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CH 13 EXAM
| Question | Answer |
|---|---|
| Prior to deregulation of the banking industry in the 1980s, what institution was dominant in providing funds for the purchase of single-family residences? | Savings associations |
| What is the major source of funds for large commercial real estate developments? | Life insurance companies |
| What will be the effect if the Federal Reserve Board decides to purchase government securities in the open market? | the money supply will increase and interest rates will decrease |
| What group of financial institutions traditionally preferred to make short-term loans for construction? | Commercial banks |
| This is where loans that were originated in the primary market are sold. | The secondary mortgage market |
| How are mortgage loan originators usually compensated for their services? | Finder's fee or commission |
| With an adjustable rate mortgage, if a payment is not sufficient to cover the interest amount due, the unpaid interest amount may be added to the loan balance. What is the term used to describe this? | Negative amortization |
| When does disintermediation occur? | ...when depositors withdraw their savings from depository institutions to invest in higher yield alternative investments |
| This clause in a blanket mortgage allows for the release of a single parcel upon payment of a specified sum. | Release |
| T/F: The FHA insures loans. VA loans are guaranteed. | 'tis true |
| Interest rates for Federal Housing Administration mortgages are determined by whom? | the market |
| The Federal National Mortgage Association was originally formed to purchase what type of loans? | FHA |
| Gerri has a 15-year loan with monthly payments that remain the same amount for the entire loan period. Whcih type of mortgage repayment plan does Gerri have? | Level payment |
| If a mortgage loan payment consists of interest only, what is the final payment (which includes the full amount borrowed) called? | Balloon payment |
| Lenders who make conventional loans where the buyer provides less than a 20% down payment will normally require that the borrower pay this. | Private Mortgage Insurance (PMI). |
| How much interest is due on an interst only, level payment term loan of $8000 at a rate of 9% for 3 months? | $180 |
| If interest at a rate of 8% for 6 months on an interest only, level payment term loan is $200 what is the principal amount of the loan? | $5000 |
| A $12,000 interest only, level payment term loan has interest due of $810 after 9 months. What is the rate of interest? | .09 or 9% |
Created by:
riverjan1122