NATIONAL FINAL
A property owner who wishes to convey property to a new owner will generally use a ______. A. Deed B. Lease C. Mortgage D. Title abstract
A
After purchasing a property, what can Jeremiah do to clear a possible future claim on the property's title? A. File a suit to quiet title. B. File suit against the lender. C. File suit against the seller. D. Have a second title search performed.
A
Breanna signed a purchase offer stating she'd buy Kathy's home for $150,000. Kathy rejected that offer but said she'd sell it to Breanna for $200,000. Breanna agreed to these terms, and they added their signatures. Which of the following statements is correct? A. Breanna accepted the offer Kathy made. B. Kathy accepted the offer Breanna made. C. The contract is invalid. D. The contract is valid but unenforceable.
A
Filomina is preparing to sell her home and thinks she should test for radon. Which of the following options about radon testing is true? A. Filomina can hire a professional to perform the test, or she can buy a test kit and submit it to a lab for analysis. B. Filomina can purchase a home test kit and interpret the results herself. C. Filomina is required to test for radon and perform any necessary mitigation before placing her property on the market. D. Filomina must hire a certified testing company to perform the radon test and interpret the results.
A
Jackie was sued in civil court by one of her creditors. As a result of the judgment against her, her house, car, and art collection are all subject to sale in order to pay the creditor. What type of lien is this? A. General B. Special assessment C. Vendor's D. Voluntary
A
Jenner purchased his first home, to which he'll have access forever, as far as he knows. Jenner owns ______. A. A freehold estate B. A leasehold estate C. An estate for years D. An ownership estate
A
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. In this scenario, who is/are the principal(s) in an agency relationship? A. John B. John and Marcus C. John and Tony D. Tony
A
Jon and Talia are artists who are looking for a home with a backyard that is big enough for them to build a studio. Which of the following properties might they want to stay away from? A. A lot that is adjacent to or partially on wetlands B. A lot with a gentle slope C. A property that is 1,200 feet from an interstate highway D. A treed lot
A
Marcus and Lucinda decided to play a round of golf on a beautiful new course in their neighborhood. As they're making the rounds, they notice vent pipes extending from the ground in various places. What might this signify? A. The course is built on a capped landfill. B. The golf course is built on a brownfield site. C. There are multiple underground tanks under the course. D. The vents are dispersing natural gas from an oil well site.
A
Marsha's title insurance policy was issued on closing day, which was June 18. The policy lists the standard exclusions as well as requirements for the company to issue the policy, such as paying off existing recorded liens. Which one of these will NOT be addressed in the schedule of exceptions? A. Marsha's second mortgage on the property, which she plans to get next January B. Marsha's unrecorded lease on the property C. Smith and Martin Building and Rehab's mechanic's lien, which was filed on June 18 D. The local cable company's unrecorded easement through the property for underground wiring. Marsha disclosed this to the title company
A
SARA is an amendment to which environmental act? A. CERCLA B. Clean Air Act C. Clean Water Act D. Environmental Responsibility Act
A
Stu is buying Freddie's property. What must occur for the transfer of title to take place? A. Freddie must deliver the deed to Stu. B. Stu must sign the deed. C. Stu must convey the deed. D. Freddie and Stu must sign the deed.
A
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? A. Maybe, but they'll have to petition their lender B. No, because PMI lasts for the life of the loan C. Yes, because their equity is over 20% D. Yes, because their equity position is at least 50%
A
The Clean Water Act and the Clean Air Act are both what type of regulations? A. Federal B. Local C. Out-dated and unenforceable D. State
A
To make valid computations of adjustments for the market comparison approach to value, elements of comparison must be applied in a specific order. Which of these elements has the highest priority? A. Conditions of sale B. Location C. Market conditions D. Physical characteristics
A
What did the Clean Air Act authorize the EPA to do? A. Establish air quality standards for the protection of human health and the environment. B. Establish U.S. air space so that no other country's pollution can impact our environment. C. Reduce the number of flights allowed per day out of each airport. D. Require everyone to stop smoking and to have annual emissions tests on their cars.
