Fed RE Exam

Gus has applied for a home equity line of credit from his federally insured bank so that he can make some renovations to his kitchen. The same bank is his lender for his home mortgage. Will this loan be subject to Real Estate Settlement Procedures Act requirements?

Yes, because RESPA applies to any residential loan transaction from a federally insured financial institution, including equity lines of credit.

You're on a planning board discussing how to keep the city more livable by reducing building density. The subject of bulk zoning comes up. What is your response?

"That's a great way to meet our objectives."

Gunther's gross monthly income is $3,800, and he has no monthly debt payments. The lender's qualifying ratios are 28% for the housing DTI ratio, and 36% for the total DTI ratio. What's the maximum housing payment Gunther can afford?

$1,064 Calculate the debt and housing ratios that buyers need to meet both lending ratios. While Gunther qualifies for a payment of $1,368 under the total DTI, he only qualifies for $1,064 under the housing DTI ($3,800 x 28%).

A seller client received $800,000 for a 5.5 acre rectangular parcel alongside a road frontage. If the property was 400' deep, what was the price per front foot of the property?

$1,335.67 First, find the square footage (5.5 x 43,560' = 239,580). Then, 239,580 ÷ 400' = 598.95 front feet. To find the price per front foot, $800,000 ÷ 598.95' = $1,335.67 per front foot.

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

$105,263.16 The seller's percentage of a sale is 100% -5% commission = 95% (or .95). Take the amount they want to net and divide it by that amount ($100,000 / .95 = $105,263.16. Conversely, if they sell for $105,263.16 x .95 = $100,000.

Clint is interested in making an offer on a house with hardwood floors that will need to be replaced. The hallway is 18' x 6'. The kitchen is 20' x 30'. The living room is 25' x 45'. Two bedrooms are 12' x 16', and the master bedroom is 14' x 20'. If the cost of the flooring is $5.48 per square foot, and the cost of installation is $1.49 per square foot, how much can Clint plan to spend to replace the floors?

$17, 404.09

Someone who's been given the authority to act on behalf of someone else is a(n) ______.

Agent

Which of the following is a common chimney or fireplace problem?

Creosote

The doctrine of laches refers to the ______ of restrictive covenants/deed restrictions.

Enforcement

When a licensee has broad responsibility to handle all details of a specific transaction, what type of real estate agency relationship usually exists?

General

You need to perform a sales comparison for your clients. Comparable A's adjusted sales price is $277,000. Comparable B's adjusted sales price is $255,000. How might you use this data to determine a list price range for the clients' home?

Give more weight to the list price on the comparable that's most similar to the property. When faced with a range of prices, give more weight to the comparable that's most similar to the subject property.

Related to reasonable accommodation of being allowed to have an assistance animal, which statement is true?

If the disability for which the tenant is making the request is obvious, the landlord may not ask why it is needed.

Hannah wasn't able to get the financing to open her boutique, so her mother came on as a silent partner and provided additional cash. Hannah and her mother have an agreement that states Hannah's mother can't be held financially or legally liable if there are any problems with the store. What type of contract clause is this?

Indemnification

In which of these situations has the licensee compromised the duties of loyalty and disclosure? -Nate didn't tell his client about a conflict of interest related to the sale of the client's property. -Josia, in listing Rob's property, failed to disclose to Rob that he represents the seller. -Hillary, in working with the seller, told the buyer about a material defect the seller hadn't disclosed. -Diana failed to present the most recent offer to the seller because it was under list price.

Nate didn't tell his client about a conflict of interest related to the sale of the client's property.

Angelo's aging mother needs a place to live out her remaining years. Angelo conveys a home to her, but only for her lifetime. This is an example of what type of life estate?

Ordinary Ordinary life estates are granted for the lifetime of the grantee. When the life estate holder dies, remaining interest is either returned to the original owner (reversion) or is granted to a third party (the remainderman).

Jacob is a developer who purchased 78 acres and had it subdivided into half-acre lots. He decided to install sewer and underground electric for the entire subdivision, because he thinks that he will easily recoup his initial infrastructure investment. This is an example of which economic characteristic of real property?

Permanence

Byron is an environmental engineer working for Smith Environmental Services, Inc. He's currently working on a site assessment for an old hospital. Byron just sent soil and water samples to the lab that Smith uses for all of its testing. Which phase of the assessment process is Byron currently in?

Phase II

Which document is used to give a buyer an overview of the title history and information about what is or isn't covered in an insurance policy?

