0122 Real Estate Principles

The body of the HUD-1 Settlement Statement has three major sections. Which one of the following phrases IS NOT the name of one of these three sections?

"Closing Expenses"

Which one of the following terms refers to the government's right to take private property for public use and benefit, provided that the owners are fairly compensated and their rights are protected by due process?

"Eminent domain"

When an individual dies without leaving a valid will, he or she is described as having died ....

"Intestate"

What does "caveat emptor" mean?

"Let the buyer beware."

Which term is often used to describe a face-to-face closing process in which the principals meet and exchange documents?

"Passing papers"

Which term describes the division of expenses and funds between a buyer and a seller?

"Settlement"

A buyer takes out a loan for $50,000 at 5% simple annual interest. The buyer informs the lender that over the first two years, he can only afford to pay off the interest and none of the principal amount. Given this information, the lender charges the buyer a 2-point loan discount up front and reduces the annual interest rate on the loan to 4%. How much more profit will the lender make in the first two years than she would if she had not charged the discount?

$0

If a lender charges a 2-point discount on a $50,000 loan, what is the amount of the discount?

$1,000

The "Good Funds Rule" of the Texas State Board of Insurance states that the title company must require the buyer to pay with a cashier's check or certified personal check if the amount due at closing is greater than or equal to ............

$1,500

If an insurance policy costs $500 a year, what is the daily rate of the policy in a statutory year?

$1.39/ day

What amount of an exemption from school district taxes are senior citizens and persons with disabilities eligible for in Texas?

$10,000

What is the monthly net operating income of a building whose value is $9 million if the annual rate of return is 15%?

$112,500

If an account has a $100,000 balance and a simple interest rate of 10%, what will its balance reach if left alone for 4 years?

$140,000

What is the limited amount of exemption from school district taxes that owners of Texas homesteads can apply for?

$15,000

A seller who is closing on July 31 has prepaid an insurance policy through November at a yearly premium of $876. With calculations based on a calendar (non-leap) year, if the buyer assumes this insurance policy and the closing agreement stipulates prorated terms through the day of closing, what does the buyer owe the seller?

$292.80

What is the value of a building that grosses $700,000 annually with $52,000 in annual expenses and a 2% rate of return?

$32.4 million

Reconstructing a certain shopping mall would cost $250,000. The mall experienced 25% depreciation since being originally built and has a site value of $150,000. What is its value now according to the cost approach to appraisal?

$337,500

If a $30,000 loan accrues 5% compound interest (yearly compounding), what is the loan balance after 3 years if the borrower has not made any payments?

$34,728.75

A parcel of land measuring 233 feet by 417 feet is being sold for $150 per frontage foot. What is the cost of the parcel?

$34,950

A percentage lease on an office building stipulates a $3,000 monthly base rent plus 3.5% of gross profit in excess of $250,000. If the company renting the building grosses $375,000 in its first year, what is the total annual rent for that year?

$40,375

What is the amount of a conforming loan limit for a single family home in 2008?

$417,000

Seller Sandy nets $45,000 on the sale after paying a 5% commission to a broker and another 5% on other expenses. What is the total sale price of the house?

$50,000

Let's assume that a seller lives in a state in which real estate taxes are prepaid. He or she has prepaid all real estate taxes for the year 2007, up to and including December 31. The total amount of prepaid taxes is $2,400. The transaction will close on September 30, 2007, which means that the buyer owes the seller for three months' worth of taxes. What is the total that will be debited to the buyer and credited to the seller in this case?

$600

A new lot is valued at $1,500, but an investor succeeds in buying it for $1,000. Five years later, he sells it at market value. How much has the investor lost if the property has been depreciating at an average annual rate of 7.5% of the original value?

$62.50

If an equalization factor of 120 percent is applied to a home assessed at $60,000, what is the new adjusted value?

$72,000

IRS documentation shows that a particular building has depreciated at a constant rate of 3% every year. Suppose that an investor buys the property in September for $100,000 and from September to the end of the first year, the property depreciates at a prorated 1%. Say that for the next eight years, the property depreciates at a constant rate of 3%, so in April of the tenth year (after taxes have been paid), the owner sells the property for $150,000. If during that last year the prorated depreciation was 1%, how much taxable income on capital gains will the owner receive from the property following the sale?

$76,000

If he wants to qualify for an FHA loan for a house that is less than $50,000 in value, what percentage of the sale price must a purchaser pay as a down payment?

1.25 percent

What is the up-front fee for an FHA Mortgage Insurance Premium?

1.50 percent

During a leap year, how many days are there in a banker's year from January 1 through April 20?