A
Which of the following best describes annual percentage rate (APR)? A. A standardized measure for interest rates and other loan costs B. Fees charged by a lender, expressed as a percentage that's always rounded to the nearest whole percentage point C. The amount a borrower pays in interest for a single year D. The amount a lender is permitted by federal law to collect in interest from a borrower during a single yea
A
Which of the following features is most likely to be the cause of an adjustment to a comparable when preparing a CMA? A. Busy street B. Color C. Demographics D. Interest rates
A
Which of the following is the cost of replacing a building in the case of total loss? A. Insured value B. Investment value C. Mortgage value D. Value in use
A
Which of these is a member of the primary mortgage market? A. CitiBank B. Fannie Mae C. Freddie Mac D. Ginnie Mae
A
Which of these statements about appraisers is correct? A. Appraisers who perform appraisals for VA or FHA loans must be approved or certified by either the VA or U.S. Department of Housing and Urban Development. B. Appraisers who perform VA or FHA appraisals must be certified by AIR. C. Lenders may use only nationally licensed appraisers for federally related loan appraisals. D. USPAP certifies and licenses all appraisers.
A
Ted is in foreclosure but has some equity in his property. An investor suggests that Ted enter into a sales contract with him for a substantially higher price than the investor would actually be paying. The investor pockets the cash and allows the house to be foreclosed on. What sort of scheme is this? A. Equity skimming B. Silent second C. Straw buyer D. Inflated appraisal
A Equity skimming occurs when an investor receives title to a property with no intention of making payments on it. When types of equity skimming fraud like this occur, houses usually end up in foreclosure.
Jamison, the seller, is closing on his property with Conrad, the buyer. Jamison paid the current year's property taxes already. Is this a prepaid or accrued expense, and how will it be represented on the settlement statement? A. The taxes are a prepaid expense and will appear as a buyer debit and a seller credit. B. The taxes are an accrued expense and will appear as a buyer debit and a seller credit. C. The taxes are a prepaid expense and will appear as a buyer credit and a seller debit. D. The taxes are an accrued expense and will appear as a buyer credit and a seller debit.
A Prepaid items will appear as a buyer debit and seller credit at closing.
Gregory and Dianne are American citizens of Cuban origin, and when they're denied a home loan, they suspect discrimination. Which of the following acts prohibits lender discrimination on the basis of the protected class of national origin? A. Equal Credit Opportunity Act B. Community Reinvestment Act C. Consumer Credit Protection Act D. Home Mortgage Discrimination Act
A The Equal Credit Opportunity Act (ECOA) prohibits lender discrimination on the basis of an applicant's protected class status, such as national origin.
Along with property ownership, rights are granted to use the land's physical components. Which right allows a property owner to use or sell the underground resources, such as natural gas and minerals? A. Air B. Sub-surface C. Surface D. Water
B
Amira's seller Tom just received the news that his buyers are walking away from the sale. They weren't willing to proceed after they saw the inspection report. Neither Amira nor Tom has requested a copy of the report. What's the most likely reason for that? A. Amira doesn't trust this particular inspection company. B. If they see the report, they'll be required to disclose any adverse findings. C. They are unwilling to pay for the report as the buyer requires. D. Tom wants to pay for his own inspector so that he can question the inspector.
B
Dean's new business venture is a software services firm where IT professionals handle programming and customer service tasks for a number of business clients. His employees all work at tables in an open office space. Dean most likely has a _______ lease for the office space. A. Gross B. Loft C. Percentage D. Triple net
B
How is the break-even point calculated for a percentage lease? A. Divide the annual expenses by the monthly base rent. B. Divide the monthly base rent by the percentage the landlord established. C. Multiply the established percentage by the base rent. D. Subtract the base rent from the monthly expenses.
B
If Acme Bank, a primary lender, wants to sell its loans on the secondary market, it would be easier for it to do so if its loans meet ______. A. FDIC guidelines B. Fannie Mae and Freddie Mac guidelines C. FHA guidelines D. VA guidelines
B
Joe gave land to a school, but still wanted to have some control over its use, so a deed was prepared that gave the school title as long as the land is used for educational purposes. What type of interest does the school have? A. Fee simple conditional B. Fee simple determinable C. Fee simple subject to a condition subsequent D. Legal life estate
B
John and Jean are thinking of purchasing a site on which they'll build a new storage facility. What should they do to determine if the site contains any environmental hazards or contamination? A. Develop an environmental impact statement. B. Have an environmental site assessment performed. C. Perform a visual inspection. D. Research the kinds of businesses previously operated on the site.
