P3-87 quiz

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Question 1 of 7

1. Question
Which statement best describes subordination in mortgage lending?
- A) Placing a HELOC ahead of the first mortgage in repayment priority.
- B) Ranking home loans by order of priority so a second mortgage is wiped out if the first mortgage is foreclosed.
- C) Removing all liens from a property automatically at payoff.
- D) Allowing a borrower to skip payments without penalty.
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Question 2 of 7

2. Question
What does the term “conveyance” refer to in real estate?
- A) The lender’s internal underwriting of a mortgage file.
- B) The appraisal inspection of a property’s condition.
- C) The process of paying off a mortgage ahead of schedule.
- D) The act of transferring ownership of real property from one party to another using a legal instrument such as a deed.
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Question 3 of 7

3. Question
Which best describes the primary mortgage market?
- A) The market where borrowers receive mortgage loans from primary lenders like banks and mortgage companies.
- B) The market where mortgage-backed securities are traded between investors.
- C) The market where government agencies insure or guarantee loans.
- D) The market where only FHA and VA loans are originated.
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Question 4 of 7

4. Question
What happens in the secondary mortgage market?
- A) Borrowers apply for new mortgage loans from retail banks.
- B) Only government agencies purchase delinquent loans.
- C) Mortgage loans and servicing rights are bought, sold, securitized, and ultimately owned by investors.
- D) Real estate agents list homes for sale to first-time buyers.
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Question 5 of 7

5. Question
Which of the following is an example of a third party provider in a mortgage transaction?
- A) The mortgage lender that funds the loan.
- B) The mortgage broker who originates the loan.
- C) The borrower’s employer verifying income.
- D) An independent appraiser hired to value the property.
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Question 6 of 7

6. Question
Which statement about an assumable loan is most accurate according to the text?
- A) Assumable loans can only be taken over without any credit qualification.
- B) A buyer may take over the seller’s existing mortgage, but the seller remains liable unless released by the lender, and FHA/VA assumptions require credit qualification.
- C) Assumable loans are never subject to due-on-sale clauses.
- D) Only conventional conforming loans are assumable.
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Question 7 of 7

7. Question
What does the Annual Percentage Rate (APR) represent in a mortgage loan?
- A) Only the note (interest) rate stated on the mortgage.
- B) The property’s annual appreciation rate.
- C) The borrower’s annual income growth rate.
- D) The annual cost of borrowing that includes the interest rate plus certain lender-related finance charges paid at closing.
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