Real Estate Exam missed questions

Automated underwriting systems offer the following benefits EXCEPT: (a) Objective-free of discrimination (b) Speed and low operating cost (c) Reduced closing cost to borrower (d) Immediate feedback for correcting deficiencies

(c) Reduced closing cost to borrower

What does a mortgagor NOT have to pay? (a) Hazard insurance (b) Property taxes (c) Life insurance (d) Title insurance

(c) Life insurance

106. Each of the following entities make loans in the primary mortgage lending market EXCEPT: (a) Hometown Savings Association (b) Big Time Federal Credit Union (c) Sallie Mae (d) Countywide Mortgage Lending Corporation

(c) Sallie Mae

E borrowed money from a bank for personal reasons. It had a fixed interest rate for a five year term. Monthly payments were interest only, and at the end, E owed the lender the full amount borrowed. This is which kind of loan? (a) Participation loan (b) Purchase money (c) Straight loan (d) Partially amortized loan

(c) Straight loan

After an offer to purchase real property has been signed and presented, how long does the offeror have to withdraw the offer? (a) Once the offer has been signed, it cannot be withdrawn until the offeree accepts, rejects, counters or the stated time period for acceptance has elapsed. (b) Three days following the presentation. (c) Until the offer has been accepted. (d) Twenty-four hours following presentation.

(c) Until the offer has been accepted.

Mrs. Brown has a contractual obligation to pay Ms. Larsen, her agent, a 6.5% brokerage fee for her services. Title costs are $1,300 and the seller is required to pay an extra $2,600 to cover carpet for the buyer. Assuming these are the only closing costs, what is the minimum selling price of the home if Mrs. Brown wants to net $150,000? (a) $153,900.00 (b) $164,327.80 (c) $2,367,692.30 (d) $164,598.93

(d) $164,598.93

The Z family purchased their first home for $160,500. They got an 85% loan and paid two discount points. They had additional closing costs of $3,250. How much cash did they have to bring to settlement? (a) $25,000.10 (b) $28,617.00 (c) $25,450.25 (d) $30,053.50

(d) $30,053.50

The buyers insisted they were not interested in a property that was less than 1.75 acres in size. A house on a property that was 465 feet by 643 looked great. How many acres does it have? (a) 5.75 (b) 7.25 (c) 4.5 (d) 6.86

(d) 6.86

74. Progression and regression are considered "sub-principles" relating to overbuilding for an area, or purchasing the least expensive model home in a development of new homes. The main principle involved is: (a) Contribution (b) Competition (c) Cycle of Change (d) Conformity

(d) Conformity

113. A deed filed in the public records provides which of the following: (a) Statute of limitations (b) Actual delivery (c) Escheat (d) Constructive notice

(d) Constructive notice

96. Which of the following is NOT true about a sale and leaseback of a commercial property? (a) Seller is able to deduct rent payments from his gross income (b) Seller frees up funds (c) Buyer can deduct depreciation from his taxes (d) Ownership does not actually transfer

(d) Ownership does not actually transfer

114. The key difference between a promissory note and a mortgage is: (a) A promissory note can be assumed by a new property owner. (b) There are no personal guarantees on a promissory note. (c) A mortgage is signed by anyone obligated to repay the loan. (d) Promissory notes are signed by people personally obligated to repay the loan.

(d) Promissory notes are signed by people personally obligated to repay the loan.

48. E borrowed money from a bank for personal reasons. It had a fixed interest rate for a five year term. Monthly payments were interest only, and at the end, E owed the lender the full amount borrowed. This is which kind of loan? (a) Purchase money (b) Partially amortized loan (c) Participation loan (d) Straight loan

(d) Straight loan

G followed the steps of adverse possession, hoping to end up owning the property. Five years into it, he was transferred across the country. H picked up where he left off, completing the requirements to seven years. This is called: (a) Severance (b) Subrogation (c) Abandonment (d) Tacking

(d) Tacking

103. In a loan, an alienation clause: (a) Protects against illegal aliens obtaining valid ownership (b) Insures that there will be no late payment of principal (c) Protects the mortgagee's position (d) Insures taxes will be paid

(c) Protects the mortgagee's position

Which of the following is NOT true regarding the income tax concept of depreciation. (a) A vacant lot can be depreciated when rented to people for gardens. (b) It does not result in "getting out of" paying taxes. (c) Cost recovery is another term for depreciation (d) Straight line method is the only one allowed for real property.

(a) A vacant lot can be depreciated when rented to people for gardens.

