Name:     ID: 
 
Email: 

Mortgage Financing

Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.
 

 1. 

Which document contains a legal description of the real property?
a.
note
c.
promisory note
b.
mortgage
d.
bill of sale
 

 2. 

Which document is most likely to be recorded?
a.
note
c.
buy - sell agreement
b.
mortgage
d.
listing agreement
 

 3. 

The borrower is the:
a.
mortgagor.
c.
vendor
b.
mortgagee.
d.
vendee
 

 4. 

Which is correct about a mortgage and a note?
a.
The mortgage secures the note.
c.
there is no security in either one
b.
The note secures the mortgage.
d.
there is security in both
 

 5. 

Both notes and mortgages are:
a.
forms of contracts.
c.
documents of conveyance.
b.
negotiable instruments.
d.
unenforceable.
 

 6. 

Which document is negotiable:
a.
mortgage note.
c.
agreement to purchase
b.
mortgage.
d.
agreement to sell
 

 7. 

The evidence of the debt and promise to pay is the:
a.
mortgage note.
c.
the buy-sell agreement
b.
mortgage.
d.
the listing agreement
 

 8. 

A mortgage is a?
a.
voluntary lien.
c.
debtor’s lien
b.
involuntary lien.
d.
sellers’s lien
 

 9. 

Which document pledges property as security for a debt?
a.
mortgage note
c.
buy-sell agreement
b.
mortgage
d.
listing agreement
 

 10. 

A mortgage:
a.
must be used if property is sold.
c.
must be used in any sell of real property
b.
pledges property to secure a debt.
d.
is never used in the sale of real property
 

 11. 

A mortgage is a:
a.
pledge of property.
c.
a purchase agreement
b.
note.
d.
a listing agreement
 

 12. 

If there is more than one mortgage, the priority of the mortgages is determined by the date:
a.
each is signed.
c.
the money is given to the borrower.
b.
each is recorded.
d.
each is paid off.
 

 13. 

A mortgage must be signed by the:
a.
mortgagor.
c.
grantor
b.
mortgagee.
d.
lender
 

 14. 

Which document personally obligates the borrower to repay the loan?
a.
mortgage note
c.
buy-sell agreement
b.
mortgage
d.
listing agreement
 

 15. 

Which mortgage clause grants priority to a later mortgage?
a.
alienation clause
c.
due on sale clause
b.
subordination clause
d.
deficiency clause
 

 16. 

The priority of liens may be changed by a/an:
a.
subordination clause.
c.
due on sale clause
b.
acceleration clause.
d.
deficiency clause
 

 17. 

A mortgage subordination agreement:
a.
prohibits mortgage assumptions.
c.
prohibits the sale of the property
b.
gives a later mortgage priority.
d.
prohibits leasing the property
 

 18. 

A subordination clause changes:
a.
the balance due on the debt.
c.
nothing
b.
rights upon foreclosure.
d.
who the seller can sell to
 

 19. 

A new buyer has no liability for an existing mortgage when purchasing property:
a.
subject to the mortgage.
c.
ever
b.
under an assumption.
d.
a new loan is always required
 

 20. 

A buyer purchased property subject to an existing mortgage. The mortgage was foreclosed upon. Who is liable for the deficiency?
a.
the seller only
c.
the buyer only
b.
both the seller and buyer
d.
neither one
 

 21. 

Under a purchase subject to, the person primarily liable for default is the:
a.
seller.
c.
both the buyer and seller
b.
buyer.
d.
neither the buyer or seller
 

 22. 

A buyer purchases mortgaged property and becomes personally liable. This is an example of:
a.
an assumption.
c.
a bad deal
b.
a purchase subject to.
d.
buyer beware
 

 23. 

In which situation is a mortgagor released when mortgaged property is sold?
a.
a simple assumption
c.
an assumption with a novation
b.
a subject to purchase
d.
a purchase subject to without a novation
 

 24. 

An assumption with a novation is known as a/an:
a.
simple assumption.
c.
good deal
b.
full assumption.
d.
bad deal
 

 25. 

Buyers are best advised to take over an existing mortgage:
a.
with an assumption.
c.
never to do this
b.
by purchasing subject to.
d.
always get new financing
 

 26. 

The buyer guarantees the existing mortgage with:
a.
an assumption.
c.
a written guarantee
b.
a purchase subject to.
d.
a written promise
 

 27. 

Which mortgage clause prevents a later purchaser from assuming the loan?
a.
due on sale
c.
novation
b.
acceleration
d.
bad credit clause
 

 28. 

