Q&A Hero

Q: Which of the following types of bankruptcy is available to a business to reorganize and rehabilitate the debtor? (A) Chapter 7 (B) Chapter 11 (C) Chapter 13 (D) Chapter 17

Q: Which of the following types of bankruptcy is filed with the end result of liquidating the debtor's assets? (A) Chapter 7 (B) Chapter 11 (C) Chapter 13 (D) Chapter 17

Q: A property is encumbered as follows: First mortgage, A: $250,000 Second mortgage, B: $40,000 Third mortgage, C: $10,000 How much can mortgagee B pay for the property at a foreclosure sale without having to raise additional funds? (A) $290,000 (B) $40,000 (C) $300,000 (D) $50,000

Q: A senior mortgage holder is owed a mortgage balance of $140,000 and brings a foreclosure suit which includes all junior claimants in the suit. If the senior mortgage holder purchases the property for $140,000 at the foreclosure sale, what happens to the claim of the junior claimants? (A) The liens of the junior claimants are unaffected and the debt is due upon sale (B) The liens of the junior claimants are extinguished, but the debt owed to the junior claimants is unaffected (C) The liens of the junior claimants and the debt owed to them are extinguished (D) The liens of the junior claimants are unaffected, but the debt owed to them is extinguished

Q: In jurisdiction where a deed of trust is used to finance real estate, there are three parties to the loan secured by the deed of trust. Which of the following is NOT one of those three parties? (A) Borrower (B) Trustee (C) Holder of the note (D) Grantor

Q: Which of the following terms refers to an owner's right to redeem a property after foreclosure? (A) Equity of redemption (B) Statutory redemption (C) Attachment (D) Execution

Q: Which of the following solutions is LEAST likely to be acceptable to a mortgagee when discussing alternatives to foreclosing a property? (A) Permanently extending the amortization period (B) Finding someone else to assume the mortgage (C) Providing a temporary grace period during which principal and interest are not paid (D) Permanently reducing the interest rate

Q: A mortgage is BEST defined as a legal document that: (A) Creates an obligation to repay a loan under specific terms (B) Names real estate as the security or collateral for the repayment of a loan (C) Defines a possessory interest in real estate (D) Conveys ownership of a property to its purchaser

Q: Which of the following is NOT a minimum mortgage requirement? (A) Description of the property (B) Covenant of warranty (C) Prepayment clause (D) Covenant of seizing

Q: Which of the following situations is NOT a common cause for the use of a purchase-money mortgage? (A) The buyer cannot come up with the down payment needed to qualify for a mortgage (B) The seller wants to receive the gain from the sale in installments (C) Third-party mortgage financing is too expensive of unavailable (D) The seller desires to artificially raise the price of the property by receiving a higher-than-market interest rate

Q: A "short sale" of real estate is: (a) A sale that closes in less than 30 days (b) The sale of a house by someone who is not the owner; it is a way to profit from an anticipated decline in real estate prices (c) A sale in which the proceeds from the sale are less than the balance owed on the loan secured by the property sold (d) A sale in which the balance owed on the loan secured by the property sold is less than the proceeds from the sale

Q: A loan in which the borrower arranges in advance with a total amount that will be advanced in stages, such as a construction loan is said to have which type of mortgage loan: (a) Assumption (b) Non-recourse (c) Open-end (d) Subordination

Q: Unless stated otherwise, the borrower is personally liable for payment of all amounts due under the terms of the note.

Q: If a debtor, under Chapter 7 bankruptcy, is not behind on his mortgage payments, he does not have the give up the property.

Q: The process of confirming a plan of reorganization under Chapter 11, even if one or more creditor classes dissent, is known as a "cramdown."

Q: A purchaser at a tax sale receives a deed to the property at the time of the sale.

Q: If a property encumbered by a mortgage is sold at a foreclosure sale for an amount less than the value of the mortgage, the mortgagor is not obligated to pay the mortgagee the remaining balance.

Q: Junior liens are eliminated by a voluntary conveyance of a property to the mortgagee.

