Cram

11. Mabel Moseley owned an easement footpath across neighboring property. School children would occasionally use the path in walking to and from school. When Mabel became interested in roses, she fenced her entire lot but did not provide a gate to the footpath. What is the probable result of this action? A. The children gain a prescriptive easement. B. Mabel has abandoned the easement. C. Mabel has given the children an easement in gross. D. The construction of the fence has no legal implications.

B. Mabel has abandoned the easement.

8. A Veteran obtained a VA loan to purchase a home. Subsequently the home was sold via loan assumption to a non-veteran purchaser. Which of the following statements is correct? A. The transaction is illegal and when it is discovered, the loan will have to be paid off. B. The Veteran remains liable for payments unless released by the lender and VA. C. The transaction is lawful and the purchaser always becomes solely liable for repayment. D. VA loans are assumable only by veterans with sufficient entitlement.

B. The Veteran remains liable for payments unless released by the lender and VA.

3. When properly executed a deed conveys an interest in property to the person who accepts it. Which of the following is NOT a requirement of a valid conveyance by deed? A. The deed must have been delivered and accepted during the lifetime of the grantor. B. The deed must be recorded in the county courthouse in which the property is located. C. The deed must be signed by a legally competent grantor. D. The deed must identify the grantee but the grantees signature is not required.

B. The deed must be recorded in the county courthouse in which the property is located.

11. Which of the following are encroachments? A. Pedestrian traffic cutting across the corner of a lot. B. The eve of a roof that extends over a property line. C. A low-flying airplane over privately owned land. D. All answers are correct.

B. The eve of a roof that extends over a property line.

12. The Federal Truth-in-Lending law applies to which of the following transactions? A. The purchase of a 51-acre farm with a $75,000 loan. B. The purchase of an $80,000 home with new first mortgage loan. C. The purchase of a five unit apartment building. D. All answers are correct.

B. The purchase of an $80,000 home with new first mortgage loan.

17. Blaze fell from the front porch of Ramsey's house. Blaze sued for damages because of injuries suffered from the fall and won a judgement. The resulting lien is: A. first in priority of claim ahead of all others. B. a lien against all real and personal property Ramsey owns in the county C. a specific lien against Ramsey's house. D. a personal lien against Ramsey, not the property.

B. a lien against all real and personal property Ramsey owns in the county

6. A seller lists property with a broker with no specific commission fee/ rate set forth, yet specifying a dollar amount the seller is to receive from the proceeds of the sale. This is: A. a gratuitous listing B. a net listing. C. permitted under Georgia Law D. an open listing

B. a net listing.

14. Given the same term, interest rate and loan amount, then: A. an amortized loan will cost more to repay than a straight loan. B. a straight loan will cost more to repay than an amortized loan. C. a term loan will cost less to repay than an amortized loan. D. the cost of repayment will be the same for both term and amortized loans.

B. a straight loan will cost more to repay than an amortized loan.

20. The clause in mortgage which allows the lender to call the outstanding loan amount due and payable should borrower fail to make payments on time is called: A. the alienation clause. B. an acceleration clause. C. an escalation clause. D. the prepayment clause.

B. an acceleration clause.

17. When a waterline recedes permanently, exposing additional land, it is known as: A. avulsion. B. dereliction. C. alluvium. D. erosion.

B. dereliction

19. The person who signs a mortgage note is known as the: A. author. B. maker or mortgagor. C. grantor. D. lender.

B. maker or mortgagor.

26. Mary and James Robinson are selling the home they purchased 5 years ago with an FHA loan. The new buyer A. may assume the current loan as an owner occupant if he/she has been deemed creditworthy and approved by the Robinson's lender B. may assume the current loan as an owner occupant if determined to be creditworthy by the Robinson's lender and the sellers are held secondarily liable C. may be an investor as long as he/she qualifies for the payments and the Robinsons are released of liability D. may not assume the loan

B. may assume the current loan as an owner occupant if determined to be creditworthy by the Robinson's lender and the sellers are held secondarily liable

20. The recording of a deed results in: A. verifying its validity. B. protecting the grantees interest against subsequent claims. C. giving actual notice of ownership to the world D. All answers are correct.

