D
A real estate purchase agreement contract used by a multiple listing member may be all of the following EXCEPT:
a. receipt for earnest money.
b. contract up to the date of closing.
c. commission agreement between the seller and broker.
d. statement of the
seller
an earnest money agreement signed by all parties is binding on the:
D
The amount of earnest money necessary for a given transaction is NOT determined by
a. the buyer.
b. the seller.
c. the buyer and seller.
d. the broker.
C
In a brokered real estate transaction, the amount of earnest money is determined by the
a. buyer.
b. seller.
c. by agreement between the buyer and seller.
d. by agreement between the buyer and broker.
C
A valid enforceable sales agreement must
a. contain the grantor and grantee's signatures.
b. be accompanied by an earnest money deposit.
c. be written and delivered.
d. be written and mailed.
A
The process of dividing ongoing expenses and income items as of the closing date is called
a. prorating.
b. "as is" basis.
c. closing.
d. arbitrating.
D
The phrase "as is" when used in real estate contracts means the buyer is accepting the property without
a. a survey.
b. a title report.
c. new financing.
d. warranty as to physical condition.
D
If a contract of sale is subject to the buyer's ability to secure a loan, and after diligent effort the buyer is unable to do so by the stated deadline, the
a. contract would become void.
b. contract would be voidable by the seller only.
c. buyer must be
C
The seller decided that he didn't want to sell his house a few days before closing. He can
a. simply not show up to sign the deed.
b. return the earnest money deposit and declare the contract void.
c. be sued by the buyer for specific performance and dama
C
The phrase "time is of the essence" means
a. that the broker must present the offer quickly.
b. that the transaction must close as soon as possible.
c. that punctual performance of the time limits set by the contract is essential.
d. little, since the phr
D
A purchase agreement for the purchase of real property is
a. not necessary in a cash sale when the amount of earnest money paid equals the purchase price.
b. a legally enforceable contract which is binding on the seller as soon as it is signed by the buye
C
What should a salesperson do if he receives a second bona fide offer after one offer has already been submitted to the seller but not yet accepted or rejected?
a. Allow the first purchaser to meet the second offer before submitting it
b. Hold the second o
C
The printed portions of a standard residential sales contract refer to all the following EXCEPT
a. title insurance.
b. liens.
c. discount rates.
d. closing date.
D
A real estate licensee may advise sellers or buyers regarding which of the following?
a. Which deed form to use
b. How to take title
c. Tax implications on the sale or purchase
d. Choices of financing for the transaction
B
When a seller wishes to convey title by means of a statutory deed form, the salesperson
a. can advise the seller which deed form to use.
b. can advise seller to obtain the services of a lawyer.
c. can advise the buyer which tenancy to use.
d. can fill it
D
A broker is preparing an original real estate sales contract for a buyer and seller. Whom may he lawfully charge for this service?
a. Buyer
b. Seller
c. Buyer and seller
d. No one
D
When property is purchased using a land sales contract, the instrument used to convey legal title would be
a. an executory deed.
b. a bargain and sale deed.
c. a warranty deed.
d. non-existent since legal title is not transferred until the contract is pai
C
If title to real property remains in the seller's name after it is sold on an installment payment plan, the buyer would have purchased it under
a. an FHA mortgage.
b. a conventional mortgage.
c. a contract for deed.
d. a VA loan.
A
When buying property under a land sales contract, which of the following does the buyer receive immediately?
a. Possession
b. Title
c. Encumbrances
d. Estate in fee simple
D
From the following, select the parties to a land sales contract.
a. Lessor-Lessee
b. Mortgagor-Mortgagee
c. Grantor-Grantee
d. Vendor-Vendee
B
If the vendee is in default, the vendor
a. cannot pursue the right of foreclosure.
b. is in title.
c. no longer has equitable title.
d. retains color of title.
B
Which of the following is true of a land sales contract?
a. Beneficiary holds naked legal title
b. Purchaser holds equitable title
c. Vendee holds full legal title
d. Mortgagor holds title
B
Under a conditional land sales contract,
a. legal title is held by the vendee.
b. equitable title is held by the vendee.
c. legal title is held by a trustee.
d. equitable title is held by a trustee.
B
A land sales contract passes
a. the right to destroy the property.
b. equitable title.
c. legal title.
d. no interest whatsoever.
A
An option is given wherein consideration is stated as $10.00. The option is
a. valid.
b. invalid for lack of sufficient consideration.
c. void.
d. unenforceable.
D
An option to purchase real property is NOT
a. a contract.
b. covered by the statute of frauds.
c. covered by real property laws.
d. cancelable by the optionor.
D
At the time the expiration of an option to purchase, the optionee
a. can request his deposit back.
b. can renew the option or the same time period and terms.
c. can repossess the property.
d. forfeits his option money if he doesn't buy the property.
D
The legal grace period in an option to purchase real estate is how long?
a. 72 hours
b. 5 days
c. 30 days
d. There is no grace period
C
When a property is optioned, the optionor is the
a. buyer.
b. vendor.
c. owner.
d. lessee.
D
Howard signed an option with Paula giving Paula the "right to purchase" in 90 days. Paula decided she did not want the property and did not exercise her option. Howard can
a. sue for specific performance.
b. sue for damages.
c. sue for specific performanc
B
A promissory note
a. describes the property being hypothecated.
b. is the primary evidence of a loan.
c. is an agreement not to do a certain thing.
d. is not negotiable when secured by a mortgage.
A
In the United States, the instrument most commonly used to evidence a debt on real property is
a. a promissory note.
b. a mortgagee's title policy.
c. a bill of sale.
d. an earnest money agreements.