Q: When a deed is given in lieu of foreclosure of the mortgage, the mortgagor no longer has an obligation to pay the mortgage note.

Q: When a purchaser takes a property "subject to" an existing mortgage, the purchaser becomes personally liable for repaying the debt.

Q: A technical default can result from failure to keep the property in repair.

Q: A mortgage default can result from failure to pay property taxes.

Q: It is a federal law that a mortgage must be recorded to be valid.

Q: A due on sale clause which specifies that the mortgage can accelerate the debt if the property is sold without the mortgagee's permissions is a typical clause in a mortgage document.

Q: Under lien theory, title and the right to possession pass from the mortgagor to the mortgagee when the mortgage is executed.

Q: A clause which specifies that the mortgagee will obtain and maintain property insurance is typically included in a mortgage.

Q: A clause which specifies that the mortgagor will pay all property taxes and other charges assessed against the property, even if theses charges have priority over the mortgage is typically included in a mortgage.

Q: A fee simple estates is a type of freehold estate.

Q: A remainder cannot be mortgaged.

Q: A second mortgage is a junior lien mortgage that is sometime used to bridge the gap between the price of a property and the sum of the first mortgage and down payment.

Q: Prepayment of a loan without penalty is a right of all borrowers.

Q: A non-recourse loan is one in which the borrower is personally liable for payment of all amounts due under the terms of the note.

Q: A mortgage is the same thing as a note.

Q: Which of the following is FALSE concerning Mechanic's Liens? (A) Gives the right to attach a lien on real estate (B) Can get money through forcing judicial sale (C) Lasts even after the bill for labor and materials has been paid (D) Might not be disclosed by the public records

Q: A reversion and a remainder are similar in that: (A) Both can be sold or mortgaged (B) Both cause the property to go back to the grantor after the sale (C) Neither is an actual interest in the property (D) Neither is considered a future estate

Q: Which of the following is FALSE regarding a tax sale? (A) An accurate and complete description of the property is required to be posted for possible purchasers before the sale (B) The property owner may not have had a court appearance through due process, thus creating a cloud on the title (C) The line of authority for the sale may not be clear (D) The purchaser is usually expected to pay all delinquent taxes at the time of sale

Q: A historical summary of the publicly-recorded documents that affect the ownership of a property is know as a(n): (A) Estate (B) Deed (C) Abstract of title (D) Lien

Q: What legal document conveys title from one person to another? (A) Mortgage (B) Note (C) Deed (D) Title

Q: Which of the following documents conveys title to a property at the time the purchaser completes the performance of the obligation called for in the document? (A) Junior mortgage (B) Package mortgage (C) Purchase-money mortgage (D) Land contract

Q: Which of the following is NOT a good method of title assurance? (A) Seller provides a warranty in the deed (B) An attorney searches recorded documents (C) Title insurance is purchased (D) Seller provides a quitclaim deed

Q: What type of estate lasts for an indefinite period of time? (A) Freehold estate (B) Estate from year to year (C) Leasehold estate (D) Estate for years

Q: What term BEST describes a person that owns a property and is conveying title to the property to another person? (A) Mortgagor (B) Grantor (C) Mortgagee (D) Grantee

Q: Which type of deed offers the grantee the MOST protection? (A) Quitclaim deed (B) Special warranty deed (C) General warranty deed (D) Officer's deed

Q: Mr. Smith has allowed Mrs. Jones to run a sewer line through Mr. Smith's backyard so that Mrs. Jones has access to the city sewer system. This is an example of a(n): (a) Easement (b) Encumberance (c) Estate for years (d) Title assurance

Q: A(n) ___ estate represents the most complete form of ownership of real estate; the owner is free to divide it up into lesser estates and sell, lease, or borrow against them as he or she wishes. (a) Fee simple (b) Freehold (c) Leasehold (d) Life (e) Outright

Q: If a lender is to repossess or bring about the sale of a property if the borrower defaults on the mortgage loan, the lender is said to have a ___ in the real estate. (a) Freehold interest (b) Lease interest (c) Secured interest (d) Quitclaim

Q: A reciprocal easement agreement allows two or more parties to access each other's property.

