Course 3 exam II

John wants to do a 1031 tax exchange. He just sold his property. How many days does he have to close on a new property?

180

Client Bette asked licensee Frank about a home equity line of credit versus home equity loan. Which of the following offers an brief overview of what a home equity line of credit is?

A borrower borrows against the equity in the house and pays back the amount withdrawn plus interest.

Which of the following describes an encumbrance?

A lien on the property due to an unpaid tax bill

A foreclosure occurs January 1, 2016. Of the following, which lien takes priority?

A property tax lien filed January 1, 2014

What is a reverse exchange?

An investor finds and closes on an investment property and then decides to immediately sell another investment property.

Sue and Jim are hoping to expand their family, which means moving to a larger home. They're closing on their new home soon, but haven't yet sold their current one. Which type of loan will help them afford both homes for a short period of time?

Bridge

Which of these would be considered a variable, essential expense?

Electric bill

The ______ clause protects the borrower's assets that aren't part of the voluntary lien from a deficiency judgment in case of foreclosure.

Exculpatory

Commander Halfback retires after 25 years of service in the Coast Guard. He is looking to buy a home. What type of loan should he use?

FHA, VA, or conventional

Which of the following entities buys primarily conventional loans from large commercial banks?

Fannie Mae

The ______ is a government-sponsored enterprise that works through a cooperative system to provide agricultural and rural loans.

Farm Credit System

Which is a requirement for veterans to use the VA's Specially Adapted Housing grant?

Have permanent and total service-connected disability

Janice is selling her five-bedroom, three-bath home. She has a marketable title. What does that mean?

Her property's title is free and clear of liens and is only subject to loan payoff and any taxes owed.

Dennis is a new licensee who's estimating his annual gross income for his first year. He plans to close at least five transactions that year, and he's researched average home prices in the area where he'll be working. Dennis finds that the average sale price is $280,000. What other data point does he need to complete his estimate?

His expected commission rate, minus his broker's split

Which of the following approaches to value uses a capitalization rate?

Income approach

For which of the following programs are veterans not required to submit a COE, get a new appraisal, or verify income?

Interest Rate Reduction Refinance

Riker, a real estate licensee and sole owner of his business, has a business entity in which he pays self-employment tax on all of the income from the business. Which business structure did he form?

LLC

Martha and Ben are selling their home to Linda. They've purchased title insurance for obtaining insurance of good title. Whom does the title insurance protect?

Linda

Babs is buying Kirk's property. Babs needs help with the down payment, and Kirk offers to supplement Babs' bank loan with a second loan, allowing her to meet her lender's down payment requirements. Which finance instrument(s) may be used for the agreement between Babs and Kirk?

Mortgage or deed of trust

Which is one of the benefits of the USDA loan program?

No down payment is required.

Sandra is a single woman fresh out of college. She hopes to qualify for an FHA loan. Her lender calculates her housing ratio as 31% and her total debt obligation as 43%. Her credit score is 480. Does she qualify under FHA underwriting guidelines?

No, she doesn't meet the credit score requirement.

The Dodd-Frank Act created the CFPB in part to regulate ______, which were among the largest originators of subprime mortgages prior to the financial crisis of 2007‒2008.

Non-bank lenders

Victor is selling his property to Sheila. He's acting as the lender, and the property is unencumbered. Which of the following options describes the type or types of financial instruments Victor may use for the loan agreement?

Note with a contract for deed, mortgage, or a note with a deed of trust

HUD's ______ has a goal of increasing the availability of safe and affordable housing to Native American families.

Office of Native American Programs

Life insurance companies sometimes like to insure their investment in commercial projects by insisting on an equity position. This is known as ______ financing.

Participation

A RAM is a type of equity financing. What does RAM stand for?

Reverse annuity mortgage

John is looking for a home to purchase. If he represents demand, which of the following represents the supply that best fits his needs?

Single-family house for sale

Select the choice that best translates this clause into plain English. "Any partial prepayment shall be applied against the principal amount outstanding and shall not postpone the due date of any subsequent monthly installments or change the amount of such installments, unless the Note holder shall otherwise agree in writing."

The borrower is allowed to prepay the loan without penalty.

Which of the following is a potential concern of a buyer who's entering into a contract for deed with a seller?

The buyer could lose the property after missing only one mortgage payment.

A multibillion dollar online retail distributor has decided to set up operations in Ashland. The population of Ashland is 22,000. What is the potential impact to the area?

The community is potentially put at risk.

What is the most likely effect when the Fed sells securities on the open market?

The economy may slow down due to a decreased money supply.

Janie and Sam are newly married and are looking for their first home. They're fortunate that Janie's mom set aside some money to help with this purchase. Janie's mom says it's a loan, though, and they will have to pay her back. What's wrong with this?

The loan will go against their debt load.

The average commission you earn from each transaction is $6,000, and 20% of your leads turn into clients. Using the funnel, what else do you need to know to calculate how many leads you will need if you want to earn $50,000 in a year?

The percentage of clients who turn into closed transactions

Margot reviewed page three of her Closing Disclosure to see the amounts she'll pay and receive, and the total cash amount. She located this information under the "Summaries of Transaction" in the "Seller's Transaction" table, which is completed by ______.

The settlement agent

The appraiser of Garran's property used the Torrens system to perform a title search. Now a claim has been filed. Who or which entity will be the title guarantor?

The state

What's the purpose of the fixed/adjustable rate note?

To convert the interest rate from fixed to adjustable

Direct farm ownership loans from the ______ may be used to buy farmland, construct and repair buildings, and make farm improvements.

USDA Farm Service Agency

A Treasury bill is a Treasury security ______.

With a maturity term of one year or less

You attend a business-related conference that includes an overnight stay away from home. Can you deduct the cost of your meals during the conference?

Yes, you can deduct 50% of the cost of your meals

The Morgans are about to close on their home. They're meeting with the lender to complete all the necessary paperwork. They've requested that none of their demographic information be shared with anyone. Which act would they need to be made aware of?

Home Mortgage Disclosure Act

How long is an MLO endorsement valid?

One year

The buying and selling of government securities as a way to influence the money supply and balance economic growth describes ______.

Open-market operations