110

If a house sells for $50,400, and its original cost was $36,000, what is the percentage of cost sold?

140%

When was the first Statute of Frauds (also called "An Act for Prevention of Frauds and Perjuries") passed in England?

1677

When was the Appraisal Foundation formed?

1987

As required by FIRREA, by what year were bank lawmakers to enforce individual laws?

1990

Mechanic's liens must be foreclosed within how many years of filing or within one year of the completion of work?

2

In addition to course work, how many hours of field work does the Appraisal Foundation currently require?

2000

How much of the original value of a home will FHA make up to the lender in the event of borrower default?

25 percent

0.25 is represented by which one of the following fractions?

25/100

What is the range of the buyer qualifying ratios (housing expense to income and total debt service ratios) for conventional loans?

28 percent and 36 percent

A house is valued at $56,000 at the time of purchase. If after five years, an appraisal finds that the house is worth $64,400, what was the average annual rate of appreciation?

3%

For a conventional loan, the borrower's total debt service should not exceed

36 percent of stable monthly income

How many days are in a banking year?

360

In Texas, prorations are usually calculated using what timeframe?

360-day year

What is the total linear footage to enclose a lot measuring 75' x 125'?

400'

A rectangular room is 12 feet wide, 12 feet long, and the distance from its floor to the ceiling is 10 feet. What is the total square footage of wall space in the room?

480 square feet

How many square inches are in an area of 4 square feet?

576

In the fraction 7/8, how many parts of the whole are there?

7

Using a calculator, what process would yield 5% of $73,260?

73,260 multiplied by .05

When working with a borrower on a transaction that relies on an FHA-insured mortgage, what are lenders required to give the buyer?

A Notice to the Homebuyer form

Which of the following statements is FALSE?

A bargain and sale deed guarantees the title a freedom from encumbrances.

FHA's requirement that a total debt service ratio should not exceed 41 percent means

A borrower's total housing expense plus his or her long term debt should not exceed 41 percent of gross monthly income.

What is an abstract of title?

A brief history of the title to a particular parcel of real estate, describing its ownership history and all past and present encumbrances

Among the following individuals, who CANNOT acknowledge or notarize a document?

A broker

A broker generally WILL NOT receive a commission when ................

A buyer breaches a purchase contract

Among the following individuals and entities, which one MAY NOT preside over the closing process in an escrow closing?

A buyer's broker

Which of the following statements is TRUE?

A certified appraiser may complete appraisals worth more than one million dollars.

The Real Estate Settlement Procedures Act requires lenders to provide to the borrower all of the following documents EXCEPT

A copy of the credit report that was used to underwrite the loan

What is Rate?

A cost per unit

What is specific performance?

A court order forcing a party who breaches a contract to comply with the terms of the breached contract

Which covenant provides the grantor's guarantee that he or she owns a property and has the legal right to transfer its title?

A covenant of seisin

Which of the following statements is TRUE?

A deed is a legal document; consequently, only an attorney may prepare one.

A property's legal description is ................

A detailed surveyor's description that uniquely identifies the property

To what does the disclosure of additional tax possibility refer?

A disclosure made by a seller to a buyer stating that a change in ownership may trigger new taxation for which the buyer would be liable

What is a breach of contract?

A failure to uphold a contract without legal cause

What is an option fee?

A fee paid by the potential purchaser at the time of contracting for the option to terminate the contract at some point before closing, if desired

How is a general lien different from a specific lien?

A general lien is a claim against all types of nonexempt property of a debtor.

Among the following types of deeds, which one provides the greatest security for a grantee?

A general warranty deed

Which of the following deeds offers a grantee the greatest level of assurance and protection regarding the condition of a property's title?

A general warranty deed

Which one of the following statements is FALSE?

A ion deed effectively transfers title from a grantor to a grantee when the misspelling of the grantee's name is ed.

What is another name for a non-conforming note that exceeds the lending conventional lending limits?

A jumbo loan

Which one of the following situations is in accordance with TREC rules?

A licensee filled in Form 20-7 to resell a single-family dwelling.

Which of the following statements about promissory notes associated with an FHA-financed partial claim is TRUE?

A lien is placed on the property until the promissory note is fully paid.

Which one of the following statements is FALSE?

A listing agreement may be terminated if a prospective buyer finds another home.

Which one of the following statements about lockboxes is TRUE?

A lockbox increases access to a property.

Which lien allows an individual to recover losses incurred from providing labor or materials to improve a property?

A mechanic's lien

Which one of the following criteria forms the basis for differences in FHA maximum loan limits?

