Rea: Estate Finance Tenth Edition

$5.$ Creating a junior loan at the same time as a senior loan is known as

a$.$ predatory lending.

b$.$ piggy$-$back lending.

c$.$ refinancing.

d$.$ subordination.

$6.$ When traded in the market, junior loans are usually sold at

a$.$ par.

b$.$ a premium.

c$.$ a discount.

d$.$ face value.

$7.$ Lenders may increase their yields on real estate loans by using all of the following techniques EXCEPT

a$.$ raising the interest rate.

b$.$ decreasing the loan term.

c$.$ charging origination fees.

d$.$ adding a discount amount to the principal owed.

$8.$ Interest rates on junior loans carried back by homesellers are usually

a$.$ equal to or lower than market rates.

b$.$ higher than market rates.

c$.$ variable over the life of the loan.

d$.$ fixed at $10\%$ by the usury laws.

$9.$ Interest rates on real estate loans are established by

a$.$ the Federal Reserve.

b$.$ the State of California.

c$.$ agreement between the lender and borrower.

d$.$ the lender.

$10.$ A cross$-$defaulting clause in a junior loan

a$.$ automatically triggers a default on the junior loan.

b$.$ voids a senior loan foreclosure.

c$.$ cancels the junior loan.

d$.$ cancels the senior loan foreclosure.