National Exam 05
The Pickets are purchasing a home for $780,000 and the lender is giving them a 90% loan at 5% interest, plus a 2% loan origination fee. How much is the loan origination fee?
$14,040 A loan for 90% of the $780,000 purchase price results in a $702,000 mortgage. Since the origination fee is based on the amount of the mortgage, not the price of the home, the fee is 2% of $702,000 or $14,040.
On an 8% straight loan of $6,071, the borrower paid total interest of $1,700. How long did he have the loan?
42 months Eight percent of $6,071 is $486 per year or $40.50 per month. $1,700 divided by $40.50 means the borrower held the loan for forty-two months.
A house sold for $420,000. The buyer made a 20% down payment. Monthly interest on the loan was $1,400. What was the interest rate on the loan?
5%
Which type of loan will result in the largest reduction of the principal balance most quickly?
6% over 15 years
A real estate licensee has a buyer agency agreement. What is the seller in this situation?
A customer
Broker Kiki is trying to sell a unique $15,000,000 mansion in South Beach. What advertising medium would probably be the best option for Kiki to sell this particular property?
A magazine ad
A broker and seller terminate the listing contract. An offer is received in the mail by the broker after the termination of the listing contract. The offer is for full price and includes all of the terms and conditions of the seller. Why is this NOT a valid contract?
No acceptance has been given.
The Rose family owns a home in a semi-rural area, which is about five years old. Recently announced plans for a new regional airport will place their home directly in line with a main runway ending 1 mile before their home. If the airport is constructed, will this diminish the value of the Rose Home?
Yes, because of economic obsolescence.
Carl Chauvinist, the owner of an apartment complex, lives in one unit of a triplex and routinely refuses to rent either of the other two units to a female. Can he do this?
Yes. He may do this if he does not use a broker or discriminate in advertising.
A buyer wanted to use a promissory note for consideration on the purchase of a property. Can he do this?
Yes. This is acceptable as long as the seller agrees.
A borrower bought a $174,000 house with no down payment. The loan was probably
a VA loan.
A feature found in a comparable property that is not present in the subject property will result in
a reduction adjustment to the comparable's selling price.
The buyer and seller agreed to a purchase price of $310,500. The buyer received an 80% loan. How much was the buyer's loan and how did it appear on the settlement statement?
$ 248,400. Credit the buyer only.
A tenant leased 3,000 square feet at $10 per square foot and 8% of gross income. The total annual rent she paid was $60,000. What was the gross income on which she paid percentage rent?
$375,000
A square is 1/8 of a mile by 1/8 of a mile. How many acres is this?
10 acres One-eighth of a mile square is the same as 10 acres. Multiply 1/8 X 1/8 = 1/64 divided into 640 acres = 10 acres
he federal anti-discriminatory laws apply to which of the following? A. A broker selling a single-family home B. A private club not open to the general public C. Office building sales D. The rental of industrial property
A. A broker selling a single-family home
Which of the following closing costs is typically paid by the buyer? A. Private mortgage insurance (PMI) B. Broker's commission C. Satisfy existing liens D. A flip tax
A. Private mortgage insurance (PMI)
Which of the following is a closing expense typically paid by the seller? A. The broker's commission B. Inspections C. The mortgage recording Fees D. The recording of the deed
A. The broker's commission
Which is true about restrictive covenants? A. They are placed by private parties in a deed. B. They are placed by government agencies in a deed. C. They are voidable by successive owners. D. They are a form of tax shelter.
A. They are placed by private parties in a deed.
A buyer bought a property without telling the seller of his intended purpose for the property. The contract contains no contingency clauses and it is a properly executedXXX. After the closing, the buyer is unable to obtain the zoning he needs for his commercial project. What is the contract at this stage?
Enforceable
Under an FHA graduated payment mortgage, which of the following fluctuates over the term of the loan? A. Interest rate B. Monthly payments C. Finance charge D. Annual rate
B. Monthly payments
What type of a listing agreement allows the owner to appoint an exclusive agent to sell his property, but retains the right to sell the property himself?