B. protecting the grantees interest against subsequent claims.

24. FHA mortgage insurance: A. is always paid by the seller B. protects the lender. C. is a floating rate affected by the number of annual claims D. protects the borrower.

B. protects the lender

6. The secondary mortgage market: A. provides mortgagors with a method to sell their mortgages. B. provides liquidity for mortgage holders. C. assures availability of second mortgages for qualifying homeowners. D. originates federally insured mortgage loans.

B. provides liquidity for mortgage holders.

12. A tenant gives up the right of possession to an apartment but retains the right to take possession if the rent is not paid. This process is an example of A. assignment. B. subletting. C. assignment with a reversionary interest. D. a sandwich lease

B. subletting.

18. The word "encumbrance" is best described as: A. the making of the property security for payment of a debt. B. that which affects or limits title or use of the property. C. the construction of any improvement partly or wholly on the land of another D. the right, privilege or interest which one party has in the land of another.

B. that which affects or limits title or use of the property.

8. According to Federal Law, a lender is limited to the collection of only a credit report fee prior to the borrower receiving Good Faith Estimate. The Law which imposes this restriction is: A. the Federal Truth in Lending Act. B. the Real Estate Settlement and Procedures Act. C. the Equal Opportunity Credit Act. D. the Fair Housing Act.

B. the Real Estate Settlement and Procedures Act.

21. When real estate is sold "subject" to an existing loan, then: A. the buyer has legal responsibility for repayment of the loan B. the seller is free from legal responsibility for repayment of the loan C. the seller remains legally responsible for repayment of the loan D. both buyer and seller are legally responsible for repayment of the loan

B. the seller is free from legal responsibility for repayment of the loan

12. A foreclosure sale brought $70,000. At that time there was a first mortgage loan with an outstanding balance of $80,000 and a second mortgage loan outstanding balance of $8,000. How much will the holder of the second mortgage receive from the proceeds of the sale? A. $7,000 B. $8,000 C. $0 D. A pro rata share of the proceeds, based on the ratio of total debt on the second mortgage to the total debt on the first mortgage.

C. $0

2. As a buyer's agent, Broker Brown sells a property listed by Broker Smith. The buyer wants the property for a commercial purpose, but it has recently been down-zoned to residential and Broker Smith is aware of this fact. All of the following are true EXCEPT: A. Broker Smith is obligated to reveal this fact. B. Broker Brown should research the zoning. C. failure to discuss zoning is not misrepresentation. D. both brokers might have liability.

C. failure to discuss zoning is not misrepresentation.

16. An act by one party intended to deceive the other party to a contract is an example of: A. duress B. undue influence C. fraud D. menace.

C. fraud

1. Jack, Jerry and Jill buy property together with stated equal interests and the right of survivorship. Their form of ownership is known as: A. severalty ownership. B. tenancy in common. C. joint tenancy. D. tenancy by the entireties.

C. joint tenancy.

12. An unpaid workman wishes to file a mechanics lien for materials, labor and travel expenses. The workman can file for: A. materials only. B. labor only C. labor and materials but not travel. D. materials, labor and travel.

C. labor and materials but not travel.

9. Severalty ownership results when: A. two parties receive title to the same property by devise. B. husband and wife buy property together. C. one of two joint tenants dies D. tenants own equal and undivided shares in the same property.

C. one of two joint tenants dies

9. If a corporation (principal) gives a third party reason to believe that a broker is it's agent even-though the broker is unaware of the appointment, then the law gives to the broker: A. express authority B. authority by ratification C. ostensible authority D. prescriptive authority

C. ostensible authority

8. An easement that is acquired by constant, hostile use is called an easement by: A. adverse possession B. necessity C. prescription D. encroachment.

C. prescription

7. One of the primary direct sources of money for mortgage loans for borrowers on residential property is: A. FHA. B. VA. C. private investors. D. GNMA.