A piece of real estate is in a high cost or non-high cost area

For the purposes of this module, what is a "market"?

A place for buying and selling commodities

An unused insurance policy assumed by the buyer at closing is considered which one of the following items?

A prepaid item at closing

Among the following documents, which one is MOST UNLIKELY to be required by a lender prior to closing?

A property's deed

Which of the following deeds offers a grantee the least assurance regarding the condition of a property's title?

A quitclaim deed

Which one of the following components IS NOT required to create a legally binding and enforceable listing agreement?

A salesperson's assistance

Which of the following statements IS TRUE?

A seller who doesn't want a "For Sale" sign must inform the broker in writing.

Which of the following liens most likely has the highest priority?

A special assessment

What is the Statute of Frauds?

A state law that requires certain contracts, such as deeds, to be in writing

What is a multiple listing service (MLS)?

A system under which brokers pool their listings to allow all member-brokers the opportunity to show and sell the pooled listings

Which of the following indices is frequently the most comprehensive resource available to someone researching a property?

A tract index

What is the "legal description" that is required in all deeds?

A unique description of the property that distinguishes it from all other properties in the world

Of the following properties, which one can be covered by a home warranty?

A washer and dryer

A listing agreement should be ................

A written contract between broker and owner(s)

All of the following are disadvantages to investing in tax liens EXCEPT?

A yield from the lien must be paid by the defaulting taxpayer upon redemption

What action does a listing agreement typically grant to a broker?

Accept earnest money in conjunction with obtaining an earnest money contract

When their principals' transactions involve federally related mortgage loans, what does RESPA prohibit licensees from doing?

Accepting fees for referrals of settlement service business

Which one of the following statements is TRUE?

Accrued items are expenses that are owed by a seller.

Which one of the following items IS NOT a necessary part of a valid deed of conveyance in all states?

Acknowledgment

Titleholder A discovers a gap in the chain of title and wishes to clear this potential cloud on the title. He or she must file a(n) ................

Action to quiet title

Which of the following terms refers to the legal understanding of a prospective buyer's direct knowledge of a fact?

Actual notice

Which one of the following loans is NOT among the three most common types?

Adjustable rate mortgage loan

Which of the following statements is FALSE?

All appraisers are self-employed.

Which of the following statements describes a requirement that is imposed by most states' Statutes of Frauds?

All contracts conveying land interest must be in writing.

Which one of the following statements is TRUE?

All contracts must have a legal objective.

Which of the following statements about liens and encumbrances is FALSE?

All encumbrances are liens but not all liens are encumbrances.

FIRREA requires all of the following EXCEPT

All states create an internship program for potential appraisers.

When a change in value of an appreciating property is expressed as a percentage of the original cost, how is it characterized?

Always greater than 1

Which one of the following statements DOES NOT describe a benefit provided by multiple listing services?

An MLS guarantees commissions to listing brokers, to compensate them for sharing their listing information.

Which of the following statements is TRUE?

An abstract of title is a brief history of the title to a particular parcel of real estate.

Which one of the following individuals is allowed to prepare documents in the state of Texas?

An attorney

Among the following types of listing agreements, which one often incorporates multiple listing service listings?

An exclusive right-to-sell listing agreement

13/8 is an example of ................

An improper fraction

What is the first step in obtaining a listing?

An initial meeting with the seller and an inspection of the property to be listed

What is a good improvement to suggest to sellers who do not have much money to renovate their properties?

An interior paint job

What does the Appraisal Foundation require prior to issuing full licensure and/or certification?

An internship

Among the following scenarios, which one describes a situation in which a commission WILL BE owed to the listing broker?

An owner sells a listed property him or herself under an exclusive right-to-sell listing agreement.

A broker IS NOT allowed (in any state or under any circumstance) to split his or her commission with whom?

An unlicensed individual who is not a principal

The first step in calculating a prorated expense is determining the ................

Annual charge for the item being prorated

Who can qualify for an FHA loan?

Any employee of the U.S. government

Titleholder A cannot make his mortgage payments for the months of September and October due to an unanticipated decrease in his income. Titleholder A does not want his lender to foreclose on his property. Therefore he should ................

Ask for a special forbearance from his lender

Which term is defined as the estimated worth of a property that local taxing authorities make in order to calculate ad valorem taxes?

Assessed value

In Texas, how often must real estate be appraised according to the fair market value, and what is the limit on appraisal increase per year?

At least every three years limited to a 10% increase

A good, professional appraisal association engages in all of the following actions EXCEPT

At most meeting the Appraisal Foundation's minimum competency standards

In Texas, where do closings customarily take place?

