REAL ESTATE COURSE 2
What actions take place on the secondary mortgage market?
1. packagind of loans into mortgage-backed securities
Buchanan v. Warley
1917; declares illegal state-and-city-imposed residential segregation.
If a property's income value is $200,000 and it's earning a net operating income of $40,000, what is the cap rate? 20% 25% 40% 5%
20%
How many business days do buyers have to inspect the property after receiving notice that it's been damaged? Four One Three Two The buyers must inspect the property within three business days, and an additional two days to determine if they want to continue with the purchase.
3 DAYS
Once the disclosure form is received, how many days does a Minnesota buyer have to review and sign, or cancel the contract for deed agreement? Five Four Seven Two
5 days
PROTECTION OR OVERRIDE CLAUSE MAX
6 MONTHS RESIDENTIAL - 2 YRS COMMERCIAL?
Within how many days can a seller reclaim the property from a buyer who defaults on a contract for deed? 120 days 30 days 60 days 90 days
60
Gerome's home purchase was secured by a deed of trust. Who or what entity holds the title while the loan is being paid off? A third party Gerome Gerome and the lender The lender
A THIRD PARTY
Secondary Mortgage Market
A market for the purchase and sale of existing mortgages, designed to provide greater liquidity for mortgages; also called the secondary money market. Mortgages are first originated in the primary mortgage market. packaging loans into mortgage-backed securities
Where in the Minnesota purchase agreement should you indicated that the sale is part of a 1031 exchange? Acceptance Deadline Additional Terms Naming the Parties Offer/Acceptance
ADDITIONAL TERMS When the Minnesota Standard Residential Purchase Agreement is being used for a 1031 exchange, this must be indicated in the Additional Terms section.
Truth in Advertising
An ethical duty to be honest to customers about the product or services being offered.
Carol is buying a home and, contrary to common practice, would like the seller to pay all of the fees related to deed recordation. In which section of the Minnesota purchase agreement should this be stipulated? Closing Costs Disclosure of Notices Real Estate Taxes and Special Assessments Title
CLOSING COSTS
Which of the following is part of the Consumer Financial Protection Bureau's mission of consumer protection? Enforce consumer financial protection laws. Level discrimination penalties and fines. Provide loan programs for first-time homebuyers. Provide low fee loans to consumers.
ENFORCE CONSUMER PROTECTION LAWS
For the vast majority of loans, a single late ______ does not automatically mean the loan has gone into default. Appointment Audit Notice Payment
Even the most responsible homeowner can make a mistake sometimes. Missing a payment doesn't mean the loan defaults automatically. Most lenders allow a small grace period for getting payments made, although late fees might be charged.
A loss in value caused by an undesirable or hazardous influence offsite is which type of depreciation? Economic and material depreciation External depreciation Functional obsolescence Physical depreciation
External depreciation or economic obsolescence is a loss in value caused by an undesirable or hazardous influence offsite. EXTERNAL DEPRECIATION OR ECONOMIC OBSOLESCENSE
What does the income approach to value rely on when valuing properties that are five or more units? Gross income multiplier Gross rent multiplier Monthly gross rent Sales comparison
GROSS INCOME MULTIPLIER
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? Community Reinvestment Act Consumer Credit Protection Act Equal Credit Opportunity Act Home Mortgage Disclosure Act
HOME MORTGAGE DISCLOSURE ACT
What are the hurdles that most often delay or prevent closings? Buyer and seller disagreements, commissions, and contingency issues Inspection issues, paperwork, and recording problems Loans and appraisals, titles, and home inspections Titles, commission, and lending problems
LOANS, APPRAISALS TITLES HOME INSPECTIONS
Plessy v. Ferguson (1896)
Legalized segregation in publicly owned facilities on the basis of "separate but equal."
where does lead most commonly appear
PAINT WATER PIPES
What does the lump sum payment at the end of an interest-only mortgage loan consist of? Interest and principal Interest only Interest, principal, and taxes Principal only
PRINCIPAL ONLY
Community Reinvestment Act of 1977
Passed by Congress to reduce discriminatory credit practices against low-income neighborhoods FINANCIAL INSTITUTIONS MUST MAKE CREDIT AVAILABLE FOR DEVELOPERS IN LOW INCOME NEIGHBORHOODS.
