aceable principles II exam practice

How many member banks are in the Federal Home Loan Bank System? 10 11 12 13

11

Who would be eligible for an FHA loan? A prospective borrower with a FICO score of: 499 580 350 210

580

_______________ items are credited to the seller and debited to the buyer

Prepaid

A seller does not feel like waiting for an appraiser so they ask their listing agent to do an appraisal for them. The listing agent agrees and performs the appraisal. The listing agent acted: a. illegally (unless they are also a licensed appraiser) b. illegally (unless they received approval from their sponsoring broker beforehand) c. legally (licensed real estate agents are allowed to perform appraisals) d. legally (as long as they appraise the property twice to make sure they did it correctly)

a. illegally (unless they are also a licensed appraiser)

A subprime mortgage carries an interest rate that: a. is higher than the rates of prime mortgages b. is lower than the rates of prime mortgages c. is equal to the rates of prime mortgages d. has no relation to the rates of prime mortgages

a. is higher than the rates of prime mortgages

In real estate transactions involving financing, to whom does the appraiser send the final appraisal? a. lender b. buyer c. broker d. buyer's agent

a. lender

With an amortizing loan, mortgage payments are: a. made over time, consist of equal installments, and go towards both principal and interest b. gradually increased over the years c. interest-only for the first year and go toward principal first, then interest d. varied because they are based on an indexed interest rate

a. made over time, consist of equal installments, and go towards both principal and interest

Fannie Mae and Freddie Mac attracted controversy in the 2000s. They pursued aggressive strategies to purchase: a. mortgages and mortgage assets under questionable standards b. short sale homes under questionable standards c. privately financed banking institutions d. commercially financed banking institutions

a. mortgages and mortgage assets under questionable standards

Michael is talking to lenders about applying for a loan. Michael is participating in the: a. primary mortgage market b. secondary mortgage market c. tertiary mortgage market d. quaternary mortgage market

a. primary mortgage market

Which deed provides the grantee with the least protection of any deed? a. quitclaim deed b. deed in trust c. bargain and sale deed d. general warranty deed

a. quitclaim deed

Voluntary alienation is the method by which property is transferred from the current owner to another party by: a. sale or gift b. foreclosure or short sale c. a title survey d. equitable redemption

a. sale or gift

Abela has one loan she has not paid off. She needs another loan for a down payment on a home. If she utilizes a wraparound loan: a. she will receive a new, increased loan at a higher interest rate b. she will retain two loan debts and make payments towards both debts simultaneously c. her original loan debt will be forgiven d. she will not have tp start repaying her second loan until she pays off her first loan

a. she will receive a new, increased loan at a higher interest rate

Which party is responsible for paying the origination fee? a. the borrower b. the seller c. the lender d. the mortgage broker

a. the borrower

Reverse mortgage loan amounts depend on: a. the borrower's age b. whether or not the home is owned free and clear c. the borrower's ethnicity d. the past five years' interest rates

a. the borrower's age

Voluntary Alienation is: a. the method by which property is transferred from the current owner to another party either by sale or gift b. the method by which property is transferred from the current owner to the state for tax deductions c. the concept of an owner willingly giving up their property for public use d. the concept of an owner willingly giving up their property for use in a tax sale

a. the method by which property is transferred from the current owner to another party either by sale or gift

With VA loans, which ratio is considered? a. total debt to income ratio b. housing expense qualifying ratio c. years of service ratio d. gross monthly interest ratio

a. total debt to income ratio

Negative amortization is the addition of: a. unpaid interest and the loan balance b. paid interest and the loan balance c. principal interest and bank-issued interest d. principal interest and state-issues interest

a. unpaid interest and the loan balance

Which value is placed on a property by a governmental unit for use in levying annual real estate taxes? assessed value market value appraised value real value

assessed value

The two programs under the USDA that offer agricultural loans are the: a. Rural Service Agency and Rural Development b. Land Development and Rural Service Agency c. Farm Service Agency and Rural Development d. Farm Service Agency and Land Development

c. Farm Service Agency and Rural Development

A home inspector's report requires investigations that will take several days to complete. What two options does the buyer have? a. negotiate an option period extension or seize the earnest money b. cancel the transaction or negotiate an option period extension c. cancel the transaction or sue the seller d. sue the seller or seize the earnest money

