HRES Hawaii Real Estate Salesperson - Set 5 - Part 1
Test your knowledge of technical writing concepts with these practice questions. Each question includes detailed explanations to help you understand the correct answers.
Question 1: In some states a mortgage is treated as a lien against property while the borrower keeps title; in others the lender or a trustee holds legal title until the debt is paid. What names these two contrasting legal approaches to mortgages?
Question 2: A lender extends financing to a borrower whose credit blemishes and high debt levels keep the loan from meeting the standards Fannie Mae and Freddie Mac will buy. To offset the added risk, the lender charges a higher rate. Which label BEST fits?
Question 3: A federal statute governs the closing on most residential mortgages, requiring standardized settlement cost disclosures and prohibiting kickbacks and referral fees among settlement service providers. A first-time buyer in Honolulu relies on its protections at her closing. Which law is this?
Question 4: At closing a borrower signs two distinct instruments: one is her personal promise to repay a stated sum with interest, and the other pledges the property as security for that promise. Which document is the promise to repay the debt itself?
Question 5: In many states, instead of a two-party mortgage, financing uses an instrument in which the borrower conveys title to a neutral third party who holds it as security for the lender until the loan is repaid. Which instrument is this?
Question 6: After a borrower makes the final payment on her mortgage, one provision of the loan obligates the lender to discharge the lien and return clear title rights, giving the owner unencumbered ownership. Which clause requires the lender to do this?
Question 7: A borrower plans to pay off her loan years early after selling, but the note contains a provision charging her an extra fee for retiring the debt ahead of schedule, compensating the lender for lost interest. Which clause creates that charge?
Question 8: A mortgage contains a provision letting the lender declare the entire remaining balance immediately payable if the borrower sells or otherwise transfers the property without the lender's consent, effectively blocking an assumption. By which name is this clause commonly known?
Question 9: A buyer wants to take over the seller's existing mortgage and continue making the same payments under the original terms. The parties look for the loan provision that determines whether the lender will permit this takeover. Which mortgage clause governs it?
Question 10: An eligible veteran buying a home in Wailuku obtains a loan in which the federal Department of Veterans Affairs promises to repay the lender a portion of any loss on default, often allowing the purchase with no down payment. What is this backing called?
Question 11: A student asks which secondary-market entity is a wholly owned government corporation that guarantees securities backed by pools of federally insured or guaranteed loans, such as FHA and VA loans, while not itself buying loans. Which entity does this describe?
Question 12: An instructor lists the two major government-sponsored enterprises that buy conventional loans from lenders in the secondary market, pool them, and issue mortgage-backed securities to investors, thereby supplying liquidity to the housing market. Which pair of entities is she describing?
Question 13: A buyer cannot qualify for a bank loan, so the seller of a Waipahu home agrees to accept the price over time, taking back a note and mortgage and letting the buyer pay directly to her. Which arrangement does this describe?
Question 14: An owner who has built up value in her Pearl City home borrows against that value in a second loan, using the property as security while keeping the original first mortgage in place. She receives the funds as a lump sum. Which loan is this?
Question 15: An instructor contrasts two categories of loans. One carries no government insurance or guaranty and relies on the borrower's creditworthiness and the property alone. The other is backed by a federal agency. Which term names the loan with no government backing?
Question 16: A borrower chooses a mortgage whose interest rate is tied to a published index plus a fixed margin, so the rate and payment can rise or fall at set intervals after an initial fixed period. Which loan type carries this feature?
Question 17: A borrower arranges financing on which she pays only interest during the loan term, then repays the entire principal in a single lump sum when the loan matures. Nothing is applied to principal along the way. Which loan structure is this?
Question 18: During pre-approval a lender adds up a borrower's monthly debt payments, including the proposed housing payment, and compares that total to gross monthly income to judge whether the applicant can manage the obligation. Which underwriting measure is the lender applying?
Question 19: At closing a borrower reviews a charge the lender imposes to cover the administrative work of taking the application, verifying documents, and underwriting the new mortgage. The instructor notes this differs from any charge that buys down the interest rate. Which fee is this?
Question 20: An instructor contrasts two situations: a home where a suicide occurred and a home with a cracked, leaking foundation. She asks which of the two conditions the law most consistently treats as always requiring disclosure across jurisdictions. Which condition BEST fits that description?
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