Real estate exam (4)
A borrower has the obligation to keep the mortgaged property in good repair for the benefit of the mortgagee. A. True B. False
A
A building badly in need of cleaning, painting and minor repairs is an example of: A. Physical deterioration - curable. B. Physical deterioration - incurable. C. Functional obsolescence - curable. D. Functional obsolescence - incurable.
A
A homeowner sells his property and realized a profit on the sale. The lender, per contract, is to receive a portion of the profits. What type of mortgage did the homeowner have? A. Shared appreciation. B. Wraparound. C. Percentage. D. Open end.
A
An appraiser who is appraising a single family residence would most likely place the greatest emphasis on which approach to appraisal? A. Market approach. B. Cost approach. C. Capitalization approach. D. Gross rent multiplier approach.
A
Being in proximity to more expensive homes will increase the value of a modest house in an expensive neighborhood. A. True B. False
A
Bill takes out an adjustable rate mortgage which has a payment cap whereby he can make a specified minimum payment which does not pay all of the interest due that month. If Bill uses that option, which of the following is the result: A. Negative amortization. B. Default. C. A reduced interest rate for that month. D. An extension of the maturity date of the loan.
A
If a mortgage is subordinate, what type of mortgage is it? A. Junior. B. Blanket. C. Amortized. D. Adjustable.
A
If an appraiser uses the Cost approach when appraising a property, she or he will consider: A. Replacement cost B. Estimated monthly rent C. Market data D. Income
A
In determining total square footage of a dwelling, the appraiser would consider: A. Outside dimensions. B. Inside dimensions. C. Price per square foot. D. Basement dimensions.
A
In the capitalization approach, the appraiser considers all of the following EXCEPT: A. Price of the property. B. Rate of return on the investment. C. Rate of return of the investment. D. The estimated future income.
A
Real estate loans would be sold by a lender in the: A. Secondary mortgage market. B. Primary mortgage market. C. Federal Reserve Open Market. D. Fannie Mae market.
A
Several people buy a piece of property jointly. If one of the owners does not pay his portion of the note, who is responsible to the lender for the payment? A. All of the other owners, jointly and severally. B. It is the banks problem as long as the others pay their portion of the note. C. The owner that has the greatest interest in the property. D. The other owners, in equal amounts.
A
The clause in a mortgage that terminates the lender's interest in real property when the mortgage is paid in full is known as? A. defeasance. B. alienation. C. acceleration. D. satisfaction.
A
The process of merging lots under one owner is known as assemblage. A. True B. False
A
Under which of the following conditions could a veteran who already has a VA loan obtain another VA loan? A. Pay off the existing loan and convey the property. B. If the property has a pending contract for sale. C. The veteran can obtain a new VA loan if the first loan is more than five years old. D. If the veteran buys a condominium to be used as rental property.
A
When a buyer obtains a loan for the purchase of property, the lender will require: A. Deed of trust and promissory note. B. Deed of trust and hypothecation note. C. Promissory note and purchase agreement. D. Deed of trust note and contract for sale.
A
When more than one piece of property is pledged as collateral to secure a loan, what type of mortgage is created? A. Blanket. B. Package. C. Purchase money. D. Balloon.
A
Which of the following statements regarding federally insured or guaranteed loans is true? A. A Federal Housing Administration (FHA) loan may be made only to a borrower whose intent is to occupy the property. B. A Veterans Administration (VA) loan may be made to a qualified veteran whose intent is to rent the property for which the loan is obtained. C. A Veterans Administration (VA) loan can only be obtained by a veteran that is at least 21 years old. D. Both FHA or VA allow the borrower to obtain a 2nd deed of trust in order to raise the down payment.
A
Which of the following will be given the greatest emphasis by a lender when qualifying an applicant for a VA loan? A. Income B. Marital status. C. Length of military service. D. All are important and would be given equal consideration.