C. private investors.

13. An alienation clause usually: A. is found in the fine print in the promissory note. B. is never used in a trust deed. C. restricts the mortgagor's ability to transfer the property. D. No answers are correct.

C. restricts the mortgagor's ability to transfer the property.

4. According to the Real Estate Settlement Procedures Act, the Uniform Settlement Statement must be used at closing when: A. all settlement charges are paid by the seller. B. the buyer's loan is a purchase money mortgage C. the lender has given the borrower good faith estimate of closing expenses. D. All answers are correct.

C. the lender has given the borrower good faith estimate of closing expenses.

1. The APR is the total cost of credit to the borrower. As such, the actual APR number shown in any advertising is: A. usually the same as the stated interest rate. B. always less than the stated interest rate. C. usually higher than the stated interest rate. D. always higher than the stated interest rate.

C. usually higher than the stated interest rate.

15. An owner signs a sales contract because of undue pressure by the broker and purchaser. The contract is: A. Avoid B. enforceable a the option of the owner/seller C. voidable at the option of the owner D. both B and C

C. voidable at the option of the owner

30. Tippins borrowed $12,000 on a straight note secured by a mortgage against the home. Tippins made monthly payments of interest computed on a 9 percent annual rate for the full term of the note. The total interest payments were $3,780.00. The term of the note was for how many months? A. 31 B. 36 C. 38 D. 42

D. 42

19. Subdivision deed restrictions may be removed by: A. expiration of time. B. consent of all benefiting owners. C. acquiescence in repeated violations D. All answers are correct.

D. All answers are correct.

5. Which of the following organizations purchases home mortgage loans from originators? A. Federal Home Loan Mortgage Corporation. B. Federal National Mortgage Association. C. MGIC investment Corporation. D. All answers are correct.

D. All answers are correct.

6. Roger Lodger leased a house from Manny Mansions. The lease contract, when properly executed and delivered, created: A. an estate for Roger. B. a possessory interest or right for Roger. C. an estate in reversion for Manny. D. All answers are correct.

D. All answers are correct.

19. Which of the following are essential to the validity of both deeds and written lease agreements? I. Names of grantor/grantee or lessor/lessee. 11. Description of the property . Il1. Recital of consideration. IV. Delivery and acceptance of the instrument. A. I and III only. B. II, II and IV only. C. I and IV only D. I, II, III and IV.

D. I, II, III and IV.

23. Mr. Anderson owns and operates a successful furniture store. He wants to invest a million dollars in modernizing his facility and increasing his inventories. He sells his store's building and land to investor Ms. Brown and then leases the premises from Brown on a 30-year lease. The results of this transaction is (are): I. Anderson gets tax deductions that he did not have before. II. Brown will get to depreciate the building. IIl. Anderson gets additional capital. IV. Brown probably gets a reasonably secure investment . A. III only. B. II and IV only. C. I, II and III only. D. I, II, III and IV.

D. I, II, III and IV.

18. Conventional loans are different than both VA and FHA loans in which of the following ways? I. VA and FHA loans are made with government funds II. Conventional loans are not insured III. Conventional loans are usually made on a lower loan-to-value ratio than VA or loans IV. VA and FHA loans must bear lower interest rates than conventional loans A. I, II, III and IV B. II, II and IV only C. I and II only D. III only

D. III only

22. An ad states the monthly mortgage payments on a loan are "only $995". Regulation Z requires further disclosure of all but which of the following? A. Terms of repayment. B. Annual percentage rate. C. Amount of down payment. D. Simple interest rate.

D. Simple interest rate.

17. When a borrower pays for mortgage insurance at closing on a conventional loan, whose risk is the insurance always covering? A. The borrower and the lender B. The borrower only. C. FHA D. The lender only

D. The lender only

14. Which of the following statements is correct with regard to the purpose of adverse possession laws'? A. To allow poor people an opportunity to own real estate. B. To provide for more equitable distribution of property. C. To enable an individual to acquire title to land which the owner will not sell. D. To insure the fullest and most productive use of privately owned land.