Q: After a house is purchased, contractors cannot ask the new owner of the house to pay any bills that were outstanding before the house was sold.

Q: As compared to other types of deeds, a general warranty deed provides the most comprehensive warranties about the quality of the title to the property.

Q: A fee simple estate is a type of freehold estate.

Q: The term real estate refers to the ownership rights associated with the physical land and improvements.

Q: It is illegal to give a quitclaim deed if the grantor has no claim in the property.

Q: A quitclaim deed says that the grantor "quits" whatever claim he has in the property in favor of the grantee.

Q: Real property refers to the ownership rights associated with real estate.

Q: Real estate refers to the physical land and improvements constructed on the land.

Q: Assume you have a choice between investing in either an equity REIT or Microsoft stock (MSFT). Which point in the figure above is NOT on the efficient portfolio frontier?(a) A(b) B(c) C(d) All points are on the efficient portfolio frontier

Q: The property manager works under a management agreement between the property owner and the property management firm. As compensation for his duties, the property manager will negotiate a management fee. Given the following information, calculate the dollar compensation to the property manager in year 1. Potential Gross Income of the property: $250,000; Vacancy and Collection Losses: 15%; Miscellaneous Income: $50,000; Management Fee: 3%. A. $4,875 B. $6,375 C. $7,500 D. $7,875

Q: In contrast to maintenance and repair expenditures, which are operating expenses, theimprovement decision generally involves a capital expenditure meant to increase the value of the structure. Which of the following classifications of improvements calls for the restoration of a property to satisfactory condition without changing the floor plan, form, or style of the structure?A. RehabilitationB. RemodelingC. Adaptive reuseD. Conversion

Q: Limited liability companies (LLCs) and limited partnerships are preferred to corporate ownership structures because these forms of ownership allow investors to obtain limited liability and avoid the double taxation faced by corporations. This tax benefit can be extremely important as the maximum capital gain rate for corporations remains at (as of 2012):A. 15%B. 25%C. 35%D. 45%

Q: Given the following information, calculate the after tax-cash flow for this property. Debt Service: $45,000; First-year NOI: $91,750; Tax liability: 25% of Before Tax Cash Flow. A. $23,812.50 B. $35,062.50 C. $68,812.50 D. $80,500.00

Q: Given the following information, calculate the loan-to-value ratio for this property. Loan amount: $450,000, Interest rate: 7.5%, Acquisition price: $550,000 A. 0.18 B. 0.82 C. 0.99 D. 1.22

Q: The use of a mezzanine loan in the purchase of a commercial property has all of the following impacts on the borrower EXCEPT:A. Allows the borrower to increase their financial leverage in the purchase of the propertyB. Increases the borrower's expected first year return on equityC. Mitigates the risk of financing for the borrowerD. Requires the borrower to pledge an equity interest in their company (e.g., LLC) as collateral for the loan rather than pledging the property.

Q: The traditional approach to loan underwriting has virtually been replaced by an automated underwriting process that involves a statistically derived equation to determine the level of default risk associated with a loan application. All of the following statements regarding the automated underwriting process are true EXCEPT:A. The marginal cost per loan underwritten using the automated process is greater than the case of traditional underwriting.B. The time taken to approve a loan using the automated process is considerably shorter than the case of traditional underwritingC. The success in identifying risky loans is higher using the automated process than is the case with traditional underwritingD. Automated underwriting has made home ownership available to households for whom it previously was inaccessible.

