REE 15-17

Due-on-sales clauses are included in commercial mortgages primarily to protect lenders from:

Default risk.

Lender's yield differs from effective borrowing costs (EBC) because:

EBC accounts for additional up-front expenses that lender's yield does not.

The dominant loan type originated by most financial institutions is the:

Fixed-payment, fully amortized mortgage

Which of the following statements is most accurate?

Joint ventures usually decrease the amount of equity capital the developer/borrower must invest in the project.

Which of these loans is a life insurance company most likely to invest in?

Large office building loan (nonconstruction)

Special allocations of income or loss are available if the form of ownership is a(n):

Limited partnership

With regard to double taxation, distributions, and the treatment of the losses, general partnerships are most like:

Limited partnerships

A real estate investment trust generally:

. None of the above

Which of these ratios is an indicator of the financial risk for an income property?

Both a and b, but not c

Consider a 30-year, 7 percent, fixed rate, fully amortizing mortgage with a yield maintenance provision. Relative to this mortgage, a 10-year balloon mortgage with the same interest rate and yield maintenance provisions will primarily reduce the lender's:

Interest rate risk.

With a mezzanine loan

the borrower's promise to pay is secured by the equity interest in the borrower's limited partnership or limited liability company.

If a mortgage is to mature (i.e. become due) at a certain future time without any reduction in principal, this is called:

An interest-only mortgage.

Which of the following statements is true about 15-year and 30-year fixed-payment mortgages?

Assuming they can afford the payments on both mortgages, borrowers usually should choose a 30-year mortgage over an otherwise identical 15-year loan if their discount rate (opportunity cost) exceeds the mortgage rate.

Double taxation is most likely to occur if the commercial properties are held in the form of a(n):

C Corporation

The tax-benefits associated with installment sales are:

Captured exclusively by the seller.

Which of these lenders is most likely to provide a construction loan?

Commercial bank

Which of the following financing structures provides for 100 percent financing?

Complete (land and building) sale-leaseback

Real estate syndicates traditionally have been legally organized most frequently as:

Limited partnerships

A characteristic of a partially amortized loan is:

A balloon payment is required at the end of the loan term.

Adjustable rate mortgages (ARMs) commonly have all the following except:

An inflation index

Which of these financial firms is the least likely to invest in a large, long-term mortgage loan on a shopping center?

Mortgage broker

The most typical adjustment interval on an adjustable rate mortgage (ARM) once the interest begins to change is:

One year.

Using financial leverage on a real estate investment can be for the purpose of all of the following except:

Reduction of financial risk for the leveraged investment.

Lockout provisions are primarily intended to reduce the lender's

Reinvestment risk

The annual percentage rate (APR) was created by:

The Truth-in-Lending Act of 1968

Which statement is false concerning the limited partnership of ownership?

The limited partners cannot enjoy tax deduction benefits but the general partners can.

Which of the following forms of ownership involve both limited and unlimited liability?

limited partnerships