A
A borrower who wanted to make a monthly payment larger than that called for by the note, could do so if the note contains a
a. prepayment privilege.
b. grace period.
c. prepayment penalty.
d. subordination clause.
A
The phrase "jointly and severally liable" in a note or bond applies when there are two or more
a. makers.
b. obligees.
c. trustees.
d. holders.
B
Of the following parties to a mortgage, whose interest is benefited by an acceleration clause?
a. The mortgagor
b. The mortgagee
c. A future owner
d. The trustee
B
When a borrower gets behind on his loan payments, the lender could call for the entire balance due immediately based on the
a. alienation clause.
b. acceleration clause.
c. subordination clause.
d. pre-payment clause.
D
A mortgage or trust deed is considered to be
a. an estate in land.
b. a promissory note.
c. chattel.
d. debt security.
D
When a loan evidenced by a note is secured by a mortgage, the funds are furnished by the
a. grantor.
b. beneficiary.
c. grantee.
d. lender.
D
Which is an example of pledged property?
a. Estoppel
b. Covenant
c. Dedication deed
d. Real estate given as security
D
The parties to a mortgage are called
a. mortgagor and grantor.
b. mortgagee and beneficiary.
c. beneficiary and trustee.
d. mortgagor and mortgagee.
B
In some states, a mortgage is considered to be a lien on real property. In other states a mortgage is interpreted as
a. a bona fide purchase.
b. a transfer of title.
c. a sales contract.
d. equitable title.
B
A mortgagee in a lien theory state holds
a. legal title.
b. a note.
c. naked title.
d. naked legal title.
B
A "due on sale" clause
a. may be called a subordination clause.
b. gives the lender the right to call the entire loan balance upon alienation.
c. is the right of a mortgagor to repay a loan.
d. gives the mortgagor the right to sell his property with a loa
B
An alienation clause in a mortgage loan is to the advantage of the
a. borrower.
b. lender.
c. mortgagor.
d. seller.
A
Barry purchased Bob's home without accepting obligation for the existing loan. Barry is said to be buying the house
a. subject to the loan.
b. with an assumption of the loan.
c. with an assumption by substitution of the loan.
d. by contract for equitable
A
A property is sold and the buyer promises the seller in writing that he, the buyer, will repay the existing loan. This is called
a. assuming the loan.
b. buying down the loan.
c. loan satisfaction.
d. a partial release.
A
Which lien would have highest priority?
a. Property tax lien
b. Mechanic's lien
c. First mortgage or trust deed
d. The lien which is recorded first
A
Unless there is a specific agreement to the contrary, the mortgage having first priority will be the
a. mortgage first recorded.
b. mortgage for the highest amount.
c. original construction loan.
d. mortgage with the earliest signature date.
D
A second mortgage is
a. a seller's lien.
b. a smaller loan.
c. paid off 50/50 with a first mortgage at foreclosure.
d. junior to a superior mortgage lien.
C
Which of the following claims against a real property interest would be the first to be satisfied?
a. First trust deed
b. Second trust deed
c. Property taxes
d. Newly filed IRS tax lien
A
Who benefits the most by the inclusion of a subordination clause in a mortgage?
a. Borrower
b. Lender
c. Selling broker
d. Trustee
C
A beneficiary allows a clause in his contract stating that another lender's interest will be allowed to take precedence over his at some later date. This clause is known as
a. a subrogation clause.
b. a rogata clause.
c. a subordination clause.
d. hypothe
B
If an owner of a single-family residence defaults on his mortgage, it can
a. not be foreclosed if an ALTA title insurance policy insured it.
b. be foreclosed on.
c. not be foreclosed on if the mortgage went into effect before 1978.
d. only be foreclosed o
D
Which of the following requires a public sale?
a. Strict foreclosure
b. Entry and possession
c. Deed in lieu of foreclosure
d. Power of sale
D
Betty is six months behind on her mortgage payments. Foreclosure by public auction has been ordered. The sale has not been completed. Betty may redeem her property by paying the
a. last six months payments.
b. full amount of the loan balance.
c. loan bala
B
The right of the mortgagor to reclaim his property upon payment in full of the obligation is
a. reconveyance.
b. redemption.
c. recapture.
d. right of deficiency.
B
When a clause in a mortgage allows the lender to proceed against a borrower's other assets if the foreclosure sale does not satisfy the debt, the result is called a
a. statutory redemption.
b. deficiency judgment.
c. equity of redemption.
d. foreclosure r
D
If a foreclosed property has sold for less than the loan amount, the difference between the indebtedness and the sale price of the real estate at the foreclosure sale is called the
a. net price.
b. deficit.
c. net market value.
d. deficiency.
A
The right, which allows the mortgagor to regain his property following a mortgage foreclosure, is known as
a. right of redemption.
b. due on sale.
c. satisfaction of mortgage.
d. defeasance.
B
A mortgagor signs a deed conveying title to the mortgagee, leaving the mortgagee without recourse. This is an example of
a. deed of surrender.
b. deed in lieu of foreclosure.
c. satisfaction of mortgage.
d. defeasance.
C
A neutral third party would be found in
a. a regular mortgage.
b. an equitable mortgage.
c. a deed of trust.
d. a land sale contract.
A
A deed given as security for the loan against real estate is known as
a. a trust deed.
b. illegal consideration.
c. usury.
d. hypothecated.
D
A trust deed can be used for all of the following EXCEPT
a. transfer of title.
b. hypothecate property.
c. secure a note.
d. secure a mortgage.
