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30-HOUR PA FUNDAMENTALS
COURSE EXAM PREP Questions and
Answers Latest 2026
What is the loan balance called? Ans: the principal
Charging interest in excess of this rate is called
__________ or illegal interest. Ans: usury
What is the total dollar amount of interest and points
paid by a borrower at closing. Ans: prepaid interest
What are a one-time fee paid at closing to increase the
yield to the investor. Ans: points
Points give the lender more money up-front so he will be
encouraged to make a loan at a __________ interest rate.
Ans: lower
The lender is able to make lower interest rate loans, but
the buyer must come up with the point money in
___________ at the time of closing. Ans: cash
What is the principal of using other people's money to
make investments? Ans: leverage
The ratio of loan amount compared to the value of the
property is called the __________. Ans: Loan to Value
Ratio
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The value in a property held by the owner in excess of
any liens against it is called __________. Ans: equity
What is the cost per thousand that is required to create
the principal and interest payment necessary to pay off
the loan? Ans: a factor
The longer the loan, the lower the __________. Ans:
interest rate
What is the order of payment in foreclosure? (4 things)
Ans: Cost of Sale - advertising, attorney fees, etc.
Special assessment and general taxes are paid after the
costs of the sale.
The first mortgage, which is determined by the order of
recording.
Whatever is recorded next
What kind of foreclosure is required to foreclose a
Mortgage? Ans: judicial
What kind of foreclosure is required to foreclose on a
Deed of Trust? Ans: non-judicial
Who, in a Deed of Trust, holds "Naked Legal Title" (one
without possessory rights), and can claim the property
without going through the courts? Ans: the trustee
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What gives the borrower the right to clear up the debt
prior to the foreclosure sale? Ans: The Equitable Right of
Redemption
What gives the borrower a certain amount of time after
the sale to clear the debt? Ans: The Statutory Right of
Redemption
If the proceeds from the foreclosure sale are not
sufficient to cover the debt, the lender can go to court
and seek what 2 things? Ans: Deficiency judgment - a
general lien and would apply to all of the borrower's
assets.
Deed in lieu of foreclosure - Lender and borrower agree
that the lender will become the owner of the property
instead of going through the formal foreclosure process.
What is the promise to repay the debt and a negotiable
instrument? Ans: a promissory note (pledge)
What is a long-term note that is not secured by a specific
property? Ans: a debenture
The buyer of the property retains the right to use the
property exclusively while it is subject to a __________ or
__________. Ans: Mortgage or Deed of Trust
Both create the collateral for a loan by promising the
property in case of default by the borrower.
In a mortgage, the borrower is the __________, and the
lender is the __________. Ans: mortgagor
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mortgagee
In a Deed of Trust, the trustor is the __________. The
beneficiary is the __________. And the trustee is
__________. Ans: borrower
lender
anyone designated by the lender
Under a Deed of Trust, who holds the promise to repay
(Promissory Note) from the borrower? Ans: the
beneficiary (lender)
Who holds the security (Deed of Trust) for the debt. Ans:
the trustee
Duties of the borrower in a mortgage or deed of trust: (4
things) Ans: Payment of the debt in accordance with the
terms of the note.
Payment of all real estate taxes on the property given as
security.
Maintenance of adequate insurance and the property in
good repair at all times.
Obtain lender authorization prior to making any major
alterations to the property.
What clause applies to If a borrower defaults on the loan,
the lender can call the entire balance due and payable
immediately. Ans: Acceleration Clause
© 2025 All rights reserved
30-HOUR PA FUNDAMENTALS
COURSE EXAM PREP Questions and
Answers Latest 2026
What is the loan balance called? Ans: the principal
Charging interest in excess of this rate is called
__________ or illegal interest. Ans: usury
What is the total dollar amount of interest and points
paid by a borrower at closing. Ans: prepaid interest
What are a one-time fee paid at closing to increase the
yield to the investor. Ans: points
Points give the lender more money up-front so he will be
encouraged to make a loan at a __________ interest rate.
Ans: lower
The lender is able to make lower interest rate loans, but
the buyer must come up with the point money in
___________ at the time of closing. Ans: cash
What is the principal of using other people's money to
make investments? Ans: leverage
The ratio of loan amount compared to the value of the
property is called the __________. Ans: Loan to Value
Ratio
© 2025 All rights reserved
, 2 | Page
The value in a property held by the owner in excess of
any liens against it is called __________. Ans: equity
What is the cost per thousand that is required to create
the principal and interest payment necessary to pay off
the loan? Ans: a factor
The longer the loan, the lower the __________. Ans:
interest rate
What is the order of payment in foreclosure? (4 things)
Ans: Cost of Sale - advertising, attorney fees, etc.
Special assessment and general taxes are paid after the
costs of the sale.
The first mortgage, which is determined by the order of
recording.
Whatever is recorded next
What kind of foreclosure is required to foreclose a
Mortgage? Ans: judicial
What kind of foreclosure is required to foreclose on a
Deed of Trust? Ans: non-judicial
Who, in a Deed of Trust, holds "Naked Legal Title" (one
without possessory rights), and can claim the property
without going through the courts? Ans: the trustee
© 2025 All rights reserved
, 3 | Page
What gives the borrower the right to clear up the debt
prior to the foreclosure sale? Ans: The Equitable Right of
Redemption
What gives the borrower a certain amount of time after
the sale to clear the debt? Ans: The Statutory Right of
Redemption
If the proceeds from the foreclosure sale are not
sufficient to cover the debt, the lender can go to court
and seek what 2 things? Ans: Deficiency judgment - a
general lien and would apply to all of the borrower's
assets.
Deed in lieu of foreclosure - Lender and borrower agree
that the lender will become the owner of the property
instead of going through the formal foreclosure process.
What is the promise to repay the debt and a negotiable
instrument? Ans: a promissory note (pledge)
What is a long-term note that is not secured by a specific
property? Ans: a debenture
The buyer of the property retains the right to use the
property exclusively while it is subject to a __________ or
__________. Ans: Mortgage or Deed of Trust
Both create the collateral for a loan by promising the
property in case of default by the borrower.
In a mortgage, the borrower is the __________, and the
lender is the __________. Ans: mortgagor
© 2025 All rights reserved
, 4 | Page
mortgagee
In a Deed of Trust, the trustor is the __________. The
beneficiary is the __________. And the trustee is
__________. Ans: borrower
lender
anyone designated by the lender
Under a Deed of Trust, who holds the promise to repay
(Promissory Note) from the borrower? Ans: the
beneficiary (lender)
Who holds the security (Deed of Trust) for the debt. Ans:
the trustee
Duties of the borrower in a mortgage or deed of trust: (4
things) Ans: Payment of the debt in accordance with the
terms of the note.
Payment of all real estate taxes on the property given as
security.
Maintenance of adequate insurance and the property in
good repair at all times.
Obtain lender authorization prior to making any major
alterations to the property.
What clause applies to If a borrower defaults on the loan,
the lender can call the entire balance due and payable
immediately. Ans: Acceleration Clause
© 2025 All rights reserved