Which mortgage clause requires the balance to be paid in full when the property is conveyed?
a.
acceleration
c.
novation
b.
alienation
d.
subordination
 

 29. 

What best protects a seller under an assumption?
a.
a novation
c.
subordination
b.
an alienation clause
d.
promisory note
 

 30. 

What protects a buyer purchasing already mortgaged property?
a.
an assumption
c.
new loan
b.
purchasing subject to the mortgage
d.
subordination
 

 31. 

Which mortgage clause requires the balance to be paid in full when the mortgagor defaults:
a.
acceleration.
c.
promisory note
b.
alienation.
d.
habendum
 

 32. 

A property sold for $100,000 subject to a $50,000 mortgage. The buyer defaulted. The lender may:
a.
foreclose and hold only the seller liable.
c.
foreclose and hold both the seller and buyer liable.
b.
foreclose and hold only the buyer liable.
d.
foreclose and hold neither liable.
 

 33. 

Which best protects the seller?
a.
A novation.
c.
A foreclosure.
b.
A buyer assumes the loan.
d.
A buyer purchases subject to the loan.
 

 34. 

Which clause is contained only in nonassumable mortgages?
a.
alienation clause
c.
novation clause
b.
acceleration clause
d.
subordination clause
 

 35. 

Which clause in the mortgage prevents a later buyer from purchasing either by an assumption or subject to the existing mortgage?
a.
alienation clause
c.
subordination clause
b.
acceleration clause
d.
novation clause
 

 36. 

Which clause makes a mortgage nonassumable?
a.
acceleration
c.
subordination
b.
alienation
d.
novation
 

 37. 

Which clause allows the mortgagee to call the full loan balance due upon default?
a.
alienation clause
c.
subordination
b.
acceleration clause
d.
novation
 

 38. 

An alienation clause requires which of the following to be paid when the property is sold?
a.
the balance owing on the mortgage
c.
utilities
b.
all taxes and liens
d.
insurance
 

 39. 

If a mortgagor sells to a new buyer, what releases the mortgagor from liability?
a.
novation
c.
subordination
b.
alienation
d.
due on sale
 

 40. 

The mortgagee may require immediate payment of the loan upon default if the mortgage contains a/an:
a.
novation clause.
c.
contingency clause.
b.
acceleration clause.
d.
defeasance clause.
 

 41. 

If a lender claims that a mortgage is not assumable, the mortgage must contain:
a.
a due on sale clause.
c.
novation clause
b.
an acceleration clause
d.
subordination clause
 

 42. 

Who signs the novation to release the mortgagor?
a.
the mortgagor
c.
an attorney
b.
the mortgagee
d.
both the mortgagor and mortgagee
 

 43. 

The mortgage clause allowing the mortgagee to call the loan upon default is:
a.
acceleration.
c.
subordination
b.
alienation.
d.
novation
 

 44. 

An existing mortgagor is released of liability if a new buyer:
a.
assumes the mortgage.
c.
says he will do it
b.
assumes the mortgage with a novation.
d.
agrees to subordination
 

 45. 

With a full assumption:
a.
the mortgagor is released of liability for mortgage default through a novation.
b.
the mortgagor remains liable if the new buyer defaults.
c.
nothing really changes
d.
the subordination agreement becomes effective
 

 46. 

With a simple assumption:
a.
the mortgagor remains liable for mortgage default.
b.
the existing mortgage must be paid off prior to closing.
c.
the buyer must get new financing
d.
subordination becomes important
 

 47. 

Who should insist that a Notice of Assignment be recorded?
a.
the assignor
c.
the title company
b.
the assignee
d.
the court
 

 48. 

If the mortgagee sells the note and mortgage to Stockman’s Bank (the assignee), what document should the assignee record to notify the mortgagor to send the monthly payments to the assignee?
a.
Notice of Assignment
c.
Notice of Subordination
b.
Notice of Foreclosure
d.
Notice of Novation
 

 49. 

A mortgage:
a.
secures the note by giving a lien to the mortgagor.
b.
gives the mortgagee the right to force the sale of the property upon default.
c.
is a good thing to have
d.
is given by the lender
 

 50. 

The deed used when a defaulting mortgagor transfers the mortgaged property to the mortgagee to avoid a court foreclosure sale is known as a:
a.
deed in lieu of foreclosure.
c.
deed under duress
b.
warranty deed.
d.
invalid deed
 

 51. 