C
A newly recorded trust deed
a. conveys the entire estate to the grantee.
b. always allows a deficiency judgement.
c. establishes a voluntary lien.
d. conveys title superior to a quitclaim deed.
A
One of the main differences between a regular mortgage and a deed of trust is
a. the number of parties.
b. rights of possession.
c. recording.
d. ownership.
D
The instrument which conveys naked title to a trustee is the
a. notice of default.
b. reconveyance deed.
c. guardian's deed.
d. trust deed.
A
The borrower under a deed of trust is called the
a. trustor.
b. beneficiary.
c. trustee.
d. grantor.
A
Who is the trustor in a deed of trust?
a. Borrower
b. Lender
c. Grantor
d. Vendor
D
A trustor's relationship to a beneficiary is most nearly the same as a
a. grantor to a grantee.
b. beneficiary to a trustee.
c. buyer to a seller.
d. mortgagor to a mortgagee.
A
The borrower under a deed of trust arrangement is called the
a. trustor.
b. beneficiary.
c. trustee.
d. holder in due course.
A
When a property is financed by means of a deed of trust, to whom are the payments made?
a. Beneficiary
b. Trustor
c. Trustee
d. Grantee
D
A trustor's relationship to a beneficiary is most nearly the same as a
a. grantor to a grantee.
b. beneficiary to a trustee.
c. buyer to a seller.
d. mortgagor to a mortgagee.
A
When a loan is secured by deed of trust, the promissory note is held by the
a. beneficiary.
b. trustor.
c. trustee.
d. grantee.
D
With regard to a deed of trust, the trustee
a. can be the beneficiary.
b. receives recorded title.
c. receives equitable title.
d. receives naked title.
C
The trustee of a deed of trust
a. may be the beneficiary.
b. may bid at the foreclosure sale.
c. has naked title.
d. always knows of his appointment.
C
A deed of trust conveys naked title to the
a. beneficiary.
b. trustor.
c. trustee.
d. escrow officer.
D
A trustor's relationship to a beneficiary is most nearly the same as a
a. grantor to a grantee.
b. beneficiary to a trustee.
c. buyer to a seller.
d. mortgagor to a mortgagee.
D
When a debt secured by a deed of trust is paid off, naked legal title reverts to the borrower from the
a. mortgagee.
b. trustor.
c. beneficiary.
d. trustee.
C
Under a deed of trust, reconveyance is issued by the
a. beneficiary.
b. trustor.
c. trustee.
d. borrower.
C
Upon payment of the debt secured by a deed of trust, the
a. trustor issues a deed for reconveyance.
b. grant deed is issued to the trustee.
c. trustee issues a release deed for reconveyance.
d. trustor now has equitable title.
C
A deed for reconveyance would be signed by the
a. beneficiary.
b. trustor.
c. trustee.
d. grantee.
C
Who must sign the reconveyance of a deed of trust?
a. Beneficiary
b. Trustor
c. Trustee
d. Grantee
C
Upon payment of the debt secured by a deed of trust, the
a. trustor issues a deed for reconveyance.
b. grant deed is issued to the trustee.
c. trustee issues a release deed for reconveyance.
d. trustor now has equitable title.
B
When default is declared on a loan secured by deed of trust, which of the following is true?
a. The trustee must sell the property at a private sale.
b. The successful bidder at the trustee's sale receives a trustee's deed at the time of sale.
c. The defa
A
The beneficiary's right, upon default, to take physical possession and collect income generated by the property is called
a. assignment of rents.
b. reconveyance.
c. power of sale.
d. the trustee has the right, not the beneficiary.
C
A borrower defaults on a deed of trust loan. Before the lender can foreclose, the lender must
a. offer to modify the loan terms to allow the borrower to catch up.
b. appoint a trustee if the deed of trust is of the automatic trustee form.
c. notify the bo
B
Under a deed of trust on real property, the trustee is
a. the owner of record of the property covered by the deed of trust.
b. empowered to foreclose, upon notice of default, by a trustee's sale of the property.
c. the equitable owner of the property.
d.
D
After a trustee's sale has been held and the property goes to the highest bidder, in most states the original trustor has
a. 21 days to pay off the loan balance.
b. 90 days equity of redemption.
c. one year to redeem the property.
d. no recourse.
B
When a person signs a note with no guarantee to the person receiving it, he is said to be signing it
a. with recourse.
b. without recourse.
c. in blank.
d. jointly and severally.
C
One of the major differences between a regular mortgage and a deed of trust is
a. a mortgage hypothecates personal property.
b. a deed of trust must be recorded.
c. the redemption period allowed.
d. there is no difference.
C
. The type of loan whereby the borrower makes interest only payments during the life of the loan with the entire principal due for the final payment is called
a. a discounted loan.
b. an amortized loan.
c. a term loan.
d. a partially amortized loan.
C
2. As payments are made, the amount of interest taken from a mortgage loan payment decreases and the amount applied to the principal increases. This is because of
a. appreciation.
b. variable interest rate.
c. amortization.
d. depreciation.
D--$50,000 X .08125
What is the annual interest on $50,000 calculated at a rate of 8.125% per annum?
a. $331.00
b. $406.25
c. $3,310.00
d. $4,062.50
B--75,500 X .80= 60,400 X 10.29/1000
If a monthly principal and interest payment for a 30-year, 12% loan of $1,000 would be $10.29 what would the monthly payment be for a home purchased at $75,500 with an 80% loan on those terms?
a. $10.29
b. $621.52
c. $755.90
d. $776.90
B--The loan = 75% of 100,000. So 100,000 � .75 = 75,000. The price ($102,000) - the loan ($75,000) = $27,000.