At the office of the title company

For a property to be valuable, it must have which characteristic?

Be able to transfer hands

Most states' statutes of frauds require all real estate contracts to .......

Be in writing

Which of the following statements about tax sales is FALSE?

Bidders usually must pay at least the fair market value for a piece of property.

From whom must a licensee obtain permission before installing a lockbox on a rental property?

Both the tenants and the owner

If a contract stipulates that prorations will be calculated to the day of closing, then who will pay property taxes for the day of closing?

Buyer

Which one of the following statements is TRUE?

Buyers and sellers may receive copies of HUD-1 settlement statements that show only their own expenses and totals.

What is the formal process by which ownership of real property moves from seller to buyer?

Closing

What document provides a detailed accounting of each party's debits and credits?

Closing statement

What is the purpose of providing a survey at an open house?

Collect feedback about the property from prospective buyers and other licensees

When facing foreclosure, what action should mortgagors take?

Continue to live in their homes When can redemption occur? Before a foreclosure sale occurs, and in some states after a foreclosure sale occurs

What is an open listing agreement?

Contract under which multiple brokers can be enlisted to sell a property, giving commission to the individual who is the procuring cause of the sale

In which approach to appraisal or tax valuation is the value of the land and the improvement differentiated?

Cost

Which one of the following terms is another name for depreciation?

Cost recovery

Which one of the following financial obligations is an example of a revolving debt?

Credit card

Volume is typically expressed in which of the following terms?

Cubic units

The "highest and best use" must have all the following traits EXCEPT

Current best use

All of the following actions are a part of the first step of appraisal EXCEPT

Deciding which appraisal approach to follow.

If a loan is amortized, what effect does each payment have on the loan's principal balance?

Decreases

How does an outstanding lien usually affect the value of a property?

Decreases it

An individual who violates a listing agreement has ................

Defaulted on the agreement

An appraiser's compensation can have all of the following characteristics EXCEPT

Dependant on the outcome of his or her value estimate

Fractions can be converted to equivalent decimals by what method?

Dividing the numerator by the denominator

Suppose that Person A dies intestate and the probate court cannot locate any heirs to Person A's estate. In such a case, Person A's property becomes the property of the state under the ................

Doctrine of escheat

The percentage funding fee varies as a function of which one of the following amounts?

Down payment

USPAP covers all of the following topics EXCEPT

Educational Requirements

Calculate "Potential Gross Income - Vacancies and Collection Losses" = ................

Effective gross income

What is net operating income?

Effective gross income minus operating expenses for the year

Buyer A approaches Homeowner B, who has defaulted on his loan payments, and offers to pay off Homeowner B's mortgage. Buyer A states that when the home is sold, Homeowner B will receive a sum of money. Which type of foreclosure scam might this be?

Equity skimming

Who usually issues a broker's commission funds?

Escrow officer In some states, brokers who default on a listing agreement may face penalties up to two or three times the damage award, if certain conditions are met.

Who establishes the guidelines for conforming loans?

Fannie Mae and Freddie Mac

Texas law prohibits the seller from being charged for which one of the following expenses?

First search of public records for title evidence

A seller has prepaid taxes on his or her property for the entire year. He or she will close a sale involving this property on July 15. Calculating the amount using a banking year, for what time period has this seller prepaid taxes beyond the closing date of the sale?

Five months and 15 days

Which deed of conveyance includes the phrase "for natural love and affection" in the description of consideration?

Gift deed

Which characteristics of a property include zoning laws and building codes?

Governmental Generally, a property that is just like all the other houses on the street is not ..........and consequently will probably be worth ..........than if it were the only property of its kind. Scarce; less

Which part of a deed generally determines what type of deed is being used to transfer the title to real property?

Granting clause

Which of the following loan types decreases the amortization term of a loan without negative amortization?

Growth equity mortgage

According to the theory of inclining and declining periods, the stages of an item's market life can be summed into which of the following phases?

Growth, stability and decline

The VA loan program provides which of the following assurances?

Guarantees loans to qualified veterans

Which one of the following is TRUE of an amortized loan?

Has its principal reduced over time until it is paid off

According to the Texas Real Estate License Act, what advice are brokers required to give to buyers in writing before or on the date of closing?

Have an attorney examine the title abstract or obtain title insurance

In Texas, the seller is generally charged for which one of the following expenses?

Having the abstract prepared

Among the following documents, which one IS NOT one that a seller generally needs to bring to a closing meeting?

Hazard insurance policies

What does a grantor guarantee by the covenant of seisin?

He or she owns, and is in possession of, the subject property, and has the right to transfer title at the time of conveyance.

