(B) Choices (A) and (D) are incorrect, but they are meant to seem like plausible answers if you didn’t know the correct answer. The first part of choice (C) refers to redlining, but the part about moving into neighborhoods is meant to confuse because it is similar to the correct answer.
(D) Choices (A) and (B) are brought to the closing by the seller, so they have nothing to do with the buyer’s promise to repay the loan. Choice (C) gives the terms and conditions of the mortgage, but it is the mortgage, choice (D), which is the promise to repay the loan.
(A) $153,132 - $117,423 = $35,709
(A) Choices (B) and (C) are good guesses, but incorrect. They deal with discriminatory practices. Choice (D) is incorrect because it deals with which contracts need to be in writing.
(D) Choice (A) is incorrect because it is not precise enough, but this answer choice is a good distracter. Choice (B) is incorrect because it refers to a penalty that a mortgagor pays if the mortgagor pays off the loan ahead of schedule. Choice (C) is incorrect because this refers to the account into which the mortgagor pays a certain amount in advance on a regular basis to pay property taxes.
(A) Choice (B) is incorrect, but meant to confuse because it seems like the granting clause, but that involves the seller and buyer, not the financial institution and the buyer. Choice (C) is incorrect because it is the definition of the defeasance clause. Choice (D) is incorrect, but such a clause is typically part of the mortgage document.
(D) The federal government does not mandate that choice (D) be disclosed to a potential buyer. Choices (A), (B), and (C) are federally mandated disclosures.
(B) Choice (A) is incorrect because it does not provide the fullest protection for a property owner; it only provides an opinion about the ownership of the property. Choice (C) is incorrect because it is one covenant in a general warranty. Choice (D) is incorrect because it would apply only if the Lims were buying a home that was under a court order for disposal. It also only warrants that the entity selling the property has the right to sell it.
(B) Choice (A) is incorrect because it is the opposite of choice (B), the correct answer. Choice (C) is incorrect because it’s not true. Choice (D) is incorrect because failure to inspect makes the contract voidable if the buyer chooses to invoke this contract term. Failure to inspect does not automatically make it invalid—or voidable.
(D) $298,000 ÷ 3,200 = $93.12 $93.12 × 2,952 = $274,890
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