b. cancel the transaction or negotiate an option period extension

A debit is a(n): a. accrued seller's expense the lender assumes b. charge, the amount the party being debited owes c. fee the seller incurs during closing d. credit, the amount the party being credited pays

b. charge, the amount the party being debited owes

John has an easement appurtenant that allows him to cross Sally's land. Sally is selling her property. When Sally's property sells, John will: a. have to go to court to keep his easement b. not have a problem as easements run with the land c. lose his right to use Sally's property d. hopefully be able to reason with the new owner

b. not have a problem as easements run with the land

The sales comparison approach should be used for appraising: a. commercial properties and vacant land b. owner-occupied residential properties and vacant land c. renovated properties and farmland d. industrial properties and some special-purpose properties

b. owner-occupied residential properties and vacant land

The primary difference between pre-approval and final approval is that during pre-approval: a. borrowers do not have to be of legal age to qualify b. property information is not considered c. creditworthiness of the borrower is not considered d. borrow application information is not considered

b. property information is not considered

A foreclosure property is purchased at a sheriff's sale. The buyer, Aviv, is responsible for fees such as: a. paying the sheriff and penalties b. property taxes and penalties c. interest and third-part financing fees d. paying the sheriff and property taxes

b. property taxes and penalties

A valid deed will: a. contain a copy of the title b. state it as a conveyance c. list all applicable liens d. be signed by an attorney-in-fact

b. state it as a conveyance

An agent is comparing a subject property with no pool to a comparable property with a pool. The agent will need to do what with the price value of the pool? a. add it to the comparable property's sale price b. subtract it from the comparable property's sale price c. establish an average price for the two properties d. establish an average price for the pool that will be accounted for on closing day

b. subtract it from the comparable property's sale price

Closing in escrow means that: a. both parties must be present when title is passed b. the buyer's money will not be paid to the seller until the seller's title is acceptable c. the seller will likely get more than the asking price through third party negotiations d. both parties must be present when title is passed

b. the buyer's money will not be paid to the seller until the seller's title is acceptable

A veteran is buying a home. The veteran puts in an offer on a property. A few days later, the CRV comes back relaying a smaller value than the veteran's offer. The VA Option Clause will allow the veteran to: a. withdraw from the contract with only minor financial penalties b. withdraw from the contract without penalty AND have their earnest money refunded c. ONLY have their earnest money refunded d. neither withdraw from the contract nor have their earnest money refunded

b. withdraw from the contract without penalty AND have their earnest money refunded

The Truth in Lending Act (TILA): a. stabilizes interest rates and ensures the economy grows at manageable prices b. licenses and monitors all professionals who work in the real estate industry c. creates a streamlines registration system for all residential mortgage loan originators d. helps consumers compare different funding options and protects consumers from unfair credit practices

d. helps consumers compare different funding options and protects consumers from unfair credit practices

The Fed operates to: a. create an unfavorable economic climate b. inflate and deflate the market c. give lenders more power d. maintain sound credit conditions

d. maintain sound credit conditions

A conventional loan is: a. underwritten by the VA b. underwritten by the FHA c. underwritten by 3 federal government agencies d. not underwritten by any agency of the federal government

d. not underwritten by any agency of the federal government

Adverse possession requires: a. permanent structures to be built b. secret use of a property c. a contract for deed d. open, notorious, and continuous use of a property

d. open, notorious, and continuous use of a property

In order to present the offer, the buyer's agent will contact the seller's agent and present the offer via: a. phone call or by mail b. personal presentation or by phone c. personal presentation or by mail d. personal presentation or an electronic version of the offer

d. personal presentation or an electronic version of the offer

The sales comparison approach uses two value principles. They are respectively known as the principles of: a. similarity and contribution b. market data and similarity c. substitution and market data d. substitution and contribution

d. substitution and contribution

The charges for recording all of the documents must be paid to the ____________________

county clerk

on the closing disclosure, the earnest money will be recorded as a _____________ to the ______________

credit; buyer

What is the official name of the RESPA/TILA form that serves as the closing statement? a. TILA Disclosure b. HUD-1 Disclosure c. Good Faith Estimate d. Closing Disclosure

d. Closing Disclosure

Who issued the first conventional loan MBS (mortgage-backed security)? a. Ginnie Mae b. FHA c. FHLBanks d. Freddie Mac