A
A home located in an area where there are factories with much smoke and dust experiences: A. Physical deterioration B. Economic obsolescence C. Locational obsolescence D. Functional obsolescence
B
A home sells for less than other nearby similar homes because it has a bad floor plan. This would be an example of: A. Physical deterioration. B. Functional obsolescence. C. Economic obsolescence. D. External obsolescence.
B
A husband and wife own property with a mortgage payment due on the first of each month. They are thirty days late in making a payment and receive notice from the lender to make payment within ten days. If they fail to make the payment the entire loan balance becomes payable immediately. Which clause in the mortgage allows the lender the right to take such action? A. Alienation clause B. Acceleration clause C. Estoppel clause D. Forfeiture clause
B
A loan in which the final payment on principal is exactly equal to the amount of the original loan is known as any of the following EXCEPT: A. Straight loan B. Partially amortized loan C. Interest only loan D. Term loan
B
A loan origination fee is. A. Always 1% of the loan amount. B. A fee charged by the lender to initiate a loan. C. 1/8 of 1% of the loan amount. D. A fee paid by the seller to assist a buyer obtaining a VA guaranteed loan.
B
A professional appraiser would establish his fee based on: A. A percentage of the estimated value B. The appraiser´s costs and time involved C. Local custom for making appraisals D. Fees allotted by the American Institute of Real Estate Appraisers
B
An appraiser is using the cost approach to value an office building. The one-story building measures 25' by 60'. The appraiser estimates the current cost of a similar structure would be $85 per square foot. What is the cost estimate for this structure? A. $97,500. B. $127,500. C. $135,500. D. $142,500.
B
An appraiser usually charges a fee based upon the percentage of the appraised value. A. True B. False
B
Appraisal fees are set by: A. Amounts determined by law. B. The appraiser's estimate of the time and effort involved in the assignment. C. A percentage of the sale price. D. Any of the above.
B
By including an exculpatory clause in a mortgage contract, the lender? A. Waives her right to escalate the interest rate. B. Releases the borrower from personal liability. C. Agrees to permit an assumption to a qualified buyer. D. Grants the borrower immunity from foreclosure.
B
Functional obsolescence might include? A. A worn carpet. B. No indoor plumbing. C. Noise from a nearby airport. D. None of these choices.
B
If an individual defaults on a $100,000 mortgage and only $95,000 is received by the lender as a result of a court-ordered sale (foreclosure), which of the following is true? A. The lender must file a $5,000 judgment against the person who purchased the property. B. The lender may be entitled to a $5,000 judgment against the original borrower. C. The lender cannot recover the $5,000. D. None of the above.
B
In financial terms, leverage means: A. How fast an asset can be converted into cash. B. The use of borrowed money to make an investment. C. The interest charged on a mortgage loan. D. The difference between a property's value and the loan amount against that property.
B
Lenders charge points to grant loans. Which of the following statements is NOT true regarding points charged? A. It increases the yield to the lender. B. Points are charged on the basis of the selling price. C. A point is the same as 1% of the loan amount. D. The number of points a lender charges is negotiable.
B
Neighborhood A has homes of similar size and quality grouped together. Neighborhood B has a mixture of sizes and qualities. The same model of house sells for more in neighborhood A than in neighborhood B. What principle of appraisal could explain this? A. Substitution. B. Conformity. C. Anticipation. D. Plottage
B
Once a promissory note securing a deed of trust is paid in full, the lien on the property is automatically cancelled. A. True B. False
B
Physical depreciation most commonly refers to: A. Obsolescence B. Wear and tear C. Outmoded design D. Property over 15 years old
B
Recognizing that property has experienced growth, stability and decline would be included in which part of an appraisal? A. Site analysis B. Neighborhood analysis C. Highest and best use narrative D. Gross rent multiplier computation
B
Redlining means making changes to loan documents that the lender has to approve. A. True B. False
B
The Equal Credit Opportunity Act (ECOA) specifically prohibits lenders from discriminating against credit applicants on the basis of their sexual orientation (such as gay or lesbian applicants). A. True B. False
B
The actual amount of money paid for a particular parcel of real estate is said to be that property's: A. Value. B. Price. C. Market value. D. Settlement value.