A house sells for $102,000 and is appraised at $100,000 by a lender who is willing to make a 75% loan-to-value loan. How much down payment will this house require?
a. $25,500
b. $27,000
c. $75,000
d. $76,500
C--50,000 - 500 - (50,000 x .02) = 48,500
A borrower signs a loan agreement for $50,000. Out of this, the lender charges a $500.00 loan origination fee and two discount points. How much cash does the borrower get?
a. $46,600
b. $47,000
c. $48,500
d. $49,000
D--$100,000 = the loan amount less 2% of the loan amount. So 100,000 is 98% of the loan amount. So 100,000/.98 = 102,040.82 (rounded to 102,041).
A home buyer wants to borrow $100,000. The lender quotes a loan origination fee of one point and a loan discount of one point. What size loan must be obtained to pay the two points and still leave $100,000?
a. $96,000
b. $98,039
c. $102,000
d. $102,041
B--The discount points (.02 � 50,000 = 1,000) will be paid in cash at closing and the borrower will pay interest on the loan amount of $50,000.
A purchaser took out a $50,000 new discount mortgage when he bought his home. The lender charged 2 discount points. On which amount will the mortgagor be paying interest the first month?
a. $49,000
b. $50,000
c. $51,000
d. $56,000
C
Money for tax and insurance payments that accompanies principal and interest could be placed in any of the following accounts EXCEPT
a. a trust account.
b. an escrow account.
c. a remaining balance account.
d. a reserve account.
A
A final loan payment that is larger than previous payments is called a
a. balloon payment.
b. budget payment.
c. terminal payment.
d. graduated payment.
A
A loan progress chart is used in connection with
a. partially amortized loans.
b. term loans.
c. index loans.
d. straight loans.
A
A mortgage lender will lend based on a proportion of the appraisal or sale price, whichever is less. This is called the
a. loan-to-value ratio.
b. owner's equity.
c. percent return.
d. CRV.
A
The value of the property above the total liens or mortgages is called
a. the equity.
b. due on sale.
c. the assessment.
d. the loan-to-value ratio.
C
The homeowner has made regular mortgage payments over ten years and the housing values in the neighborhood have steadily risen. The equity has
a. stayed the same.
b. steadily declined.
c. steadily increased.
d. fluctuated and now is less than it was when
B
The expenses, which a lender incurs while processing a mortgage loan application, are recovered from the borrower as
a. discount points.
b. origination fees.
c. mortgage insurance premium.
d. private mortgage insurance.
D--4 X 1/8 =1/2
16. Using the rule of thumb used by lenders (each point charged raises the yield by 1/8 of 1%), 4 discount points raise the effective yield of a typical home loan by
a. 1/32 of 1%.
b. 2/8 of 1%.
c. 1/4of 1%.
d. 1/2 of 1%.
D
Who normally pays the discount points when a conventional loan is taken out to purchase a residence?
a. Broker
b. Seller
c. Lender
d. Buyer
C--The loan amount = 90,000 � .80 = 72,000. 3,600/72,000 = 5.
The buyer agrees to pay $90,000 for a home, contingent upon obtaining an 80% loan. The lender charges $3,600 for points. How many points were charged?
a. 2 points
b. 4 points
c. 5 points
d. 6 points
D--3,550 / 95,000 = .0374, rounded to .037 = 3.7 points.
If a borrower paid $3,550 in points on a loan of $95,000 how many points were charged?
a. .003 points
b. .3 points
c. 3 points
d. 3.7 points
A
Discount points are more likely to be used during periods of
a. tight money.
b. available money.
c. cash sales.
d. seller financed sales.
B
The role of the FHA in residential mortgage lending is
a. guaranteeing the loan.
b. insuring the loan.
c. loaning the money.
d. as a secondary lender.
A
Who must pay the discount points on a FHA loan?
a. Anyone who agrees to
b. Seller
c. Buyer
d. There are no points on a FHA loan
A
Under section 203(b), the FHA
a. insures lenders against loan default.
b. lends to the secondary market.
c. guarantees loans.
d. makes loans directly.
A
A borrower can expect to pay a mortgage insurance premium for
a. an FHA insured loan.
b. an 80% conventional loan.
c. a graduated payment loan.
d. an accelerated payment loan.
D
A single woman applied for a FHA loan to buy a property she intends to use as a rental. Which if anything might cause her application to be denied?
a. There is no basis for denial for the application
b. She is single
c. She is a woman
d. She plans to use
A
Usually, the borrower of a FHA loan is also responsible for the
a. mortgage insurance premium.
b. funding fees.
c. private mortgage insurance.
d. estoppel certificate.
B
On a $64,000 home, which of the following would require the largest cash down payment?
a. FHA-insured loan
b. 80% loan-to-value conventional loan
c. 90% loan-to-value conventional
d. 100% DVA loan
B
Which government loan program will make direct loans if a qualified borrower cannot find a lender?
a. FHA
b. VA
c. CRV
d. HUD
B
In the event of default and subsequent foreclosure, which borrower is responsible for making good any losses suffered?
a. FHA
b. VA
c. HUD
d. 90% conventional
B
For a veteran to obtain a VA loan, it is necessary to have a
a. certificate of optimal value.
b. certificate of eligibility.
c. history of property ownership.
d. certificate of deferment.
C
The Truth in Lending Act covers credit extended for a
a. business or commercial transaction.
b. large apartment building.
c. mobile home which is used as a residence.
d. loan secured by a car valued at $30,000.
