CE Shop Challenging Questions (National Portion)

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 ratio and 36% for the total DTI ratio. What's the maximum housing payment Gunther can afford? $1,064 $1,297 $1,368 $1,492

$1,064

Phoebe's gross monthly income is $4,200, and she has $360 in monthly non-housing debt payments. The lender's qualifying ratios are 28% for the housing ratio and 36% for the total DTI ratio. What's the maximum housing payment she can afford? $1,075 $1,152 $1,176 $1,512

$1,152 The maximum house payment is the lesser of the amounts calculated using both ratios. DTI: $4,200 x .36 = $1,512. $1,512 - $360 = $1,152. Housing ratio: $4,200 x .28 = $1,176. Phoebe's maximum payment is $1,152.

Glenn is purchasing a home for $400,000. The property appraised at $415,000 and Glenn is financing $300,000. What's the loan-to-value ratio? 72% 75% 82% 96%

75%

Private mortgage insurance may be required on conventional loans where the loan-to-value ratio is in excess of ______%. 75 80 85 90

80

When Dashiell received the purchase offer for his bungalow, he was surprised to see a page added to the contract requesting that an attorney review the contract. What is Dashiell looking at? Addendum Amendment Annotation Appendix

Addendum

_______ is a standardized measure for interest rates and other costs of the loan. Annual percentage rate Discount rate Federal funds rate Prime rate

Annual percentage rate

Saul was unhappy after he and Janelle liquidated their business. Janelle sold some items for less than he'd initially agreed to and he wanted the full price to be included in the profit split. He wanted to sue, but he was required to pursue other options. What contract clause kept Saul from being able to sue? Arbitration Choice of law Damages block Liquidated damages

Arbitration

At what point must a listing agent disclose material facts to all parties involved in the transaction? As soon as possible If asked directly by a party to the transaction Never Only with the seller's permission

As soon as possible

Which of the following is an action borrowers take to temporarily lower the interest rate on their mortgage loan? Buydown Down payment Gap financing Usury

Buydown

State usury laws are typically not applicable to what type of lending? Consumer loans Credit cards Loans from private lenders Personal loans

Credit cards Credit cards, retail installment contracts, and consumer leases are typically exempt from usury laws.

To meet the requirements of the statute of frauds, an agreement must clearly identify the contract's subject matter, present the contract's essential terms and conditions, and ______ to be enforceable. Achieve a result that's fair to all parties Be agreed to verbally Be reviewed by an attorney Identify the contracting parties

Identify the contracting parties

Which of the following is an example of sub-agency? Kayla is a licensee with ABC Realty and lists a property for seller Devon. Maurice is a salesperson with XYZ Realty Group and brings a buyer to the table, but owes fiduciary duties to the seller. Kermit is represented by Bert, an agent with Street Realty. Today they're seeing Oscar's house, which has been listed by Oscar's agent, Ernie, from Energy Realty. Rita is a licensee with Hawthorne Realty. She has a client, Dinah, who's selling her condo. Rita thinks Dinah's house will be perfect for Ruby, a customer. Tim and Tom are both licensees with Acme Realty. Tim is the listing agent on a home where Tom represents the buyer.

Kayla is a licensee with ABC Realty and lists a property for seller Devon. Maurice is a salesperson with XYZ Realty Group and brings a buyer to the table, but owes fiduciary duties to the seller.

