Chapter 02 Test Bank

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1. Award: 10.00 points 2. Award: 10.00 points A mortgage is the same thing as a note. True False A note is a document that serves as evidence that debt exists between a borrower and a lender, whereas a mortgage conveys title. References True / False Difficulty: 1 Easy A nonrecourse loan is one in which the borrower is personally liable for payment of all amounts due under the terms of the note. True False A nonrecourse loan is one in which the lender agrees not to, or specifies conditions under which it will not, hold the borrower personally liable in the event of a default. References True / False Difficulty: 2 Medium
3. Award: 10.00 points 4. Award: 10.00 points Prepayment of a loan without penalty is a right of all borrowers. True False Prepayment is a privilege but not a right. References True / False Difficulty: 1 Easy A second mortgage is a junior lien mortgage that is sometimes used to bridge the gap between the price of a property and the sum of the first mortgage and down payment. True False One junior lien, usually called a second mortgage, is sometimes used to bridge the gap between the price of the property and the sum of the first mortgage and the amount of money available to the purchaser to use as a down payment. References True / False Difficulty: 1 Easy
5. Award: 10.00 points 6. Award: 10.00 points A remainder cannot be mortgaged. True False A remainder is considered a diverse, mortgageable interest. References True / False Difficulty: 2 Medium A clause which specifies that the mortgagor will pay all property taxes and other charges assessed against the property, even if these charges have priority over the mortgage, is typically included in a mortgage. True False Because loans are secured by properties and are made for very long periods of time, lenders want assurance that borrowers will pay property taxes, so a clause of this nature is often included in the mortgage. References True / False Difficulty: 1 Easy
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