B
The annual percentage rate (APR) is simply the interest rate of the loan. A. True B. False
B
The capitalization approach to value used by appraisers is: A. A future income statement B. The present value based on present and future income C. The actual cost of the property D. The same as GRM (gross rent multiplier)
B
The certificate that shows the unpaid balance of a mortgage and the amount of unpaid interest associated with that debt is referred to as: A. A waiver. B. An estoppel. C. An acknowledgment. D. A satisfaction.
B
The clause in a security instrument that prevents the assumption of a loan is known as? A. acceleration. B. alienation. C. defeasance. D. release.
B
The three (3) approaches used in the appraisal of real property are: A. Replacement; market data; cost B. Income; cost; market data C. Capitalization; replacement; cost D. Reproduction; market data; income
B
What are discount points? A. Adverse factors considered when qualifying an applicant for a loan. B. Loan points paid in return for a lower interest rate. C. The ratio between the purchase price of a home and the loan amount. D. None of these choices.
B
What is the margin of an ARM? A. The difference between the current rate and the future rate. B. The difference between the index and the note rate. C. The difference between the cap rate and the current rate. D. The lenders increase in yield.
B
When a mortgage loan is repaid, how is the lien released? A. A reconveyance deed must be recorded. B. A satisfaction of mortgage must be recorded. C. A lien release is signed. D. Any of these choices.
B
When a salesperson or broker does a Comparative Market Analysis (CMA), he or she could be doing any of the following, EXCEPT: A. Helping a seller set a reasonable price B. Providing an appraisal of value C. Obtaining information about the price of similar properties D. Assisting a potential buyer to locate a suitable property
B
When appraising an office building using the capitalization approach, all of the following would be considered EXCEPT: A. Operating expenses. B. Reproduction cost. C. Vacancy allowance. D. Estimated gross income.
B
Which of the following appraisal approaches would be most appropriate for a public school? A. Market data. B. Cost. C. Capitalization. D. Gross rent multiplier.
B
Which of the following best describes the gross rent multiplier? A. The GRM is also referred to as a "cap" rate. B. It is a factor derived by dividing the sales price of a property by monthly rental income. C. Calculating the GRM is the final step used to estimate value when using the cost approach. D. GRM is used to compute depreciation.
B
Which of the following best describes the principle of "highest and best use"? A. Value created by and maintained in proportion to the use characterized by the neighborhood B. A property that is utilized in the manner most profitable at the time that the value is estimated C. No material thing remains static, it is the future, not the past, that is of prime importance D. A property attains its highest value when it is homogeneously developed
B
Which of the following is established or set by Federal regulations as opposed to State or municipal governments? A. Real estate license laws. B. Lending institution regulations. C. Zoning ordinances. D. Real estate tax rates.
B
Which of the following statements is NOT correct? A. Prepayment penalties are prohibited with VA and FHA financing. B. HUD establishes market-based interest rates for VA and FHA loans. C. VA can make certain direct loans. D. Conventional loans may require PMI insurance.
B
A buyer assumes a seller's loan. The buyer defaults and the lender forecloses. Who is responsible for the balance owing on the loan? A. Buyer only. B. Seller only. C. Buyer and seller. D. Mortgagee's title insurance company.
C
A home that has severely peeling paint would be an example of which of the following? A. Correlation B. Obsolescence C. Depreciation D. Capitalization
C
A real estate salesperson uses a Competitive Market Analysis to suggest a listing price for a home. If this CMA has been done correctly, each of the following statements would be true, EXCEPT: A. Expired listings will be included to show the upper limits of value. B. Recent sales will be included to show what the market has been. C. The salesperson can also call the analysis an appraisal. D. Current listings will be included in the analysis
C
An appraiser is appraising a house which has 4 bedrooms and 1 bathroom. One of the comps is a 3 bedroom home with 2 bathrooms. The appraiser has determined that the appropriate adjustments for bedrooms is $5,000 and for bathrooms is $10,000. If the comp sold for $150,000, what is the indicated value of the subject property based on this comparable sale? A. $165,000. B. $155,000. C. $145,000. D. $135,000.