Lawrence is a buyer closing on a home for which he's obtaining financing. Which document will give Lawrence an estimate of the costs he'll likely pay at closing? Buyer Worksheet Closing Disclosure Loan Estimate Mortgage Disclosure

Loan Estimate

The Bransons have a conventional loan for which they were required to obtain private mortgage insurance. Their local real estate market has been going like gangbusters, and their house is now appraised at twice their loan balance! Will their PMI be cancelled? Maybe, but they'll have to petition their lender No, because PMI lasts for the life of the loan Yes, because their equity is over 20% Yes, because their equity position is at least 50%

Maybe, but they'll have to petition their lender

All terms and conditions the client authorizes must be specified and included in an offer to sell or buy. When is it acceptable to offer the property under other terms? Never Only when your designated broker approves it Only when you're reasonably certain you can get your client a better deal by doing so Only when you're representing the seller

Never

Bo's real estate ad states: "Custom homes for sale with scenic mountain views. Easy financing and low down payments." What else must be included in the ad in order for it to comply with TILA? A full disclosure, including the APR and other loan terms Nothing The number of payments and APR The specific down payment amount and APR

Nothing Under TILA, ads that mention general financing terms, such as "low down payment" or "easy financing," do not require additional disclosure. If Bo had gotten more specific (e.g., "10-year loan with 0% down") he would need to include more information.

Your buyer client, Percy, wants to start searching for his dream house and knows he needs to obtain financing to accomplish that. What's his first step? Complete a loan application. Obtain a pre-qualification letter. Sign a purchase agreement. Write an offer.

Obtain a pre-qualification letter.

The Hendersons don't have enough money to make the full 20% down payment their lender requires. To close the sale, the seller is willing to finance a loan for the gap between the home's list price and the amount the institutional lender is willing to loan. What's this type of financing called? Equity mortgage Purchase agreement Purchase money mortgage Seller-insured loan

Purchase money mortgage

What factors directly affect an adjustable rate mortgage? Amortization tables, index, and rate Index, tax basis, and margin Rate, index, and margin Rate, loan-to-value ratio, and index

Rate, index, and margin

Jayne was tired of waiting for her subcontractor to get his part of the deal done. The agreed-upon deadlines came and went, and Jayne lost money waiting for the subcontractor to come through. She decided that if the subcontractor wasn't going to honor his commitments, neither was she, so Jayne consulted with her attorney and then terminated the contract. This is an example of ______. Accepting partial performance Mutually rescinding the contract Rescinding the contract unilaterally Suing for damages

Rescinding the contract unilaterally

Rusty received an acceleration letter from his mortgage lender. What is the most likely reason for receiving this letter? Rusty failed to pay his property taxes. Rusty has paid off his mortgage. Rusty is two or three months in default. Rusty's mortgage is being sold on the secondary market.

Rusty is two or three months in default.

Which of these tasks that Jenna performs does NOT represent the fiduciary duty of accounting? She avoids commingling trust funds with her firm's operating funds. She discloses the terms of the listing agent's compensation to her client. She meticulously manages all her clients' transactional paperwork. She properly records the earnest money her buyer client gave her.

She discloses the terms of the listing agent's compensation to her client.

Travis made the final payment on his loan according to the loan terms. What must the note holder do to acknowledge that the debt has been repaid? Assign the note to Travis. Destroy the note. Endorse the note and return it to Travis. Sign the note, mark it "paid in full," and return it to Travis.

Sign the note, mark it "paid in full," and return it to Travis.

What is TRID? Terminating and Reducing Inappropriate Disclosures TILA-RESPA Integrated Disclosures Timely and Rapid Integrity through Disclosures Truth In Disclosing

TILA-RESPA Integrated Disclosures

A "homes for sale" magazine contains the following ad: "One-bedroom condo. Corner unit with beautiful ocean views. Financing available, 5.25% APR." Which of these statements is true? The ad is in compliance with TILA because condominiums aren't covered under Regulation Z. The ad is in compliance with TILA because providing the APR doesn't trigger the required disclosure of all credit terms. The ad is not in compliance because TILA requires all financing terms to be stated if the APR is stated. The ad is not in compliance with TILA because it mentions financing without including all of the terms of the financing.

The ad is in compliance with TILA because providing the APR doesn't trigger the required disclosure of all credit terms.

A client terminates a listing agreement before its expiration date. What happens now? The agent must send the client a notice of release form. The agent must sue. The client may owe a commission anyway. The listing is cancelled.

The client may owe a commission anyway.