D. To insure the fullest and most productive use of privately owned land.

16. A loan in which portions of funds are released as improvements are completed is known as: A. a chattel loan. B. an open-end loan C. a package loan D. a construction loan.

D. a construction loan.

17. A loan which provides for the borrower to make smaller payments initially and to compensate later by making larger payments is called: A. an adjustable rate loan ARM B. a variable rate loan VRL. C. a reverse annuity mortgage RAM D. a graduated payment loan. (GPM)

D. a graduated payment loan. (GPM)

9. From the standpoint of the dominant estate, an easement is: A. an encumbrance. B. a lien. C. a reversion. D. an appurtenance.

D. an appurtenance.

16. A lien is best described as: A. an encumbrance affecting the use of property. B. a monetary claim not secured by property. C. an encumbrance of any kind. D. an encumbrance affecting title to the property.

D. an encumbrance affecting title to the property.

1. The clause in a mortgage which cancels the lender's rights and claims against pledged property when the debt is repaid is called: A. subrogation. B. subordination. C. acceleration. D. defeasance.

D. defeasance.

15. John borrowed $50,000 to be amortized over thirty years in order to purchase a home. His monthly payments were to be made under a constant mortgage plan. This means: A. each installment contained a constant payment to principal B. each installment contained a constant payment to interest C. each payment contained equal amounts for principal and interest D. each payment was of a constant amount with decreasing portions applied to interest with each installment

D. each payment was of a constant amount with decreasing portions applied to interest with each installment

7. Someone who employs an agent to act for and in one's stead in specified acts may be: A. a principal B. a broker C. neither A nor B D. either A or B

D. either A or B

16. If a seller should choose to sell his/her property under the provisions of a land sales contract, then he/she would be protected to some extent by A. the purchase money mortgage he/she received B. his/her retention of legal title to the property during the term of the contract C. the security instrument used (mortgage, trust deed, or security deed) D. his/her retention of possession

D. his/her retention of possession

5. The Federal Reserve Bank's discount rate: A. is a refund rate for its members. B. helps to increase the availability of mortgage money when it is raised. C. floats in the market according to the forces of supply and demand. D. indicates the cost of credit for member banks.

D. indicates the cost of credit for member banks.

10. An agents' obligations to a customer include all of the following except: A. reasonable skill and care B. accountability. C. honesty and integrity. D. loyalty.

D. loyalty.

7. Timber and Stove Construction Company has an easement to stack lumber on another's land. This results in: A. the construction company having an appurtenant easement B. the construction company being a servient tenant. C. the construction company being the dominant estate. D. the construction company having an easement in gross.

D. the construction company having an easement in gross.

20. If a borrower owes $300 in interest on a promissory note for $10,000o after 3 months, what is the interest rate being charged? A. 12 % B. 8 % C. 60 % PD. 10 %

A. 12 %

10. PMI would apply to: A. 90 % conventional loan for 30 years . B. 80 % conventional loan with a balloon payment . C. 90 % FHA loan . D. All answers are correct

A. 90 % conventional loan for 30 years .

10. Which of the following statements expresses the relationship between mortgage money and interest rates? A. A plentiful supply results in lower rates. B. A short supply results in lower rates. C. A plentiful supply results in higher rates. D. A short supply stabilizes rates.

A. A plentiful supply results in lower rates.

3. A fiduciary is: I. an agent. 11 , a principal . III. an insurance or loan underwriter. A. I only. B. II only C. I or II. D. III only.

A. I only

11. Broker Brown lists a parcel of real estate that has a tax lien filed against it. Subsequently, it is condemned. What is the status of Broker Brown's listing? A. It is terminated B. The listing is unaffected. C. Brown is owed a condominium by the seller D. The listing is terminated unless redeemed.

A. It is terminated

16. Which of the following is a distinguishing characteristic of a special warranty deed? A. It makes warranties only for the time the property was owned by the grantor. B. It conveys both present interest and any future interest that may be acquired by the grantor C. It is the best and most complete warranty deed that a grantee may receive D. It must specify the actual amount of valuable consideration paid by the purchaser.

