real estate course 6 practice exam questions

Your client, Ray, wants to purchase a home listed for $200,000. The home is in a revitalization area, and Ray can purchase it under the Good Neighbor Program. How much will he have to pay for the home?

$200,000, less 50%, plus $100

Up to what amount will the FDIC insure?

$250,000

Which section of the Internal Revenue Code allows the owner of real property to sell that property, then reinvest the proceeds in a "like-kind" property and defer paying any capital gains taxes?

1031

What is the HECM program?

A form of reverse mortgage insured by the FHA

In a deed of trust, who is the trustee?

A neutral third party

Which of the following describes the Housing Choice Voucher Program?

A program to help very low-income families, the elderly, and disabled individuals to afford decent, safe, and sanitary housing in the private market

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

A short-term lake rental

The title is acceptable, and Kathy's attorney Amy has provided a certificate of title opinion. Which of the following will be issued?

A title insurance policy

Which of the following would be a receipt you should save for tax purposes?

A toll fee for a business trip

Curtis is completing a residential loan application. Which of the following would he include in the assets section?

Amount on deposit at his bank

When a buyer takes over the seller's original loan with the lender's permission, this is called ______.

An assumption

A CMA or a BPO is an example of ______.

An informal estimate of market value

When a promissory note is sold, what is recorded in county land records?

Assignment of the security instrument the note is attached to

A short-term security issued by the Treasury that has a maturity term of one year or less is called a Treasury ______.

Bill

Jamal is active military. His cousin, Piper, is in the National Guard. If they both qualify for a VA loan ______.

Both Jamal and Piper will pay the same funding fee if all other factors are the same.

Which of the following is included in HMDA data?

Census tract information

Cheyenne is selling the family farm via an installment contract. What is one advantage of selling the farm this way?

Cheyenne will pay less in capital gains taxes by receiving the proceeds from the sale over time, rather than in a lump sum.

Dorinda is an investor. She recently purchased shares in a tranche that holds mortgages and mortgage-backed securities. In what did she invest?

Collateralized mortgage obligation

The ______ was a response to the practice of redlining and was enacted in 1977.

Community Reinvestment Act

Cassie is helping her buyer client, Gus. As they discuss preparations for closing, she cautions Gus, "Make sure you review the Closing Disclosure as soon as you receive it and ______."

Contact your lender immediately if you find errors or have any questions

Which of the following loans may require compliance with Appraiser Independence Requirements?

Conventional

In an amortized loan, the interest portion of the mortgage payment generally ______ over the life of the loan.

Decreases

The secondary mortgage market buys loans from the primary market. How does this aid the lending market?

Ensure funds are available to borrowers

While reviewing documents, you notice that the buyer has the exact same name and birth date as a buyer you worked with previously. What might this indicate?

False identity

Of the institutions listed, which of these is viewed only as a secondary mortgage market player?

Fannie Mae

What entities make up the secondary mortgage market?

Fannie Mae, Ginnie Mae, Freddie Mac, Farmer Mac, and lending institutions that buy loans from other lenders

Which process temporarily stalls foreclosure?

Filing for Chapter 7 bankruptcy

Which type of loan is insured by the Federal Housing Administration?

Government

Which of these is actually an amendment to the Truth in Lending Act (TILA)?

Home Ownership and Equity Protection Act

Before you can create a budget for your personal finances, you should ______.

Identify and analyze your current expenses

Karen has saved $30,000 of her $40,000 goal for a down payment on a house. Why is it unwise to keep all of that money in a traditional savings account?

It doesn't earn high enough interest.

Which of the following best describes the non-judicial foreclosure process?

It may be used if the deed of trust includes a power-of-sale clause.

What are the effects on a property if it includes an encumbrance?

It restricts the owner's use or decreases the value.

Because of the Secure and Fair Enforcement for Mortgage Licensing Act, borrowers can determine if mortgage loan originator is ______.

Licensed and registered

Which of the following is a passive type of real estate investment?

Limited partnership

Maggie has a neighbor, Jim, who is facing foreclosure. She likes Jim and wants to help him out, so they agree to do a "subject to" purchase. What does this mean?

Maggie will take over Jim's loan payments without telling his lender she's doing so.

Which of these is an essential component of a sound plan for your personal finances?

Make sure that your spending supports your personal values

The ______ is where the borrower finds details about how, when, and by how much the interest rate will change in an adjustable rate mortgage (ARM).

Mortgage note

Which type of federally related lending transaction is covered under RESPA?

Mortgages and home equity credit lines

Which organization manages and charters credit unions?

NCUA

Special mortgage loan programs for ______ include the FHA248 and HUD 184 programs.

Native Americans living on tribal land

The Dodd-Frank Act created the CFPB in part to regulate ______, which were among the largest originators of subprime mortgages prior to the financial crisis of 2007‒2008.

Non-bank lenders

Iris is planning to purchase her first home. Based on what you know about the nature of real estate finance in our country, which approach is she most likely to use?

Obtaining a loan to purchase the home

In which type of partnership does each mortgagee receive a share of the mortgage payment?

Partnership among mortgagees

In which type of participation agreement would a financier lower the interest on the mortgage in exchange for partial ownership of the project?

Partnership between mortgagees and mortgagors

Which of these is a recommended way to begin paying off the outstanding balances on multiple credit cards?

Pay as much as possible toward the card with the highest interest rate first.

Which interest rate do banks use to offer consumer loans?

Prime rate

The document that describes the loan amount and the terms for repaying and is attached to a security instrument is called the ______.

Promissory note

Residential property owners don't often default on property taxes. Why not?

Property taxes are usually paid with the monthly mortgage payment.

Which of these items is an asset to list on a residential loan application?