B
Kenneth, an appraiser, is driving around the area where the subject property is located. Which step in the appraisal process does this represent? A. Estimate the land value. B. Gather and analyze data. C. Identify data needed. D. State the problem.
B
LaTonya's aunt left her a bungalow on the outskirts of the city. For many years, it was the place for family holiday gatherings, and LaTonya's sister was even married there. That's why her family is so upset to learn that she plans to sell the bungalow as soon as she gets it cleaned out. Which real property right allows her to sell the property? A. Control B. Disposition C. Exclusion D. Possession
B
Martin placed all of his real estate investments in a trust, and the proceeds are distributed through the trust to his son Nathan. Martin still manages the properties indirectly, and Nathan currently benefits as he's past the required beneficiary age of 18. What type of trust is this? A. Indirect trust B. Living trust C. Probate trust D. Testamentary trust
B
Oscar bought an older home and hired a contractor to replace the old knob and tube wiring throughout the house. He was invoiced for the work, but 60 days have passed, and Oscar has yet to pay the bill. The electrician filed a lien against Oscar's house. What type of lien is this? A. HOA-related B. Mechanic's C. Mortgage D. Special assessment
B
Penny landed a great job in a new city, but now she needs to find a place to live. Rather than commit to a long-term lease, she wants a short-term rental while she explores the various neighborhoods. She's hoping to sign a lease which can be terminated at any time, also known as a(n) ______. A. Estate at sufferance B. Estate at will C. Estate for years D. Periodic estate
B
Select the situation that correctly represents a true conflict of fiduciary duties. A. Kai learns that her buyer clients' inspector will be reporting a furnace issue to the buyers. She doesn't want to break the news to them. Her duty of confidentiality to the seller and her duty of loyalty to her buyers are in conflict. B. Nikki's seller client has instructed her not to present offers that are less than the listing price. This is a conflict of Nikki's duty of disclosure, which requires her to present all offers, and her duty of obedience. C. Renee's clients don't want showings on weekends. Renee knows this may reduce market exposure and she feels it's not in her client's best interests. This is a conflict of her duty of loyalty and her duty of obedience. D. Terrance's buyer clients don't want him to share with the seller that they're having trouble coming up with the down payment. Terrance's duty of loyalty to his clients is in conflict with his duty of disclosure.
B
Seller Jason is giving listing agent Rebecca a tour of his house and pointing out all the features, even the spot in the attic where a previous owner's ghost likes to come back and visit. Jason asks Rebecca if buyers should be told about this. Which response is best? A. "All states require sellers to disclose any undesirable feature of a house, which includes ghosts." B. "The presence of spirits stigmatizes the property. Many states don't consider this a material fact requiring disclosure, but this is my first ghost encounter, so I'll check our laws." C. "We can tell prospective buyers that the property comes with a roommate." D. "You can't mention this, because it would be a fair housing violation."
B
Sherman, who owns property in a life estate, neglects the property, significantly diminishing its value. This is called ______. A. A lease option B. An act of waste C. An estate at sufferance D. A possessional prerogative
B
Through which method of involuntary alienation may the government take private land for public use? A. Court-ordered partition of property B. Eminent domain C. Escheat D. Regulatory taking
B
What is the best description of a deed? A. A covenant B. A document to transfer ownership/interest in real estate C. An abstract of title D. A recording fee
B
Which of the following statements about the number of contingencies in a sales contract is true? A. Every sales contract should contain a minimum of three contingencies. B. The inclusion of numerous contingencies makes it less likely that the buyer's offer will be accepted. C. The more contingencies, the better from the seller's perspective. D. The number of contingencies is directly related to the cost of the home. The higher the asking price, the greater number of contingencies.
B
Which of these factors makes a site a Superfund site? A. An active chemical spill on the site B. An EPA designation of a necessary cleanup C. A previous chemical spill at the site D. Site location in a designated wetlands area
B
Which of these is excluded on a title insurance policy on Martha's property because of the schedule of exceptions? A. A mechanic's lien recorded by A1 Siding and Windows B. A verbal lease agreement Martha has with her neighbor who leases Martha's garage C. Last year's unpaid property taxes D. The current year's unpaid property taxes
B
Which option is true if a deed is not recorded after closing? A. The title never transfers to the buyer. B. The legal ownership of the property can be challenged. C. The entire closing is void. D. The buyer must pay a fine to the seller.