C
An appraiser would most likely use the capitalization approach for? A. An owner occupied dwelling. B. A public library. C. A restaurant that is currently rented. D. Vacant land.
C
An appraiser would use which of the following information if she or he was appraising a house built in 1935? A. Consumer Price Index for 1935 with annual adjustments B. Current construction costs adjusted by the CPI index C. Replacement or reproduction cost D. Actual cost of construction in 1935
C
How would an appraiser normally appraise an office building? A. Abstraction. B. Cost. C. Income. D. Market Data.
C
If an appraiser advises you "...this property suffers from incurable depreciation", what would he or she be describing? A. Physical obsolescence B. Functional obsolescence C. Economic obsolescence D. Generic obsolescence
C
If you buy property with a conventional loan, your loan can be insured by: A. FHA mortgage insurance. B. A VA guarantee. C. A private company which sells mortgage insurance. D. FNMA.
C
The comparison approach to appraisal is based on the principle of: A. Contribution. B. Progression and regression. C. Substitution. D. Anticipation.
C
The cost of utilities, the expense of professional management and the cost to replace worn out appliances and furniture are used in which appraisal approach? A. Market data B. Comparables C. Income D. Cost
C
The current interest rate for U.S. Treasury Bills might affect the interest rate of an adjustable rate mortgage: A. Under no circumstances. B. In every case. C. If the Treasury Bill rate is used as the index rate. D. If the borrower challenges the interest rate of the loan.
C
To find the value of real property using the Income approach, which of the following would be divided by the capitalization rate? A. Gross income B. Effective gross income C. Net income D. None of the above
C
Under Truth-In-Lending requirements, the mortgagee: A. Is regulated as to how much interest he may charge. B. Must give buyer an accurate amortization schedule. C. Must advise the borrower the total amount of interest that will be paid, if the loan is paid at the scheduled maturity date. D. Must allow the loan to be assumed.
C
Usury laws, established by each state, provide for the protection of: A. Sellers. B. Lenders. C. Borrowers. D. Licensed real estate brokers and salespersons.
C
When a clause is included in a mortgage, requiring it to assume a lower lien priority position, it is called: A. An estoppel clause. B. An acceleration clause. C. A subordination clause. D. A participation clause.
C
When an appraiser is using the Market Data approach on a residential property, the appraiser would be LEAST likely to use which of the following? A. The type of financing used to sell other homes in the neighborhood B. The dates on which other homes in the neighborhood soldThe dates on which other homes in the neighborhood sold C. The cost of nails, shingles, floor joists and paint on the subject property D. The size, shape and topography of the lot of the subject property
C
When appraising property located on a corner lot, the appraiser would consider all of the following, EXCEPT A. Comparable sales. B. Highest and best use. C. Acquisition cost. D. Zoning and deed restrictions.
C
When the appraiser prepares a site analysis, which of the following is INCORRECT? A. Topographic factors are important for farm valuation. B. Commercial properties are influenced by corner location more than residential properties. C. The wider the lot, the greater the value of the lot. D. The cost and availability of utilities are a part of site analysis.
C
Which clause in a mortgage loan would allow the lender to foreclose to recover the entire remaining loan balance if the borrower defaults on the loan? A. The defeasance clause. B. The subordination clause. C. The acceleration clause D. The alienation clause.
C
Which of the following is incurable depreciation? A. A kitchen with outdated appliances. B. A poorly designed floor plan. C. Noxious odors from a nearby chemical plan. D. A leaking roof.
C
Which of the following is usually contained in an appraisal report? A. Original cost of the property. B. Recommended listing price. C. Highest and best use of the property. D. Best financing for the property.
C
Which of the following statements is true regarding an assumed loan? A. The seller continues making the monthly payments. B. The buyer has no personal liability for the payments. C. The buyer has primary liability for making the payments. D. The seller has no liability to the lender.