Which of the following actions is completed by the secondary mortgage market? Issues loans to consumers Purchases loans from lending institutions Regulates lending institutions Sets interest rates
Purchases loans from lending institutions
What cancer-causing substance is naturally created when the gas in rocks and soil decays? Asbestos Lead paint Radon Silicone
RADON
How common are interest-only loans today? Rare
RARE
Alberto is adding an addendum to an offer he's putting together. What should he do? Add the addendum after the contract is approved Ask his client to write the addendum Draft the addendum himself Reference the addendum in the purchase agreement
Reference the addendum in the purchase agreement
Jones vs. Mayer (1968)
Supreme court decision that reenacted the original civil rights act of 1866. It stated that when it came to race in regard to the sale or rental of housing there were no exceptions or exemptions.
Which of the following acts created regulations for advertising credit services? Homeowner and Equity Protection Act Honest Lending Education Act Real Estate Settlement Procedures Act Truth in Lending Act
TRUTH IN LENDING ACT
How many parties does a mortgage involve? Five: borrower, lender, trustee, trustor, and beneficiary Four: borrower, lender, trustee, and trustor Three: borrower, lender, and trustee Two: borrower and lender
TWO
What's the purpose of the Disclosure of Notices section in the Minnesota Purchase Agreement form? It indicates that sellers must pay for an onsite inspection if they accept the offer. It indicates that the buyers should consult an attorney before signing the contract. It indicates that the sellers don't accept the offer and want to terminate the sales contract. It indicates that what the seller has revealed about the property is true.
The Disclosure of Notices section basically reiterates the contract thus far; that everything the seller's told us is true, and that there aren't any outstanding violations or impending legal proceedings against the property.
Which of the following is true about lockboxes? They must be hidden from plain sight. They must be visible from the sidewalk. They must be visible from the street. They require a seller's written permission to post.
They require a seller's written permission to post.
As part of the sales contract, Garth, the seller, was supposed to provide a copy of the seller's disclosure to the buyer, Melanie, but he failed to do so. What type of contract is this? Implied Incomplete Valid Voidable
VOIDABLE
Marvin knows that three-bedroom properties with two bathrooms sell quickest in his market. In an ad for a new listing, he wrote, "Bonus room could easily be a third bedroom", even though he knows from experience that this isn't true because the room is too small, has no egress and no heat source, and can only be accessed by walking through a bathroom. Is Marvin guilty of misrepresentation? No, because any buyers interested in the bonus room as a third bedroom should be able to see for themselves that it won't work. No, because the term "easily" is subjective. Yes, because he billed the property as a three-bedroom when it only has two. Yes, because he knew there would be major issues converting that room to a bedroom.
YES BECAUSE HE KNEW THERE WOULD BE MAJOR ISSUES CONVERTING THAT ROOM TO A BEDROOM It was a 3 bedroom! so OK - bonus room not easy to add under circumstances
Jessica and Tom just purchased a home in Minnesota. What type of security instrument is used to secure their loan? A deed of trust A mortgage A mortgage and a deed of trust A promissory note
a deed of trust
Recourse Mortgage Loan
allows lender to sue the borrower for damages if foreclosure occurs
Which of the following features is most likely to be the cause of an adjustment to a comparable when preparing a CMA? Busy street Color Demographics Interest rates
busy street
Disclosure notice; residential sale
indicates that what the seller has revealed about the property is true
In which of the following situations is a lender prohibited from enforcing an alienation clause? A transfer between parent and child A transfer between real estate agent and client A transfer between siblings A transfer where the buyer is employed by the lender
transfer between parent and child
Brown v. Board of Education (1954)
unanimously held that the racial segregation of children in public schools violated the Equal Protection Clause of the 14th Amendment. Brown claimed that Topeka's racial segregation violated the Constitution's Equal Protection Clause because the city's black and white schools were not equal to each other and never could be. Overruled Plessy v. Ferguson's "separate but equal" doctrine and would eventually led to the desegregation of schools across the South