57. The government took R's property for a highway and paid R fair market value. Which of the following gives the right for this type of action? (a) Eminent Domain (b) Regulation Z (c) RESPA (d) Condemnation

(a) Eminent Domain

Which kind of title insurance would provide the most protection for the buyer of the property? (a) Extended Owner's policy (b) ALTA Lender's policy (c) Plain Language policy (d) Standard policy

(a) Extended Owner's policy

What could happen if a property owner does not pay his/her property tax? (a) It may take several years but, the home could be sold at a county auction to recoup the taxes due. (b) Nothing. The local taxing authority would be forced to hold out indefinitely until the property owner was able to pay. (c) The home could be purchased by a third party who would be responsible first for the taxes due. (d) The property taxes will be paid once the property is sold, and only after when the other liens have been paid.

(a) It may take several years but, the home could be sold at a county auction to recoup the taxes due.

115. Q is willing to seller finance the purchase of his home which he owns free and clear. Q would be considered the: (a) Payee (b) Leasee (c) Payor (d) Grantee

(a) Payee

75. R wanted to buy Q's home, but being new on the job could not qualify. Q agreed that with $15,000 down, Q would carry a loan for the remainder of the purchase price, amortized over 30 years at 8% interest. This is a(n): (a) Purchase money mortgage (b) Discounted loan or note (c) Wraparound loan (d) Double contract, and illegal

(a) Purchase money mortgage

19. Once the appraiser calculates the adjusted prices of all the comparables, the final step for developing a single estimate of market value is called: (a) Reconciliation. (b) Highest and best use. (c) Gather data and investigage. (d) Weighted substitution.

(a) Reconciliation.

An apartment building with 12 units has 6 covered parking spaces, all of which are assigned, a handicapped tenant moves in. Which of the following is true? (a) The handicapped person must be given a space as soon as one becomes available if it is necessary for his enjoyment of the property. (b) Under no circumstances does a parking space have to be provided if the owner doesn't want to do it. (c) The owner must add additional space if one isn't available. (d) The owner must make provisions so the handicapped person can have a parking place.

(a) The handicapped person must be given a space as soon as one becomes available if it is necessary for his enjoyment of the property.

39. Z went to a trust deed foreclosure sale on an investment property that looked like a good deal. There were other investors, but Z won the bid. Which of the following would Z expect to receive. (a) Trustee's Deed (b) Trust Deed (c) Sheriff's Deed (d) Deed of Trust

(a) Trustee's Deed

17. If the assessed rate is 55%, the appraised value is $213,000, and the tax rate is 23 mills, how much are the property taxes? (a) $2,875.00 (b) $2,694.45 (c) $2,650.78 (d) $2,750.00

(b) $2,694.45

54. A loan is obtained for $30,000. The loan calls for the principal to be paid in equal installments each month for 25 years. The interest on the loan is 0.75% per month. How much is the first payment? (a) $355 (b) $325 (c) $2,350 (d) $1,425

(b) $325

What does a VA loan have that an FHA loan does not? (a) Discount points (b) An LTVR of 100% (c) A right of reinstatement (d) No prepayment penalty

(b) An LTVR of 100%

When a person builds an improvement that extends onto the property of a neighbor, it is considered a(n): (a) Easement (b) Injunction (c) Encroachment (d) Defeasance

(c) Encroachment

Each of the following are stated goals of the Federal Reserve System EXCEPT: (a) Ensure the safety and soundness of the nation's banking and financial system. (b) Balance consumer demand for low mortgage interest rates with the large foreign investor's desire for more profitable mortgage interest rates. (c) Manage national monetary policy to help achieve full employment and stable prices. (d) Protect credit rights of consumers.

(b) Balance consumer demand for low mortgage interest rates with the large foreign investor's desire for more

53. Which if the following requirements is specific to RESPA? (a) If a "trigger" term is used, all numbers must be used in advertising. (b) Borrower can see the Closing Disclosure Form form 3 days before closing. (c) A historical example must be given if the loan is an ARM. (d) A three-day right of rescission must be observed.

(b) Borrower can see the Closing Disclosure Form form 3 days before closing.

A large benefit of using a credit report to process an application is: (a) It may be the only way to verify an applicant's assets. (b) It is factual record of history allowing a quick and objective decision. (c) The applicant can never determine what the loan decision was based on. (d) It provides a seasoned and expert opinion on the applicant's character.

(b) It is factual record of history allowing a quick and objective decision.