Preliminary report

Victor's family has always owned this particular lake house. When he was little, he remembers the "beach" being no more than four feet wide before the waterline. Now Victor brings his own children to the lake house, but the beach is almost seven feet wide. What natural process could explain the beach being bigger?

Reliction Reliction is the process by which water gradually recedes, which reveals new land.

Upon a life estate holder's death, the estate either reverts to the original owner or to another person the original owner has named, known as a ______.

Remainderman

What title guarantees will Jody have if her property is deeded to her after a foreclosure?

The covenant of seisin

Some down payment assistance programs offer low- or no-interest deferred loans, known as silent seconds. Which of the following statements is true about these programs?

The deferred loan doesn't need to be repaid until the first mortgage is paid off or refinanced, or the home is sold.

What must happen for an easement to be terminated due to abandonment?

The dominant estate owner takes action that shows a clear intent to stop using the easement.

Aidan accepted a contract for the sale of his home. The home inspection report reveals that certain aspects of the house don't meet the current building code. What's the most likely result?

The house is probably not required to meet the current code.

A licensee realizes that her client, a landlord, is discriminating against Olaf, a tenant. Olaf is a member of a protected class under the Fair Housing Act. Which of the following statements is true?

The licensee may face consequences for her actions, whether she acts to stop the discrimination or does nothing to stop it.

Real estate professionals handle many documents related to real estate transactions. Which one of the items listed below is one of the most important in detecting mortgage fraud?

The original sales agreement and any addenda

Sophia and Antonio are expecting twins. They want to sell their old house and buy a larger home using a conventional loan. In order to be sure they'll get the PMI waived, what will they need to have?

They should have a loan-to-value ratio of 80% or less. Primary mortgage insurance may kick in when the loan-to-value ratio exceeds 80%; that is, the borrower is borrowing more than 80% of the property's value. To be sure they can avoid paying PMI, Sophia and Antonio need to put at least 20% down.

What's the minimum number of business days prior to closing that lenders have to provide borrowers with the Closing Disclosure form?

Three

How many parties does a deed of trust involve?

Three: borrower, lender, and trustee

Your buyer is worried that after she closes on her property, she'll find out someone else has a claim to its ownership. What can reassure her?

Title insurance

Considering where pipelines and utilities can be located and their impact on the overall look in the subdivision are factors of ______.

Topography

Hank leases 150 acres from Sara and Jesse. He has an option contract attached to his lease, with an option to purchase that can be exercised within the next two years. What type of contract is this?

Unilateral

CD

certificate of deposit

LE

life estate

Which of the following is true about investors and tax depreciation?

nvestors can depreciate an appreciating asset.

wo years ago, Amelia purchased a commercial building for $619,000. It was in great shape, so she didn't need to make any renovations. She will use straight-line depreciation to determine the amount of depreciation she can take each year. What is the total amount of depreciation Amelia has accounted for including last year and this year?

$31,743.58 Straight-line depreciation for a commercial building means that you should divide the building's basis ($619,000) by 39 years. The yearly depreciation is $15,871.79, and you'd multiply this by two to get the two-year depreciation total.

Sam and Monique knew that the old industrial site that they purchased needed some environmental cleanup, but they don't have the cash and put cleanup on hold. The EPA hired its own crew to deal with groundwater issues because of industrial solvents and billed Sam and Monique $164,000 when the job was complete. If Sam and Monique don't pay the bill, they may be pulled into a lawsuit and have to pay damages of up to how much?

$492,000 If property owners refuse to pay cleanup costs as billed by the EPA, the EPA can seek damages of up to three times the original costs.

Roland's farm land is assessed at 1.5 million dollars and the improvements for $500,000. At a tax rate of 4 mills, how much are Rolan's monthly taxes?

$667.00 Assessed value + improvements = total value of $2,000,000. Multiply 2 million by 4 (mills/millage rate) then divide by 1000 = $8,000 in annual taxes . Divide $8,000 by 12 to give you the monthly tax amount ($8,000 ÷ 12 = $667.00).

Gary has an 80% LTV loan on his new $318,000 townhome with an annual interest rate of 4.125%. What's his interest payment the first month?

$874.50 The loan amount is $254,400 ($318,000 x .8). The first month's interest is $874.50 ([$254,400 x .04125] ÷ 12).

The Gatlins' lender tells them they can afford a monthly payment of $1,830 on their new home loan. What interest rate are the Gatlins getting if this is an interest-only loan with a principal balance of $349,000?

6.29% Annual payment ÷ loan balance = interest rate. $1,830 x 12 to get the annual payment of $21,960. Then divide the annual payment by the loan amount: $21, 960 ÷ $349,000 = .0629, or 6.29%.