C
Which of the following types of loans is most likely to experience negative amortization? A. Blanket mortgages. B. Open-end mortgages. C. Graduated payment mortgages. D. Shared equity mortgages.
C
A mortgage is released by? A. Revision. B. Reconveyance. C. Quitclaim deed. D. Satisfaction.
D
A mortgage payment (PITI), would normally include each of the following, EXCEPT: A. A payment toward the principal of the loan. B. A payment toward the interest on the loan. C. 1/12 of the annual real property taxes. D. 1/12 of the annual life insurance premium.
D
A poor floor plan in a home would be an example of: A. Curable physical depreciation. B. Incurable physical depreciation. C. Curable functional obsolescence. D. Incurable functional obsolescence.
D
Alice purchased a home and financed it using a mortgage which included the term "amortized over 30 years, due and payable after 10 years." Which of the following statements is correct? A. The loan will necessarily have negative amortization. B. The loan is a partially amortized loan. C. The loan will have a balloon payment D. The loan is a partially amortized loan and will have a balloon payment.
D
Finding a property is in need of a really good paint job, an appraiser would say that the property suffers from: A. Neglect. B. Economic obsolescence. C. Functional obsolescence. D. Physical deterioration.
D
In a home loan using a trust deed, who holds naked legal title to the property? A. The trustor. B. The beneficiary. C. The intermediary. D. The trustee.
D
In a trust deed loan, which of the following statements is correct? A. The trustor makes the monthly payment to the trustee. B. The beneficiary makes the monthly payment to the trustor. C. The beneficiary makes the monthly payment to the trustee. D. The trustor makes the monthly payment to the beneficiary.
D
Mike has sold his home to Phil under the following conditions. Mike will remain responsible for his existing 6%, $15,000 loan. Phil will give Mike a note for the total purchase price of $95,000 at 10%. The mortgage created could be defined as: A. Blanket mortgage. B. Combination mortgage. C. Open-end mortgage. D. Wraparound mortgage.
D
The Equal Credit Opportunity Act makes it unlawful to refuse to grant credit to qualified applicants on the basis of: A. Age. B. Marital status. C. Religion. D. All of these choices.
D
The Market Data Approach to value is normally used in estimating the value of: A. An oil refinery B. A hotel C. A gas station D. Vacant land
D
The appraiser should NOT consider which of the following in making his or her appraisal? A. The presence or lack of curbs, gutters and sidewalks. B. The prevailing winds in the area. C. The elevation of the lot. D. The racial make-up of the neighborhood.
D
The part of the appraisal report that addresses issues of zoning, schools, and shopping is called the: A. Competitive (Comparative) market analysis B. Capitalization analysis C. Useful life analysis D. Neighborhood analysis
D
To properly calculate effective gross income on a 16-unit apartment building, the appraiser should allow for: A. The amount of property taxes B. The amount of income taxes paid C. Principal and interest paid on the mortgage D. Vacancy rate and bad debts
D
What type of mortgage would a builder offer to a buyer as an incentive to buy one of his houses? A. Open-end mortgage. B. Construction loan. C. Wraparound mortgage. D. Buy-down mortgage.
D
When computing the net operating income, an appraiser would deduct which of the following? A. Depreciation. B. Interest payments on any mortgages. C. Both depreciation and interest payments on any mortgages. D. None of these choices.
D
When using the market data approach, an appraiser would make adjustments for? A. Location. B. Market conditions. C. Financing. D. All of these choices.
D
Which of the following describes market value? A. Assessed valuation B. Listing price C. Reproduction cost less depreciation D. Most probable selling price
D
Which of the following factors would have the LEAST effect on an appraisal? A. The real estate market, in general. B. Income to be derived from the property. C. Location of the property. D. Livelihood of the prospective buyer.
D
Which of the following is not a major participant in the secondary mortgage market? A. GNMA B. FNMA C. FHLMC D. FHA
D
Who holds the security in a deed of trust? A. The trustor. B. The mortgagor. C. The beneficiary. D. The trustee.
D