20. Rent control laws have what effect? (a) Tenants like them because it means the lease has no termination date. (b) Landlords don't like them as they must carry the burden of inflation. (c) They benefit lessors and lessees equally. (d) They raise the general economy and everyone likes them.

(b) Landlords don't like them as they must carry the burden of inflation.

The lender wanted a very thorough appraisal report for the shopping mall being considered for financing. Which type of appraisal report would accomplish that? (a) Survey (b) Narrative (c) Check List (d) Letter Form

(b) Narrative

Agent G was going to leave XYZ Real Estate and go to ABC Realty. G's great-aunt had listed her house and wanted G to still be her agent. Which of the following answers would accomplish this in accordance with the law? (a) Everything stays the same and G continues to service her aunt's listing. (b) The broker of XYZ agrees to cancel the listing. (c) The listing is assigned from XYZ to ABC (d) The listing has to stay with XYZ and the aunt will be assigned a new agent.

(b) The broker of XYZ agrees to cancel the listing.

50. In which of the following situations involving a 1031 would income taxes NOT have to be paid? (a) The exchange of two properties resulting in one owner owing $5,000 less than before on the property loan. (b) The exchange of a fourplex in the city for a small farm of equal value. (c) Exchanging a duplex and a car for a triplex (d) The exchange of a boat which can be a residence for a single family home.

(b) The exchange of a fourplex in the city for a small farm of equal value.

72. George Smith, who owns his property fee simple, grants a three-year lease to Tom Green. During the second year of the lease, George sells the property to Ned Gray. What happens to the lease when the sale closes? (a) It terminates. (b) The lease remains in effect with Mr. Gray and Mr. Green. (c) It must be negotiated between Gray and Mr. Green, the leasee. (d) Property cannot be sold and title transferred to a new owner when a lease is in effect.

(b) The lease remains in effect with Mr. Gray and Mr. Green.

Tom is asking $100,000 for his home. Kyle calls and offers $100,000 over the phone. Tom accepts the offer. This contract would be considered: (a) Unilateral (b) Unenforceable (c) Void (d) Voidable

(b) Unenforceable

24. Sam obtained an interest only loan on the property for 65% of its appraised value. The interest rate was 12.5%. The first semi-annual interest payment was $6,000. What was the appraised value? (a) $126,001.10 (b) $77,384.62 (c) $147,692.31 (d) $62,400.00

(c) $147,692.31

Mrs. Brown has a contractual obligation to pay Ms. Larsen, her agent, a 6.5% brokerage fee for her services. Title costs are $1,300 and the seller is required to pay an extra $2,600 to cover carpet for the buyer. Assuming these are the only closing costs, what is the minimum selling price of the home if Mrs. Brown wants to net $150,000? (a) $164,327.80 (b) $153,900.00 (c) $164,598.93 (d) $2,367,692.30

(c) $164,598.93

Tom wants to clear $90,000 when he sells his property. He must pay a 7% commission, $250 in closing cost, and $300 to the attorney who assisted in the transaction. What should he sell the property for? (a) $97,324 (b) $96,850 (c) $97,365 (d) $96,774

(c) $97,365

If the interest rate on a straight loan is 8% and the monthly interest payment is $650, what is the amount of the loan? (a) $103,250 (b) $75,682 (c) $97,500 (d) $88,750

(c) $97,500

In Utah, what is the statutory period for obtaining a prescriptive easement? (a) 7 years (b) 40 years (c) 20 years (d) 5 years

(c) 20 years Seven years is adverse possession and losing water rights; 40 is marketable title; and five is nothing.

A person lived on a property openly and notoriously under "color of title." This situation has to do with: (a) Fee simple defeasible (b) An owner who holds a quit claim deed (c) Adverse possession (d) Easement by prescription

(c) Adverse possession

92. In which of the following situations is a special warranty deed most likely to be used? (a) In a divorce the husband gives up his rights to the home. (b) A lease with an option to buy. (c) After a death, the executor grants the property to the devisee. (d) A standard sale of an existing residence.

(c) After a death, the executor grants the property to the devisee.