Q: The cap rate is an important metric that investors use to analyze the state of commercial real estate markets. When interpreting cap rate movements, an increase in cap rates over time would indicate that:A. The discount rate used in TVM (time value of money) calculations has increasedB. The discount rate used in TVM (time value of money) calculations has decreasedC. Property values have increasedD. Property values have decreased

Q: Analysis of a subject property's pro forma reveals that its fifth year net operating income (NOI) is projected to be $100,282 (you can assume that this cash flow occurs at the end of the year). If you estimate the projected rental growth rate for the property to be 3% per year and the going-out capitalization rate in year five to be 10%, determine the net sale proceeds the current owner of the property would receive if he were to sell the property at the end of year five and incur selling expenses that amounted to $58,300. A. $944,520.00 B. $974,610.00 C. $1,002,820.00 D. $1,032,910.00

Q: Suppose that an appraiser has come to the following conclusions in evaluating the subject property. Due to the dramatic shift in the perceived safety of the neighborhood, values of any residential properties in the area of the subject property have fallen by $10,000, on average. Due to the subject property's age, physical deterioration to the building accounts for an estimate of $50,000 in lost value. An evaluation of the floor plan reveals that it is quite obsolete relative to current homebuyer preferences. This has a detrimental effect on the value of the property that is estimated to be approximately $15,000. Based on your understanding of adjustments related to accrued depreciation, which of the following pertains to the adjustment for external obsolescence? A. $10,000 B. $15,000 C. $50,000 D. $75,000

Q: Based on the following information, determine the location quotient for Amusement City and whether this city has a competitive advantage in the amusement industry. Employment in Amusements and Recreation in Amusement City: 54,446; Total Employment in Amusement City: 578,477; Employment in Amusements and Recreation (nationally): 1,381,377; Total Employment (nationally): 106,201,232. A. 0.14; No, the city does not have a competitive advantage in this industry. B. 7.24; No, the city does not have a competitive advantage in the industry C. 0.14; Yes, the city has a competitive advantage in this industry D. 7.24; Yes, the city has a competitive advantage in this industry

Q: You would get the greatest amount of diversification if two securities are A. positively correlated B. negatively correlated C. not correlated D. perfectly correlated

Q: Which of the following statistics provides a measure of the extent to which returns tend to move together or have no relationships? A. The coefficient of determination B. The variance C. The coefficient of variation D. The covariance

Q: With regards to real estate investments, risks which are associated with the type of property, its location, design, lease structure, etc. can be thought of as: A. marketability risk. B. liquidity risk. C. business risk. D. interest rate risk.

Q: The FRC Property Index can be characterized by all of the following except: A. the index includes only properties with no outstanding mortgage debt. B. the information used in compiling the index is voluntarily contributed by property owners. C. the index reflects payments to both property managers and portfolio asset managers. D. all of the above are true.

Q: Recovery of Capital (or ROC) results in A. An increase in the dividend available to the investor. B. An increase in the value of the stock. C. A reduction in the cost basis of acquired stock. D. A reduction in losses on the stock.

Q: FFO for a REIT is roughly equal to A. NOI less interest deductions B. Earnings before tax plus depreciation deductions C. NOI plus interest deductions D. Earnings per share plus capital gains

Q: Considering the REIT in MC21-3, at the very least what dividend payment must it make to maintain its tax exempt status? A. $1.90 B. $2.85 C. $3.80 D. $5.70

Q: 4. Which of the following is NOT a CMO security type?A. A repeat floaterB. A Z trancheC. An inverse floaterD. An IO tranche

Q: Which of the following does not increase the non credit risks in CDOs? A. Collateral Management risk B. Certainty in Average life of CDOs tranches C. Higher correlation and liquidity D. None of the above

Q: Which of the following is FALSE concerning a planned amortization class (PAC) tranche? A. It has the greatest degree of cash flow certainty. B. It receive variable payments. C. Payments are received over predetermined period of time. D. Payments are received under a range of prepayment scenarios.

Q: A calamity call allows the issuer to recall all securities for a specified time after issue in the event that all but which of the following occurs? A. Investors want to cash out their positions. B. Interest rates decline sharply. C. Prepayments decline sharply. D. Reinvestment rates are below what was promised to investors.

Q: Duration, as referred to in the chapter, is: A. a measure of the extent to which different investments expose an investor to interest rate risk. B. a measure of the weighted-average time required before all principal and interest is received on an investment. C. a measure that takes into account both the size of cash flows and the timing of their receipt. D. all of the above.

Q: REMICs were created in order to avoid taxes:A. entirely.B. at the investor level.C. at the entity level.D. none of the above.