d. Freddie Mac

Which of these loans would RESPA rules not apply to? a. a loan to buy a primary residence that is a condo b. a loan to buy an owner-occupied vacation properties c. a loan to buy a one-acre single-family home d. a loan to purchase a commercial building

d. a loan to purchase a commercial building

A fixed-rate amortized loan payment plan features payments of principal and interest that: a. gradually increase throughout the life of the loan b. vary throughout the life of the loan c. decrease throughout the life of the loan d. are constant throughout the life of the loan

d. are constant throughout the life of the loan

One important goal of RESPA is to protect: a. sellers from buyer fraud b. buyers from seller fraud c. lenders from abusive brokerage services d. consumers from abusive lending practices

d. consumers from abusive lending practices

VA loans can be used for HOW MUCH of the purchase price? 100% 50% 75% 25%

100%

____________ items are generally debited to the seller and credited to the buyer

Accrued

What does DUST stand for? What is it used for?

Demand Utility Scarcity Transferability four characteristics that make real estate valuable

True or False: The sale of the property closes after the buyer's loan closes.

False

Appraiser that can only do appraisals of One-to-four family non-complex residential units where the transactions are valued at less than $1,000,000

Licensed Residential Appraiser

PITI

Principal, Interest, Taxes, Insurance

USDA Rural Development Guaranteed Housing Loans are usually referred to as: a. USDA loans b. rural loans c. development loans d. guaranteed loans

a. USDA loans

The SAFE Act aims to: a. enhance consumer protections and support anti-fraud measures b. limit and inhibit the flow of information to and between regulators c. provide decreased accountability and less regulation of MLOs d. charge consumers to access information regarding MLOs

a. enhance consumer protections and support anti-fraud measures

A provision in the mortgage contract that triggers the payment in full of the loan upon the sale or conveyance of the property is known as a(n): a. deficiency judgement b. alienation clause c. equitable redemption d. breach letter

b. alienation clause

In addition to disclosure statements, lenders must provide ARM borrowers with: a. mortgage insurance guide b. consumer handbook on Adjustable Rate Mortgages c. Texas Discounted Interest Rates Handbook d. Clear Title Guide

b. consumer handbook on Adjustable Rate Mortgages

There is usually no legal limit on loan amounts with: a. government-backed loans b. conventional loans c. conventional loans and government-backed loans d. neither conventional loans nor government-backed loans

b. conventional loans

For VA loan limits, the actual limit is established by: a. state b. county c. city d. country

b. county

The fully indexed rate is: a. less than the margin plus the index b. equal to the margin plus the index c. equal to the margin minus the index d. more than the margin minus the index

b. equal to the margin plus the index

What are three conditions shared by most residential sales contracts? a. good title. agent commission, and modifications b. good title, financing, and property inspection c. financing, buyer approval, and property inspection d. financing, modifications, and buyer approval

b. good title, financing, and property inspection

The intent of TRID is to: a. help agents select the best mortgage brokers for them and to protect them from illegal kickbacks b. help borrowers select the best mortgage for them and to protect them from abusive lending practices c. help borrowers get lower interest rates d. help lenders avoid fraudulent borrowers

b. help borrowers select the best mortgage for them and to protect them from abusive lending practices

Mary dies, and in a handwritten will with no witness, gifts her house to her grandson. Mary has created what kind of will? a. testamentary b. holographic c. harmonious d. automatic

b. holographic

Market value is generally the price that a property can sell for: a. when the seller is in a weaker financial position b. if offered openly under normal conditions c. when the buyer is having difficulty obtaining a loan d. when the property's appraised value is extremely low

b. if offered openly under normal conditions

A seller seeking a seller-financed loan should execute a promissory note addressing details such as: a. leaseholder rights b. interest rate c. borrower age d. borrower ethnicity

b. interest rate

In most cases, attorney fees for the preparation of the deed and a release of lien are charged to the: a. lender b. seller c. broker d. buyer

b. seller

the balance of the buyer's new loan will be recorded as a _________ on the closing disclosure

credit

The buyer MUST receive a copy of their Closing Disclosure by: a. the day before closing, at the latest b. the week before closing, at the latest c. three calendar days prior to closing d. three business days prior to closing

d. three business days prior to closing

The borrower pays the lender interest in exchange for the: principal down payment mortgage profit

principal

what are the 3 approaches to value?