46. An easement by prescription can best be described as: (a) An easement created by eminent domain (b) A right of way created for landlocked property (c) An adverse use (d) An easement recommended by a doctor for a sick land owner

(c) An adverse use

A builder buys a lot and obtains a loan to build a "spec house." What type of loan would he have? (a) Wraparound (b) Blanket (c) Construction (d) Graduated

(c) Construction

Q decides to rent a single family home. The agreement prohibits the tenant from assigning or subletting. Which right in the Bundle of Rights does the tenant NOT share in? (a) Possession (b) Quiet Enjoyment (c) Disposition (d) Use and Control

(c) Disposition

When an apartment building is sold, how should the renters' security deposits be handled on the HUD 1 statement? (a) They will be a debit to both since they belong to the renters. (b) They will appear as a debit to the seller and a credit to the buyer. (c) They will not be noted in the settlement statement. (d) They will be a debit to the seller and a notation in the buyer's credit section.

(d) They will be a debit to the seller and a notation in the buyer's credit section.

30. In a graduated lease contract, which of the following would NOT be a means to determine future rent amounts? (a) Escalation clause (b) Index (c) Reappraisal (d) Use of an ARM

(d) Use of an ARM

The buyers made an offer; the sellers accepted it by signing the sales contract. Then the buyers decided they wanted to extend closing a week later. What should the agent do?

(d) Write an addendum with the new date and have both parties sign.

39. M starts a small business teaching people how to do unique types of quilting and stitchery and hires one person to help her. She finds an old house to rent cheaply. It only has one very small 1/2 bath, and five steps to get in the front door. In this case, ADA requirements: (a) don't apply as it would be too costly for a small business to make major construction modifications. (b) do not apply since there's only one employee. (c) only apply when there are more than 15 employees. (d) are violated because a handicapped person would not have equal access.

(d) are violated because a handicapped person would not have equal access.

The non-disturbance clause found in the loan comes into play when and protects whom? (a) loan is paid off: lessee (b) default on lease: owner (c) eminent domain: lessor (d) default on loan: lessee

(d) default on loan: lessee

Phil paid $2,500 in discount fees on his new loan. If the discount fees were 1.50% and Phil received a 90% LTV loan, what was the appraised value of the property? (a) $186,186.17 (b) $185,185.17 (c) $149,999.99 (d) $150,000.00

B 185, 185. 17

Under a mortgage foreclosure, K made the highest bid and got the property. Within 24 hours K had paid the full amount to the sheriff. What would K receive? (a) A bargain and sale deed (b) A certificate of sale (c) A quit claim deed (d) A special warranty deed

B A certificate of Sale

111. A straight loan has monthly interest payments of $738.02. The interest rate is 7.67%. What is the amount of the principal? (a) $130,698.98 (b) $124,362.08 (c) $115,465.97 (d) $118,934.89

Correct answer: c Explanation: All loan problems: Loan is FIRST interest is RATE and interest payment is LAST. Just remember, interest % is annual so you may have to adjust the interest dollars to be annual because R equals L. So take the $738.02 monthly interest times 12 to annualize it. Then "divide the one below the line by the one above the line" or $8,856.24 divided by 7.67% = the principal (original loan or current balance).

All of the following actions terminate a listing except (a) Death of the principal (b) Death of the listing broker (c) Abandonment by the broker (d) Death of the listing salesperson

D. Death of a Listing Agent

People who execute a document are referred to as: (a) Notary Republics (b) Testators (c) Signatories (d) Executors

Signatories

86. All of the following statements are true about the Cost Approach to valuation EXCEPT: (a) The final result when adding the total cost to replace the subject property (land plus improvements) minus the approximate depreciation is a fair estimate of market value for the subject property. (b) Depreciation is calculated for the buildings and land to reflect the three different types of depreciation (loss in value) to the subject property. (c) The land is valued separately from the structure and site improvements. (d) The cost to rebuild or replace the structure and other land improvements is calculated using today's construction costs.

b . Depreciation is calculated for the buildings and land to reflect the three different types of depreciation (loss in value) to the subject property.

What method of appraising would be most effective when appraising a vacant parcel of land? (a) Capitalization approach (b) Market data approach (c) Cost replacement approach (d) Income approach

b Market data approach Explanation: The income approach and capitalization need income, not vacant land. Cost replacement works only for the improvement to the land. So market data, or comparison approach is the only one that is applicable.

67. You can deduct loan interest in which of the following circumstances? (a) Credit card debt used for improving your home. (b) Points on a home equity loan incorporated into the loan. (c) The automobile used to travel to and from work. (d) On your house and your motor home.

d) On your house and your motor home.

42. Which thing on the list that follows would NOT be an item addressed in the property management contract between the broker and the owner? (a) The commission structure (b) The responsibilities of the agent (c) The work schedule of the agents (d) The rents to be charged

d) The rents to be charged