B
Which statement most accurately describes the type of notice provided by recording a change of ownership document? A. Recording the deed provides actual notice of the property sale. B. Recording the deed provides constructive notice of the property sale. C. Recording the new owner's title policy serves as constructive notice of the sale. D. Recording the promissory note provides constructive notice of the property sale.
B
Which type of estate gives the owner condition-free interest in a property? This type of estate conveys the highest possible interest. A. Fee complete B. Fee simple absolute C. Fee simple defeasible D. Free and clear
B
Your client is purchasing a single-family home with a conventional loan. The listing price is $150,000. Does this situation require a licensed or certified appraiser? A. No, since conventional financing does not require an appraisal. B. No, since the sales price is less than $400,000. C. Yes, all property transfers require an appraisal. D. Yes, properties with sales prices of less than $175,000 require a certified appraiser.
B
Sam's not very good with planning for his expenses. He has a mortgage payment that includes his property taxes and property insurance, so he can knock those all out with his mortgage payment every month. Sam's also happy to know that his monthly payment will remain the same for the life of his loan. What type of mortgage does Sam have? A. Straight B. Budget C. Amortized D. Adjustable
B Budget mortgages are a type of amortized loan that include principal, interest, taxes, and insurance (PITI) in each amortized monthly payment.
The purpose of the Truth in Lending Act (TILA) is to ______. A. Require lenders to treat all applicants fairly, regardless of their religion, race, color, national origin, age, disability, or familial status B. Require lenders to make disclosures that allow consumers to compare the costs of making a purchase using credit from different lenders, and to compare those with the cost of using cash C. Require lenders to publicly disclose all data regarding credit applicants and the disposition of mortgage loan applications D. Require lenders to treat others as they would treat themselves
B The Truth in Lending Act requires lenders to provide credit applicants with disclosures that allow credit offer comparisons.
When the deed of trust is used as the security instrument for a mortgage loan, which of the following is a true statement? A. The bank gives title to the borrower while the loan is being paid off. B. It is much easier for a lender to foreclose on a property. C. A promissory note the borrower has signed gives the lender the right to seize and sell the house should the borrower default. D. The borrower is considered the owner of the home. I don't know. Can you help me out?
B When a deed of trust is used, title to the property is held by a third party (the trustee), generally making it possible for the lender to foreclose using a non-judicial process.
What's the relationship between the Loan Estimate and the Closing Disclosure? A. Lenders issue the Loan Estimate to verify the figures detailed on the Closing Disclosure. B. Lenders issue the Loan Estimate at application and Closing Disclosure figures should be similar to those on the Loan Estimate. C. The Closing Disclosure outlines the lender's responsibilities to the borrower. D. Closing Disclosure figures should match Loan Estimate figures exactly.
B Lenders first issue the Loan Estimate; borrowers can compare the Closing Disclosure, which is issued before closing, to the estimate's figures.
Jeffrey has accepted an offer of $299,000 for his house. The buyer is making a $50,000 down payment, and the buyer's appraisal came in at $300,000. On what number will the buyer's lender base the loan-to-value ratio? A. $300,000 B. $299,000 C. $249,000 D. There's no way to tell given the data provided.
B Lenders use the lesser of the sales price or appraised value.
A closing agent has several duties to perform both before and after the closing. Which of the following is a task the closing agent must complete during or after the closing? A. Perform a title search B. Pay off the existing loan C. Prepare a closing statement D. Obtain title insurance
B The title search, closing statement preparation, and title insurance purchase must all be completed prior to closing. After closing, the closing agent makes arrangements to pay off the seller's existing loan with the proceeds from the buyer. "We're recorded and funded" is music to a licensee's ears.
Charlie represents Sue, a buyer, in a transaction. A licensee from another firm represents the seller, Claude. Claude will pay a 6% commission to his listing firm, and that firm will split the commission with Charlie's firm. Charlie will be compensated through his brokerage. What's true about this situation? A. Charlie and the other licensee are engaging in undisclosed dual agency. B. Charlie's compensation comes from Claude, so Charlie is also Claude's agent. C. In this transaction, Charlie only represents Sue, and the other licensee only represents Claude. D. Sue is now Charlie's customer because she's not compensating Charlie for his services as her buyer's agent.