A
Truth in lending laws were created primarily to protect
a. consumers.
b. lenders.
c. beneficiaries.
d. mortgagees.
C
Regulation Z deals with
a. annual percentage rates.
b. escrow fees.
c. truth-in-lending.
d. statue of frauds.
C
According to regulation Z, which of the following would be allowed without further disclosure in an advertisement to sell a residence?
a. Easy 11% mortgage assumption
b. Take over an 11% loan
c. Assume an 11% annual percentage rate mortgage
d. Assumable 1
B
Which of the following loans would be exempt from the disclosure requirements of the truth-in-lending laws?
a. Commercial loans
b. Personal property loans in excess of $25,000
c. Financing extended to corporations
d. Consumer loans to natural persons
B
When advertising, a lender must disclose the
a. cost of appraisal.
b. annual percentage rate.
c. closing costs.
d. cost of the title search and title insurance.
D
Which of the following loans would be exempt from the disclosure requirements of the truth-in-lending laws?
a. An unsecured personal loan of $3,000
b. An educational loan from a commercial bank
c. A second mortgage loan on a residence
d. A $30,000 loan fo
C
Truth in lending laws require a lender to provide figures for all EXCEPT
a. loan amount.
b. interest rates.
c. maintenance costs.
d. annual percentage rate.
B
Regulation Z requires a lender to disclose
a. interest charges expressed as dollars and percent.
b. dollar amount of any finance charge.
c. APR as a dollar amount.
d. all charges only as a percent.
D
Penalties for violation of the truth-in-lending laws include
a. a fine of up to $5,000 and/or imprisonment for up to 1 year.
b. penalties up to twice the amount of the finance charge up to a maximum of $1,000.
c. Court costs, attorney fees, and actual dam
D
With regard to truth in lending laws, which of the following is legally permissible to advertise, without further explanation?
a. Only $1,000 down payment
b. Less than $500 per month
c. 11% interest loan
d. APR 10% assumable
C
Under the truth in lending act, the cost of credit extended must be expressed as an
a. actual percentage rate.
b. approximate percentage rate.
c. annual percentage rate.
d. average percentage rate.
B
Which of the following contains a trigger term under Regulation Z and requires further disclosure?
a. "Assumable VA loan"
b. "Buy for less than $600 a month"
c. "Cash price, only $79,500"
d. "Rent for only $499 per month
B
A borrower does not have the right, under the truth-in-lending laws, to rescind a credit transaction
a. for a consumer loan on personal property.
b. for the acquisition of the borrower's principal dwelling.
c. both a and b.
d. neither a nor b.
D
When borrowing money to buy a home, the borrower has the right of rescission
a. within three business days, including Saturday.
b. within three business days, not counting Saturday.
c. within three years.
d. at no time.
D
In analyzing a mortgage loan application, a lender considers all EXCEPT
a. job stability.
b. income adequacy.
c. credit rating.
d. sales price.
A
Which of the following would be most important to a lender qualifying an individual for a residential mortgage loan?
a. Borrower's regular income
b. Overtime income
c. Spouse's part-time income
d. Pest and dry rot report
A
All of the following are important to a mortgage lender when determining whether or not to make a real estate loan EXCEPT
a. the needs of the borrower.
b. the borrower's income.
c. the appraisal.
d. child support payments.
C
Generally, before a lender will approve a loan, the borrower must
a. have sufficient funds for the down payment.
b. sign a statement if the borrower intends to occupy the property.
c. both a and b.
d. neither a nor b.
C
Which of the following do lenders of home loans consider the most important in their analysis of a loan application?
a. Age, sex, race, and marital status of the borrower
b. Location and age of the collateral
c. Job stability, income adequacy and credit r
A
Which of the following ratios of monthly payment to monthly income would be preferred by a residential lender?
a. 25%
b. 55%
c. 65%
d. 75%
B
In analyzing a mortgage loan application, it is illegal for a lender to consider
a. job stability.
b. marital status.
c. income adequacy.
d. credit rating.
D
Which of the following is given consideration in evaluation of a loan application?
a. Race
b. Marital status
c. Sex
d. Income adequacy
C
When making a mortgage loan application, borrowers are protected from discrimination based on marital status by the
a. Fair Credit Reporting Act.
b. Fair Housing laws.
c. Equal Credit Opportunity Act.
d. Real Estate Settlement Procedures Act.
D
A lender can legally discriminate in loan terms based on the applicant's
a. religion.
b. marital status.
c. race or skin color.
d. intention to occupy (or not occupy) the mortgaged property.
D
The Federal Equal Credit Opportunity Act protects borrowers from discrimination based on
a. handicap status.
b. familial status.
c. sexual preference.
d. marital status.
B
The right of individuals to inspect their file at a credit bureau is found in the
a. Truth-in-Lending Act.
b. Fair Credit Reporting Act.
c. Regulation Z.
d. Federal Consumer Credit Protection Act.
C
The Fair Credit Reporting Act gives individuals several rights EXCEPT
a. correct any errors on their report.
b. inspect their file at a credit bureau.
c. delete any reference to bankruptcy.
d. make explanatory statements to supplement the file.
B
When considering loan applications, lenders like to see
a. very little use of credit cards.
b. good repayment records.
c. derogatory information.
d. information at least seven years old.
B
The APR is
a. usually lower than the interest rate.
b. made up of the interest rate combined with the other costs of the loan.
c. both a and b.
d. neither a nor b.
