FIN 3300 Exam #2 with Accurate
Solutions
Primary Market - ANSWER-Debt is created
Secondary Market - ANSWER-Debt is traded
Mortgage Documents Include: - ANSWER-1.) Mortgagee/Mortgagor
2.) Legal Description
3.) Protective Covenant
4.) Due on sale clause
5.) Mortgage Lien
6.) Senior Mortgage/Junior.....
Due on sale clause - ANSWER-You must pay your loan after moving
Transfer Settings (3): - ANSWER-1.)New Loan Transfer
2.) Cash Transfer
3.) Assumption Transfer
New Loan Transfer - ANSWER-Buyer gets new loan plus downpayment & the seller
pays it all
Cash Transfer - ANSWER-No new loan just cash
Assumption Transfer - ANSWER-The buyer takes over the sellers loan
Novation Clause - ANSWER-Your name is removed when a new owner comes along on
the promissory note
Termination the Loan Includes: - ANSWER-1.) Paying off over the life of the loan
2.) Pre-pay the Loan
3.) Failure to Pay
4.) Deed include of foreclosure
5.) Short Sale
Paying off over the life of the loan - ANSWER-You pay off the loan
Pre-pay the loan - ANSWER-Pay it off in full before its due
, Re-finance - ANSWER-To pull equity out & lower interest rate
Pre-paying the loan includes: - ANSWER-*Re-financing
*Pre-Payment Penalty
Pre-Payment Penalty - ANSWER-Penalty for spending more than you owe
Failure to pay - ANSWER-You don't Pay
Default - ANSWER-Missing a payment
Forbearance - ANSWER-Another word for having patience
Judiciary Supervised - ANSWER-You have to go to court
Power of Sale - ANSWER-Don't go to court because they have the power to hold an
auction themselves
Equitable right of Redemptions - ANSWER-Time horizon is from time of default &
auction. If you make a partial payment within 6 months it's canceled
Statutory Right of Redemption - ANSWER-The right for the borrower to buy back the
house at auction price.
Starts when equitable right of redemption ends. Last 0 days - 2 Years.
Deed Include of For-closure - ANSWER-Instead of going through foreclosure, the lender
& borrower can go straight to signing a deed
Short Sale - ANSWER-Lender accepts a lesser amount that is owed from the borrower
and call it even
Mortgage Types - ANSWER-1.) Fixed Rate Level Amortized Loan
2.) Adjustable Rate Loan
3.) Adjusted Rate Loan
4.) Term Loan
5.) Hybrid Loan
6.) Partially Amortized Loan
7.) Shared Equity
8.) Reversed Annuity
Fixed Rate Mortgage - ANSWER-* Fixed Rate of Interest
* Equal Payments
* Each payment includes interest & Principle
* Payments equal up to loan amount
Solutions
Primary Market - ANSWER-Debt is created
Secondary Market - ANSWER-Debt is traded
Mortgage Documents Include: - ANSWER-1.) Mortgagee/Mortgagor
2.) Legal Description
3.) Protective Covenant
4.) Due on sale clause
5.) Mortgage Lien
6.) Senior Mortgage/Junior.....
Due on sale clause - ANSWER-You must pay your loan after moving
Transfer Settings (3): - ANSWER-1.)New Loan Transfer
2.) Cash Transfer
3.) Assumption Transfer
New Loan Transfer - ANSWER-Buyer gets new loan plus downpayment & the seller
pays it all
Cash Transfer - ANSWER-No new loan just cash
Assumption Transfer - ANSWER-The buyer takes over the sellers loan
Novation Clause - ANSWER-Your name is removed when a new owner comes along on
the promissory note
Termination the Loan Includes: - ANSWER-1.) Paying off over the life of the loan
2.) Pre-pay the Loan
3.) Failure to Pay
4.) Deed include of foreclosure
5.) Short Sale
Paying off over the life of the loan - ANSWER-You pay off the loan
Pre-pay the loan - ANSWER-Pay it off in full before its due
, Re-finance - ANSWER-To pull equity out & lower interest rate
Pre-paying the loan includes: - ANSWER-*Re-financing
*Pre-Payment Penalty
Pre-Payment Penalty - ANSWER-Penalty for spending more than you owe
Failure to pay - ANSWER-You don't Pay
Default - ANSWER-Missing a payment
Forbearance - ANSWER-Another word for having patience
Judiciary Supervised - ANSWER-You have to go to court
Power of Sale - ANSWER-Don't go to court because they have the power to hold an
auction themselves
Equitable right of Redemptions - ANSWER-Time horizon is from time of default &
auction. If you make a partial payment within 6 months it's canceled
Statutory Right of Redemption - ANSWER-The right for the borrower to buy back the
house at auction price.
Starts when equitable right of redemption ends. Last 0 days - 2 Years.
Deed Include of For-closure - ANSWER-Instead of going through foreclosure, the lender
& borrower can go straight to signing a deed
Short Sale - ANSWER-Lender accepts a lesser amount that is owed from the borrower
and call it even
Mortgage Types - ANSWER-1.) Fixed Rate Level Amortized Loan
2.) Adjustable Rate Loan
3.) Adjusted Rate Loan
4.) Term Loan
5.) Hybrid Loan
6.) Partially Amortized Loan
7.) Shared Equity
8.) Reversed Annuity
Fixed Rate Mortgage - ANSWER-* Fixed Rate of Interest
* Equal Payments
* Each payment includes interest & Principle
* Payments equal up to loan amount