C
Christy found a property that was for sale by owner and made an offer. The seller accepted Christy's offer, but neither of them knew how to proceed. Licensee Zelda helped Christy complete the necessary purchase documents and walked her through the process. What kind of agency exists? A. Confirmed agency B. Express agency C. Implied agency D. Verbal agency
C
Donald and Martina decided to purchase a newly built home, and their agent, Ed, recommended that they get a professional home inspection done. The couple tells Ed that they thought inspections were only for older homes. How should Ed respond to that? A. Ed needs to inform his clients that home inspections are most important for newer properties. B. Ed should let them know that lenders for new construction loans require inspections. C. Ed should remind them that every dwelling, no matter the age or size, should have a home inspection. D. Ed should tell him that he doesn't trust the builder.
C
Emma is interested in purchasing a property with a big fenced backyard, because her eventual goal is to open an in-home daycare. Which of the following is a zoning issue that you would encourage her to research? A. How many children she'll legally be able to watch per state guidelines. B. The kind of fence that is required for daycare playgrounds. C. Whether or not current regulations permit home-based businesses. D. Whether she'll need to provide a business plan to lenders for a small business loan.
C
Jared wants to purchase property. One of the properties his agent shows him was formerly zoned for commercial use. It has a steep drop off at the back of the property, as well as some soft spots and mounds. Should Jared's agent recommend that he have a home inspector investigate it? A. No, Jared can address the cliff by bringing in additional soil. B. No, Jared is going to bulldoze the entire property to flatten it out anyway. C. Yes, these are clues that the property may have been used as a waste disposal site. D. Yes, these are indications of an underground storage tank.
C
Jessie, the buyer's agent, decides to informally inspect the property while she waits for the professional inspection. She notices a small puddle of water in the basement behind a stack of boxes. Later, Jessie calls the seller's agent and tells him what she found. The agent tells her not to worry; the seller is aware of the leak and plans to have it fixed within the week. Which one of these statements about this situation is true? A. Jessie can check the basement later to be sure the leak is fixed. B. Jessie can rely on the inspector to discover and disclose the leak. C. Jessie should disclose this to her buyer. D. Since the seller intends to fix the leak, Jessie doesn't need to disclose it to her buyer.
C
Julian and Clara want to leave their real estate holdings to their children. If at all possible, they'd like those holdings to avoid the probate process after they're deceased. Their attorney recommends a land trust. Is there a type of trust they could establish that would avoid probate? A. No, all trusts go through probate. B. Yes, a C trust would avoid probate. C. Yes, a living trust would avoid probate. D. Yes, a testamentary trust would avoid probate.
C
Kevin and Regina sold their property to Vickey using a general warranty deed. Which one of these statements is true? A. Either Regina or Kevin can convey the property. B. Kevin and Regina are the grantees. C. Vickey is the grantee. D. Vickey is the grantor.
C
Olivia took out a 15-year loan secured with a deed of trust. She worked two jobs in order to pay the loan back and finally made her last payment this month. What happens now? A. The lender releases the deed of trust that secured her mortgage loan. B. The lender releases the mortgage that secured her mortgage loan. C. The lender tells the trustee to release the title to Olivia. D. The trustee releases the mortgage that secured her mortgage loan.
C
Once Greg and Caitlin were married, they decided to purchase a home together. Since it was a shotgun wedding after a weekend in Vegas, they made sure that their ownership included the right of survivorship as well as protection from the other spouse attempting to sell the house from under them. Though not recognized in all states, the most likely form of co-ownership under which they would make this purchase is ______. A. Estate in severalty B. Joint tenancy C. Tenancy by the entirety D. Tenancy in common
C
Regina closed on the sale of her house to Tom on Thursday, then went to a second closing on Friday and sold it to Martin. How could the title company in Martin's transaction have missed the fact that Tom had purchased the property? A. Martin's title company didn't do its due diligence in researching the property ownership. B. Regina's closing with Martin took place in a different county than her closing with Tom. C. Tom's title company didn't have time to record Tom's deed before Regina closed with Martin. D. Tom's title company failed to provide the required notification that the property was already sold.
