Accounting
Anthropology
Archaeology
Art History
Banking
Biology & Life Science
Business
Business Communication
Business Development
Business Ethics
Business Law
Chemistry
Communication
Computer Science
Counseling
Criminal Law
Curriculum & Instruction
Design
Earth Science
Economic
Education
Engineering
Finance
History & Theory
Humanities
Human Resource
International Business
Investments & Securities
Journalism
Law
Management
Marketing
Medicine
Medicine & Health Science
Nursing
Philosophy
Physic
Psychology
Real Estate
Science
Social Science
Sociology
Special Education
Speech
Visual Arts
Real Estate
Q:
General industry standards for a conventional loan specify a maximum LTV of 60 percent.
Q:
The Federal Housing Administration (FHA) provides mortgage insurance, but does not make loans.
Q:
For a loan with an LTV greater than 80 percent, the costs of mortgage insurance always exceed the costs of second lien financing.
Q:
Which of the following organizations provides lenders with complete protection against default losses:
A) FHA
B) FNMA
C) FHLMC
D) VA
Q:
GSE is the abbreviation for:
A) Government-sponsored entity
B) Government-specific entity
C) Government-sponsored enterprise
D) Government-specific enterprise
Q:
A self-employed borrower who has documentable assets but is not able to provide adequate documentation for his income may be eligible for this type of loan:
A) FNMA
B) FHLMC
C) Conforming
D) Alt-A
Q:
The APR estimate must be accurate to the nearest ________ percent.
A) 1/2
B) 1/4
C) 1/8
D) 1/16
Q:
RESPA requires lenders to disclose to buyers a uniform settlement statement detailing all closing costs within:
A) One day before the real estate closing
B) Three days before the real estate closing
C) One day after loan application
D) Three days after loan application
Q:
Which of the following is the main objective of the FTL legislation?
A) More effective advance disclosure of settlement costs
B) More informative disclosure of the cost of credit
C) Elimination of kickbacks and unearned fees
D) A reduction in the amount of escrow placed in accounts for homeowners
Q:
The uniform settlement statement displays settlement summaries for which of the following parties to the closing?
A) Borrower and seller
B) Borrower and broker
C) Borrower, seller, and broker
D) Borrower, seller, and lender
Q:
RESPA requires lenders to disclose to buyers a good faith estimate of certain closing costs within:
A) One day before the real estate closing
B) Three days before the real estate closing
C) One day after loan application
D) Three days after loan application
Q:
Which of the following is NOT one of the essential aspects of RESPA?
A) Advance disclosure of settlement costs
B) Limitations on the cost of mortgages
C) Prohibition of kickbacks and unearned fees
D) Limitations on escrow deposits
Q:
Which of the following is typically NOT one of the settlement costs that are escrowed over the life of the loan?
A) Property taxes
B) Mortgage insurance
C) Selling commissions
D) Hazard insurance
Q:
Which of the following is typically NOT one of the financing costs associated with the financing of real estate?
A) Mortgage insurance fees
B) Loan application and credit report fees
C) Property inspection and appraisal fees
D) Loan discount and prepaid interest fees
Q:
What document usually summarizes the sources, disbursements, charges and credits associated with a real estate closing?
A) The purchase contract
B) The deed of trust
C) The listing agreement
D) The settlement statement
Q:
Which of the following groups customarily does NOT attend real estate closing?
A) The buyer and seller
B) The buyer's and seller's immediate families
C) Real estate broker(s)
D) Settlement agent(s)
Q:
An escrow account:
A) Ensures that a default insurance policy does not lapse if a borrower is in danger of default
B) Ensures that sufficient funds are collected to make annual hazard insurance and property tax payments
C) Is a non-interest-bearing account into which a borrower prepays certain fees and taxes
D) All of the above
Q:
Payment to income ratio is BEST described as:
A) The factor used to determine if interest on mortgage loans is tax deductible
B) The only measure of a borrower's ability to fulfill his or her loan obligations
C) The ratio of the estimated rental income to the expected payments on a rental property
D) The ratio of the expected payments on a property to the income of the borrower
Q:
A jumbo loan:
A) Is another term for an adjustable-rate mortgage loan
B) Meets loan limits of loans that Fannie Mae and Freddie Mac can buy
C) Tends to have a higher interest rate than conforming loans
D) Has lower LTV requirements than conforming loans
Q:
A conforming loan:
A) Exceeds the loan limits of loans that Fannie Mae and Freddie Mac can buy
B) Meets loan limits of loans that Fannie Mae and Freddie Mac can buy
C) Cannot be purchased by GSEs such as Fannie Mae and Freddie Mac
D) Is another term for a fixed-rate mortgage loan
Q:
Which of the following is NOT typically included in housing costs used to calculate a borrower's payment-to-income ratio?