Which of these statements about the promissory note is true?

A promissory note is a negotiable instrument and can be transferred to a secondary holder who has the right to enforce the note's terms.

After getting into a fender-bender, Parker had to purchase a new car. To make the down payment on the car, he had to skip a couple of his mortgage payments. He received a letter in the mail from his lender indicating the remaining amount of his loan is due immediately and in full. What clause in his mortgage stipulates this?

Acceleration

Alluvion describes new deposits of land that are the result of what natural process?

Accretion Alluvion, or new deposits of land, is the result of the process of accretion.

The element of a deed that signifies the grantor's intention to transfer title to the grantee is the ______.

Act of conveyance

Jansen and his listing agent just left the closing on Jansen's house. What kind of notice does Jansen, his agent, the buyer, and the buyer's agent have regarding the sale of Jansen's house?

Actual notice

Which of these questions can an agent in a dual agency transaction answer without breaching her duties to either client?

Are you aware of any structural issues with the property?

Which of the following would make the 'Choose Your Neighbor' flier an allowable strategy for finding prospective buyers?

As part of a comprehensive marketing strategy that doesn't limit or restrict potential buyers

In which of the following situations does a new tenant take the place of a departing tenant, thereby becoming responsible for the lease, but the departing tenant may remain liable?

Assignment

You're performing a market analysis for the Swansons. Comparable A has an adjusted sales price of $251,250. Comparable B has an adjusted sales price of $265,000. What would be a good way to use this data to arrive at a suggested list price range?

Base list price on the comparable most similar to the subject property.

Susan is selling her house for $265,000, and closing is set for June 19. She prepaid the property taxes ($1,350) and insurance ($925). Using a calendar-year proration method for calculations, how will these amounts appear on Susan's closing statement if Susan owns the property on the day of closing?

Credit of $1,214.85 First, calculate tax and insurance daily rates: ($1,350 ÷ 365 (days/yr) = $3.70) and ($925 ÷ 365 (days/yr)= $2.53). Combine the daily rates ($3.70+$2.53 = $6.23). Then multiply $6.23 x 195 days from closing until year end = a $1,214.85 seller credit.

The Richards' farm is located on a 10-acre parcel of land, which is very rare to come by in their area. However, the house is rundown and in need of many repairs. Buyers in the area looking for a move-in ready home would need to either look elsewhere or wait several months for the home to be renovated. Which factors are negatively impacting the value of the Richards' property?

Demand and utility

Which task is NOT the responsibility of an escrow officer?

Determine how earnest money is to be distributed in case of a dispute.

Which type of leasehold lasts for a defined period of time and automatically terminates when that period ends?

Estate for years

Which entity services rural development loans?

FSA The Farm Service Agency, an agency of the USDA, administers this program.

Johann submitted his rental application for a condo. He has a high credit score and solid employment. He uses a wheelchair for mobility. His application was rejected, and he believes it's because of his disability. Which fair housing act protects him?

Fair Housing Amendments Act of 1988

Which act provides consumers with remedies if they become victims of discrimination in the sale, rental, or financing of housing?

Fair Housing Amendments Act of 1988

While working with a buyer client, Jeffrey filled in the blanks on the purchase agreement, drafted an early-occupancy addendum, and assured his buyer that she was "fully protected" and would get her earnest money back if the sale didn't close. He encouraged her to hire an attorney to review the contract and addendum and invoiced her for a nominal $15 fee to prepare transaction documents. Which of these tasks would NOT be considered unauthorized practice of law?

Filled in the contract blanks

Property ownership gives the title holder a bundle of rights. What's significant about the concept of a bundle of rights?

It describes the ability to separate one right from the others while leaving the rest of the bundle intact.

John is selling his rental property to Tony. Marcus represents John, and Meredith is working with Tony, though there is no agency relationship between them. Who is/are the principal(s) in this transaction?

John and Tony

Which ownership type is defined by four unities: time, title, interest, and possession?

Joint tenancy

A mortgage is a legally binding document that creates a lien on a piece of property and gives the lender the right to foreclose on the property if the borrower defaults. Who or what is the mortgagee?

Lender

Claire rents 1,100 square feet of office space in a new professional building. Her rent payment includes all utilities and property taxes, but she pays separately for custodial services. What kind of lease does Claire have?

Modified gross lease

Tammy and Reginald bought a house with a gas line easement on the property. An easement like this one placed by the utility company is an example of a ______.

Private land control Private land controls include conditions, covenants, and restrictions (CC&Rs), HOA or subdivision regulations, liens, and easements.

