Q&A Hero

Q: Find the value by use of the income approach. (round to the nearest $100) 1) an older three-unit apartment rents for $1,000 per month per unit 2) vacancy factor of 5% 3) annual operating expenses $10,000 4) capitalization rate of 8% (a) $302,500 (b) $288,000 (c) $276,500 (d) $275,000

Q: Land is valued at $80,000. New construction cost for a home 35 feet by 45 feet is $100 per square foot. For a garage 25 feet by 25 feet, the cost is $40 per square foot. Depreciation is 10% of new replacement cost. What is the value estimate? (a) $262,500 (b) $182,500 (c) $164,250 (d) $224,250

Q: The cost approach would be given the least weight if appraising a: (a) new home (b) new apartment (c) old home (d) special purpose property

Q: A loss in value because of a poor floor plan is an example of: (a) economic obsolescence (b) accrual for depreciation (c) functional obsolescence (d) physical deterioration

Q: The difference between the current replacement cost new and the estimated value of the building as of the date of the appraisal: (a) market depreciation (b) remainder depreciation (c) past or accrued depreciation (d) future or accrual for depreciation

Q: The appraisal principle that states that the value of a property tends to be influenced by the price of acquiring an equally desirable property: (a) principle of supply and demand (b) principle of highest and best use (c) principle of substitution (d) principle of change

Q: The essentials of value include all of the following, except: (a) age (b) utility (c) scarcity (d) demand

Q: The market (sales comparison) approach to value is most important for determining the value of: (a) special purpose properties (b) commercial property (c) existing residential homes (d) income-producing property

Q: The most important consideration in an appraisal is the: (a) methods used (b) experience, license, and integrity of the appraiser (c) data gathered (d) inspection of the title records

Q: A person who buys a note in good faith and obtains superior rights is called a: (a) negotiable holder (b) investor holder (c) holder in due course (d) holder in present

Q: The VA will guarantee loans on the following properties: (a) mobile homes (b) townhomes. (c) both a and b. (d) none of the above

Q: Which program has the seller deed title to the government? (a) VA (b) Cal-Vet (c) FHA (d) FNMA

Q: When a borrower pays mortgage insurance on an FHA loan, this type of insurance: (a) protects the lender against a shortage in the event of a default (b) is an expense that is borne entirely by the lender (c) pays the borrower the loan balance in the event of a fire loss (d) prevents foreclosure in the event of the trustor's death

Q: For qualifying purposes, monthly housing payments include: (a) principal payments (b) principal and interest payments (c) principal, interest, taxes, and insurance (d) principal, interest, taxes, insurance, homeowner dues, and PMI, if any

Q: Which organization requires a CRV appraisal before approving a loan? (a) California Department of Veteran's Affairs (b) Federal Housing Administration (c) U. S. Department of Veterans Affairs (d) Federal National Mortgage Association

Q: Private mortgage insurance (PMI): (a) makes the payments if the borrower gets disabled (b) is paid for by the lender (c) pays the loan off if the borrower dies (d) insures the lender for the top portion of the loan

Q: For gross income purposes, most lenders want the borrower to have at least a: (a) 1-year work history (b) 2-year work history (c) 3-year work history (d) 4-year work history

Q: For an REIT to avoid double taxation, it must distribute what percentage of its income each year to the shareholders /investors? (a) 85% (b) 90% (c) 95% (d) 100%

Q: Which of the following best defines a purchase money mortgage? (a) a mortgage providing for additional advances to the mortgagor without the necessity of writing a new mortgage (b) a single mortgage (c) a mortgage that includes chattels (d) a mortgage used to acquire a property

Q: The term impound most nearly means: (a) attachments (b) points (c) penalties (d) reserves

Q: Insurance companies are one of the major sources for conventional loans. Insurance companies: (a) generally do not use the services of a loan correspondent (b) restrict their loans to the immediate area of their home office (c) loan funds primarily on large commercial properties (d) have only a minor portion of their money in mortgages

Q: Who does not lend their money, but instead earns a fee for bringing a borrower and lender together? (a) mortgage banker (b) mortgage broker (c) mortgage consultant (d) mortgage investor

Q: Which of the following are major types of California lenders: (a) Commercial banks (b) Savings banks. (c) Life insurance companies (d) all of the above.