C
Sebastian owns a country house and vacations there every summer and on holiday weekends. As much as he'd like to will it to his niece when he passes, his ownership of the house ends when he dies. What type of estate does Sebastian own? A. Fee simple estate B. Free leasehold estate C. Life estate D. Remainder estate
C
Tawna agrees to sell her small plot of land to Morris for $5,000 cash. They don't write up a contract, but otherwise all the necessary elements for a valid contract are in place. What's the status of this contract? A. It's illegal. B. It's valid and enforceable by a court of law. C. It's valid but not enforceable by a court of law. D. It's void.
C
The EPA-approved pamphlet, "Protect Your Family From Lead in Your Home," provides buyers and renters with ______. A. A list of health centers that can treat the effects of lead toxicity B. A list of homes that have been confirmed as containing lead-based paint C. Information about identifying and controlling lead-based paint hazards D. Information about the presence of lead in heating and cooling systems
C
Trenton Excavating owns land on which it intends to build an equipment storage facility. It's found to be contaminated with agricultural chemicals. What's true of Trenton's liability? A. Even if contamination occurred before Trenton purchased the property and Trenton saw no obvious signs of it, the company is liable. B. If Trenton didn't complete an entire site assessment (Phases I - IV), it's responsible for the cleanup. C. If Trenton had no knowledge of the damage and no reason to suspect that the property was contaminated, it may be immune from liability. D. Trenton is liable for the cleanup regardless of the situation because it's the current landowner.
C
Under RESPA, a rebate of a licensee's commission may be offered to a transaction party, provided which of the following is true? A. It is less than half of the commission amount. B. The licensee is the listing broker. C. The rebate is not required for referral of business. D. The rebate is split among both transaction parties equally.
C
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? A. Avulsion B. Erosion C. Reliction D. Riparian
C
What is the term for sites identified by the EPA under the Comprehensive Environmental Response, Compensation, and Liability Act? A. CERCLA site B. Hazardous Environment Community Clean-up (HECC) site C. Superfund site D. Waste Remediation Environmental Need (WREN) site
C
What's the purpose of a quiet title suit? A. Compel the seller to provide title insurance. B. Pay all debts and liens against a title. C. Remove any claims against a property's title. D. Compel the lender to finance a cloudy title
C
Which of these situations represents reproduction cost in the cost approach to value? A. Ginger's parents built a new home when Ginger was just leaving for college. When she graduated, Ginger went back to her home town and hired a builder to build a similar but smaller house on her parents' property for her and her new husband. B. Jenning's historic property was mostly destroyed by fire. He rebuilds it with similar materials, square footage, and design. C. Kristina's antebellum mansion in New Orleans was severely damaged by a hurricane. She spends several years repurposing materials from other similar homes to rebuild it exactly as it was before the hurricane. D, Martin sold his beloved family home, then built one just like it. Only the new home has newer materials that were more environmentally friendly, and the house is in a warmer, drier part of the country.
C
Which of these terms can be defined as what a buyer has paid for a property and what the seller has accepted? A. Appraisal B. Cost C. Price D. Value
C
Morae's lender tells her that her FHA loan has a maximum debt ratio of 43% and a maximum housing ratio of 33%. What does this mean? A. The home Morae purchases can't be valued at more than 43% of her gross income and she can't finance more than 33% of the home's value. B. Morae's down payment must equal the difference between the maximum housing ratio and the debt ratio (43% - 33%, or 10 %). C. Morae's monthly housing costs can't exceed 33% of her gross monthly income and her total recurring monthly debt can't exceed 43% of her gross monthly income. D. Morae's total recurring monthly debt can't exceed 33% of her gross monthly income and her total housing costs can't exceed 43% of her gross monthly income.
C The housing ratio is Morae's total monthly housing expenses (mortgage payments, insurance, taxes, and association fees) divided by her monthly before-tax income and her lender has said that it can't exceed 33%; her total recurring debt payments (debt ratio) her lender has said it can't exceed 43% of her monthly before-tax income.
When Stacy's clients ask her if she can recommend a mortgage broker, she promptly gives them the name of the best mortgage broker she knows, Gary Jones. Later, she always receives a check from Gary as payment for the referral. Is this legal or illegal under the Real Estate Settlement Procedures Act (RESPA)? A. This is legal under RESPA because the referral fee didn't involve granting credit. B. This is legal under RESPA because Stacy has proven experience with the mortgage broker she referred, so it's an honest transaction. C. This is illegal under RESPA because it's considered a kickback between settlement service providers. D. This is illegal under RESPA because it's considered a referral.