Tryon Corp. and Sandoval, Inc. were joint owners of the former Sandy Glass manufacturing facility. An environmental assessment found that the two companies share joint and several liability for a hazardous materials cleanup. Tryon is currently in Chapter 11 reorganization and has no assets available to pay cleanup costs. Sandoval has strong company financials. What is Sandoval's likely course of action?

Sandoval will pay the upfront cleanup costs, but then try to collect Tryon's half once it is out of Chapter 11.

Frank owns a property on which there is walkway to the beach shared by his neighbors on either side. What is Frank's property?

Servient estate

The Housing and Community Development Act of 1974 added which protected class to federal fair housing law?

Sex

Which of the following could be a clue that a property was formerly a waste disposal site?

Soft spots, mounds, and discolored soil

Which one of the following types of ownership termination allows each tenant to have a specific, divided portion (partition) of the property exclusively?

Termination of co-ownership by partition

Which one of the following statements about testamentary trusts it true?

Testamentary trusts do not avoid probate.

A seller tells his agent that he has to sell his house quickly because of a divorce proceeding and that he's willing to accept less than his list price. His agent tells a buyer that the seller will accept as much as $10,000 less than the list price. Which of these is true?

The agent has breached his duty of confidentiality to his client.

Which of the following would be a description of economic depreciation?

The asset is worth less because it's deteriorating physically.

Which of the following is an example of the duty of reasonable skill and care?

Advising clients to seek expert advice on matters outside of your expertise

Simon is looking for a facility for a large grocery distribution operation. He found two options, one of which is offering him a triple net lease and the other an absolute net lease. Why is his attorney arguing against the latter?

An absolute net lease has no legal defenses if Simon fails to pay.

What's the primary difference between an ordinary and a pur autre vie life estate?

An ordinary life estate ends with the death of the estate holder; a pur autre vie life estate ends with the death of someone other than the life estate holder.

What information would the Loan Estimate NOT provide to buyers under the TRID-required disclosures law?

Final closing costs Lenders provide the Loan Estimate within three days of receiving a borrower's application. Borrowers receive final closing cost information (on the Closing Disclosure) three days before closing.

Lewis and Elliot started a real estate investment business together. After much discussion with their attorney they decided to incorporate, but in such a way that they are treated like a partnership and don't have to pay corporate taxes. What form of business do they have?

Subchapter S corporation S corporations are corporations that are taxed as partnerships. They don't pay corporate income taxes and shareholders may deduct losses on their taxes that represent their share of the corporation's losses.

When might an additional provision be needed in an agreement of sale?

The buyer requests terms of sale that aren't part of the standard contract.

Darren wants to set up a land trust so that his children could benefit from his real estate investments after he dies. He asked his financial advisor Tom to manage the trust, and Tom agreed. How is the trust created?

When Darren conveys the real estate to Tom.

May listing agreements be terminated without penalty?

Yes, with both the listing broker and the seller's agreement in writing

If someone wants to use their property in a way not permitted by a zoning ordinance, they must submit a request for a variance or special use permit to which of the following groups?

Zoning board of appeals

Katherine is purchasing a second home as an investment/vacation property. She has a large down payment, and the seller is financing the rest of the purchase. Which of these statements is true?

The CD and LE aren't required in a seller-financed transaction.

Jeanine has an exclusive right-to-sell agreement with her listing agent, Tera. Which of these statements about Tera's compensation is true?

The exclusive right-to-sell agreement guarantees procuring cause, which means that the broker will be paid no matter who brings the buyer to the transaction.

Rachel is talking with a co-worker, Shawna, about homebuying. Rachel shares some general market trends and talks about the impact of rising interest rates. She notes that the listing price of Shawna's neighbor's house seems lower than it should be, and then they talk about the importance of getting pre-approved for a loan early in the process. Which of her statements might have created an implied agency situation? -Current market trends -The impact of rising interest rates -The listing price of the neighbor's property -Loan pre-approval

The listing price of the neighbor's property

Which of the following is a typical accrued adjustment?

Unpaid real estate taxes

Picture a drawing of a section of land. Where is Township 1 located?

Upper right (NE) corner

What's a good policy a buyer's agent should employ regarding contingencies?

Use contingencies judiciously to protect the clients and the deal.

What's usury?

When a loan's interest rate is higher than the maximum allowable rate

What does CAN-SPAM Act stand for?

controlling the Assault of Non-Solicited Pornography and Marketing Act CAN-SPAM Act stands for the Controlling the Assault of Non-Solicited Pornography and Marketing Act. Question 69 of 100