Which principle is so important that it comprises its own step in the appraisal process?

Highest and best use

A prospective buyer wants to ensure that he is receiving a clean title to a property. He should ................

Hire an abstracter to create an abstract and then have an attorney review the abstract and give an opinion of the title's condition

If Mr. Appraiser estimates the market value of Home A by looking at the purchase price of a recently purchased property, Home B, which of the following statements is TRUE?

Home A is the subject property and Home B is the comparable property.

Which one of the following statements is FALSE?

If a deed involves consideration, then the deed must state the actual consideration in full.

Which one of the following statements is TRUE?

If a seller does not want his or her property listed on an MLS, he or she may stipulate this request as part of the listing agreement

Which of the following statements about foreclosure is TRUE?

In order to protect their interests, lien holders with lower priority can make payments on liens of greater priority and foreclose on a property themselves

Which one of the following conditions about mortgage loans with a greater than 80 percent loan-to-value ratio must be TRUE?

Insured by a private mortgage guaranty insurer

Which of the following expenses is NOT typically paid into an escrow account?

Interest

Among the following expenses, which one WOULD NOT generally be considered an example of a prepaid item?

Interest on an existing assumed mortgage

The Appraisal Foundation significantly increased its education requirements for certification and licensing on what date?

January 1, 2008

All of the following items would probably be exempted from attachment EXCEPT

Jewelry

Which form of co-ownership explicitly involves the right of survivorship?

Joint tenancy

Which one of the following is a non-recurring closing cost NOT associated with the lender?

Legal document preparation fee

What is one difference between lenders who obtain a lien on property and lenders of unsecured loans?

Lenders who obtain liens have a more immediate right to debtors' property.

Texas is a ....theory state.

Lien

Among the following costs, which one IS NOT typically deducted from a seller's gross proceeds as part of determining the net proceeds?

Loan origination fee

Fannie Mae and Freddie Mac underwriting guidelines categorize loans by which of the following criterion?

Loan-to-value ratio

In an escrow closing, how must copies of the settlement statement be handled?

Mailed or delivered to the buyer and seller immediately after closing

What is an acceleration clause designed to accomplish?

Make the entire amount of the loan due upon default

A listing agreement is a contract to ................

Market real estate

"The most probable price that a property should bring in a competitive and open market when all conditions required for a fair sale have been met, that is, the buyer and seller are both acting prudently, knowledgeably, and assuming neither is under duress," refers to which factor?

Market value

What land description method is most commonly used in Texas?

Metes and bounds

Interest is the cost of the use of ................

Money

Which one of the following judgments specifies a certain payment amount?

Money judgments

Which of the following statements about deeds in lieu of foreclosure is FALSE?

Mortgagors should offer a deed in lieu of foreclosure to avoid a partial claim.

Which of the following steps would you take to convert a decimal to a percentage?

Move the decimal 2 place to the right and add the % sign.

Which one of the following agreements IS NOT one of the four basic listing agreement contracts that were discussed in this lesson?

Multiple listing agreement

Which one of the following calculations finds the area of a circle?

Multiply the radius squared by 3.142

The area of a triangle can be determined by performing which of the following functions?

Multiplying the base by the height and dividing by 2

If the sale price of a house is known, in addition to the percentage of gross sales required to account for expenses, a person can determine the seller's net profit by which one of the following methods?

Multiplying the sale price by the percentage used for total expenses and then subtracting the resulting amount from the sale price

Which one of the following statements describes a disadvantage of net listing agreements?

Net listing agreements give brokers a motive to misrepresent a property's true worth and thus violate their fiduciary duties to the seller

Which of the following states is not a community property state?

New York

Which one of the following advantages do VA loans provide?

No mortgage insurance premium

Conventional loans are

Not necessarily insured by anyone

At closing, what are buyers generally focused on?

Obtaining marketable titles from sellers

When is the earliest that a buyer can request to see the HUD-1 Settlement Statement?

One day before closing

In the sixth step of the appraisal process what must the appraiser employ?

One ore more of the above three approaches

Which one of the following indicators ly defines the term loan origination fee?

One-time fee charged by the lender for issuing the loan

Of the following assurances, which one does an unsecured note include?

Only a promissory note for assurance against default

What parties are involved in listing agreements?

Owners and brokers

If an expense has been paid outside of the settlement, which acronym should be used on the HUD-1 settlement statement line?

P.O.C. ("paid outside of closing")

Partner A is a limited partner in a limited partnership. Which statement is TRUE?

Partner A's role in the partnership is primarily that of an investor

According to the legal doctrine of escheat, who receives the estate of a person who dies without a will and no legal heirs?