(1) The Sales Comparison Approach, (2) The Income Approach, (3) The Cost Approach.

Which would NOT be prorated at closing? a. homeowner's insurance b. unpaid ad valorem property taxes c. HOA dues d. trash and sewer utility bill

a. homeowner's insurance

In 2015, the HUD-1 Settlement Statement was replaced by a document called the: a. abstract of title b. RESPA Disclosure c. Closing Disclosure d. Settlement summary

c. Closing Disclosure

Sharon's home is newly renovated but its value has gone down because of forces outside of her control. This is an example of: a. economic obsolescence b. physical deterioration c. functional obsolescence d. locational deterioration

a. economic obsolescence

If an advertisement includes the amount of the down payment, which of the following is one of the details that must also be included? a. Annual Percentage Rate b. property taxes c. homeowners' association dues d. mortgage insurance rates

a. Annual Percentage Rate

What is the main difference between Fannie Mae and Freddie Mac? a. Fannie Mae deals with larger commercial banks b. Freddie Mac deals with larger commercial banks c. Freddie Mac does not engage in conventional conforming mortgage loans d. Fannie Mae does not engage with government-specific loans

a. Fannie Mae deals with larger commercial banks

Regulation Z requires all consumers seeking credit receive a: a. disclosure statement b. strict timeline c. non-disclosure statement d. discount

a. disclosure statement

Sally and Jorge are a married couple who own a house together. The couple has one adult daughter, Emilia. When Jorge dies intestate, who receives the house? a. Sally receives the house b. Emilia receives the house c. Both Sally and Emilia receive one-half d. Sally receives one-third; Emilia receives the rest

a. Sally receives the house

The principle of contribution states: a. a property's value is the combined value of each of its parts b. the present value of a property is affected by the anticipated income that property will generate c. the value of something is affected by the cost of getting a similar item elsewhere d. a property's value is determined by adding the assessed and previous market values

a. a property's value is the combined value of each of its parts

Which of the following properties cannot depreciate? a. a tract of undeveloped land b. a residential house c. an urban condominium d. a public facility

a. a tract of undeveloped land

Who are possible attendees at the closing of a real estate transaction? a. attorneys and real estate agents b. lender's representatives and appraisers c. appraisers and county sheriff d. sellers and county sheriff

a. attorneys and real estate agents

VLB Land Loans may: a. be assumed after 3 years b. never be assumed c. be assumed after 2 years d. be assumed at any time

a. be assumed after 3 years

A mortgage insurance premium (MIP) must be paid: a. by the borrower when obtaining an FHA-insured loan b. by the seller when obtaining an FHA-insured loan c. in order to purchase a discount point d. in order to sell a discount point

a. by the borrower when obtaining an FHA-insured loan

With an adjustable rate mortgage, the interest rate: a. changes periodically b. stays the same c. increases annually d. decreases annually

a. changes periodically

Conventional loans can be: a. conforming or nonconforming b. conforming only c. nonconforming only d. neither conforming nor nonconforming

a. conforming or nonconforming

On the Closing Disclosure, how will the earnest money typically be recorded? a. credit to the buyer b. credit to the seller c. debit to the seller d. debit to the buyer

a. credit to the buyer

Which of these individuals would be regulated by TACLB? a. Lucia the lender b. Bob the broker c. Arnie the appraiser d. Sabah the sales agent

b. Bob the broker

Which of the following are Government-Sponsored Enterprises (GSEs)? a. Freddie Mac, Fannie Mae, Ginnie Mae, and the FHLBank System b. Fannie Mae, Freddie Mac, and the FHLBank System c. Fannie Mae, Ginnie Mae, and Freddie Mac d. the FHLBank System, Ginnie Mae, and Freddie Mac

b. Fannie Mae, Freddie Mac, and the FHLBank System

As per Regulation Z rules, an advertisement may: a. need to include detailed financing information such as monthly payments b. advertise the annual percentage rate (APR) c. NEVER utilize general phrases like "liberal terms available" d. NEVER advertise selling price

b. advertise the annual percentage rate (APR)