A) Principal and interest on the mortgage applied for
B) Mortgage insurance
C) Property taxes
D) Utilities
E) All of the above are included in the housing costs
Q:
In some cases, lenders require that borrowers obtain default insurance. The purpose of such insurance is to:
A) Decrease the effective interest rate on the loan
B) Increase the value of the underlying property
C) Protect the borrower from defaulting on the loan
D) Protect the lender from losses associated with borrower default on the loan
Q:
In order to avoid the requirement to purchase private mortgage insurance when the loan-to-value is greater than 80%, a buyer may be able to take out a first mortgage for 80% or less and couple it with a second mortgage to account for the remainder of the necessary funds.
Q:
A borrower who was required to purchase private mortgage insurance as a condition of their mortgage should be able to eliminate that requirement if the loan-to-value ratio of a home is proven to have dropped to less than 85%.
Q:
Someone with a credit score of 900 is likely to only qualify for a subprime loan.
Q:
A conforming mortgage is one for which the US Treasury will provide credit backing through the GSEs.
Q:
The FTL act requires that the lender provide a financing statement of the exact closing costs within three days of loan application.
Q:
The FTL Act and RESPA essentially say the same things.
Q:
RESPA requires a lender to disclose good faith estimates of closing costs within three days of loan application.
Q:
One of the objectives of RESPA was to disclose kickbacks and unearned fees on the settlement sheet.
Q:
To protect themselves from loss due to default, most lenders require borrowers to acquire hazard insurance policies.
Q:
Which of the following is NOT a factor in causing a property to become distressed:
A) Borrower's personal debts
B) Delinquent property taxes
C) Delinquent homeowner's insurance bill
D) Borrower's inability to make mortgage payments
Q:
A home sales transaction in which the seller was not under undue pressure to sell for a discounted price (e.g., foreclosure, selling to family member, etc.) is referred to as a(an):
A) Aboveboard transaction
B) Arm's-length transaction
C) Parsed transaction
D) Tainted transaction
Q:
Which of the following is NOT tax deductible for homeowners?
A) Points in mortgage loans
B) Mortgage interest
C) Property taxes
D) Maintenance expenses
Q:
Federal income tax policy has generally been thought to:
A) Discourage homeownership
B) Encourage renting
C) Increase interest rates
D) Encourage homeownership
Q:
When a homeowner improves some aspect of his property far in excess of comparable properties in the neighborhood, he is said to have:
A) Under-improved the property
B) Over-improved the property
C) Reached the point of increasing returns
D) Exceeded the breakeven point
Q:
The influence on property values brought about by a net benefit related to the value of public goods less their cost is referred to as:
A) A capital gain
B) A capital loss
C) The capitalization effect
D) The depreciation effect
Q:
Which of the following would NOT result in an increase in housing demand?
A) Population growth
B) Employment growth
C) Higher interest rates
D) Higher household income
Q:
When calculating taxes, the difference between the acquisition cost and selling price of a house is called:
A) Ordinary income
B) Amortization
C) Capital gain
D) Deferred income
Q:
When considering the federal income tax treatment for housing, which of the following is tax deductible?
A) Mortgage principle and interest paid
B) Mortgage interest paid
C) Homeowner's insurance paid
D) Mortgage principal paid
Q:
The appraised value of a property usually represents the:
A) Actual value of the property
B) Actual selling price of the property
C) Actual opinion of an appraiser
D) Actual replacement value of the property
Q:
The subject property of an appraisal has only two bedrooms, but one of the comparables used in the appraisal has three. If the adjustment for a third bedroom is $5,000, the adjustment would be:
A) A $5,000 increase to the comparable's selling price
B) A $5,000 decrease to the comparable's selling price
C) A $5,000 increase to the subject's selling price
D) A $5,000 decrease to the subject's selling price
Q:
An appraisal usually contains three approaches to valuation. Which of the following is NOT one of those approaches?