Exclusive agency
Anna owns 50 acres of land with 500 feet of frontage on a desirable recreational lake. She wishes to subdivide the parcel into salable lots, but she wants to retain control over the lake frontage while allowing lot owners to have access to the lake. Which of the following types of access rights would provide the greatest protection for a prospective purchaser? A. An easement in gross B. An appurtenant easement C. An easement by necessity D. A license
B. An appurtenant easement
The right to control one's property includes all of the following EXCEPT A. the right to invite people on the property. B. the right to exclude the utilities meter reader. C. the right to erect "no trespassing" signs. D. the right to enjoy pride of ownership.
B. the right to exclude the utilities meter reader.
Who is the largest purchaser in the secondary market?
Fannie Mae
If additional information is not provided, which of the following would be in violation of Truth in Lending? A. "FHA financing available" B. "Assumable loan" C. "No down payment required." D. "Easy financing terms"
C. "No down payment required."
A real estate agent should tell the buyer, his customer, which of the following? A. How the area's demographics have changed recently B. The seller's motivation for marketing his property C. A pending or recent zoning change D. The seller is getting a divorce
C. A pending or recent zoning change
Which of the following would be used to clear a defect from the title records? A. A lis pendens B. An estoppel certificate C. A suit to quiet title D. A writ of attachment
C. A suit to quiet title
An agent of the seller would suggest that the buyer hire an inspector from an outside service in all of the following cases EXCEPT A. when they smell gas in the basement. B. when there is a slow drain in the toilet. C. when a hinge is off the door. D. when there is sawdust in the kitchen cabinets.
C. when a hinge is off the door.
All of the following are duties of the property manager EXCEPT A. reporting to the owner all notices of building violations. B. providing upkeep and maintenance on the property. C. maintaining financial records and accounts. D. securing tenants of a particular ethnic origin in accordance with the owner's wishes.
D. securing tenants of a particular ethnic origin in accordance with the owner's wishes.
A partition suit is used for which of the following? A. Determination of party fences B. To allow construction of additional bedrooms or bathrooms in a house. C. To force a division of property without all the owners' consents D. To change a tenancy by entireties to some other form of ownership
C. To force a division of property without all the owners' consents
The word "improvement" would refer to all of the following EXCEPT A. streets. B. a sanitary sewer system. C. chattel D. the foundation.
C. chattel
Broker Nathan works for seller Ted. Nathan should do all of the following except A. accounting for all monies. B. maintain confidential information. C. provide legal advice. D. be loyal to Ted.
C. provide legal advice.
The word "improvement" would refer to all of the following EXCEPT A. streets. B. a sanitary sewer system. C. trade fixtures. D. the foundation.
C. trade fixtures.
A breach of contract is a refusal or a failure to comply with the terms of the contract. If the seller breaches the purchase contract, the buyer may do all of the following EXCEPT A. sue the seller for specific performance. B. rescind the contract and recover the earnest money. C. sue the seller for damages. D. sue the broker for non-performance.
D. sue the broker for non-performance.
Who is NOT an originator of primary loans? A. Savings and loans B. Credit unions C. Commercial banks D. FHA
D. FHA
Which of the following is true of a second mortgage? A. It has priority over a first mortgage. B. It cannot be used as a security instrument. C. It is subject to termination with mortgagor notification. D. It is usually issued at a higher rate of interest.
D. It is usually issued at a higher rate of interest.
A Savings & Loan institution would be violating the Equal Credit Opportunity Act by denying a loan to Mr. and Mrs. Happy Borrower for which of the following reasons? A. Low earnings B. No full-time job(s) C. Too many loans D. Minority background
D. Minority background
Jim Jones, the landlord, rents a property to Tom Smith, a handicapped person. Mr. Smith, with Mr. Jones' permission, modifies the house to suit his needs. When the lease expires, which of the following requirements would not have to be met by Mr. Smith? A. Mr. Smith must remove the "grab rails" in the bathroom that were installed for his use. B. Mr. Smith must raise the kitchen cabinets that were lowered for his use. C. Mr. Smith must repair the walls where the "grab rails" in the bathroom were removed. D. Mr. Smith must restore the wide doorways, that were installed for him, to the original size.