Reconciliation is: a. based on an exact formula that calculates the average of precise tax values b. an appraiser's comparison of estimates they made based on cost approach, sales comparison approach, and/or income approach c. a method of calculating the depreciated value of a home due to factors outside the owner's control d. a license holder's estimate of what value an official appraiser would assign a property

b. an appraiser's comparison of estimates they made based on cost approach, sales comparison approach, and/or income approach

VLB programs: a. are serviced by loan payments from the government b. are self-funded c. are not allowed to be financed with bonds d.. rely on 50% public taxpayer funding

b. are self-funded

The federal funds rate is the rate a: a. person charges when lending funds to other people b. bank charges when lending funds to other banks c. person charges when lending funds to a bank d. bank charges when lending funds to people

b. bank charges when lending funds to other banks

If a document is to be recorded concerning real or personal property, it MUST: a. contain a legal property description with a seal of authenticity from the lender b. be signed by the grantor in front of two or more witnesses (or an authorized officer) c. contain all of the seller's brokerage information d. contain sworn statements of conveyance from all involved parties

b. be signed by the grantor in front of two or more witnesses (or an authorized officer)

Which of these would be considered a prohibited kickback according to RESPA? a. fee splitting among cooperating brokers or members of multiple listing services b. the division of a commission between a broker and their sales agents c. a broker or agent receiving a fee for referring a particular homebuyer or seller to a lender d. referrals made by an employee to generate business for their company

c. a broker or agent receiving a fee for referring a particular homebuyer or seller to a lender

A broker charges a fee for using a CLO system. This is: a. legal but frowned upon and rarely practiced b. illegal c. acceptable as long as the fee is disclosed and reasonable d. acceptable as long as the agent receives a commission from the fee

c. acceptable as long as the fee is disclosed and reasonable

What is a CLO? a. a letter of notice giving the borrower 30 days to bring their mortgage loan current b. a standardized document jointly owned and maintained by Fannie Mae and Freddie Mac c. an electronic network for handling loan applications d. a provision in the mortgage contract that triggers the payment of the loan in full

c. an electronic network for handling loan applications

What is TRUE of earnest money and the closing statement? a. the seller will receive a credit for the money that they have prepaid b. earnest money will not be paid until after the closing statement c. at closing, the buyer will receive a credit on the closing statement for the money that they have prepaid d. the buyer will receive the earnest money amount as a check from the seller at closing

c. at closing, the buyer will receive a credit on the closing statement for the money that they have prepaid

The right of one party to access or use the land of another is a(n): a. encroachment b. assessment c. easement d. lien

c. easement

To compare mortgage banks to commercial banks, mortgage banks are regulated: a. more than commercial banks b. equal to commercial banks c. less than commercial banks d. in direct correlation to commercial banks

c. less than commercial banks

Construction loans generally bear a higher-than-market interest rate because of the risks to the lender, such as: a. a lack of mechanics' lien b. the contractor's guarantee against financial failure c. possible delays in construction d. the multitude of lenders

c. possible delays in construction

Once a sales contract is signed by all parties, TREC requires the broker deposit the earnest money by the end of the: a. fourth business day b. fifth business day c. second business day d. third business day

c. second business day

When finding comparable properties, it's best to look back at properties: a. sold over a year ago b. sold over 6 months ago c. sold within the last 6 months d. sold within the last year

c. sold within the last 6 months

Which of the following is part of the very first part of the appraisal process? a. conducting a highest and best use study b. delivering a formal appraisal c. stating the full legal description of the property d. clarifying which approach will be used to appraise

c. stating the full legal description of the property

With a buydown mortgage: a. the interest rate starts equal to the market rate b. there is no interest rate because no interest is paid c. the interest rate starts well below the market rate d. the interest rate starts well above the market rate

c. the interest rate starts well below the market rate

What is inverse condemnation? a. the power of government or public entity to take private property for public use without consent of the property owner b. an interest in real property that affords a person the right to make limited use of another person's real property c. involuntary transfer of title from an owner who does not use or inspect their land for a number of years to another person who has some claim to the land and takes possession d. when the government has over-regulated a property so that it can't be fairly used via restriction, permitting, etc., that virtually eliminate any use of the property

d. when the government has over-regulated a property so that it can't be fairly used via restriction, permitting, etc., that virtually eliminate any use of the property