A) The Market Approach
B) The Ratio Approach
C) The Cost Approach
D) The Income Approach
Q:
The objective of appraisal is to:
A) Establish the highest possible price that a property can sell for
B) Establish the most probable price that would be paid for a property under competitive market conditions
C) Establish the market value for a property's land without any structures (such as a house)
D) Establish the market value for a property if the property is put to its highest and best use
Q:
The capitalization effect:
A) Is one of the major factors leading to housing bubbles
B) Has no impact on housing prices
C) Relates the quality of public services that individuals receive relative to the taxes that are paid for the services
D) Relates the interest rate on mortgage loans to the value of residential real estate
Q:
A region has a location quotient of 0.5 for manufacturing. This means that: (B)
A) The region's share of employment in manufacturing is twice as big as the share of manufacturing employment in the U.S.
B) The region's share of employment in manufacturing is half as big as the share of manufacturing employment in the U.S.
C) Manufacturing is a "base" or "driver" industry for the region
D) Both A and C
E) Both B and C
Q:
A property is purchased for $200,000 with an 80 percent LTV. After five years, the owner's equity is $80,000. What would be the approximate annual expected appreciation rate on home equity (annual EAHE)?
A) 13.9%
B) 14.9%
C) 20.0%
D) 80.0%
E) 100%
Q:
Which of the following statements best describes the "wealth effect"?
A) Households with equity in their houses are wealthier than households that rent their housing
B) Expected appreciation in assets, such as home equity, may increase spending on other goods and services in the economy
C) Economists believe that wealthier households have a positive effect on the housing market, while low-income households have a negative effect
D) A 10 percent increase in homeownership is associated with a 12 percent increase in economic growth
Q:
Assume that houses in an area appreciate at the rate of 4 percent a year. A borrower expects to have a loan-to-value ratio of 90 percent. What is the approximate expected appreciation rate on home equity (EAHE)?
A) 4.0%
B) 10%
C) 20%
D) 40%
Q:
Potential investors, in analyzing the profit potential for a distressed property, generally consider a financial framework including the acquisition phase, the holding period phase and the disposition phase.
Q:
Comparable properties must be chosen from those homes that have been sold, or have been listed for sale, most recently and that are located in the same city as the subject property.
Q:
A location quotient is the ratio of total employment to base employment.
Q:
Housing futures contracts allow investors to speculate on changes in home prices without actually owning a home.
Q:
Residential appraisers use only the sales comparison approach to determine value of the homes they appraise.
Q:
The appraisal function is purely objective; an appraiser's judgment is not part of the decision process.
Q:
When using the cost approach to valuation, current market data for land values must be obtained.
Q:
Estimating the land value for an improved property cannot be accomplished using the sales comparison method of valuation.
Q:
It is likely that two identical houses located in different school districts will sell for different prices.
Q:
Population increases are usually associated with increases in demand and house price appreciation.
Q:
When the value of public goods exceeds their cost, the effect on house prices is called the "capitalization effect."
Q:
Mortgage interest and property taxes are deductible for federal income tax purposes for homeowners.
Q:
Use of construction costs is very important in the sales comparison approach to valuation.
Q:
A housing bubble occurs when there is a big increase in the supply of homes.
Q:
One concern of appraisers when using the sales comparison approach is that financing benefits paid for by a seller of a property may result in a selling price for the comparable property that is lower than the market value.
Q:
Cluster analysis using location quotients and/or employment multipliers provides a snapshot of employment at a point in time but does not provide a forecast of future employment in a specific industry.
Q:
If mortgage interest rates increase, demand for purchased housing tends to increase.
Q:
If the cost of rental housing increases relative to house prices, demand for purchased housing tends to increase.