A. It makes warranties only for the time the property was owned by the grantor.

14. Which of the following liens has priority over the others? A. Special Assessments. B. First Mortgage. C. Mechanic's Lien. D. Federal Income Tax Lien.

A. Special Assessments.

2. When a loan is to be secured by a new automobile, the lender may take: A. a chattel mortgage. B. a chattel deed of trust. C. chattels real. D. a bill of sale.

A. a chattel mortgage.

7. The principal advantage to the mortgagee of budget mortgages is: A. assurance of payment of items which could affect the lender's security. B. a larger portfolio of smaller loans, thus spreading risk. C. higher interest. D. more well-qualified borrowers, hence fewer foreclosures.

A. assurance of payment of items which could affect the lender's security.

15. A loan which includes monthly payments of taxes and insurance is commonly referred to as: A. budget mortgage B. blanket mortgage C. graduated payment mortgage D. open end mortgage

A. budget mortgage

15. Private agreements that govern the use of land are known as: A. covenants. B. zoning ordinances. C. building codes. D. All answers are correct.

A. covenants.

18. The gift of property by a nuncupative will would NOT be known as a: A. devise. B. bequest. C. legacy. D. Both B and C are correct.

A. devise.

10. Telephone, gas and electric lines placed on privately owned land are examples of: A. easements in gross. B. appurtenant easements C. encroachments. D. trespassing

A. easements in gross.

22. The right to reclaim property between the time of default and foreclosure sale is known as the: A. equitable right of redemption B. statutory right of repossession C. equitable right of replevin D. statutory right of redemption

A. equitable right of redemption

11. A security deed: A. is the borrower's security for the loan. B. is held by the trustee until the loan has been paid. C. may be sold to a holder in due course. D. No answers are correct.

A. is the borrower's security for the loan.

11. A mortgage loan had an outstanding balance of $58,500 at the time of foreclosure. The encumbered property sold for $57,000 at public auction. The lender: A. may seek a judgment against the debtor for the difference B. must stand the loss in all cases. C. may sell additional property owned by the debtor. D. must file an interpleader action to recover the loss.

A. may seek a judgment against the debtor for the difference

5. To defend a claim of ownership the owner must prove: A. that constructive notice was provided. B. an actual notice was given. C. an abstract of title was delivered. D. an owner's title insurance policy was purchased.

A. that constructive notice was provided.

3. The law which requires a 7 day waiting period after delivery of the disclosures and an additional 3 day waiting period if the APR changes more than 0.125 % is : A. the Federal Truth in Lending Act. B. the Real Estate Settlement and Procedures Act. C. the Equal Credit Opportunity Act. D. Georgia Mortgage Fraud Law.

A. the Federal Truth in Lending Act.

14. A prospective purchaser gives $5,000 for an option to purchase a farm at a price of $250,000 for a period of 90 days. This means: A. the owner keeps $5,000 no matter what. B. the $ 5,000 must be treated as an earnest money deposit . C. the owner must refund the $5,*000 after 90 days if the purchaser does not exercise the option D. the owner may not charge the purchaser more than $250,000 during the 90 days, but may, sell to another party for more provided the $5,000 is refunded.

A. the owner keeps $5,000 no matter what.

2. Real estate loans are customarily evidenced by two instruments: a promissory note and a security instrument (mortgage, deed of trust, security deed). While the security instruments are not negotiable, the note is, because: A. the right to receive payments may be transferred from holder to holder B. it represents a contact between borrower and lender. C. the terms of the note may be renegotiated at stated intervals. D. consideration has been given and received.

A. the right to receive payments may be transferred from holder to holder

12. Greg Houser wished to give his nephew a residential lot as a wedding present. Greg properly executed a deed and left it with his attorney for safekeeping. Greg died before the wedding and the delivery of the deed. The result is: A. Greg's attorney may deliver the deed and transfer title B. the nephew may lawfully demand the deed from Greg's estate. C. Greg's executor or administrator will be required to deliver the deed to the nephew. D. the deed is invalid and cannot transfer title .