Pass to the state

What is involved in the process of self-acceleration?

Paying more than is due on a loan to lessen the life of the loan

Real estate tax due dates are also called ................

Penalty dates

Percent (%) means which of the following?

Per hundred

Which of the following items do appraisers use to prove the physical condition of a property as being accurately described in their appraisal report?

Photo journal

Which characteristics of a property include its age, location, and surroundings?

Physical

Which of the following steps would you take to change 50% to a fraction?

Place 50 over 100

Which of the following statements best describes a witnessed will?

Prepared by an attorney and signed by the testator with two or more witnesses present

According to the principle of conformity, if all residences in a locality are of the same structure, have the same age and size, are maintained in the same way, and have comparable market appeal, their value increases. The principle of conformity therefore entails market characteristics?

Progression and regression

What type of tax is federal income tax?

Progressive

Among the following documents, which one is something that a buyer must nearly always bring to a closing meeting?

Proof that he or she has secured appropriate financing

Which of the following property is LEAST LIKELY to be exempt from ad valorem taxes?

Property owned by commercial organizations

Why do most buyers typically look at ten or more properties before making a final decision about a purchase?

Prospective buyers are understandably cautious about a very costly purchase

What is the term that refers to the period after the termination of a listing agreement in which the broker may still receive a commission if he or she is the procuring cause of a sale?

Protection period

Paying a home inspector to inspect a property and write an inspection report allows for all of the following provisions EXCEPT

Provide the seller with an appraisal value for the house

The three tests of a borrower's income are

Quantity, quality and durability

What term refers to the percentage income that an investor of the property earns through the income the property generates?

Rate of return

Brokers are permitted to ................

Receive commission after their listing agreements have expired, provided that certain conditions are met

What is the name of the process by which an appraiser combines the findings of several appraisals into the final report?

Reconciliation

Texas requires all interest in land to be...?

Recorded

In the process of researching the chain of ownership, all of the following information would be found EXCEPT

Records of any existing acknowledgements

Among the following expenses, which one IS NOT generally prorated using a banking year?

Rents

Which approach to appraisal depends on the principle of substitution?

Sales comparison

Which approach to appraisal is most commonly used for single family homes?

Sales comparison

Which one of the following statements is TRUE?

Salespeople owe sellers fiduciary duties to sellers; even though the salesperson is not party to the listing agreement, fiduciary obligations are created by the salesperson-broker relationship.

Because properties located near a library are ..........such property values are ................

Scarce; higher

What is the value criterion of a commodity that refers to its lack of presence in the market?

Scarcity

Which one of the following entities is a principal in a real estate transaction?

Seller(s)

A cooperating broker is a broker who ................

Sells a property listed on an MLS for which he or she is not the listing broker, thus "cooperating" with the listing broker

How long is the statutory redemption period after a tax sale in Texas?

Six months, or two years for homesteads and agricultural properties

By which one of the following methods do VA loans originating after January 31, 1988, determine the amount of eligibility?

Sliding scale

Who is the best candidate for a reverse annuity mortgage?

Someone who already owns a home and needs a greater monthly income

Which characteristic(s) about special assessments is TRUE?

Sometimes voluntary and sometimes involuntary

Under which alternative to foreclosure might a defaulting homeowner qualify for a temporary suspension or reduction in payments?

Special forbearance

Which of the following deeds is generally distinguished by a covenant asserting that the grantor did not personally encumber the title during the period of his or her ownership?

Special warranty

What type of lien is a mechanic's lien?

Specific, involuntary

By provision of FIRREA, who should formulate a process for individuals to follow to be certified or licensed in the appraisal industry?

States

If a person dies intestate, then his or her property will be distributed according to his or her state's ................

Statute of descent and distribution

Which of the following statements about redemption in Texas is TRUE?

Statutory redemption is allowed only after tax sales

"After a court-specified time period, if the debtor has not paid the portion of the debt in default, the lender can obtain full title to the property." This statement applies to which of the following types of foreclosure?

Strict foreclosure

Which principle states that a purchaser will only pay that amount of money to purchase a property for which she can buy another similar property?

Substitution

How are the buyer's closing costs calculated?

Subtract the buyer's total credits from the buyer's total debits

In Testator A's will, a single parcel of land is bequeathed to Heir B and Heir C for them to share. However, the two heirs disagree about how the land should be divided between them. If they want legal help resolving their disagreement, they should file a(n) .........

Suit for partition

What is the basic premise of community property?

That both spouses contribute equally to a marriage, and thus both have equal ownership rights to all property acquired during marriage.