C
A primary mortgage lender is one who
a. lends to FNMA, FHLMC and GNMA.
b. pools, insures, guarantees and sells first mortgage loans.
c. lends to borrowers, services the loans and perhaps sells the instruments to another.
d. lends only for first mortgages
A
From whom would a borrower obtain a VA or FHA loan?
a. Approved mortgage lender
b. VA or FHA
c. Insurance companies
d. Sale of bonds
D
Which of the following sources provides the most home mortgage money in the United States?
a. Mutual savings banks
b. Commercial banks
c. Credit unions
d. Mortgage companies
D
Which of the following are designed to prevent disintermediation?
a. Adjustable rate mortgages
b. Secondary mortgage markets
c. Pass-through certificates
d. Certificates of deposit
D
To whom can a borrower turn for a direct loan for the financing of a single-family dwelling?
a. Federal Housing Administration
b. Mortgage broker
c. Insurance company
d. Savings and loan institutions
D
Which of the following supplies money to finance home loans?
a. Fannie Mae
b. FHA
c. VA
d. Savings and loans
C
Commercial banks are most likely to deal heavily in
a. house boat loans.
b. mobile home purchase loans.
c. construction loans.
d. residential home loans.
A
Commercial banks are most likely to deal heavily in
a. interim loans.
b. 40-year residential loans.
c. home improvement loans.
d. VA loans.
A
One of the primary reasons for the decline in loan demand at savings and loan institutions appears to be
a. deregulation of the lending industry.
b. the poor location of many of the branch offices.
c. the high interest rates being charged by commercial ba
C
With regard to real estate loans, life insurance companies tend to favor
a. single family houses.
b. interim construction loans.
c. large commercial buildings.
d. not being involved in real estate.
C
One may find financing for a single family dwelling at all of the following EXCEPT
a. savings and loans.
b. commercial banks.
c. insurance companies.
d. mortgage bankers.
D
Which of the following is most likely to specialize in large, commercial participation loans?
a. Mortgage banks
b. Savings and loans
c. Farmers home loan association
d. Life insurance companies
D
Lenders who could be described as investing a major portion of their assets in long-term real estate loans, preferring not to service their own loans, and favoring large commercial properties would be
a. commercial banks.
b. savings and loans.
c. mutual s
C
Which of the following specializes in making loans and reselling them?
a. FNMA
b. Mortgage brokers
c. Mortgage bankers
d. VA
C
Which of the following specializes in bringing lenders and borrowers together without lending their own money?
a. Insurance companies
b. Mortgage bankers
c. Mortgage brokers
d. Commercial banks
B
Most mortgage brokers generally
a. lend their own funds.
b. use money provided by other investors.
c. service the loans they make.
d. only make loans on large properties.
D
An investor can invest in mortgages by purchasing all EXCEPT
a. Ginnie Mae pass-through certificates.
b. Freddie Mac participation certificates.
c. junior mortgages.
d. municipal bonds.
C
A lender who continues to collect mortgage payments even after selling the loan is said to be
a. originating loans.
b. laundering money.
c. servicing the loan.
d. discounting the loan.
B
. All of the following offer secondary mortgage market programs EXCEPT
a. FNMA.
b. FDIC.
c. FHLMC.
d. GNMA.
C
The secondary mortgage market is an area of activity in which
a. a borrower may get loans if the primary market cannot accommodate them.
b. second mortgages are made.
c. existing mortgages are bought, sold and discounted.
d. foreclosed properties are boug
D
Fannie Mae buys and sells all mortgages EXCEPT
a. FHA loans.
b. VA loans.
c. conventional loans.
d. chattel mortgages.
A
The entity that purchases the most loans in the secondary market is
a. FNMA.
b. FHLMC.
c. HUD.
d. GNMA.
A
A quasi-governmental agency, which was originally established to create a secondary mortgage market for FHA loans, is
a. FNMA.
b. GNMA.
c. FHLMC.
d. HUD.
A
The basic role of the GNMA is to
a. resupply capital to primary lenders by guaranteeing repayment of pools of mortgage loans.
b. insure loans made by primary government lenders.
c. sell mortgage pools to money market funds.
d. facilitate the resale of mor
C
Freddie Mac was originally formed to provide a secondary mortgage market facility for the
a. Federal National Mortgage Association.
b. Government National Mortgage Association.
c. Federal Home Loan Bank Board.
d. Mortgage Guaranty Insurance Corporation.
A
The term "usury" in the field of real estate lending means charging an interest rate over and above
a. the legal limit.
b. the prime rate.
c. 10%.
d. 20%.
D
Computerized Loan Origination (CLO) programs are available to
a. mortgage brokers.
b. real estate brokers.
c. attorneys.
d. all of the above.
C
Participation Certificates (PCs) are instruments used by
a. GNMA.
b. FNMA.
c. FHLMC.
d. Farmer Mac.
A
FHLMC was formed primarily to provide a secondary market for
a. savings and loans.
b. commercial banks.
c. mortgage companies.
d. insurance companies.
D
Other lenders providing mortgage money might include
a. pension and trust funds.
b. credit unions.
c. commercial finance companies.
d. all of the above.
A
The interest rate of a loan from a local savings and loan may be increased or decreased during the life of the loan. This is an example of
a. a variable interest rate.
b. escalated interest.
c. graduated interest.
d. percentage interest.
D
All of the following may be used for setting ARM interest rates EXCEPT
a. one-year U.S. Treasury securities.
b. six-month Treasury bills.
c. cost of funds to thrift institutions.
d. Gross National Product is not used to set ARM interest rates.
