Real estate prep
A manager for real property may be compensated in all he following except
Paid by receiving discounts on purchases or supplies
Which of the following are synonymous
Construction loan / interim loan
When escrow closes on a home purchase the closing statement typically shows that the seller has paid certain items in arrears or in advance related to the ownership of that home. These items are usually prorated or adjusted. All of the following would be included in these prorated items except
Delinquent interest and principal payments for a home improvement loan
Who can insure a mortgage
Fha or private mortgage insurer
How are interest rates determined for the trust deed loans
Supply and demand for money
Concerning the relationship between an effective and nominal interest rate which of the following is correct
The effective interest rate is paid. Y the borrower for the use of the money and the nominal rate is a rate specified within the note
Under a land contract for the sale real property who holds legal title
Vendor
John borrowed money from a company bank and gave the lender a trust deed for 9 separate pieces of property that John owns free and clear without any encumbrances. What kind of trust deed would this be
A blanket deed of trust
When a money award for damages does not satisfy the damages on a defaulted contract a lawsuit for specific performance can be brought by all of the following except
A broker who has a current license acting on behalf of their client
How would an existing sellers mortgage that is assumed by a buyer appear on the closing statement
A debut to the seller
What best describes equity
A down payment on a property The price of the property minus he loan amount The amount of the property the owner has an interest in minus the loan amount
According to the real estate settlement procedures act when a lender makes a loan they must first provide
A good faith estimate
According to the statute of frauds all contracts must be in writing in order to be enforced in the court of law. Of the following choices the statement that is not an example of this would be
A lease agreement which is less than one year
Which of the following does not require agency disclosure
A lease for 10 months
Compliance with agency relationship law, which is enacted and part of the civil code is required in which of the following transactions?
A lease for a period lasting for more than a year
Of the following which is not needed to create an agency relationship
A written agreement to pay consideration
What does it mean when a lender calls a loan
Accelerates the amount due on the loan
A licensee who is acting as an agent for their principal in the sale of property can do the following without authority from the principal
Accept a purchase contract from a buyer that is signed and will become binding if the seller accepts it
Licensee rob acts as an agent for both he buyer and seller and did. It disclose that fact to both parties involved. It was not disclosed because licensee rob was unaware that both buyer and seller considered him as their agent. Agent rob is now involved in a
Accidental dual agency
How can a minor or incompetent person acquire property without requiring court approval
Acquire real property by way of a gift or an inheritance
A broker who looks for buyers and accepts a deposit from a buyer to purchase a piece of real property without the express written authorization and acknowledgement from the owner to sell the property is
Acting as an agent for the buyer not the seller
According to the civil code which of the following is a fiduciary duty of the agent working for a buyer
Acting with the utmost care integrity and honest when working with buyers
The fiduciary obligation to protect a client's confidential info should continue
After the listing agreement term
A licensee who is working with their client to sell their real property to a third party is said to be operating under he law of
Agency
The real estate disclosure law which came into effect January 1 1988 refers to the
Agency relationship disclosure
Per statute of frauds which must be in writing
An agreement by a purchaser of real property to oay a debt secured by a mortgage or deed of trust on the property purchased
An individual who is delegated to legally act for another person is known as
An attorney in fact
Ottis bought the browns house through the browns agent Jacob. In October there was rain and the roof leaked. Otis took everyone involved to court. During the trial it was announced that the seller browns told their agent Jacob about the leaks. Jacob withheld he info from the buyer because they didn't ask about the roof. What is the outcome of the trial
Buyer Otis recovered damages from seller Brown who recovered damages from agent Jacob
If a seller declines to fill in their section of real estate transfer disclosure statement the agent should
Complete the listinf agents portion of the transfer disclosure statement and submut it to the buyer
A fha loan is different from a conventional loan in all the following ways except
Conventional loans always permit a deficiency judgement fha loans do not
If a buyer applies equal payments to a long term home loan what will happen to the payment of the principal over the life of the loan
Increase while interest payments decrease
The supply of real estate loans tends to increase by all of the following except
Increased demand for liquid assets
Broker robert is showing buyer Sarah property hat he has under contract. Broker robert is aware of a major defect in the plumbing. Broker robert should
Inform buyer Sarah of this issue because it is a material fact about the property
Of the following which is the least likely to show as adebit on a buyers closing statement
Interest on an assumed loan
What does an acceleration clause do when added to a note that is otherwise negotiable
It does not reduce the negotiability of the note
A binding contract between two parties can become voidable if
It is legally retracted by one of both parties