What event signaled to Congress the need for federal appraisal legislation?

The 1980s recession

Who set(s) the minimal education requirements for the appraisal industry?

The Appraisal Foundation

Who is the publisher of USPAP?

The Appraisal Standards Board

The minimum requirements for appraiser training are set by whom?

The Appraiser

What does FHA stands for?

The Fair Housing Administration (actual FEDERAL Housing Administration)

Who is one of the largest buyers of mortgage loans in the secondary market?

The Federal Home Loan Mortgage Corporation (Freddie Mac)

Of the following systems of land registration, which one influenced the current U.S. method of recording?

The Torrens system of land registration

FHA is part of which organization?

The U.S. Department of Housing and Urban Development

Who insures an FHA loan?

The U.S. government

Who define(s) appraisal as the act or process of developing an opinion of value?

The USPAP

What is an adjustable rate mortgage (ARM) margin?

The additional amount a lender adds to the index to account for business expenses

Among the following pieces of information, which one IS NOT included in the preliminary part of the HUD-1 Settlement Statement?

The amount of the loan being used for the purchase

To complete step two, listing necessary data and its sources, what must the appraiser know?

The appraisal approach to be used

Who is responsible for verifying data for accuracy in an appraisal report?

The appraiser

Which one of the following situations would NOT create a conflict of interest for an appraiser?

The appraiser does not belong to any professional organizations.

Person R wants to place a parcel of real estate into a trust for his Person L. He asks Person V to manage the trust for Person L until she becomes 21. In this situation, which party is the beneficiary, which party is the trustor, and which party is the trustee?

The beneficiary is Person L, the trustor is Person R and the trustee is Person V.

As LTV increases, the conforming guidelines for conventional loans become stricter because

The borrower has less equity in the property and is more likely to default.

Among the following scenarios, which one describes a situation in which a commission WILL NOT be owed to the listing broker?

The broker finds a buyer who is ready, willing and able to purchase the property under terms and conditions that are unacceptable to the seller.

Which one of the following statements DOES NOT describe one of those conditions?

The broker violated fair housing laws.

Although it IS NOT part of the final contract between the seller and the buyer, which one of the following pieces of information IS included on the listing agreement?

The broker's commission

What does the VA require in order to purchase a home that has a sales price greater than its Certificate of Reasonable Value?

The buyer must pay the difference as a down payment.

What is the result if the buyer's total credit is larger than his or her debit?

The buyer will receive cash at closing.

Who sets recording fees in Texas?

The county

In a net listing, how is the broker's determined?

The difference between the seller's expected selling price and the actual selling price

Which of the following statements about reconciliation step of appraisal is FALSE?

The findings from different approaches are usually averaged for the final report.

When do foreclosure sales occur in Texas?

The first Tuesday of every month

Which of the following statements is FALSE?

The general norm is that appraisal reports are orally delivered to the client.

What does the grantor guarantee under the covenant of quiet enjoyment?

The grantee will be protected against claims to the property by third parties and will not be evicted due to a defect in the title

When are capital gains taxed as long-term gains?

The holding period is longer than one year

To which of the following does the term "title" refer?

The intangible, legal right to or ownership of property

If there is more than one buyer or seller involved in a transaction, what should the settlement agent enter on the HUD-1 Settlement Statement?

The legal names and addresses of all buyers or all sellers

Which of the following is TRUE of title theory states?

The lender is considered the owner of property until a loan is paid off.

What do linear measurements express?

The length of an object

Among the following conditions, which one IS NOT likely to delay the sale of a home?

The licensee has scheduled an open house

Which one of the following events might cause a downturn in the real estate market?

The nation goes to war

Which of the following best describes the meaning of the term "title"?

The ownership rights to a parcel of property

Of the following information, seller's disclosure notices include all EXCEPT

The price for which the current owner purchased the property

All of the following are disadvantages for lenders who accept a deed in lieu of foreclosure EXCEPT

The property is generally worth less than the remaining balance of the loan.

USPAP's definition of market value assumes all of the following situations EXCEPT

The property is not allowed exposure in the open market.

When a licensee is preparing a comparative market analysis (CMA), which of the following facts SHOULD NOT be included for each property?

The property's owners

What does the term "proration" describe?

The proportional division of expenses between two or more parties

In the sales comparison approach to appraisal, what must the appraiser adjust to compensate for the difference between the comparable and subject properties?

The purchase price of the comparable(s)

In Texas, who owns the property on the date of closing?

The seller

Which one of the following statements DOES NOT reflect a one of the seller's warranties on a listing agreement?