Q:
Ms. Towne is buying a home for $250,000 and is putting down 20% cash on the purchase. She is financing the rest with a 30-yr, fixed rate mortgage with a rate of 4.625%, but is considering an option that would allow her to make biweekly payments. How much interest would the biweekly payment option allow her to save over the life of the loan and how long would it take to pay off the loan?
A) $29,528; 25.5 years
B) $33,234; 22.2 years
C) $29,528; 22.2 years
D) $33,234; 25.5 years
Q:
Which of the following is an important aspect of the loan refinance decision process?
A) Terms associated with the existing loan
B) Terms of the new loan
C) Fees associated with paying off the old loan and/or acquiring the new loan
D) All of the above
Q:
The market value of a loan is:
A) The loan balance times one minus the market rate
B) The loan balance times one minus the original rate
C) The future value of the remaining payments
D) The present value of the remaining payments
Q:
Which of the following is TRUE regarding the incremental cost of borrowing?
A) It should be less than the rate for a first mortgage
B) It should be compared to the cost of obtaining a second mortgage
C) It is used to calculate the APR for the loan
D) It is independent of the loan-to-value ratio
Q:
Which of the following is FALSE concerning buydown loans?
A) They are often used during periods of high inflation
B) They always lower the rate on the loan for the borrower for the entire loan term
C) They help borrowers qualify for a loan
D) They can be offered by home builders
Q:
Which of the following is TRUE concerning wraparound Loans?
A) The borrower makes payments on an existing loan
B) The lender makes payments on an existing loan
C) The lender only makes payments on the second mortgage
D) The borrower only makes payments on the second mortgage
Q:
When calculating the cash equivalent value of an assumable loan, you find the present value of the payments using the:
A) Contract interest rate
B) Incremental borrowing cost
C) Market interest rate
D) Discount rate
Q:
Mr. Fisher has built several houses and is offering buyers mortgage rates of 10% with a 15 year term. Current rates are 10.75%. Fourth National Bank will provide the loans, if Mr. Fisher pays an equivalent amount up front to buy down the interest rate. If a house is sold for $290,000 with a 90% loan, how much would Mr. Fisher have to pay to buy down the loan?
A) $1,957.50
B) $11,989.34
C) $11,250.25
D) $10,790.41
Q:
Ms. Madison has an existing loan with payments of $782.34. The interest rate on the loan is 10.5% and the remaining loan term is 10 years. The current balance of the loan is $57,978.99. The home is now worth $120,000 and Ms. Madison would like to borrow an additional $30,000 through a wraparound loan which would increase the debt to $87,978.99. Terms of the wraparound loan are 12.25% interest with monthly payments for 10 years. What is the incremental cost of borrowing the extra $30,000 through a wraparound loan?
A) 15.47%
B) 11.38%
C) 12.96%
D) 13.41%
Q:
Bud is offering a house for sale for $180,000 with an assumable loan which was made 5 years ago for $140,000 at 8.75% over 30 years. Kelsey is interested in buying the property and can make a $20,000 down payment. A second mortgage can be obtained for the balance at 12.5% for 25 years. What is the effective cost of the combined loans, if Kelsey would like to compare this financing alternative to obtaining a first mortgage for the full amount?
A) 10.63%
B) 9.39%
C) 9.04%
D) 11.27%
Q:
A loan was made 10 years ago for $140,000 at 10.5% for a 30 year term. Rates are currently 9.25%. What is the market value of the loan?
A) $128,271
B) $147,600
C) $139,828
D) $151,395
Q:
A borrower made a mortgage loan 7 years ago for $160,000 at 10.25% interest for 30 years. The loan balance is now $151,806.62 and rates for this amount are currently 9.0% for 23 years. Origination fees and closing costs are $4,500 and closing costs are not financed by the lender. What is the effective cost of refinancing?
A) 9.00%
B) 10.85%
C) 15.32%
D) 9.39%
Q:
When purchasing a $210,000 house, a borrower is comparing two loan alternatives. The first loan is a 90% loan at 10.5% for 25 years. The second loan is an 85% loan for 9.75% over 15 years. Both have monthly payments and the property is expected to be held over the life of the loan. What is the incremental cost of borrowing the extra money?
A) 20.25%
B) 16.17%
C) 11.36%
D) 12.42%