D. Mr. Smith must restore the wide doorways, that were installed for him, to the original size.
Discrimination is prohibited in lending practices under
ECOA.
Which of the following types of ownership CANNOT be created by operation of law, but must be created by the parties' express intent? A. Community property B. Tenancy in common C. Condominium ownership D. Tenancy by the entireties
D. Tenancy by the entireties
Tom leases store space to Kim for a restaurant, and Kim installs her ovens, booths, counters, and other equipment. When do these items become real property?
When the lease expires, if the items are not taken by the tenant
Personal property includes all of the following EXCEPT A. chattels. B. fructus industriales. C. emblements. D. fixtures.
D. fixtures.
A home improvement company was negotiating with a homeowner to add on two rooms to a home. The company agreed to take a second mortgage as long as the homeowner also included the rest of the property in the loan. The company and the homeowner agreed to a price and the company provided the necessary disclosure form on Monday and the homeowner signed the agreement at noon the following day. Assuming that the week had five business days, until what time could the homeowner rescind the loan?
Friday, midnight
H agrees to purchase V's real estate for $230,000 and deposits $6,900 earnest money with Broker L. However, V is unable to clear the title to the property, and H demands the return of his earnest money as provided in the purchase contract. Broker L should
If both sides agree, return the entire amount to H.
If a single parent is applying for a real estate loan, when would the fact have to be revealed that part of the parent's income is from child support?
If the parent was relying on the income for repayment of the loan
When can a landlord evict a disabled blind or disabled tenant from the premises?
If the tenant has loud parties, makes too much noise, and is constantly disturbing other tenants
Jim and Sandy are next-door neighbors. Sandy tells Jim that he can store his camper in her yard for a few weeks until she needs the space. Sandy did not charge Jim rent for the use of her yard. Sandy has given Jim a(n) what?
License
In doing a market analysis, an appraiser found a recently sold property where the owners had just gone through a divorce. The property had been listed for $260,000 for 3 months but was purchased for $170,000 by one of the spouses. Should the appraiser use this as a comparable?
No--because of the divorce it was not an "at arms' length" transaction.
An owner advertised "beautiful acreage; only $5,000 down; owner will personally finance down payment." Would this be in violation of the Truth in Lending Act?
No. Owners are not covered by Regulation Z.
The property manager suspects that the tenants in a property are engaging in illegal drug trafficking. What should the property manager do?
Notify the owner immediately of the suspicious activity
A buyer assumes the mortgage. How is the owner relieved of the liability?
Novation (or "full assumption)
A bill of sale is used to transfer the ownership of what?
Personal property
How does one determine the gross rent multiplier?
Property value divided by the monthly rent
The Civil Rights Act of 1866 prohibits discrimination in housing based on which of the following reasons?
Race
When a claim is settled by a title insurance company, the company acquires all rights and claims of the insured against any other person who is responsible for the loss. This is known as what?
Subrogation
An owner was selling his own home. Can he advertise the down payment?
Yes, because it was his own home.
The buyer of an apartment complex is told that the refrigerator in one of the apartments goes with the sale. After taking title, he discovered that the refrigerator belonged to the tenant. Which is true about this situation?
The refrigerator is the personal property of the tenant. The seller had no right to offer it to the buyer.
When the lender under a deed of trust requires title insurance, who would be the most likely person to pay for it?