D. the deed is invalid and cannot transfer title .

1. You list property for an owner who is in financial distress and must sell to meet creditor's demands. You should tell a prospective purchaser all the following EXCEPT: A. the land across the street is in the process of being rezoned. B. there is a structural fault in the building on the listed property. C. the county has a plan to widen the street in front of the property. D. the seller is in bad financial condition.

D. the seller is in bad financial condition.

13. A broker lists, then sells a property. Prior to closing, it is discovered the owner was adjudged incompetent 10 years ago. Your listing and sales contracts are: A. valid but not enforceable. B. voidable at the option of the owner. C. voidable at the option of the purchaser. D. void.

D. void.

28. Homer Houser borrowed $ 60,000 at 14 % annual interest and agreed to make monthly payments of $711 on his 30-year amortized loan. Of his first month's payment, how much was applied to principal? A. $11 B. $21 C. $23 D. insufficient data to compute

A. $11

20. With the exception of certain tax and/or mechanic's liens, claim among liens is determined by: A. date of sale. B. size of lien. C. date of recordation. D. litigation.

C. date of recordation.

9. If Smith had a constant mortgage payment on a $90,000 mortgage loan at 10 % interest , how much of the first payment would go to principal reduction if Smith had no monthly escrows and the total payment was $772.50? A. $ 22.50 B. $44.50 C. $772.50 D. Insufficient information

A. $ 22.50

23. A delinquent borrower may attempt to avoid foreclosure by: A. selling the property prior to foreclosure B. giving the lender a deed in lieu of foreclosure C. either A or B D. neither A nor B.,

C. either A or B

7. A husband and wife in a community property state are divorced. Their former community property: A. may be partitioned only while married. B. may still be held by them as tenants in common. C. either A or B. D. neither A nor B.

C. either A or B.

27. The total interest charged on a $12,000 straight loan for five years at 12 1 / 2 % interest per annum is : A. $5,845 B. $7,500; C. $4,800; or, D. $ 19,500

B. $7,500;

29. If an interest payment of $115.50 is made every three months on a $4,200 loan, what is the annual interest rate? A. 8.25 % B. 11 % C. 9.5 % D. 12 %

B. 11 %

8. A life estate is classified as which of the following? A. An estate in fee simple. B. A freehold estate. C. A defeasible fee. D. An estate for years.

B. A freehold estate.

5. Which of the following would not, of itself, terminate an agency? A. Destruction of the property by fire B. Failure of the agent to keep the principal informed C. Voluntary bankruptcy by the broker D. Death of the seller

B. Failure of the agent to keep the principal informed

13. Property owner Ann was upset over neighboring property owner asserting a claim and demanded the building be torn down. The punish Bee, Ann waited until 11 stories had been completed before of the building was two feet over the property line. In order to construction began, property owner Ann found that the foundation permitted, there was little Ann could do at the time. Shortly after Bee's decision to build a 12-story apartment house. Since zoning probable result will be: A. Ann will succeed because the building is an encroachment. B. will have to stand the loss because Ann claimed within the period of time allowed by the Statute of Limitations. C. Ann will fail because of the doctrine of laches. D. both A and B are correct.

C. Ann will fail because of the doctrine of laches.

6. Which of the following organizations functions as a mortgage insurance company? A. Federal Housing Administration B. Mortgage Guaranty Insurance Corporation C. Both A and B. D. Neither A nor B.

C. Both A and B.

24. W hich organization deals primarily in mortgages for low-income housing? A. FNMA B. FHMLC C. GNMA D. MGIC

C. GNMA

4. Joint tenancy and tenancy in common are distinguished from each other by which of the following statements? A. Only joint tenants have equal rights of possession. B. Tenants in common may not own equal interests. C. In a tenancy in common, there are as many titles as tenants; in a joint tenancy there is only one title. D. A joint tenant may not sell his/her interest without the consent of the other joint tenants.

