An encumbrance; A quitclaim deed; A lien; A covenant not to impose encumbrances.

57. "A charge imposed upon specific real property by which it is made security for the performance of an act," defines which of the following: • An encumbrance; • A quitclaim deed; • A lien; • A covenant not to impose encumbrances.

57. "A charge imposed upon specific real property by which it is made security for the performance of an act," defines which of the following: • An encumbrance; • A quitclaim deed; • A lien; • A covenant not to impose encumbrances. Lien – A charge imposed

666. A lien may be created by recording: • A notice of non-responsibility; • A mortgage; • An easement; • A restriction.

666. A lien may be created by recording: • A notice of non-responsibility; • A mortgage; • An easement; • A restriction. Lien – Trust Deed or Mortgage

797. The Johnson's purchased their home from Crow. As part of the purchase price, Crow took back the Johnson's note secured by a mortgage on the property. This created: • An equitable lien; • A specific lien; • A general lien; • An involuntary lien.

797. The Johnson's purchased their home from Crow. As part of the purchase price, Crow took back the Johnson's note secured by a mortgage on the property. This created: • An equitable lien; • A specific lien; • A general lien; • An involuntary lien. Specific lien – Trust deed (or mortgage)

542. If a lien has been created by court action, and it covers all properties of the debtor in that county where it is recorded, it is known as a: • Lis pendens; • Specific lien; • General lien; • None of the above.

542. If a lien has been created by court action, and it covers all properties of the debtor in that county where it is recorded, it is known as a: • Lis pendens; • Specific lien; • General lien; • None of the above. General Lien – All property

886. A promissory note is: • Used as security for a trust deed; • Always recorded as proof of debt; • Always used when real estate is sold; • Evidence of a debt.

886. A promissory note is: • Used as security for a trust deed; • Always recorded as proof of debt; • Always used when real estate is sold; • Evidence of a debt. Promissory Note – Evidence of debt

68. The liquidation of a financial obligation on an installment basis is commonly termed: • Condemnation; • Amortization; • Acceleration; • Conveyance.

68. The liquidation of a financial obligation on an installment basis is commonly termed: • Condemnation; • Amortization; • Acceleration; • Conveyance. Amortization – Liquidation

870. When financing a home with a long-term loan, if equal monthly payments are made, the amount of each payment applied to the outstanding principal balance will: • Decrease while the interest payment increases; • Increase while the interest payment decreases; • Increase by a constant amount throughout the life of the loan; • Decrease at a constant rate.

870. When financing a home with a long-term loan, if equal monthly payments are made, the amount of each payment appliedto the outstanding principal balance will: • Decrease while the interest payment increases; • Increase while the interest payment decreases; • Increase by a constant amount throughout the life of the loan; • Decrease at a constant rate. Level payment – Payment applied to principal increases

721. When the required payments on a real estate loan are insufficient to pay the interest due, the result is: • Increased principal payments; • A reduced term of the loan; • Negative amortization; • A greater down payment.

721. When the required payments on a real estate loan are insufficient to pay the interest due, the result is: • Increased principal payments; • A reduced term of the loan; • Negative amortization; • A greater down payment. Negative amortization – Payments do not cover interest

830. A “GPAM” mortgage loan provides for: • Deferment of certain payments on the principal during the early period of the loan; • Adjustment of its interest rate as market interest rates change; • Renegotiation of the interest rate on the note; • A long-term loan consisting of a series of short-term notes.

830. A “GPAM” mortgage loan provides for: • Deferment of certain payments on the principal during the early period of the loan; • Adjustment of its interest rate as market interest rates change; • Renegotiation of the interest rate on the note; • A long-term loan consisting of a series of short-term notes. GPAM loan – Defers some principal payments

742. Which of the following does not directly affect the level and movement of mortgage interest rates: • The demand for funds; • The supply of funds; • The rate of unemployment; • The inflation rate.

742. Which of the following does not directly affect the level and movement of mortgage interest rates: • The demand for funds; • The supply of funds; • The rate of unemployment; • The inflation rate. Interest rates affected by – Not unemployment

64. On home loans, the interest which is paid for the use of money borrowed is almost always: • Discount interest; • Compound interest; • Simple interest; • Annuity interest.

64. On home loans, the interest which is paid for the use of money borrowed is almost always: • Discount interest; • Compound interest; • Simple interest; • Annuity interest. Simple interest – Home loans

203. The terms of some real estate loans provide that the interest rate may be increased or decreased depending on money market conditions. We call this type of loan: • An interim loan; • A loan which is secured by a short term land contract; • A variable interest rate loan; • A fluctuating market condition loan.

203. The terms of some real estate loans provide that the interest rate may be increased or decreased depending on money market conditions. We call this type of loan: • An interim loan; • A loan which is secured by a short term land contract; • A variable interest rate loan; • A fluctuating market condition loan. Variable interest – rate can increase or decrease

768. Which of the following statements, if any, is correct concerning the relationship between an effective interest rate and a nominal interest rate: • The effective rate is the rate the buyer will pay; the nominal rate is the rate named in the loan application; • The effective interest rate is always lower because the nominal interest rate includes charges other than interest; • The effective interest rate is the rate actually paid by the borrower for the use of the money; the nominal interest rate is the rate specified in the note; • None of the above is correct.