A
In order to make adjustable rate mortgage loans more attractive to borrowers, lenders offer
a. lower initial interest rates.
b. gifts such as appliances, trips, etc.
c. lower insurance rates.
d. lower down payments.
C
What feature in an adjustable rate mortgage protects the borrower against very large monthly payment increases?
a. Index rate
b. Adjustment period
c. Interest rate cap
d. Margin
C
The interest rate of an adjustable rate mortgage may rise or fall based on the
a. interest rate cap.
b. adjustment period.
c. index.
d. margin.
B
In a graduated payment mortgage, the graduated part is the
a. interest rate.
b. monthly payment.
c. maturity date.
d. entire loan is graduated.
D
Prior to the introduction of adjustable rate mortgages, the FHLBB approved the use of
a. variable rate mortgages.
b. renegotiable rate mortgages.
c. both a and b.
d. neither a or b.
D
A new home developer who is including appliances with the sale of each house most probably would assist the buyer in obtaining a
a. blanket mortgage.
b. shared appreciation mortgage.
c. equity sharing mortgage.
d. package mortgage.
A
When two or more properties serve as collateral for the same loan, it is called a
a. blanket mortgage.
b. tandem mortgage.
c. security mortgage.
d. blended rate mortgage.
D
A builder bought all 20 lots in a subdivision from the developer, who carried most of the purchase price on one loan. To sell the lots, he must include a
a. reverse loan clause.
b. sale-lease back clause.
c. package mortgage clause.
d. partial release cla
A
When considering a ARM loan, the lender must explain to the borrower, in writing, the
a. worst-case scenario.
b. best-case scenario.
c. average-case scenario.
d. respective credit report.
C
An elderly couple is "house rich, money poor". To obtain money now while still living in their magnificent home, they should look for a
a. negative amortization.
b. an adjustable rate mortgage.
c. a reverse annuity mortgage.
d. a graduated payment mortgag
C
. Which of the following involves the greatest risk to a lender?
a. First mortgage
b. FHA loan
c. Construction loan
d. VA loan
C
Construction loans are
a. long term, low risk.
b. long term, high risk.
c. short term, high risk.
d. short term, low risk.
A
Equity sharing is based on the concept of someone who has assets sharing those assets in exchange for
a. a share of the ownership.
b. tax benefits.
c. both a and b.
d. neither a nor b.
C
A blended-rate loan arrangement is designed to
a. raise the rate of interest to the buyer.
b. lower the sales price of the property.
c. attract buyers who are discouraged by high interest rates.
d. pay off a loan sooner.
B
Each of the following statements about open-end mortgage clauses is true EXCEPT
a. using an open-end clause, the new amount borrowed is added to the mortgage balance.
b. they are used in government loans like DVA and FHA.
c. they are used in conventional
B
When an existing loan at a low interest rate is refinanced by a new loan at an interest rate between the current market rate and the rate of the old loan, the result is a
a. combined rate.
b. blended loan.
c. wraparound loan.
d. merged loan.
B
A loan arrangement whereby a lender extends a line of credit is
a. a buy-down mortgage.
b. an open-end mortgage.
c. a wraparound mortgage.
d. a purchase money mortgage.
D
The phrase "taking back paper" applies to
a. a cash sale.
b. conventional loans.
c. VA loans.
d. seller financing.
A
A mortgage taken by a seller from the buyer in part payment of the purchase price of real estate is known as
a. seller financing.
b. a conflict of interest.
c. usury.
d. a second trust deed.
D
An individual who is contemplating the purchase of a mortgage as an investment should have
a. the property appraised.
b. a credit check made on the borrower.
c. the title searched.
d. all of the above.
A
One of the main differences between a land sales contract and a purchase money mortgage is
a. the passing of title.
b. interest charged.
c. time between payments.
d. the term of the loan.
B
When should a purchase money mortgage properly be recorded?
a. Before the deed
b. After the deed
c. At the same moment as the deed
d. Upon full payment
A
For a successful wraparound, it is necessary to have an existing mortgage with
a. a below-market interest rate.
b. a due-on-sale clause.
c. an above market interest rate.
d. an alienation clause.
C
Under the terms of a shared appreciation mortgage
a. the loan is made at a below-market interest rate.
b. the lender received a portion of the property's appreciation.
c. both a and b.
d. neither a nor b.
B
A contract for deed on residential property
a. allows transfer of title to the purchaser at the inception of the mortgage.
b. transfers title to the purchasers at the fulfillment of the conditions of the mortgage.
c. does not provide for transfer of title
A
. A company wishing to raise capital by selling its real estate but still remaining as the occupant of the property would enter into
a. a sale and lease-back.
b. an option agreement.
c. an equity mortgage.
d. a contract for deed.
C
An overencumbered property would be one with a market value of
a. $125,000 with a first mortgage of $75,000 and a second mortgage of $26,000.
b. $375,000 with a first mortgage of $25,000 and a second mortgage of $200,000.
c. $120,000 with a first mortgage
C
ARM loans with teaser rates are avoided by
a. mortgage insurers.
b. secondary market buyers.
c. both a and b.
d. neither a nor b.
B
Property taxes are
a. levied according to square footage.
b. a lien until paid.
c. based on income of the owner.
d. an encroachment until paid.
A
Plottage is likely to have which of the following results?
a. Raising the tax bill
b. Raising the tax rate
c. Accelerating the lien date
d. Lowering the tax bill
A
A city or county sponsored public improvement is most appropriately financed by
a. general property taxes.
b. an improvement district.
c. an assessment district.
d. federal income taxes.
