Test Bank Champions Real Estate Finance
Exam Question and Answer 2026/2027 | Grade
A+
• Mortgage -✓✓A pledge of real property as security for a debt.
• Deed of Trust -✓✓A three party loan instrument - borrower, lender and trustee.
• Note, Promissory Note -✓✓A personal promise to repay a debt.
• Mortgagor -✓✓Borrower under a mortgage
• Mortgagee -✓✓Lender under a mortgage
• Beneficiary -✓✓Lender under a deed of trust
• Trustor -✓✓Borrower under a deed of trust
• Trustee -✓✓A third party under a deed of trust who acts as an agent for the lender
• Power of Sale -✓✓A clause in a deed of trust allowing non-judicial foreclosure
• Non-judicial foreclosure -✓✓Foreclosure that does not require court proceedings or a
judgment of foreclosure - the result of power of sale clause in a deed of trust
• Hypothecation -✓✓The action of pledging real property as security for a debt
• Acceleration Clause -✓✓A clause in a mortgage allowing the lender to declare the
whole amount of the principal due and payable in the event of default by the borrower.
• Alienation Clause -✓✓"Due on Sale" clause stating that the balance of the debt
becomes due if the property is sold by the mortgagor
• Defeasance Clause -✓✓A clause stating that the lien on the property is defeated when
the debt is repaid
• Escalation Clause -✓✓A clause allowing the lender to raise the existing interest rate -
although most often associated with an Adjustable Rate Mortgage, it can be used to
overcome an alienation clause
, • Prepayment Clause -✓✓A clause stating that the borrower can pay the entire amount
or the stated amount prior to the due date in the note and whether there will be a
penalty associated with that prepayment.
• Subordination Clause -✓✓A clause allowing a lender to move to or take a lower lien
position
• Assumption Clause -✓✓A clause outlining the obligations of the original borrower and
a new borrower in the event the loan is assumed
• Straight Assumption -✓✓A new borrower assumes the payments and liability on an
existing loan and usually releasing the original borrower from liability
• Assumption "subject to" -✓✓A new borrower assumes the payments but not the
liability on an existing loan - the original borrower remains liable
• FHA -✓✓Federal Housing Administration - aids in home financing by insuring high LTV
loans with more lenient qualifying ratios.
• MIP -✓✓Mortgage Insurance Premium - insurance on the FHA loan - insures the
whole loan
• VA -✓✓Veterans Admin - assists veterans in the purchase of housing by guaranteeing
loans.
• DD 214 -✓✓Veterans discharge papers - provided to demonstrate eligibility for a VA
loan
• Certificate of Eligibility -✓✓Evidence of VA approval of a qualified veteran for a VA
loan
• CRV -✓✓VA appraisal - Certificate of Reasonable Value
• Funding Fee -✓✓A fee required to be paid by the buyer, seller or included in the loan
at closing on all VA loans
• Amortization -✓✓The repayment or satisfaction of a debt by installment payments of
principal and interest on a regular basis
• Conventional Loan -✓✓A loan that is neither federally insured nor guaranteed - a
private sector loan
• Fixed Rate Amortized Loan -✓✓A loan with equal regular payments of principal and
interest until the debt is fully repaid or amortized
Exam Question and Answer 2026/2027 | Grade
A+
• Mortgage -✓✓A pledge of real property as security for a debt.
• Deed of Trust -✓✓A three party loan instrument - borrower, lender and trustee.
• Note, Promissory Note -✓✓A personal promise to repay a debt.
• Mortgagor -✓✓Borrower under a mortgage
• Mortgagee -✓✓Lender under a mortgage
• Beneficiary -✓✓Lender under a deed of trust
• Trustor -✓✓Borrower under a deed of trust
• Trustee -✓✓A third party under a deed of trust who acts as an agent for the lender
• Power of Sale -✓✓A clause in a deed of trust allowing non-judicial foreclosure
• Non-judicial foreclosure -✓✓Foreclosure that does not require court proceedings or a
judgment of foreclosure - the result of power of sale clause in a deed of trust
• Hypothecation -✓✓The action of pledging real property as security for a debt
• Acceleration Clause -✓✓A clause in a mortgage allowing the lender to declare the
whole amount of the principal due and payable in the event of default by the borrower.
• Alienation Clause -✓✓"Due on Sale" clause stating that the balance of the debt
becomes due if the property is sold by the mortgagor
• Defeasance Clause -✓✓A clause stating that the lien on the property is defeated when
the debt is repaid
• Escalation Clause -✓✓A clause allowing the lender to raise the existing interest rate -
although most often associated with an Adjustable Rate Mortgage, it can be used to
overcome an alienation clause
, • Prepayment Clause -✓✓A clause stating that the borrower can pay the entire amount
or the stated amount prior to the due date in the note and whether there will be a
penalty associated with that prepayment.
• Subordination Clause -✓✓A clause allowing a lender to move to or take a lower lien
position
• Assumption Clause -✓✓A clause outlining the obligations of the original borrower and
a new borrower in the event the loan is assumed
• Straight Assumption -✓✓A new borrower assumes the payments and liability on an
existing loan and usually releasing the original borrower from liability
• Assumption "subject to" -✓✓A new borrower assumes the payments but not the
liability on an existing loan - the original borrower remains liable
• FHA -✓✓Federal Housing Administration - aids in home financing by insuring high LTV
loans with more lenient qualifying ratios.
• MIP -✓✓Mortgage Insurance Premium - insurance on the FHA loan - insures the
whole loan
• VA -✓✓Veterans Admin - assists veterans in the purchase of housing by guaranteeing
loans.
• DD 214 -✓✓Veterans discharge papers - provided to demonstrate eligibility for a VA
loan
• Certificate of Eligibility -✓✓Evidence of VA approval of a qualified veteran for a VA
loan
• CRV -✓✓VA appraisal - Certificate of Reasonable Value
• Funding Fee -✓✓A fee required to be paid by the buyer, seller or included in the loan
at closing on all VA loans
• Amortization -✓✓The repayment or satisfaction of a debt by installment payments of
principal and interest on a regular basis
• Conventional Loan -✓✓A loan that is neither federally insured nor guaranteed - a
private sector loan
• Fixed Rate Amortized Loan -✓✓A loan with equal regular payments of principal and
interest until the debt is fully repaid or amortized