When a licensee represents a seller, which one of the following statements is true about the licensee's ability to list other properties that are for sale? The licensee isn't permitted to list other properties for sale. The licensee is permitted to list other properties for sale as long as they're not competing properties. The licensee is permitted to list other properties for sale, even if they're competing properties. The licensee must list the seller's property only for the first 90 days, after which the licensee may list other properties.

The licensee is permitted to list other properties for sale, even if they're competing properties.

Jacqueline found a ready, willing, and able buyer for her client's condo, with a sales price of $20,000 more than the asking price. However, the appraisal came in just under the asking price. Which number will the lender use to calculate the loan-to-value ratio? A middle point between the two numbers A weighted average based on the sales price, appraisal amount, and recent sales The larger number, as a buyer has already been found The smaller number

The smaller number

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'll need a 90% loan-to-value ratio. They'll need to put down at least 25%. They should have a loan-to-value ratio of 80% or less. They will need to qualify for an FHA loan

They should have a loan-to-value ratio of 80% or less.

Which of the following is a reason a lender might charge a prepayment penalty? Because the lender is a subprime lender To cover the costs of processing an early payoff To deter buyers from ever paying off their mortgage To recover the money lost in anticipated interest

To recover the money lost in anticipated interest

The ______ can offer direct loans to farmers and ranchers. The loans are funded by congressional appropriation. American Agricultural Lending Service Farm Credit System USDA Farm Service Agency USDA Rural Development Program

USDA Farm Service Agency

Because Shelby has a high prepayment penalty on her high-interest loan, she is ________. Able to pay off the loan early without penalty Able to refinance whenever she wants without incurring any penalties Eligible for additional tax deductions Unable to refinance her high-interest subprime loan without paying a stiff penalty

Unable to refinance her high-interest subprime loan without paying a stiff penalty

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? No, because Gus won't be using a real estate professional. No, because there's no transfer of title involved. Yes, because RESPA applies to any residential loan transaction from a federally insured financial institution, including equity lines of credit. Yes, because the bank is also the lender for his home mortgage. If he'd used a different lender, RESPA would not apply.

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

Which of these is an example of severability? Jules and Katrina are under contract for the purchase of Katrina's house. A dispute arises over some contract terms, and they end up in court. The court rules one of the terms invalid but leaves the remainder of the contract in force. Mark's contract with Reuben states that either party may sever the contract if any contract term is only partially performed. Misty's lease agreement with Thomas contains a provision that permits her to sever the lease if Thomas doesn't remodel the apartment as promised. Ricardo and Timothy are under contract in the sale of Ricardo's office building. Ricardo's tenant leases gives him the option to sever the lease agreements upon sale of the building.

Jules and Katrina are under contract for the purchase of Katrina's house. A dispute arises over some contract terms, and they end up in court. The court rules one of the terms invalid but leaves the remainder of the contract in force.

Luci's client Kaden wants to purchase a new construction property, and he wants to get as much house as he can afford. Which of the following does Luci need to advise Kaden about regarding interest rates when purchasing a newly built home? If Kaden uses his builder's lender, he can get a better interest rate and won't have to worry about market fluctuations between now and closing. Kaden doesn't need to worry about interest rates for his long-term mortgage until 90 days prior to closing when he can lock in the best rate. Kaden needs to allow for the possibility of an interest rate increase between now and closing because lenders won't lock in an interest rate for more than 90 days before closing. Kaden needs to lock in the interest rate on his long-term mortgage now to avoid unexpected increases that could put his loan amount over his approval amount.

Kaden needs to allow for the possibility of an interest rate increase between now and closing because lenders won't lock in an interest rate for more than 90 days before closing.

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 entity is considered the mortgagee? Borrower Lender Loan Property

Lender

What type of arrangement allows the buyer to retain title to the property but places a security interest in the property on behalf of the seller? A straight-term loan Land contract Purchase money mortgage Wrap-around mortgage

Purchase money mortgage