The law of agency states that an agency has imputed authority of their principal when dealing with third parties. What does that imputed power allow
It usually binds he principal as long as the authority is granted to the agent
When a lender is loaning money to two or more co borrowers in order to protect the lender and add security and add security to the note the lender will add the following language after the names of each of the borrowers
Joint and severally
Why is it considered essential that every party to a real estate transaction receive a full and complete disclosure of who is representing whom
Legal effect, ethical and professional responsibility imputed authority
Institutional lenders often charge fees for the expenses they incur such as document preparation and underwriting. The fees are usually a percentage of the face amount of the loan. What are these fees known as
Loan origination fees
In order for a seller who owns 1-4 units to be in compliance with the California civil code regarding real estate transfer disclosure statements the owner must
Make a reasonable effort to inspect the property then complete the disclosure
When real property is sold escrow will be used in order to
Make sure all of the conditions and terms are met before the transaction closes
What does an or more clause mean in an installment note
More can be paid without receiving a penalty
Stock and bonds when compared to real property are thought be
More liquid in the market
All of the following are required for a contract to be valid except
Must be in writing
Agent Mitchell has a listing to sell a home owned by owner Donald. Which of the following actions by the licensee would result in creating an agency relationship with a potential buyer
Negotiating for the buyer
A proper fire insurance policy provides a home owner of real property with protection in the case of a loss. What should the insured expect when utilizing the insurance policy
Neither gain nor lose
Of the following what is not needed in the formation of a contract
Performance
When a licensee acts exclusively as a buyers agent they can
Present offers to the seller and sellers agent
Most junior loans that are negotiated today are secured from
Private lenders
What is the purpose of the mortgage insurance on a fha loan
Protects the lender in the case of default
One of the primary purposes of respa is
Provides the prospective buyer the ability to shop for the very best price
If a seller wants to sell their real propert and carry the loan or credit themselves and keep legal title to the property which kind of financial tool would be used
Real property installment or conditional sale contract
In real estate finance the term beneficiary statement
Refers to the current balance due to the lender and the pay off amount
Lots ofthinga can e prorated in real estate during the escrow process. Which of the following would be something buyers and sellers would agree to prorate during the sale process using escrow
Rent
Of the following which would be a primary purpose of respa
Requires disclosures made. Y lenders that make loans for 1-4 unit residences
Mr. And Mrs. Childers bought a property and they were not informed that it contained an oil tank buried in the grounds that is used for heating the home. They would have the right to
Rescind the contract
The law of agency states that real estate agents have legal responsibilities to their principals. Which of the following does not
Research what the reserves and expected expenses may be for the maintenance of a business
During an exclusive right to sell listing contract the principal no longer wishes the broker to work for them. The principal may
Revoke the listing however the seller may be held liable for damages
Which of the following would produce changes and impact the real estate market
Sudden shifts in the real estate industry Land use controls Consumer sentiment changes
What is a Fico score typically used for
Supplies the credit history of the prospective buyer
A trustor defaults on their loan and does not reinstate the deed of trust. What is the quickest way for the beneficiary to handle this situation
Trustee sale
Who does a subordination clause benefit the most
Trustor
Who has the authority to sell real property in a default situation
Trustor and trustee
A tight money policy implemented by the fed would the net effect of increasing the
Use of secondary trust deed financing for real estate purchases
Seller Andrew sold a home to buyer bill. Buyer bill was deemed to be incompetent. In this type of situation the contract would be
Void
If a contract is obtained under duress that contract is
Voidable
Tenant Greg verbally agrees to low the lawn for owner Amanda. Week after week owner Amanda asks tenant to mow yet nothing is done. After repeated attempts Amanda writes up a contract and forces tenant to sign the contract stating that Amanda will evict tenant if he does not comply with this action. This stipulation will make the contract
Voidable
Investor joe owns a duplex priced and 100,000 and has a mortgage debt that is outstanding 30,000. This property was sold using a 1031 exchange for a four plex priced at 170,000 with a first mortgage balance of 100,000. For the exchange to be completed on what profit amount will the owner have to pay property gains taxes in the profit of the first property
$0
If a broker misrepresents his principals property, what could possibly happen to the principal
Damages may be awarded to the buyer The seller may owe damages to the buyer for broker misrepresentations facts Cancellation of the sale by the prospective buyer
If a seller refuses to disclose that his property is in a flood zone on the transfer disclosure statement what should the licensee do to protect themself
Decline the listing
Real property requires more time to market require more care and comes in larger amounts than securities in the stock market. Therefore returns on real property should be
Higher than that of bonds or first mortgages
