Practice exam unit3 (4)

Jose is an investor who found and closed on an investment property, then decided to sell a property other than the originally marked for the exchange. What is this an example of?

A reverse tax deferred exchange

Lender Sonia wants to make sure the legal description of the Jacobson's property is accurate. She feels it's essential to determine whether any lot size changes have been made. What might Sonia request to determine this?

A survey

In which of the following sections of credit report might a lender expect to find a loan that has been paid off on time?

Accounts in good standing

What feature do most adjustable rate mortgages have?

Allows borrowers to convert to a fixed rate during a specific period of the mortgage.

Which act made some mortgage insurance premium deductions available to certain taxpayers?

American Taxpayer Relief Act of 2012

What's the definition of appreciation?

An increase in property value

California's seller financing disclosure law requires the arranger of credit to provide Both the buyer and seller with disclosures. What's the time in requirement for this disclosure?

As soon as possible before the execution of any note or security document

Kendra and her real estate agent are preparing to close on the property she's purchasing on Thursday. Kendra will sign the paperwork with her lender to close on the loan at the same time. When does the lender need to provide Kendra with the closing disclosure form?

At least three business days prior to closing on the loan.

Which event led to the establishment of the FDIC?

Bank failures during the Great Depression

Which of these appraiser requirements does AIR NOT specify?

Be knowledgeable about the global market rates

A part of a deficiency judgment shots by a lender, a __________ May be placed on any current and future property the borrower owns until the lender recovers all losses.

Blanket lien

A long-term security issued by the treasury that has a maturity of 30 years is called a treasury________.

Bond

Which of the following statements about liens is true?

Both mechanic's and materialman's liens are junior liens.

Brenda is a new licensee working as an independent contractor for ABC realty Siri who is responsible for making Brenda's quarterly estimated tax payments?

Brenda

Britney is selling her bungalow via an installment contract the buyer made payments dutifully for five years, but has not made any payments for more than a year. Which of the following is true?

Britney can keep all of the proceeds received and repossess the property.

What is meant by pass-through taxation?

Business income passes through to the business owner's individual tax return rather than being taxed as a separate entity

_______Are part of the loan approval process and are responsible for completing a loan application and supplying supporting documentation.

Buyers

Marion has been a licensee For four years and earns a relatively steady income. Which of the following is a good way for Marion to estimate her monthly business expenses?

Calculating monthly expenses based on her expense history from the past year

Lucy is a mortgage banker. Her business is regulated by ____.

California residential mortgage lending act

The blind transfer of money from your business checking account to your personal checking account to your savings account is called_______.

Cash flow

Georgette and Elise are buying a home together, and have taken out a loan with a private loan company they'll pay a bit more interest, and larger fees, but they feel it's worth it to have the home they've always dreamed of. What else might the private loan company require?

Collateral

When a promissory note as sold, how is ownership transferred?

Endorsement of the note

Rick finds that some of his ongoing expenses as a licensee are paid monthly, some quarterly, and some annually. How can he arrive at a standard monthly figure that will help him manage his cash flow?

Estimate total annual expenses and divide by 12 for a monthly amount

Which banking related entity shares similarities with a purpose and function of the NCUA?

FDIC

Lauren obtained a loan that's insured and that only required a down payment of three. 5%. Which of these most likely the type of loan Lauren has?

FHA

A homeowner may go into default on a home loan due to__________.

Failure to meet loan terms and conditions

Which institution was created as the Federal National Mortgage Association in 1938?

Fannie Mae

If you were a farmer who obtain a loan for your business, it's most likely that your lender will sell your loan to which of the following entities?

Farmer Mac

Which entity provides disclosures and public information about the financial condition of FCS?

Federal Farm Credit Banks Funding Corporation

Which of the following entities buy loans primarily through thrifts?

Freddie Mac

What two types of data does an appraiser gather?

General and specific

Which of these describes a bridge loan?

Gina is moving across the country to be closer to her family. Her existing home hasn't sold, but she is ready to purchase her new home.