Real estate

Which of the following should be retained for tax purposes?

Receipts for parking fees when visiting a client's condo

Section 255 of the Title II FHA-insured loan program covers ______ mortgages for borrowers age 62 or older.

Reverse

Because of the funding fee required for a VA loan, a borrower with no down payment funds saved should ______.

Roll the funding fee into the loan

With this IRA, withdrawals of contributions are tax-free.

Roth

Which of these is a required component of a successful system for your personal finances?

Schedule regular time with your finances.

Institutions that purchase loans, package them into mortgage-backed securities, then sell these to investors may commonly be referred to as ______.

Secondary market players

When the Treasury collects fewer funds than what is needed to pay the government's bills, what action might it take?

Sell securities

What is the most common structure for a CMO?

Sequential pay

Which of these items did the Federal Housing Administration (FHA) implement to stabilize and improve the mortgage market?

Set construction standards for homes purchased with FHA loans

Marissa is obtaining a VA loan, and she's decided to place 20% down. What's her responsibility for paying the VA loan funding fee?

She won't be required to pay it since she made a large down payment.

Melanie is a buyer who has agreed to purchase Stan's property using a contract for deed. Who holds legal title to the property during the term of the loan?

Stan

What term is used to describe loans that were approved for borrowers with lower incomes and poor credit histories?

Subprime

Some countries have banks that issue loans for U.S. real estate purchases. What are the main countries that participate?

Taiwan, the U.K., and Canada

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

Taxpayer Relief Act of 1997

Which of the following was created as a result of the Housing and Economic Recovery Act?

The Federal Housing Finance Agency

What is one of the main differences between the U.S. Mint and the Bureau of Engraving and Printing?

The U.S. Mint produces coins, and the Bureau of Engraving and Printing produces paper notes.

A borrower who has received a certificate of eligibility will qualify for a VA loan under which of the following circumstances?

The borrower also has sufficient credit and income.

Select the choice that best translates this clause into plain English. "Any partial prepayment shall be applied against the principal amount outstanding and shall not postpone the due date of any subsequent monthly installments or change the amount of such installments, unless the Note holder shall otherwise agree in writing."

The borrower is allowed to prepay the loan without penalty.

What do property taxes in a mortgage payment pay for?

The cost of public services as a percentage of the property value

How are creditors or lien holders paid during a foreclosure process?

The property is sold at auction and lien holders are paid from the proceeds of the sale.

The appraiser of Garran's property used the Torrens system to perform a title search. Now a claim has been filed. Who or which entity will be the title guarantor?

The state

What may happen to a transaction if a cloud on the title is discovered?

The transaction comes to a standstill until the cloud is cleared.

Jim is self-employed. He and his wife want to obtain a home loan. Which of the following statements is true?

They'll need to provide additional proof of income.

What is the benefit Ginny Mae investors have over those who invest in other MBSs?

They're able to collect timely principal and interest payments.

Which of the following statements is true about government loans?

They're insured or guaranteed by a government agency.

How many parties does a deed of trust involve?

Three: borrower, lender, and trustee

How is title usually conveyed to the buyer during a foreclosure process?

Through a referee's deed

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

What must a prudent lender do with the information received on a loan application?

Verify it.

The Mortgage Disclosure Improvement Act gives applicants a three-day ______ to review and approve the Loan Estimate and Closing Disclosure form.

Waiting period

In what situation would the U.S. Treasury be most willing to sell securities?

When the government's bills exceed income collected

Page four of the Closing Disclosure lists specific disclosures about the loan, such as the penalty for late payments, whether a demand feature applies, whether the loan can be assumed, and ______.

Whether partial payments are accepted

The American Recovery and Reinvestment Act provided mortgage assistance to ______.

Wounded servicemen and servicewomen

Sissy is a veteran who used her full entitlement to purchase a home. The loan has since been paid off, and Sissy still owns the home. Now, she'd like to buy a second home using another VA loan. Is Sissy allowed to do this?

Yes, Sissy can apply to have her entitlement restored and can buy a second house using a VA loan.

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

The Ropers are purchasing a home using VA financing. The sales price of the home is $210,000. The CRV comes in at $215,000. On what number will the VA's loan guarantee be based?

$210,000, the sales price

The VA loan program offers a basic entitlement amount of ______.

$36,000

Your client, Judy, with a credit score of 620, has been approved for an FHA loan for a home with a sales price of $200,000. What is the minimum down payment that will apply?

$7,000

Fannie Mae, Freddie Mac, and the Federal Home Loan Bank are regulated by the ______.

Federal Housing Finance Agency

Which of the following resources will give you reports and statistics including house price index, foreclosures, and refinancing?

Federal Housing Finance Agency

Which action can be taken if you don't pay a lien against your property?

Foreclosure

The amount of the ______ a veteran must pay depends on factors such as military status, down payment amount, and whether the veteran's entitlement is being used for the first time or a subsequent time.

Funding fee

What do loans create for banks and other financiers?

Future cash income

Which of the following statements is true regarding closing costs on a VA loan?

Payment of closing costs may be negotiated.

The ______ was enacted in 1946 in response to the creation of several new federal agencies. It established a process for how the agencies could propose and establish regulations.

Administrative Procedure Act

Robert is a rancher. He was told about the USDA Farm Service Agency offerings. What can he use an approved loan for?

Building a new hay barn

Which approach to finding value would licensed appraiser Christina probably weigh most heavily when appraising a three-unit rental property?

Income

How do VA loan programs compute "residual income"?

Income minus shelter expenses and debts

Which of the following are potential private loan resources that may be willing to finance a home?

Individual entrepreneurs

How much should you keep in your tax savings account in order to be prepared to pay your quarterly estimated tax?

Just over what you expect to owe