Q: Fannie Mae is the: (a) Federal Home Loan Mortgage Corporation (b) Federal National Mortgage Association (c) Government National Mortgage Association (d) Federal Deposit Insurance Corporation

Q: A secondary mortgage market is where: (a) existing lenders sell to other lenders and investors (b) a seller carries a junior trust deed (c) the supply of funds available for real estate loans is decreased (d) the Federal Reserve tightens mortgage interest rates

Q: Traditionally, the total monthly expenses should not exceed____ to ____of the borrower's gross monthly income. (a) 33%-38% (b) 33%-36% (c) 28%-30% (d) 25%-30%

Q: The major source for junior loans (2nds, 3rds, etc.) is: (a) FHA (b) Cal-Vet (c) private parties (d) savings and loan associations

Q: The ultimate source of all loan funds is: (a) taxes (b) government spending (c) transfer payments (d) savings

Q: The maximum FHA-insured loan under the 203b program for a condo with an acquisition cost of $150,000 is: (a) $150,000 (b) $145,725 (c) $144,750 (d) $144,275

Q: Sylvia wants to purchase a home. She is recently divorced and is receiving alimony for the next ten years in addition to child support for her three year old son. She has been in her present job for five years. What sources of income can she include in her loan application? (a) Her salary from her job and alimony. (b) Her salary from her job only. (c) Her salary from her job and child support. (d) Her salary from her job, alimony, and child support.

Q: A credit report is used to help measure a borrower's: (a) capacity to pay (b) desire to pay (c) income ratio (d) qualifying ratio

Q: A Seller's Financial Disclosure Statement must be signed by the: (a) buyer (b) seller (c) broker (d) all of the above

Q: The three major credit reporting agencies are: (a) Experian, TRW, and Equifax. (b) Experian, Equifax, and TransUnion. (c) TRW, Equifax, and FICO. (d) Equifax, Experian, and Franklin.

Q: Which of the following is an institutional lender? (a) credit union (b) mortgage company (c) life insurance company (d) pension fund

Q: Any loan payment twice as large as a regular payment is called a: (a) balloon (b) wrap (c) teaser (d) cap

Q: The loan-to-value ratio on a mortgage is defined as the: (a) loan amount as a percentage of sales price (b) loan amount as a percentage of assessed value (c) loan amount as a percentage of appraised value (d) monthly payments as a percentage of the face amount of the loan

Q: For loans that fall under the California usury law, the maximum interest rate is: (a) 5% above the Federal Funds Rate (b) 10% or 5% above the Federal Reserve Discount Rate, whichever is greater (c) 10% or 5% above the Federal Reserve Discount Rate, whichever is lesser (d) 10% above the Prime Rate

Q: Which of the following words expresses a meaning most completely opposite to the term "alienation"? (a) amortization (b) ad valorem (c) acquisition (d) acceleration

Q: Real estate advertisements must comply with: (a) ECOA p. 207 Equal Credit Opportunity Act prohibits lenders from discriminating. (b) APR p. 207 Annual Percentage Rate is an effective interest rate on the loan. (c) GPM p. 198 Graduated Payment Mortgage is a type of loan. (d) Reg Z

Q: Under the Real Property Loan Law, the maximum amount a borrower can pay for closing costs, excluding commission, regardless of the size of the loan, is: (a) 5% (b) $390 (c) $700 (d) $900

Q: A clause in a trust deed that states that the lender's rights shall become secondary to a new trust deed is called: (a) an alienation clause (b) a subordination clause (c) a submortgage (d) an escalation clause

Q: A copy of a Mortgage Loan Disclosure Statement prepared by the broker and signed by the borrower must be retained by the broker for at least: (a) five years (b) four years (c) three years (d) two years

Q: In an ARM loan, the distance between the borrower's rate and the index is called the: (a) cap (b) adjustment (c) margin (d) teaser

Q: If a broker negotiated a third trust deed for $12,000 payable in five semi-annual installments, the maximum rate of commission allowed by the Mortgage Loan Brokerage Law would be: (a) 15% (b) 10% (c) 5% (d) no rate is established for third trust deeds

Q: $300,000 loan at 8% payable $2,000 per month is what type of note? (a) installment (b) straight (c) wraparound (d) amortized