Sam has a mortgage that has a static interest rate, but monthly payments that increase over time according to a set schedule. What type of mortgage does Sam have?

Growing Equity

Appraiser John is determining how a property is being used to determine a more optimal function. What is he determining?

Highest and best use

Sharon needs to know which mutual funds make the most sense for her financial situation. Which professional could offer the most expertise in this area?

Investment advisor

What is the purpose of the request for verification of employment?

It allows the lender to verify the employment listed on the applicant's loan application.

In which situation will sellers apply a portion of the rent towards the purchase price to entice buyers to close more quickly?

Lease with option to buy

The lender, the employer, and the_____all complete parts of the request for verification of employment form.

Loan applicant

In the early 2000s, before the 2007 financial crisis, how would you characterize the real estate market?

Low interest rates and high property values

FHA county loan limits are based on ______.

Median price for the area and property type

A local town has been growing and needs a new elementary school. What kind of bond instrument will the town used to finance this project?

Municipal bond

What would likely happened to the real estate market if there were no lenders?

New construction and home purchases would greatly decreased

Yancey purchased a home six months ago using a VA loan. Due to an inheritance, he is suddenly able to pay off his mortgage. Will he pay a pre-payment penalty?

No

One common predatory lending practices to charge fees for unnecessary or _______ loan products or services.

Nonexistent

Which of the following is a true statement about retirement accounts?

Only self-employed individuals can use SEP IRAs

The buying and selling of government securities as a way to influence the money supply and balance economic growth describes_______.

Open market operations

Which of the following is a MLO violation?

Performing MLO activities before notifying the bureau of real estate

Which of these actions is a MLO violation?

Performing a mellow activities before obtaining an endorsement

Which of the following best describes foreclosure by entry and possession?

Petition to enter, repossession, notice of eviction

If Jeff is healthy and always has excellent check ups, which of the following would likely be the most important factor in his insurance selection?

Premiums

How often must self-employed individuals pay estimated taxes?

Quarterly

What is it called when borrowers pay back all the amounts owed and become current no longer in default on their loan?

Reinstatement

Violet purchased a house from Nick, and assume the existing loan. Nick wants to make sure he isn't liable if violet ever defaults. What can he do to remove his name from the loan agreement?

Request an novation

What information does schedule B Dash one of an ALTA title commitment provide?

Requirements that must be met before a title policy will be issued.

Jim is a licensee who has formed a corporation in which he will pay individual income tax on both his personal income and the business profit. What type of entity did he form?

S Corporation

Where can a party that's reviewing a title commitment find exceptions that are covered by the title insurance policy?

Schedule B2

In addition to lending money to member banks, FHL banks also do which of the following?

Set rules and regulations that member banks must follow.

Bart is selling his home and has accepted an offer from a buyer, who is obtaining a VA loan. The sale price is agreed-upon and is in the purchase contract. Then Brgr receives a call from his agent, explaining that the buyer is hoping that Bart will lower the sale price because_____, and there is a risk the buyer will not be able to get the VA loan as a result.

The VA appraiser completed the CRV and it is less than the sale price

The upfront MIP on an FHA loan is calculated on ______.

The base loan amount

When a borrower has paid off the loan, how is the release handled if the security instrument is a mortgage?

The lender executes and records a satisfaction of mortgage and returns the note to the borrower.

Which of the following statements best describes the judicial foreclosure and sale process?

The lender must seek the court's permission to foreclose on the property used as collateral for the loan.

Which of the following is true regarding value?

The principle of substitution means that people won't pay more for a property than they have to

The form credit system Funds are acquired from_________.

The sale of debt securities an international money markets.

The housing an economic recovery act and the American recovery and reinvestment act were enacted in response to________.

The sub prime mortgage crisis an economic meltdown of 2007 2008

What is the 95% rule as it relates to text deferred exchanges?

The total value of the property or properties being exchanged is at least 95% of the value of the property being sold.

Which of the following is true about mortgage brokers?

