Module 7 - Ch 15 & 16

A two-unit apartment building is being appraised. In this neighborhood, the accepted gross rent multiplier is 144. The annual income on the building is $16,800 (both units rented). The monthly expenses are $300. Based on the income approach, what is the estimated market value of the apartment building? A. $201,600 B. $224,800 C. $232,500 D. $258,600

A. $201,600

Which of these reports would a salesperson MOST likely research and deliver to a prospective seller? A. Comparative market analysis B. Appraisal C. Letter of intent D. Cost benefit analysis

A. Comparative market analysis

A package loan includes A. real and personal property. B. private mortgage insurance. C. multiple parcels or lots. D. cash for the construction of improvement on real estate.

A. real and personal property.

An apartment building has $65,000 in potential gross annual income. The vacancy rate is estimated at 5%, total operating expenses are $29,000, and the capitalization rate is 9%. Using the income approach, what is the value of the building? A. $324,773 B. $363,889 C. $372,895 D. $392,367

B. $363,889

A house had a sale price of $240,000. The buyer obtained a loan for $220,000. If the lender charges three points, how much will the buyer pay in points? A. $5,335 B. $6,600 C. $6,950 D. $7,540

B. $6,600

The broker helps the homeowner answer the on-screen qualification questions. Which of these events is an improper use of a CLO system? A. 1 only B. 2 only C. 2 and 3 D. 1 and 3

B. 2 only

To qualify for most conventional loans, the borrower's monthly housing expenses and total other monthly obligations cannot exceed what percent of the total gross monthly income? A. 28% B. 36% C. 41% D. 45%

B. 36%

In which approach to value are the square-foot method, the unit-in-place method, and the quantity-survey method used? A. Sales comparison approach B. Cost approach C. Income approach D. Reconciliation approach

B. Cost approach

Which of these makes direct loans to qualified borrowers? A. VA B. FSA C. Fannie Mae D. FHA

B. FSA

Which of these approaches is given the greatest weight in reconciling the appraised value of a two-bedroom, owner-occupied home? A. Income approach B. Sales comparison approach C. Cost approach D. Market value approach

B. Sales comparison approach

Who is responsible for paying the broker or the broker's salesperson when one of them uses a computerized loan origination system to take the loan application from a borrower? A. The lender B. The borrower C. The seller D. Both the lender and the borrower

B. The borrower

Assuming that all of the transactions are federally related, which of these properties would NOT have to be appraised by a state licensed or certified appraiser? A. The commercial property valued at $350,000 B. The condominium unit with a sale price of $67,850 C. The residential property valued at $262,500 D. The commercial property valued over $1 million in a refinance

B. The condominium unit with a sale price of $67,850

The principle of value that is the interaction of supply and demand is called A. anticipation. B. competition. C. conformity. D. contribution.

B. competition.

A house sits on the corner of a busy intersection. Two of the corners are occupied by gas stations, and directly across from the house is a fast food restaurant. The house's owners have been told that the property would be worth more if the lot were vacant. This is an example of A.progression. B. highest and best use. C. regression. D. conservation.

B. highest and best use.

The Equal Credit Opportunity Act prohibits lenders from discriminating against credit applicants on the basis of all of these factors EXCEPT A. religion. B. past credit history. C. income from public assistance. D. marital status.

B. past credit history.

The land on which a house was built is worth $50,000. The house was constructed in 1990 at a cost of $265,000 and was expected to last 50 years. Using the straight-line method, determine how much the house has depreciated by 2014. A. $28,600 B. $96,600 C. $127,200 D. $145,200

C. $127,200

What is the GRM for a residential duplex with a selling price of $234,000 if the monthly rent for each unit is $925? A. l.054 B. 10.54 C. 126.5 D. 252.9

C. 126.5

The Federal Deposit Insurance Corporation (FDIC) does which of these? A. Administers Freddie Mac and Ginnie Mae B. Administers Freddie Mac only C. Insures deposits in insured institutions up to $250,000 per depositor, per account D. Services loans

C. Insures deposits in insured institutions up to $250,000 per depositor, per account

What does private mortgage insurance cover? A. Pays the lender if the borrower dies B. Reimburses the cosigner if the borrower defaults C. Protects the top 20 to 30% of the loan against borrower default D. Pays the borrower if the borrower loses the house to a title claim

C. Protects the top 20 to 30% of the loan against borrower default

A 16-year-old female applied for a conventional loan in order to purchase a condominium. The lender denied the application, citing the applicant's age as the reason for the denial. Which of these is TRUE? A. The lender violated the ECOA because the applicant is female and sex cannot be a lending consideration. B. The lender violated the ECOA because lending decisions cannot be based on age. C. The lender lawfully denied the application because the applicant was under 18 and therefore was too young to legally sign a contract. D. None of these.

C. The lender lawfully denied the application because the applicant was under 18 and therefore was too young to legally sign a contract.

Which of these formulas is incorrect for the income approach? A. Income ÷ value = rate B. Income ÷ rate = value C. Value ÷ rate = income D. Value × rate = income

C. Value ÷ rate = income

When appraising a new home in which no one has ever lived, an appraiser will likely use the A. sales comparison approach. B. income approach. C. cost approach. D. GRM.

C. cost approach.

Air pollution from increased automobile traffic near a building with ornate exterior decoration has dissolved much of the intricate detail work. The cost of restoring the front of the building is roughly five times the building's present value. These facts describe A. curable external obsolescence. B. incurable functional obsolescence. C. incurable physical deterioration. D. curable external deterioration.

C. incurable physical deterioration.

One way a borrower can obtain a conventional mortgage loan with a lower down payment than 20% of the purchase price is by A. obtaining a package loan. B. obtaining a blanket loan. C. obtaining private mortgage insurance. D. obtaining permission from the FDIC.

C. obtaining private mortgage insurance.

The property being appraised is called the A. lot. B. parcel. C. subject property. D. comparable property.

C. subject property.

An empty lot is located in a neighborhood of single-family homes. It is the only empty lot in this well-maintained neighborhood. A busy street with many stores is located three blocks away. An industrial area is about six blocks away. What is the probable highest and best use of this lot? A. A store B. A factory C. A parking lot D. A single-family home

D. A single-family home

A woman plans to build a large house in a neighborhood of smaller homes, so she purchases three neighboring lots from their three owners. What is the term for the woman's activity? A. Substitution B. Plottage C. Progression D. Assemblage

D. Assemblage

Lenders that make conventional loans to sell in the secondary mortgage market follow the standardized forms and guidelines issued by Fannie Mae and A. the FSA. B. the FHA. C. Ginnie Mae. D. Freddie Mac.

D. Freddie Mac.

A woman buys a small house in a highly desirable neighborhood consisting of large homes and pays $390,000. A man buys a nearly identical house in a neighborhood of similarly sized homes and pays $290,000. What economic principle BEST describes the reason why the woman paid more than the man? A. Plottage B. Substitution C. Regression D. Progression

D. Progression

All of these are roles of the Federal Reserve System EXCEPT A. help counteract inflationary trends. B. create a favorable economic climate. C. maintain sound credit conditions. D. make direct loans to buyers.

D. make direct loans to buyers.