Q: In a trustee's sale, the proceeds of the sale were sufficient to pay the demands of the first and second trust deed holders, foreclosure costs, and provide a small cash surplus. What is the priority schedule for the distribution of the cash proceeds? (a) trustor; first trust deed; second trust deed; foreclosure costs (b) foreclosure costs; trustor; first trust deed; second trust deed (c) first trust deed; second trust deed; foreclosure costs; trustor (d) second trust deed; first trust deed; foreclosure costs; trustor

Q: An annual percentage rate (APR): (a) is not an interest rate but rather a percentage rate that reflects the effective interest rate on the loan. (b) is an interest rate that includes tax service fees. p.207 Not a true statement. (c) is not an interest rate; it is a fee for lending. p.207 Not a true statement. (d) is an interest rate that only applies to refinancing. p.207 Not a true statement.

Q: An owner sells and the buyer takes over the existing loan. To relieve the seller of primary liability, the buyer must: (a) sign a non-recourse agreement (b) take title contingent upon the note and trust deed (c) take title subject to the note and trust deed (d) assume the note and trust deed

Q: RESPA stands for: (a) Real Estate Settlement Procedures Act (b) Real Estate Salesperson Association (c) Real Estate Syndication Planning Act (d) Real Estate Settlement Program Act

Q: The Mortgage Loan Broker Law does not apply to first loans of $30,000 or more and second deed of trust loans of: (a) $5,000 (b) $17,500 (c) $19,500 (d) $20,000

Q: A lender foreclosed on a California home that had a VA loan. The proceeds from the sale were not enough to cover the outstanding loan amount. Which of the following statements are true? (a) The lender takes the loss and cannot do anything about it. (b) The lender can sue the seller who sold the home to the veteran. (c) The lender cannot sue because California is an anti-deficiency judgment state. (d) The lender can sue for a deficiency judgment.

Q: If a real estate loan is paid off in advance of the due date, some lenders are legally allowed to charge a penalty. This is called what type of penalty? (a) acceleration (b) alienation (c) prepayment (d) balloon

Q: The Equal Credit Opportunity Act requires a lender to: (a) quote interest rates as annual percentage rates (APR) (b) disclose all closing costs (c) use a HUD-approved uniform closing statement (d) not discriminate on the basis of race, creed, color, sex, origin, marital status

Q: Under the Trustee's Sale procedure, after a Notice of Default has been recorded, a borrower has how long to reinstate by making up past payments, penalties, late charges, and trustee expenses? (a) 5 days prior to trustee's sale date (b) 90 days (c) 3 months (d) 1 year

Q: A type of financing instrument in which the owner (vendor) retains the legal title until the buyer (vendee) fulfills the terms of the purchase contract is a/an: (a) lease contract (b) installment sales contract (c) wraparound contract (d) junior lien contract

Q: A negative amortized ARM means: (a) it can cause some problems in later years. (b) the payments may not cover the annual interest. (c) the unpaid interest is added to the principal. (d) all of the above.

Q: An enforceable due-on-sale clause is correctly called an: (a) acceleration clause (b) alienation clause (c) wrap around clause (d) prepay clause

Q: All of the following involve one phase of real estate financing except: (a) application (b) analyzing (c) leveraging (d) closing

Q: A real estate promissory note that reads $200,000 principal payable interest only monthly at a rate of 7% is what type of promissory note? (a) straight (b) installment (c) principal and interest (d) accommodation

Q: Lily asks her friend David for a $5000 loan. David agrees but asks Lily to sign a note that states she will pay him back the money in 12 months at eight percent interest. Lily signs the note. As luck would have it David needs $2500 for an emergency two weeks later. He sells the note for $4500 to Colin which is at a discount of 10%. What was Colin's rate of return on the amount invested? (a) 12% (b) 10% (c) 20% (d) None of the above.