C RESPA prohibits kickbacks between settlement service providers. Also, Stacy may suggest a few mortgage brokers, but the final decision is up to her clients.
Charles is selling his property to Seth. Charles paid off his own mortgage on the property years ago, so he's in a position to provide 100% financing for Seth's purchase. Seth will make payments to Charles while Charles retains the property title. What's this an example of? A. Purchase money mortgage B. Wrap-around mortgage C. Land contract D. A straight-term loan
C Right! The seller retains the title in a land contract. When the loan balance is paid in full, the seller gives the buyer the title. While the loan is being repaid, Seth has equitable title. When the loan balance is paid in full, Charles will give Seth the full title to the property.
Dawn and Steve are planning to purchase a home, but are wary of the commitment of a mortgage. However, they have no other way to make home ownership a reality, so they decide to educate themselves on the process for obtaining a mortgage loan. Where would you recommend they go for clear, consumer-oriented education on this topic? A. The loan officer at their local bank B. A class on finance at the community college C. The CFPB website D. A real estate brokerage
C The CFPB website provides consumer-oriented education about all types of consumer credit products and services, including mortgage loans.
Celia was obtaining a conventional loan, and she put $50,000 down as a down payment. Why might her lender also require her to obtain private mortgage insurance (PMI)? A. PMI is triggered at the $50,000 down payment amount. B. She has poor credit. C. Her down payment of $50,000 isn't at least 20% of her loan amount. D. Her lender is a subprime lender.
C When loan-to-value ratios exceed 80% on a conventional loan, lenders may require PMI.
Bonnie has a mortgage on her investment property, but she allows the homeowners insurance to lapse. Which of these is a possible consequence of this action? A. The lender can sue Bonnie. B. Bonnie won't be allowed to pay off her loan early. C. The lender can place Bonnie's loan in default. D. Bonnie's mortgage loan interest rate will increase.
C lender's investment is at risk when homeowners insurance is allowed to lapse. A continued lapse can lead to default, because lenders don't like it when their assets aren't protected.
Colleen and Judy purchased a dilapidated townhome in an estate sale. Due to their fix-up work and the current economy, the property value has skyrocketed. They decide to sell it to get their equity out of it. After they list it, a woman comes forward, saying she is an heir to the previous owner and lays claim to the property. Which general warranty deed covenant protects Colleen and Judy? A. The covenant against encumbrances B. The covenant of seisin C. The covenant of the right to convey D. The covenant of warranty
D
In which of these situations has the licensee compromised the duties of loyalty and disclosure? A. Diana, the seller's agent, presented an offer to the seller even though it was under list price. B. Hillary, in working with the seller, told the buyer about a material defect the seller hadn't disclosed. C. Josie, in listing Rob's property, failed to disclose to Rob that he represents the seller. D. Nate didn't tell his client about a conflict of interest related to the sale of his client's property.
D
Malcolm loves his apartment, even though he's rarely there. His job in international development has him on the road for months at a time. He doesn't have to worry about missing out on his lease renewal though, because he has a(n) ________. A. Estate at will B. Estate for years C. Freehold estate D. Periodic estate
D
Margot has fallen in love with a three-bedroom, 2,500-square-foot property in her friend's neighborhood. It's listed for $400,000. However, just down the street, another three-bedroom, 2,400-square-foot home very similar to the one Margot loves was just listed for $350,000. Margot and her agent immediately make an offer on the second property. Which economic principle is at work here? A. Anticipation B. Conformity C. Progression D. Substitution
D
Rennie has consistently violated the Residential Lead-Based Paint Hazard Reduction Act by neglecting to provide prospective buyers with the pamphlet, "Protect Your Family From Lead in Your Home." In addition to a fine, what other penalty is Rennie most likely to incur? A. Community service assisting homeowners living in pre-1978 housing B. Jail time C. Lead abatement education D. Requirement to return to compliance with the law
D
Robin has great credit and was able to secure a loan for her ocean-side dream home. Her 30-year, fixed-rate loan is for an amount that's above conventional loan limits. What type of loan does Robin have? A. A conforming Freddie Mac loan B. A government loan C. An FHA loan D. A non-conforming loan
D
Seller Jamison is closing on his property with buyer Conrad. Jamison paid the current year's property taxes already. Is this a prepaid or accrued expense, and how will it be represented on the settlement statement? A. The taxes are an accrued expense, and will appear as a buyer credit and a seller debit. B. The taxes are an accrued expense, and will appear as a buyer debit and a seller credit. C. The taxes are a prepaid expense, and will appear as a buyer credit and a seller debit. D. The taxes are a prepaid expense, and will appear as a buyer debit and a seller credit.
