11/03/2008 05:12 am ET Updated May 25, 2011


In my last post, I whined that no one in government was doing an adequate job of educating the public about the arguments for and against the bailout bill.

My belief is that there is just too much information out there being thrown at us too quickly and no one is stopping to explain the fundamentals.

I suggested we find Ron Popeil (of Veg-o-Matic fame) to help. But, since Ron is apparently retired, I will appoint myself.

But, first a True - False test. Let me know how you do.

1. When a lender makes a loan to a borrower that is secured with a mortgage, the lender is the mortgagee and the borrower is the mortgagor. T or F?

2. The priority of mortgages against a piece of real estate are sometimes altered after the mortgages are recorded. T or F?

3. A mortgage broker's compensation is tied to the delta between the interest rate a lender will accept and the interest rate the broker can convince the borrower to pay. T or F?

4. The National Association of Realtors took out full-page ads in national newspapers in the fall of 2006 suggesting to buyers that it was a great time to buy. T or F?

5. When there are multiple lenders with mortgages against a house, the lender who gets paid first is the one who was the first in time to file its mortgage. T or F?

6. Notwithstanding the order of recording, there are certain liens that always take precedence over others in the event of a foreclosure. T or F?

7. A negotiated "short sale" will generally reflect better on one's credit score than will a foreclosure proceeding. T or F?

8. Cross-collateralization gives security on several assets for the same debt. T or F?

9. Generally, there cannot be a mortgage modification of a first mortgage if there is a subsequent mortgage in place and the subsequent mortgage lender does not agree.
T or F?

10. Whereas in Europe borrowers are likely to be pursued for a deficiency judgment after foreclosure, that is usually not the case in the United States. T or F?

If you answered all ten "True," well done. If not, I hope you will watch for coming posts as I attempt to bring you up to speed on exactly how we got into the housing and credit crises and, how you can protect yourself from ... or better yet, find opportunity in ... what will happen next.

Jim Randel is the author of the just-released book, The Skinny on the Housing Crisis: What Every Homeowner and Homebuyer NEEDS to Know!!!.