Q: To settle the estate of the deceased, a probate sale is held on a mobile home. The first court bid is $30,000; the next minimum bid must be for at least: (a) $31,000 (b) $32,000 (c) $33,000 (d) $31,750

Q: Seller is guaranteed a $50,000 net. Seller's closing cost and existing loan total $130,000. If a broker wishes to earn a 10% commission, what must be the selling price? (a) $135,000 (b) $186,000 (c) $198,000 (d) $200,000

Q: Real estate broker Jos, lists a property for $300,000. A six percent commission is agreed upon. Another agent brings an offer for $280,000. The seller then asks Jose to reduce his side if the commission to two and a half percent. Jos agrees. What is the difference between the reduction in commission and the original commission that Jose will receive? (a) $18,000 (b) $2,000 (c) $7,000 (d) $9,000

Q: An owner sold a property for a $100,000 profit. The $100,000 represents a 25% profit. What was the selling price? (a) $250,000 (b) $300,000 (c) $375,000 (d) $400,000

Q: A five-unit apartment property rents for $820 per unit per month. Expenses and vacancies average $800 per month. The asking price is $440,000. What is the capitalization rate? (a) 8% (b) 9% (c) 10% (d) 11%

Q: A person purchased a home for $350,000 and applies for a 90% loan at 6% interest-only all due in 5 years. What will be the monthly payments? (a) $1,500 (b) $1,575 (c) $1,750 (d) $1,890

Q: An investor purchased 3 lots for a total of $360,000. Later the investor sold the same lots for a total of $600,000. Based on cost, what was the percentage of gross profit? (a) 50% (b) 66.67% (c) 33.3% (d) 25%

Q: Two acres are being subdivided into 5 equal lots. Each lot has a front set back of 10 feet and is 198 feet wide. What is the buildable area of each lot? (a) 18,524 sq. ft. (b) 17,424 sq. ft. (c) 15,444 sq. ft. (d) 14,744 sq. ft.

Q: Sales price $298,500, buyer to put $86,500 down and to assume seller's loan of $230,000. The documentary transfer tax is: (a) $330.15 (b) $328.35 (c) $253 (d) $95.15

Q: Under an option agreement, the grantor/owner of the property is the: (a) optionee (b) option holder (c) option owner (d) optionor

Q: The listing agreement stated that the existing loan was to be assumed. The broker received an offer per the exact terms of the listing except that the buyer wanted to put on a new loan. The seller refused the offer. The broker would be: (a) entitled to one-half the commission (b) entitled to no commission (c) entitled to a reimbursement for expenses (d) entitled to a full commission

Q: What is a contract called in which the seller agrees to pay a commission and the broker agrees to use diligence in finding a buyer? (a) bilateral executory contract (b) unilateral executory contract (c) bilateral executed contract (d) unilateral executed contract

Q: When would a broker be legally required to reveal the amount of commission under a net listing? (a) when the property is listed (b) after the close of escrow (c) whenever the seller asks (d) before the seller accepts the buyer's offer

Q: Six separate co-buyers of a parcel of land signed a deposit receipt contract at different times and places. A copy must be: (a) given to the first signer only (b) given to each at the time they sign (c) given to the first and last signers only (d) sent to each one after the last one signed

Q: Megan's Law is concerned with the: (a) possibility of mold and its required disclosure (b) location of registered sex offenders (c) issue of AIDS and/or death in the home (d) hazards of earthquakes and un-braced water heaters

Q: Which of the following indicates the greatest progress toward completion of a sale? (a) buyer advised broker that buyer would sign acceptance of seller's counter offer (b) broker notified buyer of seller's signed acceptance of buyer's offer (c) seller informed broker that seller would accept the lower price offered by buyer (d) broker advises principal that broker has a signed offer to buy per the listing terms

Q: The sellers have accepted an offer in which they agreed to carry a second trust deed. What contract should be provided to the seller to be sure all the required information is available to them to enter into this type of agreement? (a) Real Estate Transfer Disclosure Statement. (b) Common Interest Development Statement. (c) Seller Financing Addendum and Disclosure Statement. (d) Buyer's credit report.

Q: A real estate agent may legally refuse to show property available for sale to a person of a minority race if the: (a) agent feels the home was not suited for the people (b) owners were out of town and had left instructions the home was not to be shown to anyone during their absence (c) owners had given specific instructions against showing the home to minority buyers (d) agent felt the buyers would not like the location

Q: There are some basic provisions that should be included in a contract. Which one of the following is one of those provisions? (a) Names of the sellers only. (b) What is the buyers' income. (c) Consideration. (d) All of the above.

Q: An owner lists a home for sale with XYZ Realty, with instructions to submit the listing to the multiple listing service and invite other brokers to help find a buyer. This is an example of a(n): (a) dual agency (b) offer to cooperate (c) implied agency (d) buyer's agency