C. In a tenancy in common, there are as many titles as tenants; in a joint tenancy there is only one title.

9. Which of the following is NOT a characteristic of a VA-backed loan? A. Maximum term for repayment B. For home or farm ownership only. C. Maximum loan amount by law. D. Guaranteed by the Veteran's Administration

C. Maximum loan amount by law.

19. All of the following are true with respect to a VA loan EXCEPT: A. VA regulations determine the amount of the guarantee that is based on the loan. B. A lender will typically make a loan four times the amount of the guarantee with no down payment. C. Once an appraisal is completed the VA will issue a conditional commitment which establishes the ceiling permitted on a VA loan D. there is no maximum loan limit for a VA Loan.

C. Once an appraisal is completed the VA will issue a conditional commitment which establishes the ceiling permitted on a VA loan

14. Ms. Brown purchased an undeveloped lot and plans to build a house on the lot next year. She paid one-fourth down and the seller took back a first mortgage on the property for the balance to be paid over the next 15 years. Which of the following would adversely affect Ms. Brown's plans for a new mortgage on her new house next year if it were excluded from her security deed? A. Acceleration Clause. B. Escalation Clause. C. Subordination Clause. D. Subrogation Clause.

C. Subordination Clause.

4. Which of the following is true? A. A purchaser who has been pre-approved is guaranteed to get final approval for the specific loan described B. There is no significant difference between the pre-qualification and pre-approval process. C. The front end qualifying ratio is calculated by dividing the monthly mortgage obligation which typically includes the principal, interest, taxes and insurance by the gross monthly income of the applicant. D. The back end qualifying ratio considers the total of all reoccurring monthly debt obligations but does not include the payment on the new mortgage.

C. The front end qualifying ratio is calculated by dividing the monthly mortgage obligation which typically includes the principal, interest, taxes and insurance by the gross monthly income of the applicant.

13. Which of the following best describes the APR? A. The effective interest rate charged the buyer. B. The total amortized cost of the property. C. The relative cost of credit expressed as a percentage of interest. D. The annual interest rate which is stated on the promissory note.

C. The relative cost of credit expressed as a percentage of interest.

15. A partition suit is used for which of the following? A. Determination of ownership of party fences. B. To allow the construction of party walls. C. To force a division of property without all the owners' consent. D. To change a tenancy by the entireties to some other form of ownership

C. To force a division of property without all the owners' consent.

3. If Ms. Baker wishes to borrow $100,000 from your bank, would her transaction be covered by the provisions of Regulation Z? A. Yes, because all consumer credit transactions are covered. B. No, because the amount is over $75,000. C. Yes, if the reason for the loan is for residential property financing. D. Yes, if Baker is going to put the money to personal, family, household or farming use

C. Yes, if the reason for the loan is for residential property financing.

4. A broker takes bushels of corn from a farmer in the amount of $10 per bushel as commission. Several days later, the broker sold the corn for a profit. The broker's action constitutes: A. a secret profit. B. profiting at the expense of the principal. C. a legal profit D. a breach of the agency relationship unless the $5 per bushel profit is disclosed to the farmer.

C. a legal profit

2. The deed which contains no warranties is called: A. an executor's deed. B. a sheriff's deed. C. a quitclaim deed. D. a grant deed.

C. a quitclaim deed.

8. According to the law of agency, a real estate listing contract is an example of an agreement creating: A. a general agency B. a universal agency C. a special agency D. a specific agency.

C. a special agency

18. A three-party instrument which transfers title to the third party as security for a debt owed by the first party to the second party is known as: A. an equitable mortgage. B. a security deed C. a trust deed D. a contract for deed

C. a trust deed

25. A loan which uses an index and margin to determine the rate is called: A. an amortized mortgage B. a straight term mortgage C. an adjustable rate mortgage D. an interest only mortgage

C. an adjustable rate mortgage

13. The words of conveyance in a deed state: A. that real property is being granted. B. the quantity of the estate which is being granted. C. both A and B. D. neither A nor B.

C. both A and B.