Real Estate Finance Flashcards

What is the 'due-on-sale' clause in a mortgage?

Answer: A clause requiring the full loan balance be paid when the property is transferred

A due-on-sale (alienation) clause requires the borrower to pay off the remaining mortgage balance in full when the property is sold or transferred.

Which government-sponsored enterprise (GSE) focuses primarily on multi-family and apartment building financing?

Answer: Freddie Mac and Fannie Mae both have dedicated multi-family programs

Both Fannie Mae and Freddie Mac operate dedicated multi-family lending programs that finance apartment buildings and other multi-family properties.

Under TRID rules, when must the Closing Disclosure be provided to the borrower?

Answer: At least 3 business days before closing

TRID requires lenders to provide the Closing Disclosure at least three business days before loan consummation.

What is a 'bridge loan' used for in real estate?

Answer: Short-term financing to bridge the gap between buying a new property and selling an existing one

A bridge loan provides short-term financing that allows a homebuyer to purchase a new property before their current home is sold.

Which of the following is NOT a component of PITI?

Answer: Income tax

PITI stands for Principal, Interest, Taxes, and Insurance — income tax is not a component of this monthly mortgage payment calculation.

What is the maximum seller concession allowed on a conventional loan with an LTV between 75.01% and 90%?

Answer: 3%

Fannie Mae and Freddie Mac guidelines limit seller concessions to 3% of the purchase price for conventional loans with LTV between 75.01% and 90%.

What is 'chain of title' in real estate?

Answer: The chronological history of all ownership transfers for a property

The chain of title is the chronological sequence of historical property transfers from the original owner to the current owner, establishing clear ownership history.