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Question:

Hypothecate means `____`

A to give a thing as security without giving possession.

explanation

To hypothecate is to offer property (real or personal) as security for a loan without giving up possession.

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A mortgage which provides for securing the amount of the initial loan together with any sums later loaned to the mortgagor is known as a (n) ____

open-ended mortgage.

An open-ended loan is one that allows for future advanced monies as part of the original commitment, such as a home equity line of credit (HELOC).

The phrase “the secondary mortgage market” refers to ____

a resale marketplace for existing trust deed loans.

Don’t confuse “second trust deed” with “secondary mortgage market.” The secondary mortgage market is where lenders resell bundled loans.

A clause in a trust deed calling for an assignment of rents most benefits the ____

beneficiary.

An assignment of rents clause allows the lender to collect the rents on an income-producing property when the borrower defaults on the underlying loan.

A clause in a trust deed calling for an assignment of rents most benefits the ____

beneficiary.

An assignment of rents clause allows the lender to collect the rents on an income-producing property when the borrower defaults on the underlying loan.

In real estate financing, the acronym “PMI” means ____

private mortgage insurance.

PMI is the acronym for private mortgage insurance paid to a private mortgage insurer. Alternatively, a mortgage insurance premium (MIP) is paid on a government-insured loan.

When a borrower defaults on a loan and the lender initiates judicial foreclosure, the right of possession to the property is held by the ____ during the redemption period.

mortgagor

The borrower (mortgagor) has possession during the redemption period.

In real estate loans, the term “impounds” most nearly means ____

reserves.

When a lender requires impounds, they are demanding that monthly payments be made to establish a reserve fund to pay future property tax and insurance expenses.

If a lender accepts a deed-in-lieu of foreclosure, the lender ____

assumes any junior liens.

When the holder of the first trust deed accepts a deed-in-lieu, they become responsible for all liens junior to their position.

The buyer in a sale leaseback transaction would be least concerned with the ____

original cost to construct the building.

In any purchase, the original cost of the construction is of least importance.

Which of the following entity does not buy loans in the secondary mortgage market?

Federal Housing Administration (FHA).

The Federal Housing Administration (FHA) is neither the lender nor purchaser of loans on the secondary mortgage market. The FHA acts as an insurer of the loan which is originated by a lender or mortgage company.

The mortgage insurance premium (MIP) paid on a Federal Housing Administration (FHA) loan protects ____

the lender.

The mortgage insurance required for Federal Housing Administration (FHA)-insured loans are for the protection of the lender.