The very best way to create an agency relationship is
In writing
If Ethan bought a home with a minimal down payment and long repayment term what would the result be
Increase financing cost
When a false transfer disclosure statement is given to a buyer that omits facts about the property how long does the buyer have to bring a lawsuit against the seller and the broker
2 years
two months ago a seller had accepted an offer from a buyer to purchase their real property. Contract was in writing and signed by both parties. Later he seller refused to complete the transaction because they felt property price would increase in the near future and wanted max profit. How long would the buyer have to pursue legal action against the seller due to the breach of the written contract
4 years
Vic needed 4,000 to buy a motorcycle. He gave the lender his note for 4,8000 which was secured by a second deed trust against his personal home. The note was payable to 154/month including 10% per year over three years. How much is the total principal that Vic must pay back to the lender
4,800
Matt sold his home and escrow will close on march 1. He annual tax amount is 2,100. If the first installment has been made and the second installment will be prorated on the escrow closing date how much will the buyer be charged for taxes
700
Seller Julie listed her vacation home with agent Ann. When the sale is executed the commission will be 7% if agent Ann is able to find a buyer who is ready willing and able to purchase the property at the list price or more. Agent Ann will utilize her best efforts to find a buyer for the listing. What kind of contract must be in place for any of this to happen
A bilateral executors contract
What is the name of a contract between the seller and a licensee in which the seller agrees to pay a commission to the licensee if they produce a ready willing and able buyer of property and the licensee complies and does the due diligence procuring a buyer
A bilateral executors contract
How would a balloon loan be described
A loan that is partially amortized
Regulation z gives the borrower of a loan a 3 day right of rescission when the loan is
A loan that is secured by a second deed of trust of an owner occupied single family residence when money is borrowed for use of that purchase
Of the following types of loan which would qualify for fha insurance but not va loan guarantee
A loan to buy a 1-4 unit residential income property
What does the term warehousing mean when we use it in relation to real estate
A mortgage bank that is gathering loans and preparing them for sale
Life insurance companies who do not want to work directly with the consumer will pay a loan servicing fee and preparation fee and make real estate mortgage loans that can be purchased indirectly through
A mortgage company
All of the following are negotiable instruments assuming there is no agreement to the contrary except
A mortgage securing a promissory note
The broker works on behalf of their principal. All of the following defines the relationship between the two parties except
A power of attorney relationship
In order for a contract to be legal which of the following would be considered consideration
A promise to clean coneones pool once a week for 10 years A promissory note that has a set amount of interest A promise to apply classy roofing tiles in a building that has yet to be built
Of the following statements which is false about real estate financing
A promissory note is security for a mortgage
What does debt to income ratio mean
A qualifying tool for a loan
When showing property to potential buyers what must the listing agent disclose to the third party buyer
All known material facts about the real property
A single family home is being sold and the new buyer will be assuming the existing loan. In order for the new buyer to assume the loan without any penalties what should the real estate agent check to make certain that this is not included with the loan
An accelerating clause
Of the following which would create a dual agency situation
An agent is representing both he buyer and seller in the same transaction and all parties are aware and agree
What is the name of an arrangement where one party agrees to pay the other party for incurred damages for clearly defined risks in exchange for a payment of money
An insurance policy
Which of the following is required to create a legal and valid contract
An offer and acceptance
What would best describe a mortgage in which the terms secure the initial amount of the loan plus any additional amounts loaned at a later date
An open ended mortgage
What best describes the increase in value due to an increase in population
An unlearned increment
When does the uniform settlement need to arrive in the mail to he borrower
At or before the date of settlement
To be enforceable, a contract for real property must
Be in writing
In order to record a contract for real propert it must
Be signed by both the both and the seller must have acknowledge
A real estate broker helped their client negotiate a loan. The homeowner gave the lender a promissory note and a second trust deed for 5,600. Which of the following would be used by the broker in this transaction
Brokers loan statement
When the gross national product and the employment rate goes up which of the following. Occurs
Building and developing of new homes will start Personal income rises Existing home sales will increase
Recession prosperity expansion and depression are all related to which of the following cycles
Business
What is the primary purpose of fnma (federal national mortgage association)
Increase the amount of money available for credit financing of housing
If a buyer wishes to take title of a residential property subject to the existing loan and the lender does not allow the loan to go forward what are the potential penalties
Buyer can lose he property if they cannot get other financing up until the foreclosure The seller may be responsible personally for the amount. Of the loan and any costs accrued The lender can accelerate the loan and payment is due immediately
