial advantage perspective?

Accepted Answer

A)   Not buying private mortgage insurance which was not tax deductible for many years.
B)   The interest rate on the piggyback mortgage was always lower than a home equity line of credit.
C)   Fannie Mae would buy both the first and second when made together making the closing and funding go faster.
D)   When a first and second mortgage were made together it made Loan modification or settlement problems easier to deal with if they occurred.E) A) and C)
F) A) and B)

Question 2

A note allowing monthly repayment amounts less than are necessary to fully amortize a loan during its term is called a

Accepted Answer

A)   Growing Equity Mortgage
B)   Graduated payment note
C)   Balloon payment note
D)   Buy-down noteE) A) and B)
F) All of the above

Question 3

Negative amortization, or an increase in the principal amount due each month, is most likely to be found in which of the following?

Accepted Answer

A)   Adjustable Rate Mortgage
B)   Growing Equity Mortgage
C)   Pledged Account Mortgage
D)   Graduated Payment MortgageE) B) and C)
F) C) and D) D

Question 4

A major advantage for the borrower in a home equity revolving type loan is that

Accepted Answer

A)   the home does not serve as collateral
B)   the interest expense has been used as a qualifying tax deduction applicable to a home loan
C)   the interest rate charged is limited by law to the same as a first mortgage
D)   all lenders freely offer this type of creditE) B) and C)
F) C) and D)

Question 5

An index as used in an adjustable rate mortgage must be

Accepted Answer

A)   one approved by the lender's regulatory authority.
B)   the lender's current cost of funds.
C)   current market yields on mortgage loans.
D)   any mortgage index.E) None of the above
F) A) and D)

Question 6

A buy-down mortgage is distinguished by which of the following?

Accepted Answer

A)   Any mortgage with lower initial monthly payments.
B)   A mortgage with less-than-market interest rate.
C)   Payment by the seller of a portion of the interest cost at closing to reduce monthly payments in the early years of repayment.
D)   A second mortgage that reduces, or "buys down, the first mortgage".E) B) and C)
F) A) and D)

Question 7

Which of the following is the most important distinguishing feature of an adjustable rate mortgage?

Accepted Answer

A)   The payment amount is fixed for the life of the loan.
B)   The lender has the right to change the interest rate during the term of the loan.
C)   The term of the loan may be extended.
D)   The borrower has the right to reject a change in the payment amount.E) A) and D)
F) All of the above

Question 8

A buy-down mortgage is distinguished by which of the following?

Accepted Answer

A)   Any mortgage with lower initial monthly payments
B)   A mortgage with less-than-market interest rate
C)   Payment by seller of a portion of the interest cost at closing to reduce monthly payments in the early years of repayment
D)   A second mortgage that reduces, or "buys down, the first mortgage.E) All of the above
F) B) and C) C

Question 9

A reverse annuity mortgage is intended to

Accepted Answer

A)   provide a source of income for an elderly person
B)   make monthly payments in reverse order of date due and amount
C)   reduce the principal due
D)   allow interest to be escrowed and remitted at a later dateE) B) and D)
F) C) and D)

Question 10

A shared equity mortgage allows

Accepted Answer

A)   the lender to share in any appreciation made by the property pledged
B)   two or more parties to share property ownership and the mortgage obligation
C)   one party to undertake the mortgage obligation and another to take or share ownership
D)   a partial obligation on the mortgage commensurate with their ownership interest\E) B) and C)
F) A) and D) B

Question 11

In mortgage lending, the term "amortization" means

Accepted Answer

A)   making monthly payments
B)   the pay-off of a loan at maturity
C)   periodic reduction of the principle balance
D)   periodic payment of interestE) All of the above
F) C) and D)

Question 12

One reasons for the Option ARM's decline in use is

Accepted Answer

A)   better rate adjustment options on new innovative mortgage products.
B)   product was used for mortgagors that it was inappropriate for their risk profile.
C)   the 15 year option for amortization ceased to exist.
D)   the low interest rate environment.E) C) and D)
F) A) and B)

Exam 7: Mortgage Repayment Plans

What was the primary early selling point of a borrower being offered a piggyback mortgage from a financial advantage perspective?

Correct Answer
verified

A note allowing monthly repayment amounts less than are necessary to fully amortize a loan during its term is called a

Correct Answer
verified

Negative amortization, or an increase in the principal amount due each month, is most likely to be found in which of the following?

Correct Answer
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D

A major advantage for the borrower in a home equity revolving type loan is that

Correct Answer
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An index as used in an adjustable rate mortgage must be

Correct Answer
verified

A buy-down mortgage is distinguished by which of the following?

Correct Answer
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Which of the following is the most important distinguishing feature of an adjustable rate mortgage?

Correct Answer
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A buy-down mortgage is distinguished by which of the following?

Correct Answer
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C

A reverse annuity mortgage is intended to

Correct Answer
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A shared equity mortgage allows

Correct Answer
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B

In mortgage lending, the term "amortization" means

Correct Answer
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One reasons for the Option ARM's decline in use is

Correct Answer
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Exam 7: Mortgage Repayment Plans

What was the primary early selling point of a borrower being offered a piggyback mortgage from a financial advantage perspective?

Correct AnswerverifiedShow Answer

A note allowing monthly repayment amounts less than are necessary to fully amortize a loan during its term is called a

Correct AnswerverifiedShow Answer

Negative amortization, or an increase in the principal amount due each month, is most likely to be found in which of the following?

Correct AnswerverifiedD

A major advantage for the borrower in a home equity revolving type loan is that

Correct AnswerverifiedShow Answer

An index as used in an adjustable rate mortgage must be

Correct AnswerverifiedShow Answer

A buy-down mortgage is distinguished by which of the following?

Correct AnswerverifiedShow Answer

Which of the following is the most important distinguishing feature of an adjustable rate mortgage?

Correct AnswerverifiedShow Answer

A buy-down mortgage is distinguished by which of the following?

Correct AnswerverifiedC

A reverse annuity mortgage is intended to

Correct AnswerverifiedShow Answer

A shared equity mortgage allows

Correct AnswerverifiedB

In mortgage lending, the term "amortization" means

Correct AnswerverifiedShow Answer

One reasons for the Option ARM's decline in use is

Correct AnswerverifiedShow Answer

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D

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C

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B

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