B
All of the following benefit from property taxes EXCEPT
a. school budget.
b. municipal stadium.
c. public libraries.
d. parks.
C
What is the most correct meaning of the term "ad valorem"?
a. Appraised value
b. Property tax
c. According to the value
d. And wife
A
Taxes become a lien
a. in advance.
b. only when delinquent.
c. in arrears.
d. when an assessment appeal is filed.
C
How is the priority of property tax liens established?
a. By the county tax assessor's decision which is final
b. By the amount of the lien compared to others
c. They have priority no matter when recorded
d. By the date of recording
C--Assessed value = 90,000 � .80 = 72,000; Annual taxes are 840 � 2 = 1,680;
so 1,680/72,000 = .0233 � 1,000 = 23.33 per 1,000.
If an owner's semiannual property taxes on a $90,000 home are $840 and the house is assessed at 80% of value, what is the tax rate per thousand dollars of evaluation?
a. $11.66
b. $18.66
c. $23.33
d. $720.00
B--50 front feet � $100 per front ft. = $5,000.
A lot measured 50' on a county road and 80' deep. The county assessor valued the lot at $15,000. The tax rate is $100 per front foot. The tax bill is
a. $1,500.
b. $5,000.
c. $8,000.
d. incalculable without the millage rate.
C--Assessed value = 124,000 � .80 = 99,200; the rate is 18.20/1000 so 99,200 � 18.20/1000 = 1,805.44.
If a home sold for $124,000 and was assessed at 80% of its value, how much would the property taxes be at a rate of $18.20 per thousand dollars of assessed value?
a. $992.00
b. $1,444.35
c. $1,805.44
d. $2,256.80
B--25,000 X 2.50/100=625
A property is assessed at $25,000. With a tax rate of $2.50 per hundred, what will the taxes be?
a. $100
b. $625
c. $1,000
d. $6,250
D--55,864 � 3.32/100 = 1,854.68; rounded to the nearest dollar = 1,855.
The tax rate on a property is $3.32 per $100 of assessed valuation. The assessed value is $55,864. What is the annual tax payment? (round to the nearest dollar)
a. $185
b. $594
c. $592
d. $1,855
C
When a home owner feels his property has been assessed too high and files an appeal, the burden of proof is on the
a. appraiser chosen by the home owner.
b. assessor's staff appraiser.
c. homeowner.
d. county supervisor.
D
A municipality is installing new sidewalks in a neighborhood. The cost of this project would most likely be paid for by means of
a. individual contracts with property owners.
b. income taxes.
c. a dedication.
d. a special assessment.
A
The theory of special assessment allocation is that the improvement benefits the
a. land in the district.
b. structures in the county.
c. people in the equalization area.
d. businesses in the district.
C
The following public improvements would most probably be funded by a special assessment EXCEPT
a. installation of street lights.
b. curbs.
c. reconstruction of city sewage plant.
d. widening of neighborhood streets.
B
In a special assessment district, which occurs first?
a. Bonding
b. Hearing
c. Confirmation
d. Assessment collection
B
All of the following may be considered in calculating the cost basis of a property in a capital gain tax computation EXCEPT
a. purchase price.
b. repairs or maintenance.
c. landscaping.
d. improvements.
B--Sales price of $90,000 - expenses of sale $6,300 = adjusted sale price of $83,700; adjusted sales price of $83,700 - basis of $40,800 = gain of $42,900.
A home with a cost basis of $40,800 in 2005 is resold today for $90,000. Commissions and closing expenses are $6,300. What is the gain on the sale?
a. $6,300
b. $42,900
c. $83,700
d. $82,600
D
A woman sold her residence of 3 years for $96,500 and immediately invested in another residence at a sales price of $150,000. Assuming a basis of $46,500 in the original property, how much taxable gain will she have to report on this sale?
a. $7,000
b. $5
D--Sales price of $80,000 - expenses of sale $5,600 = adjusted sales price of $74,400.
A home with a cost basis of $40,800 in 2003 is resold today for $80,000. Commissions and closing expenses are $5,600. What is the adjusted sales price?
a. $5,600
b. $33,600
c. $72,300
d. $74,400
A
In order to determine taxable gain on a residence, the
a. basis must be subtracted from the amount realized from the sale.
b. closing costs are subtracted from the sale price.
c. basis and the amount realized from the sale must be the same.
d. sales price
D
Persons wishing to defer federal income tax on the sale of a personal residence must have lived in the residence
a. 180 days.
b. six months.
c. one year.
d. two years of the last five.
D
An investor sells his real property using an installment sale. His capital gains tax would be due
a. never, if he owned the property for more than one year.
b. after the last installment s paid.
c. the year of the sale.
d. as he receives the payments.
A
Local government programs and services are financed primarily through
a. property taxes.
b. federal income taxes.
c. state income taxes.
d. state sales taxes.
C
Taxes on real property are levied
a. on an ad valorem basis.
b. according to the value of the property.
c. both a and b.
d. neither a nor b.
A
The assessment ratio of real property in a community may be
a. 100 percent of its appraised value.
b. more than its fair market value.
c. more than its appraised value.
d. any of the above.
D
Tax rates may be expressed as
a. a millage rate.
b. dollars of tax per hundred dollars of valuation.
c. dollars of tax per thousand dollars of valuation.
d. any of the above.
D
Which of the following would be the highest tax rate?
a. 38 mills
b. $3.80./$100
c. $38/$1,000
d. no difference
D
Records of the assessed valuations of all properties within a jurisdiction are known as
a. appraisal rolls.
b. allocation rolls.
c. appropriation rolls.
d. assessment rolls.