Who can execute escrow instructions
Buyers 3rd parties Sellers
Generally speaking, an escrow agent is authorized to perform which of the following
Call for the findings of the buyers loan
A licensee receives an offer for a property they have listed. It's in writing however it's below the asking price and they know the seller will never accept it. Which would not be acceptable for the licensee to do
Change the terms to what the licensee thinks the seller would accept
What disclosures are needed for a graduated payment mortgage under the trust in lending law
Different monthly payments
What is the purpose of the truth in lending act
Disclosure of credit terms
With regards to portfolio risk management lenders would be most concerned about
Diversification of assets Liquidity of money Reserves on hand
Of the following nine of the individuals may enter into a valid real estate contract to purchase property except
Emancipated minirs
A trust deed under California law
Encumbered the real property that is designated in the deed of trust
An investor who wants to hedge against the erosion of capital caused by inflation would invest money into
Equity interest
Of the following which answer describes why it is critically important to disclose who represents whom in a real estate transaction
Ethical and professional responsibility, legal affect of the disclosure, doctrine of imputed notice
Which of the following agencies helps to increase availability of mortgage credit by maintaining a secondary market for residential conventional mortgages
Federal home loan mortgage corporation
How is the federal housing administration different from other lending institutions
Fha insures loans it doesn't make loans
Which of the following is the best way to describe a brokers duty in keeping their principal informed and updated on the transaction
Fiduciary duty
In California escrow law would be found in which of the following documents
Financial code of California
Donald sold his home for 32,400 and took back a 25,000 note with interested at 9% per year. The property has a fair market value of 30,000 and later Donald decided to sell the mortgage note and discount the note for 19,000. Donald sold them to Laura smith and on the back of the. Orr Donald wrote "I assign this note to Laura smith without any recourse" it the maker of the note defaults before any principal payments are made Laura's best legal is to
Foreclose to enforce payment of the 25,000
Along with due diligence care and skill a real estate agent must also fully disclose all material facts of the property to the principal. If there is any purposeful concealment of material facts by the agent this could be regarded as
Fraud
The measure of goods and services produced by the nation in one calendar year is known as
Gross national product
A straight note with the same term and interest rate would
Have more interest than an installment note
You purchase a negotiable note and you are unaware of any defects with the note. You would be known as the following
Holder in due course
When the market turns from a buyers market to a sellers market what could be expected
Home prices will go up because of a lack of inventory
In the formation of a contract which of the following would not make the contract voidable
Illegal purpose
When does an agent inform others bag they are working on behalf of a buyer
Immediately
What is one of the unique features of a VA loan
No down payment
Who pays the points on a cal vet loan
No one
Seller Johnson listed his home for sale with agent mike. The listing stated cash only offers to be considered and possibly accepted. Agent mike brought a buyer who was qualified with a VA loan. Seller Johnson rejected the offer from agent mike. What is agent mike entitled to in regards to commission
None of the commission
Of the following which would not be legal for a licensee to do
Not tell prospective buyers that the foundation has documented structural issues
Agency can be terminated in many ways. Of the following which is not a way to terminate agency
Notice to perform
During the escrow process the escrow officer receives two pest control reports from two. Different companies. What should the escrow agent do immediately
Notify the real estate agent and receive written instructions from the buyer and seller as to which report to use
When is a real estate agent obligated by law and the state regulations to communicate any offers to a principal
Only if it's in writing
How would insurance be described
Substitution of certainty for uncertainty Transfer of risk from one person to another According to the policy terms and amount it protects the insured from a loss
Seller Charles put his property up for sale worth agent Samantha for 100,000. The property sold very quickly and seller Charles was impressed how quickly everything occurred. Samantha showed the property to buyer pip and made pip aware that the seller was having financial difficulties and with that info pip submitted an offer for 90,000 which seller Charles accepted. Which is true about Samantha's actions
Samantha violated her fiduciary duty to the seller and acted in excess of her authority
Of the following which lender would have the greatest percentage of their funds invested in real estate mortgages
Savings and loan associations
What's the best way for the fed to create a tight money market
Sell government bonds and raise the discount rate
You do to lust a property for sale and you find out that the seller has a conditional/installment contract of sale. While you read the agreement you notice there is no acceleration clause and there is No language that disallows he resale or assignment of the contract. What can your client do?
Sell or assign the rights to the new buyer and retain the original duties unless the contract seller agrees
Concerning an interest in real property when two parties want to create an enforceable broker/principal relationship what is the most important thing to create first?
