Loans & Lending Practices Quiz # 2

A bond coupon payment

The principal portion of a loan

The monthly payment on a loan

An agreement or promise to do or not to do a particular thing related to a loan

Nothing — it is a risk the lender takes for high returns

Sue the borrower in a small claims court

Call the bank that helped structure the loan

A loan is a debt contract, and the borrower can be sued for the funds

Debt-to-income ratio

Underwriting

Surveying

Assessing 

Lending money to people who are extended beyond their means in an attempt to get them to spend more than they should

Lending money to high net worth individuals

Lending people money to buy a car

Lending money to students to pay for their education 

Charging people a fair market interest rate based on their credit

Charging people zero interest rate

Financing a car using an auto loan

Charging interest rates in excess of what is standard and customary

10 percent of the mortgage

0.1 percent of the mortgage

1 percent of the mortgage

$1000

An open line of credit

A credit card with a fixed monthly amount of payment

A credit card by someone other than a major bank

A credit card to get which a deposit account must be established; often 100% of the available credit is required as a deposit 

The placing of funds in a special account to cover regular payment of taxes and insurance

The fee charged for borrowing money

An additional payment made to reduce the principal balance of a mortgage

The final payment made to pay off a mortgage

A postponement of payment on a loan, typically if the borrower doesn't qualify for a deferment and is unable to make payments for a reason such as poor health

A step taken during bankruptcy

An extra loan payment made to pay down principal

None of the above

A fee charged for the use of money

Buying expensive properties and renting them out

Buying undervalued properties and renting them out

The process of buying a property and then attempting to sell it relatively quickly for a profit

The same as income to debt ratio

The percentage of living expenses to housing expenses

The percentage of monthly income that goes towards the housing payment

The ratio of the house price to those of other similar houses

As a short term liability

As a long term liability

As an asset

As revenue

It reduces cash and short term liabilities

It reduces cash and increases short term liabilities

It decreases short term liabilities and increases long term liabilities

It has no impact

The day a price is agreed on for a home transaction

The meeting where the buyers, sellers, and their representatives meet to finalize the legal exchange of property

The process of being approved for a mortgage

A legal document used to transfer the ownership of a property 

Interim Financing

Contingency

Overdraft

Mortgage Modification

Assets pledged to secure the repayment of a loan

The monthly payment of a loan

Only the principal portion of a loan

A situation where one fails to make a payment, which can lead to foreclosure

The minimum amount a loan can be made for

The interest rate below which the rate of an Adjustable-Rate Loan cannot be adjusted

The minimum amount of time a mortgage can be set for

A professional opinion of the current market value of a property

In the year the loan was taken out

In the year the final payment on the loan is made

It is not allowed to be deducted at all

In the year the interest is paid 

They are required by law to be placed on all borrowers

To force a borrower to abide by rules which compel the borrower to stay in a situation where they can repay the loan

The IRS forces the lenders to place them on all commercial loans

To protect the borrower

Funds provided by a philanthropist to fulfill a role similar to equity

Interim financing for a home buyer

A short term loan used to pay closing costs

A bond that does not earn any interest

They work for the bank and sell mortgages

They work for the borrowers, aggregating all loan options and provide the borrowers with options

They work for the real estate companies and sell property

They are the buyers of real estate 

The government promotes the use of credit cards

It is healthy for people to spend beyond their means

People want to use them for vacations

It is easy to apply for and get a credit card 

Because interest paid represents the cost of having a loan and is an expense to the borrower

Because it is revenue to the lender and should be income as well to the borrower

Because it is unfair for the borrower to have this deduction

Because the SEC requires it

Because there is no precedent allowing it

Because the lender will be deducting them on their side

Because they were not taxed on the proceeds of the loan, they can not deduct repayments either

Because it is unfair to the borrowers 

Nothing

The loan becomes 'in default', and can be called by the lender

The borrower has to pay double the amount of the loan

The IRS will tax the borrower  

Payments which are large initially but become smaller over time

Paying interest only for several years, then increasing the payment to repay the principal as well

The making of the scheduled monthly payments to the lender by the borrower

One large payment at a predetermined time

Because consumer credit ratings have been going down rapidly

Because higher bankruptcy and non payment levels by consumers have been eating into the profit levels

Because consumers have nothing else to buy

Because there is a tendency among consumers to take out home loans instead 

It helps bolster their credit report

They get a discount on future loans

They are offered additional credit by the lender

Their credit report begins to indicate late payments, reducing their ability to receive credit in the future 

They target people with jobs

They are offered in stores

They charge interest rates lower than credit cards

They are short term loans with interest rates far higher than those on any standard loan and are typically aimed at the poor and/or the uneducated people 

It is required by the mortgagee

It is the legal document showing the ownership of the property

It lists out the interest rate of the mortgage

None of the above