D
What attracts borrowers to adjustable rate mortgages? A. Balloon payment B. Convertible feature C. Initial cap D. Lower initial interest rate
D
What's the rate of capitalization of a property generating net property income of $25,000 per year that's valued at $312,500? A. 10% B. 12% C. 6% D. 8%
D
Which of these actions is a violation of the Residential Lead-Based Paint Hazard Reduction Act when a property constructed before 1978 is being marketed by a licensee? A. The buyer is given more than 10 days to complete a lead inspection of the property. B. The buyer's agent fails to complete the lead-based paint disclosure form. C. The seller refuses to perform lead abatement work requested in buyer's offer. D. The seller's agent fails to provide the pamphlet, "Protect Your Family from Lead in Your Home," to prospective buyers.
D
Which of these guarantees is offered by a general warranty deed but NOT a special warranty deed? A. The seller owns the property (title). B. The seller is legally allowed to sell the property. C. The property is free of debt or other claims taken on during the grantor's period of ownership. D. The seller will defend against all claims against the property's title.
D
Which of these guarantees is offered by a general warranty deed but not a special warranty deed? A. The property is free of debt or other claims taken on by the grantor during the ownership period. B. The seller is legally allowed to sell the property. C. The seller owns the property (title). D. The seller will defend against all claims against the property's title.
D
Which one of the following protects the owner against financial loss if the real estate title has defects? A. Abstract of title B. Chain of title C. Deed D. Title insurance
D
Which one of the following statements about asbestos is true? A. Homeowners can safely remove it. B. It's harmful only if left in place. C. It's not harmful at low levels. D. No amount of it is considered safe.
D
While walking around the exterior of a rural home she's inspecting, Juanita noticed a metal vent pipe sticking out of the ground 25 feet from the house. She documents this because it may be a sign of what potential environmental hazard? A. Capped well B. Radon vent system C. Septic system D. Underground storage tank
D
Meg is considering a move to a foreign country and wants to deed her property to her son, Christian, who's 16. Which of these situations must occur to make this transfer legal? A. Christian must agree to the transfer and sign the deed. B. Meg must wait until Christian has reached the age of majority. C. Christian must provide monetary compensation to Meg. D. Meg must sign the deed and have her signature acknowledged.
D As the grantee, Christian doesn't have to sign the deed, and he doesn't have to be legally competent or of legal age. The property can be conveyed only if some consideration is in place, but it doesn't have to have a monetary value.
Kara is representing Leo in the sale of his property. Zoe represents the buyers, Trish and Todd Melvin. The closing officer, Regina, has worked closely with all the parties to bring the transaction to a successful close. Which of these statements about commission rebates under RESPA regulations is true? A. Kara can offer part of her commission as a rebate to Regina. B. Kara can offer a rebate to her client, Leo, but not to the Melvins. C. Kara is prohibited from offering any rebates. D. Kara may offer a rebate to both Leo and the Melvins.
D Brokers may legally rebate commissions to either party to a transaction.
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? A. Closing Disclosure B. Mortgage Disclosure C. Buyer Worksheet D. Loan Estimate
D The Loan Estimate, required by the Dodd-Frank Act, informs buyers of the costs they're likely to pay at settlement and discloses the mortgage loan specifics, such as its key features, costs, and risks.
The Baxters are looking at a $425,000 home near Camelback Mountain in Phoenix, Arizona. They have $90,000 in savings to use as a down payment. What loan type(s) would likely be the best option for them? A. A. FHA B. VA C. FHA, VA, or conventional D. Conventional
D That's the one! A $90,000 down payment would be a little more than 20% down ($90,000 ÷ $425,000 = 0.212, or 21.2%). The Baxters should qualify for a conventional loan with that much to put down on the home.