Sign a written employment contract
He trust in a trust deed
Signs a note for the amount borrowed
When using a purchase money trust deed, the trustor
Signs the trust deed as security for the loan
Capital turnover in real estate investments is
Slower than the average commodity
For. Contract of real property to be enforceable the consideration must be relative and if sufficient value in order to enforce a suit for
Specific performance
Of the following an agency cannot be created by
Subordination
According to the California civil code real estate relationships can be terminated in many ways. Which is not that
Termination by completion
A real estate licensee may represent both sides of a real estate transaction and
The agency relationship has been disclosed and written consent is given by all parties involved A commission may be paid by each of the principals All principals involved must be aware that they will be represented by the same person
The law of agency consists of the rights liabilities and duties between
The agent and the third party The principal and the third party whom the agent deals with The principal and their agent
A broker who is hired by a property owner to sell their property must reveal all significant and material information to the seller. Of the following which would be considered significant and/or material info and must be revealed
The agent has been told by another broker that a higher priced offer is coming within the hour
When the. Rocker is an agent to a seller what is owed to the buyer
The duty to be fair and honest
Of the following which cannot create an agency relationship
The agent offering to work for the principal
Of the following which is the most challenging for the mortgage lender to calculate
The amount of risk the mortgage company will take on
He federal right to cancel notice must be given to the borrower by the agent if
The borrowers residency is being used as collateral for the loan
Which of the following scenarios would entitle a prospective buyer to damages against a real estate broker
The broker exceeds the authority given by the principal
According to the civil code when serving as a Byers agent the real estate agent has a dedicate duty to
The buyer
When both the buyer and seller sign a real property conditional sales agreement what effectively happens.
The buyer receives the equitable title
What does it mean when the buyer takes property subject to the existing loan
The buyer will not be personally responsible for the loan
A seller tells their listing agent that the pool is uneven and leaks. The broker does not inform the buyers of this material fact. A few months after the buyer purchases the property the buyer discovers the pool is leaking and uneven. The buyer files a lawsuit after buying the property and the seller immediately files a lawsuit against the broker. What is the most likely outcome
The buyer would win against the seller and the agent and the seller would win against the agent
What are discount points a percentage of
The loan amount
A trust deed note in a single family owner occupied residence which has loan from a state and savings and loan association can be repaid without penalty after
The loan matures to 7 years
What is the lender referring to when discussing discounting
The loan proceeds disbursed by the lender are less Han the face value of the note
A lender who extends a fha loan would least be concerned about
The mortgage insurance rate
To whom would a borrower apply for a fha loan
The mortgagee
When a borrower defaults on a loan and their lender chooses a judiciary foreclosure the borrower is given an amount of time to redeem the property. During the redemption period who maintains the right of possession of the property
The mortgagor
When a licensee acts as a buyers agent on a home listed by their broker the broker has a fiduciary duty to
The seller
Broker Steve has been employed by seller mike. Broker Steve has been showing property to many interested homebuyers and has been telling everyone that the roof was in great shape and did not have any issues or leaks when in fact the seller told the broker that the roof was old and had leaks. Buyer brian soon discovered that after the first rainstorm the roof was in terrible diapause. Who would brian have recourse against
The seller and the broker for fraud and damages associated with the roof
A seller wishes to sell a piece of real property using a conditional sales contract and carry back the mortgage as a first trust deed. What is the benefit of conducting he sale in this manner rather than using a grant deed
The seller retains legal ownership up until the buyer makes the final payment to satisfy he loan
The commission of a real estate listing for a lease property would typically be paid as a percentage of
The total rent collected over the period of the lease, but can be negotiated
When transferring certain real property the California civil codes states that a transfer disclosure statement is to be delivered by which of the following
The transferor
What does the security of a loan made for real property depend on
The value of the property being used for the lien
David sold Joan his home. They used a land contract and signed and recorded it. Joan made 100 down payment and the. Made 6 more equal payments over he next few months. One day Joan picked up and left never to return again. Of the following which is true
There is a cloud on title
Of the following which is he truer statement about the activities of a mortgage company
They prefer to fund loans that can be sold in the secondary market
When a blanket mortgage is placed on property and the release schedule is showing the amount that must be paid off for each lot hose amounts are normally higher for the first few lots sold. The reason is
To increase the value of the remaining lots To compensate for the loss of security for the best lists being sold first To compensate for the loss of security as the lots under the blanket encumberance are sold
Of the following which is true about the escrow process
When all requirements are met the escrow changes from dual agency to separate agency