Section 7: Loan Basics
This quiz will test your knowledge of Section 7 of the training module and will focus on loan basics that will give you a good foundation for learning all other subsequent material.
- 1.This document is used to secure a piece of real property to a loan and will state the terms of the loan and the parties involved.
- A.
Warranty Deed
- B.
Deed of Trust or Mortgage
- C.
Special Warranty Deed
- D.
Grant Deed
- 2.What are the three parties involved in a Deed of Trust? (Check all that apply)
- A.
Grantor/Borrower
- B.
Beneficiary/Lender
- C.
Trustee
- D.
Notary Public
- 3.This document is used to officially state that a loan has been paid off and the property is no longer subject to the loan.
- A.
Release
- B.
Satisfaction of Mortgage
- C.
Reconveyance
- D.
All answers are correct
- 4.A loan is best defined as .
- A.
The process of taking possession of a mortgaged property as a result of the mortgagor's failure to keep up mortgage payments
- B.
The exchange of a commodity for money
- C.
The action of buying and selling goods and services
- D.
A financial transaction in which one party (a borrower) borrows money from another party (a lender), usually with interest paid to the lender in addition to the principal amount borrowed
- 5.Loans on real property generally do not require collateral.
- A.
True
- B.
False
- 6.A way of ensuring the lending party does not lose all their money if the borrower does not pay back the money they owe, is also referred to as what?
- A.
Loan
- B.
Collateral
- C.
Mortgage
- D.
Line of credit
- 7.What occurs if there is a default on the loan (the borrower doesn't pay)?
- A.
The lending party (typically a bank) takes ownership of the real property from the borrower
- B.
The borrower still owns the property
- C.
Nothing, terms of a loan are just words
- D.
The lender receives a net loss and can take no further action
- 8.is a great form of collateral because you can't hide it or destroy it.
- 9.The more valuable the property securing the loan, the more a bank or other financial institution is willing to lend to the borrower.
- A.
True
- B.
False
- 10.What are portfolio loans?
- A.
Loans that involve multiple pieces of real property being used for collateral for a loan
- B.
Loans only involving one piece of property as collateral
- C.
Loans on which the interest is reduced by an explicit or hidden subsidy
- D.
Loans for artists using their body of work as collateral
- 11.The party borrowing money in a loan is referred to as what?
- A.
The beneficiary
- B.
The grantee
- C.
The trustee
- D.
The grantor
- 12.What are single asset loans?
- A.
Loans on which the interest is reduced by an explicit or hidden subsidy
- B.
Loans that involve multiple pieces of real property being used for collateral for a loan
- C.
Loans only involving one piece of property as collateral
- D.
Loans used by single people to purchase property for themselves, married people aren't allowed to have these
- 13.A gives the borrower the ability to borrow money as needed up to a certain limit.
- 14.of a loan occurs when the borrower decides they would like to change the terms of their loan by either getting their lender to change, or getting a new lender to pay off their loan and then giving them an entirely new loan with the terms they want.
- A.
Refinancing
- B.
Line of Credit
- C.
Mortgage
- D.
Release
- 15.occurs when a property is sold from one to another, the original loan on the property goes with it instead of being paid off at closing. The buyer assumes responsibility for the loan the seller already has on the property and all terms of the original loan are the same except the parties change.
- 16.When a borrower fails to pay the money they owe, the loan and the property securing the will go into .
- A.
Foreclosure
- B.
Loan Assumption
- C.
Release of a loan
- D.
Refinancing
- 17.If you had one super power what would it be and why?
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