Principles Of Real Estate Finance! Trivia Quiz

Explanation
Down payments of 40%-50% were common before the Great Depression.

Explanation
It is called a Note.

Explanation
A mortgage is a legal document that is used to secure payment of a loan that is taken out to purchase a property. This document serves as a guarantee to the lender that the borrower will repay the loan amount, and if the borrower fails to do so, the lender has the right to take possession of the property. Therefore, the statement that the document used to secure payment of the loan to buy a property is called a mortgage is true.

Explanation
The explanation for the given correct answer is that the mortgage does represent a portion of the total value of the real estate, which is expressed by the loan to value ratio. This ratio shows the relationship between the loan amount and the value of the property. Therefore, it is true that the mortgage represents a portion of the total value of the real estate.

Explanation
A mortgage is a loan provided by lenders, and they charge interest on the borrowed money to make a profit. The loan amount, which is the money borrowed, is referred to as the "principal." This statement is true because lenders do charge interest on mortgages to earn a profit, and the borrowed amount is indeed called the principal.

Explanation
This practice is known as "usury" and is illegal on some kinds of loans; however, there is no usury limit on most mortgage loans with the exception of some private lenders.

Explanation
The mortgage application fee is paid by the borrower at the time of mortgage application and is usually non-refundable.

Explanation
The statement is true because the mortgage origination fee is indeed a fee that is charged to cover the costs of originating or obtaining a mortgage. It is commonly referred to as "points" in the real estate industry, and the term "point" represents a percentage.

Explanation
Lenders require a "title insurance policy" to provide insurance coverage for the amount of any unpaid mortgage balance if it is ever discovered that there is a defective title of the real property owner.

Explanation
Hypothecation refers to the practice of pledging real property as collateral while the borrower still retains possession and use of the property. This is done as a precautionary measure in case the borrower fails to fulfill their contractual obligations, such as making mortgage loan payments on time. In such cases, the lender can initiate a legal procedure called foreclosure to recover the remaining borrowed money. Therefore, the statement is true.

Explanation
The above is a description of a balloon mortgage. An amortized mortgage is one in which the regular periodic, payments have a portion of each payment that is first applied to pay the loan interest. The remaining portion of the loan payment is then used to reduce the loan amount known as the principal.

Explanation
The change in mortgage financing from term loans to amortized mortgages during the Great Depression led to an increase in real property ownership in the United States. This shift allowed more people to afford homes and led to a significant increase in the number of people who own their dwellings rather than renting. Government statistics today confirm that over two-thirds of the population in the United States are homeowners. Therefore, the statement "True" is correct.

Explanation
The alienation provision is not used on FHA and VA mortgages as they allow their mortgages to be assumed.

Explanation
The statement states that all direct lenders in the marketplace are collectively referred to as the primary mortgage market. This means that the primary mortgage market includes all the direct lenders available in the marketplace. Therefore, the statement is true.

Explanation
The Federal National Mortgage Association is known as FANNIE MAE and is the most dominant buyer of mortgages from the primary mortgage market.