To reduce the effect of a mortgage default, a mortgagor could give the lender:
a.
a mortgage.
c.
a new promise to pay
b.
a deed in lieu of foreclosure.
d.
a subordination agreement
 

 52. 

Business executives borrowing money for their business are advised to use:
a.
nonrecourse financing.
c.
recourse financing
b.
mortgages upon their homes.
d.
any promise to pay contract
 

 53. 

A power of sale clause:
a.
allows a mortgagee to foreclose without a court hearing.
b.
allows a licensed broker to handle the foreclosure process.
c.
allows the borrower extra time before the foreclosure
d.
automatically gives the borrower the right to give a deed in lieu of foreclosure
 

 54. 

The only deed which requires court approval is the:
a.
warranty deed.
c.
quit claim deed
b.
sheriffs deed.
d.
special deed
 

 55. 

When a mortgage note is paid in full, the title will be cleared by:
a.
a quitclaim deed.
b.
a mortgage release, satisfaction, or certificate of discharge.
 

 56. 

The defeasance clause is triggered when the mortgagor:
a.
pays off the loan.
b.
defaults.
 

 57. 

A mortgage may be foreclosed upon:
a.
in any county in the state.
b.
only in the county where the property is located.
 

 58. 

Prior to a foreclosure sale, the mortgagor has:
a.
an equitable right of redemption.
b.
a statutory right of redemption.
 

 59. 

After a foreclosure sale, the prior owner has:
a.
an equitable right of redemption.
b.
a statutory right of redemption.
 

 60. 

After purchasing Al's property subject to the mortgage, Betty defaulted and filed for bankruptcy. The property was foreclosed upon and Al was asked to pay the deficiency. Is Al liable?
a.
No, due to the bankruptcy.
c.
Yes, because Al was never granted a release from liability.
b.
No, because the property was purchased subject to the mortgage.
d.
Yes, because Al cannot legally be released from liability until the mortgage note is paid in full.
 

 61. 

The mortgage used when the seller lends the buyer all or part of the purchase price is a/an:
a.
reverse annuity mortgage.
c.
straight mortgage
b.
purchase money mortgage.
d.
lenders mortgage
 

 62. 

A mortgage used in seller financing is a:
a.
reverse annuity.
c.
annuity mortgage
b.
purchase money.
d.
regular mortgage
 

 63. 

If the seller keeps title until the purchase price has been paid, the parties have a:
a.
contract for deed.
c.
regular mortgage
b.
lease.
d.
reverse annuity mortgage
 

 64. 

Payment of all or part of the purchase price may be deferred with a:
a.
contract for deed.
c.
option
b.
lease.
d.
mortgage
 

 65. 

The seller under a contract for deed (installment land contract) retains:
a.
actual title.
c.
buyer’s title
b.
equitable title.
d.
nothing
 

 66. 

The purchaser under a contract for deed is the:
a.
vendee.
c.
vendor
b.
mortgagee.
d.
mortgagor
 

 67. 

Sally bought a home by using a contract for deed. If the last payment has not yet been made, Sally:
a.
may not sell her equity.
c.
may not lease her home.
b.
may not bequeath her equity to heirs
d.
may list and sell her equity.
 

 68. 

A buyer under an installment land contract (contract for deed) wants:
a.
possession before making the last payment.
b.
the deed to remain unsigned until the last payment has been made.
c.
the seller to verbally promise to turn over the deed at some point
d.
to have an attorney
 

 69. 

Who wants the contract for deed to be recorded immediately?
a.
the seller
c.
the title company
b.
the buyer
d.
the court
 

 70. 

The buyer under a contract for deed wants the seller's deed to be signed:
a.
at the time of closing.
c.
at some time in the future
b.
when the last payment is made.
d.
they really don’t care
 

 71. 

Under a contract for deed, the buyer's default usually results in:
a.
the return of all payments made.
c.
they get some payments back
b.
the forfeiture of all payments made.
d.
a partnership with the seller
 

 72. 

Under a contract for deed, who wants the deed signed at closing?
a.
vendor
c.
mortgagor
b.
vendee
d.
mortgagee
 

 73. 

Under a contract for deed, the buyer gets the deed when:
a.
the closing is held.
c.
the contract is recorded.
b.
51% of the purchase price is paid.
d.
the final payment is made.
 

 74. 

What title does the buyer have under a contract for deed?
a.
equitable title
c.
no title
b.
actual title
d.
a title that is as good as that with a mortgage
 

 75. 

What title does the seller have under a contract for deed?
a.
equitable
c.
no title
b.
legal
d.
a future interest title
 



 
         Start Over