The trustor
Broker Carr, with ABC Real Estate Company, listed the property of a seller. Broker Smith, with XYZ Real Estate Company, called Broker Carr, and disclosed that he was a Buyer Agent. Broker Smith wrote a contract with a buyer for the sale of the property. What, if any, is the relationship between the buyer's broker, the seller and the listing broker?
There is not a relationship between the parties. Broker Carr represents the Seller and Broker Smith represents the Buyer.
Why would a mortgagee require an appraisal on the property?
To assure the property value is sufficient to cover the loan
Why is the RESPA closing statement allowed to be examined on or before closing?
To check for errors
Homeowner Tanya acquired the ownership of land that was deposited by a river running through her property by
accretion.
The amount of earnest money deposit is determined by
an agreement between the parties.
A special warranty deed differs from a general warranty deed in that the grantor's covenant in the special warranty deed
applies only to a definite limited time.
Restrictive covenants that run with the land
apply to and bind all successive owners of the property.
The maximum permissible amounts are based on "loan to value ratios"
based on sale price or appraised value, whichever is lower.
The list of previous owners from whom the present real estate owner derives his or her title is known as the
chain of title.
Seller Jolita lists her house with Broker Fred. Fred then buys Jolita's house and collects the agreed-upon commission. This is an example of
self-dealing.
The title to real estate passes when a valid deed is
delivered and accepted.
The primary purpose of Truth in Lending is to
disclose the true costs of obtaining credit.
When the preliminary title report reveals the existence of an easement on the property, it indicates that the easement is a(n)
encumbrance.
Sam and Nancy bought a store building and took title as joint tenants. Nancy died testate. Sam now owns the store
in severalty.
When the grantor does not wish to convey certain property rights, he or she
may note the exceptions in the deed of conveyance.
Some expenses paid at closing must be __________ between the buyer and the seller. The most common items that fall into this category include taxes, insurance, and utilities.
prorated
When an appraiser correlates the three approaches into a final estimate, he
reconciles the differences according to the type of property being appraised and the quantity and quality of data available.
The Adams family purchased the largest and most expensive house in a new subdivision. Five years later, when they were ready to move, they discovered the monetary value of the home had gone up proportionately less than the other houses in the neighborhood. This phenomenon is an example of the principle of
regression.
Jim, Manny, and Harry are joint tenants owning a parcel of land. Harry conveys his interest to his long-time friend Wendell. After the conveyance, Jim and Manny
remain joint tenants owning a two-thirds interest.
A buyer makes an earnest money deposit of $10,000 on a $300,000 property and then withdraws her offer before the seller can accept it. The broker is responsible for disposing of the earnest money by
returning it to the buyer.
The rights of the owner of property located along the banks of a river are called
riparian rights.
Broker K arrives to present a purchase offer to Mrs. D, an 80 year old invalid who is not always of sound mind, and finds her son and her daughter-in-law present. In the presence of Broker K, both individuals persistently urge D to accept the offer, even though it is much lower than the price she has been asking for her home. If D accepts the offer, she may later claim that
she was under undue duress from her son and daughter-in-law, and, therefore, the contract is voidable.
A mechanic's lien would be properly classified as a(n)
statutory lien.
The illegal practice of directing minorities to areas populated by the same race or religion is called
steering.
Apartment buildings in an area were selling for $100,000 and a buyer offered $100,000 for an apartment building. The buyer is operating on the principle of
substitution.
When an appraiser uses the phrase "effective age," she is referring to
the age of the property based upon its condition.
In valuing a single family residence by the sales comparison approach, an appraiser would make adjustments to
the comparable properties.
The ________ is the culmination of the real estate transaction.
title closing
The primary purpose of a deed is to
transfer title.
A mortgage company makes a number of loans to be assembled into one package and sold to permanent investors. This process is an example of interim financing to the mortgage company and is called
warehousing.
The local utility company dug up Charlotte's garden to install a natural gas line. The company claimed it had a valid easement and proved it through the county records. Charlotte claimed the easement was not valid because she did not know about it. The easement
was valid even though the owner did not know about it.