768. Which of the following statements, if any, is correct concerning the relationship between an effective interest rate and a nominal interest rate: • The effective rate is the rate the buyer will pay; the nominal rate is the rate named in the loan application; • The effective interest rate is always lower because the nominal interest rate includes charges other than interest; • The effective interest rate is the rate actually paid by the borrower for the use of the money; the nominal interest rate is the rate specified in the note; • None of the above is correct. Effective interest rate – rate paid Nominal interest rate – rate specified in note

65. If there has not been an agreement to the contrary, all of the following would qualify as a negotiable instrument, except: • An installment note; • A personal check; • A mortgage securing a promissory note; • A bank draft.

65. If there has not been an agreement to the contrary, all of the following would qualify as a negotiable instrument, except: • An installment note; • A personal check; • A mortgage securing a promissory note; • A bank draft. Negotiable instrument – Not a mortgage

730. When comparing a straight note with an installment note, the straight note: • Will have equal annual principal reduction payments; • Will have no principal payments during the term of the loan except on the last payment; • Will have a total effective interest rate greater than if the loan were an installment loan; • None of the above.

730. When comparing a straight note with an installment note, the straight note: • Will have equal annual principal reduction payments; • Will have no principal payments during the term of the loan except on the last payment; • Will have a total effective interest rate greater than if the loan were an installment loan; • None of the above. Straight note – No principal payments made

67. A note on which only the interest is paid during its term is called: • A straight note; • An amortized note; • An installment note; • Void.

67. A note on which only the interest is paid during its term is called: • A straight note; • An amortized note; • An installment note; • Void. Straight note – No principal payments made (interest only)

594. A balloon loan could also be described as a: • Non-assumable loan; • Due-on-sale loan; • Partially-amortized loan; • Fully-amortized loan.

594. A balloon loan could also be described as a: • Non-assumable loan; • Due-on-sale loan; • Partially-amortized loan; • Fully-amortized loan. Balloon loan – Partially-amortized

872. Of the following, which is the best definition of a balloon payment; • The tenth annual payment on a 30-year loan; • The required payment of the interest that has accumulated prior to the first regular installment; • The required payment of the entire balance due; • A payment to prevent a prepayment penalty.

872. Of the following, which is the best definition of a balloon payment; • The tenth annual payment on a 30-year loan; • The required payment of the interest that has accumulated prior to the first regular installment; • The required payment of the entire balance due; • A payment to prevent a prepayment penalty. Balloon loan – Entire balance due

667. You purchase a negotiable note and have no knowledge of any defects. You are known as: • The new trustor; • The new mortgagor; • The holder in blank; • The holder in due course.

667. You purchase a negotiable note and have no knowledge of any defects. You are known as: • The new trustor; • The new mortgagor; • The holder in blank; • The holder in due course. Holder in due course – No knowledge of defects

63. The beneficiary of a second trust deed sold his interest in the property for less than the unpaid balance of the note. This action is most commonly described as: • Leveraging; • Liquidating; • Discounting; • Subrogating.

63. The beneficiary of a second trust deed sold his interest in the property for less than the unpaid balance of the note. This action is most commonly described as: • Leveraging; • Liquidating; • Discounting; • Subrogating. Discounting – selling for less

769. Ryan Mills sold his home for $21,500 and took back a $15,000 note with interest at 10% per annum. The note was secured by a first mortgage. The home had a fair market value of $20,000. Later, he decided to sell the mortgage and note and discounted the note to $13,500. He sold them to Cindy Lomez. On the back of the note, he wrote, "I hereby assign the within note to Cindy Lomez without recourse." If the maker of the note defaults before any principal payments are made, Lomez's best legal remedy is to: • Foreclose to recover the $13,500; • Recover from Mills based upon her $13,500 note; • Sue her assignor based upon the endorsee's secondary liability; • Foreclose to enforce payment of the $15,000.

769. Ryan Mills sold his home for $21,500 and took back a $15,000 note with interest at 10% per annum. The note was secured by a first mortgage. The home had a fair market value of $20,000. Later, he decided to sell the mortgage and note and discounted the note to $13,500. He sold them to Cindy Lomez. On the back of the note, he wrote, "I hereby assign the within note to Cindy Lomez without recourse." If the maker of the note defaults before any principal payments are made, Lomez's best legal remedy is to: • Foreclose to recover the $13,500; • Recover from Mills based upon her $13,500 note; • Sue her assignor based upon the endorsee's secondary liability; • Foreclose to enforce payment of the $15,000. Default – Foreclose for $15,000

843. When loaning money to two or more co-borrowers on a single promissory note, the lender would be best advised to increase the security on the note by inserting which of the following phrases after the names of the co-borrowers: • Personally and corporately; • Together as individuals; • Individually and severally; • Jointly and severally.

843. When loaning money to two or more co-borrowers on a single promissory note, the lender would be best advised to increase the security on the note by inserting which of the following phrases after the names of the co-borrowers: • Personally and corporately; • Together as individuals; • Individually and severally; • Jointly and severally. More than 1 borrower – Jointly & severally

End of session

An encumbrance; A quitclaim deed; A lien; A covenant not to impose encumbrances.