They don't service the loan beyond placement.

When Stacy's clients ask her if she can recommend a mortgage broker, she probably gives them the name of the best mortgage broker she knows, Gary Jones. Later, she always receives a check from Gary as payment for the referral. Is this Legal or illegal under the real estate settlement procedures act?

This is illegal under RESPA because it's considered a kickback between settlement service providers.

In the judicial foreclosure, if the sheriff's Sale was enough to pay off the borrowers debt plus foreclosure costs, how long does a borrowers redemption period last?

Three months

How does the VA qualify a property for a VA-guaranteed loan?

Through a VA-approved appraiser

What's one reason a borrower may choose a piggyback or split loan?

To avoid pain private mortgage insurance

Dennis wanted to leave his surfboard To his niece when he died, but he didn't want her to miss a single minute of wave action while he's a state was held up in probate. Dennis needs_____.

To create a living trust

Why does the federal government have agricultural lending programs?

To ensure that credit is available to agricultural producers, who often can't meet conventional underwriting standards due to the nature of their work

The purpose of evaluating spending habits is __________.

To see where those having to do or don't align with personal values.

What type of interest rate my HELOC have?

Variable or fixed

Mark, I real estate licensee, is having trouble reading the small print on the MLS listings. What type of insurance would help him find a resolution to this problem?

Vision

A treasury note is a treasury security__________.

With a maturity term between two and 10 years.

In which of the following situations is a catastrophic health insurance plan the most reasonable choice?

You have excellent health and get regular check ups

Who or what entity directs the activities of credit unions?

board of directors

Sue and Jim are hoping to expand their family, which means moving to a larger home. They're closing on their new home soon, but haven't yet sold their current one. Which type of loan will help them afford both homes for a short period of time?

bridge

A lender was not able to recover all of the losses incurred during the foreclosure process. What could it pursue to recoup these losses?

deficiency judgment

Jackson holds a real estate broker license with an MLO endorsement. How often must he renew his MLO endorsement?

every year

Your seller wants $100,000 after the 5% commission is paid. Assuming no closing cost, at what price does the home need to sell for the seller to net this amount?

$105,263.16

A buyer has a 30-year, $400,000 loan with a 7% interest rate. How much of the first month's mortgage payment is interest?

$2,333.33

A buyer is purchasing a property for $400,000. His loan to value ratio is 80% the lender also charges a one point loan origination fee. How much is the loan origination fee?

$3200

I lender requires a title search to finance a transaction. Who pays for this search?

Buyer

Jonathan is selling his home to Chris and Samantha. He's closing, and the underwriting fee must be paid. Who pays for that?

Chris and Samantha

Jerry is appraising a five bedroom home in the suburbs. After identifying the purpose of the appraisal, what does he need to do next?

Identify the data that is needed.

Mark and Nancy purchased a municipal bond to help with the funding of a new school gymnasium. In exchange for their investment, what will they receive?

Interest

What type of property is Eileen appraising if she's using the income approach?

Short term lake rental

Travis made the final payment on his loan according to the loan terms. What must a note holder do to acknowledge that the debt has been repayed?

Sign the note, market paid in full and return it to Travis

When HUD pursues actions that are designed to restore the financial health of the Federal Housing Administration, which of its goals is it supporting?

Strengthen the housing market to bolster the economy and protect consumers.

Which act exempted homeowners from paying taxes on capital gains up to a specified value?

Taxpayer Relief Act of 1997

To whom would a 1031 tax exchange usually appeal?

investors

Joe works for a life insurance company that funds commercial investment projects and often insures these projects by insisting on an equity position. What type of financing does this describe?

participation

Which of the following may a lender request to verify an applicants work history and earning information?

pay stub

Which interest rate do banks use to offer consumer loans?

prime rate

A goal written according to the SMART criteria is ______.

realistic

Long and short term debt instruments are called _________.

securities

After bonds are ______, their value goes up and down with the market.

sold

Which of the following would the FDIC most likely not insure?

stock certificates