The seller warrants that he or she will assume financial responsibility for any and all of the property's defects.

In Texas, it is customary for any of the following individuals to preside over a closing EXCEPT

The seller's broker

A seller might avoid making necessary improvements to his or her property for all of the following reasons EXCEPT

The seller's familiarity with the current market

Which of the following statements is TRUE?

The settlement agent should fill out the "Settlement Charges" section of the HUD-1 Settlement Statement first, because totals from this section are needed in the other sections.

What is the only VA loan qualifying ratio?

The total debt service ratio not exceed 41 percent.

Which one of the following definitions refers to Area?

The two-dimensional surface of an object

What does "Utility" refer to?

The use to which an item can be put

Which of the following statements is TRUE?

The value of real estate can change because of certain events that are predicted to happen.

Which of the following is not a requirement for a veteran to reuse an entitlement?

The veteran obtains a co-signer.

Suppose a married couple is looking to sell their home that is owned by the wife. Whose signature(s) should appear on the listing agreement?

The wife's, the husband's, and the broker's

Which one of the following advantages does an FHA insured loan provide?

There is a low down payment.

Partner A and Partner B have formed a general partnership. Which statement is TRUE?

They are both equally responsible for debts and other liabilities incurred by their business

How are adjustable rate mortgage interest rates determined?

They are tied to an economic indicator.

Which one of the following disadvantages applies to an adjustable rate mortgage (ARM)?

They carry the potential for negative amortization.

Which of the following statements is true of fully amortized conventional loans?

They have equal monthly payments throughout the life of the loan.

Consider the question How many cubic yards of dirt will it take to fill a hole?

This question asks that we solve using which one of the following measurement units? The volume of the hole

All of the following describe reasons that a document must be notarized before it can be entered into a public record EXCEPT

To guarantee the effectiveness of the notary's commission

What is the most effective way to keep the seller happy over the long term?

To keep the seller fully informed about developments in the marketing process

What is the purpose of the Real Estate Broker-Attorney Committee?

To promulgate forms for brokers and salespersons to use

What is the purpose of a payoff statement?

To record the exact amount required to pay off an existing loan

What is the purpose of a trustee's deed?

To take property out of trusteeship

Which of the following describes the potential gross income?

Total profit when vacancies and collection losses are zero

Which of the following statements about real estate transfer taxes is FALSE?

Transfer taxes are usually around six percent of the sale price.

Among the following duties, which one IS NOT one of the fiduciary duties that brokers owe to those with whom they make listing agreements?

Trust

How many boards comprise the Appraisal Foundation?

Two

An underwriter will include most sources of income in an income analysis if a history can be established that covers

Two years

How long do Texas lenders have to file suit for deficiency judgments?

Two years

What is the origin of the requirements that guide appraisers in writing and presenting an appraisal report?

USPAP

Which of the following statements is TRUE?

USPAP allows appraisers to complete some appraisals with a conflict of interest, provided they disclose the conflict.

What is the fundamental difference between an exclusive agency agreement and an exclusive right-to-sell agreement?

Under an exclusive agency agreement, owners reserve the right to sell their properties directly to buyers without owing commissions to any brokers.

During the negotiations of a sales contract, Texas requires a disclosure pertaining to the conditions under the surface of which type of property?

Undeveloped

A listing agreement DOES NOT typically give a broker permission to ................

Use his or her discretion about disclosing material facts to prospective buyers

What type of lien is formed when all terms of the contract for a sale have been satisfied, but a seller fails to deliver title to a parcel of real estate?

Vendee's lien

Which of the following statements about VA loans is TRUE?

Veterans may substitute VA loan eligibility if assuming another veteran's VA loan that requires equal eligibility. Maximum eligibility for a VA loan in excess of $144,000 is $104,250

What type of lien is a mortgage?

Voluntary

When do mechanic's liens take effect in Texas?

When construction begins or when materials are delivered to a site

When does title actually transfer from the grantor to the grantee?

When the deed is delivered to and accepted by the grantee

Which of the following statements about VA loans is TRUE?

Widowed spouses of veterans and spouses of military personnel missing in action and prisoners of war may receive VA loans.

What does "Demand" refer to?

Wish and ability to buy an item

In appraisal, the principle of supply and demand relates to the availability and desire to purchase homes in which of the following locations?

Within the local real estate market

Which one of the following legal actions allows a court to seize and maintain custody of a property until it reaches a judgment?

Writ of attachment

When touring competing properties that are currently on the market, who should accompany the licensee?

Your seller client

When one "quitclaims" a property,

she Has relinquished all rights and ownership interests in it