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MBA Exam > Additional Practice Test Questions > Flashcards

Additional Practice Test Questions Flashcards

1
Q

It is illegal to press the call for help button in an elevator, True or False?

A

False

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2
Q

What financial statements must the Borrower submit as required by the HUD MAP Guide?

Three years of the following financial statements:
Balance Sheet, Income Statement, Cash Flow Statement

Steel framing and reinforced concrete framing

Cash Basis - used by individuals and small businesses; revenue is recognized when cash is received, expenses recorded when cash is paid.

Accrual Basis - revenue is recorded when earned and expenses when they are owed
Crawl space, known to collect water, and attract termites, both of which will rot wood joists.

A

Three years of the following financial statements:

Balance Sheet, Income Statement, Cash Flow Statement

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3
Q

CMU is an acronym for what?

Bond beam block
Concrete masonry unit
Tilt-up concrete
Reinforced concrete

A

Concrete masonry unit

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4
Q

What is typically the most expensive framing style to build?

Wood
Steel Framing
Assembly Worker Wages
Fabric

A

Steel Framing

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5
Q

What is the average turn time for a unit under normal conditions?

7 days
10 days
5 days
3 days

A

3 days

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6
Q

What is the debt ratio formula?

A

Debt Ratio = (Total Debt / Total Assets)

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7
Q

Hydraulic elevators were originally used in the empire state building, true or false?

A

True

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8
Q

How many interior components does a packaged unit rely on to heat and cool the air?

Trick question, zero, packaged units are outside of building and store all necessary components in one unit shell.

All active principles are controlling participants, but not all controlling participants are active principles

No, focus is on prevention, monitoring, education

Seismic design and retrofit issues, not enough time to present. AEI has a separate slide deck on seismic issues and I will format that into the MBA slides and provide it to Gail for review and distribution.

A

Trick question, zero, packaged units are outside of building and store all necessary components in one unit shell.

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9
Q

CNA & E-Tool
The following underwriter risks: Deferred Maintenance, Routine Maintenance, Capital Replacement and Renovation can all be categorized under:

Elements of Design
Elements of Capital Needs
Elements of Property Condition
None of the above

A

Elements of Property Condition

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10
Q

Are emergency generators fueled by electricity?

Yes
No

A

No

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11
Q

What is the debt ratio formula?

Debt Ratio = (Total Debt / Total Assets)

Water supply shut‐off valve was in off position,

Traction/hoist elevator

Drainage/Standing water

A

Debt Ratio = (Total Debt / Total Assets)

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12
Q

In which type of ownership structure do all partners share in business gains and all partners are held personally liable?

Limited Partnership
General Partnership
Limited Liability Company
Limited Liability Partnership

A

General Partnership

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13
Q

why are some exhaust flues metal and some PVC?

A

Less efficient furnaces (80 AFUE) have metal flues as a result of the hot temperature of the exhaust. More efficient condensing furnaces (90+ AFUE) have lower temperatures and produce condensed exhaust gases that contain water and carbon dioxide, which together form carbonic acid that results in a corrosive condensate. As such, only special types of plastic are recommended by furnace manufacturers for venting and condensate drainage in a condensing furnace.

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14
Q

When evaluating the REO schedule, how should current physical occupancy be considered?

A. The average physical occupancy over time.
B. The most current physical occupancy at a specific point in time.
C. The current market occupancy.
D. The median physical occupancy.

A

B. The most current physical occupancy at a specific point in time.

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15
Q

What is the working capital formula?

A

Working Capital = Current Assets - Current Liabilities

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16
Q

A vertical pipe used to carry rainwater from a roof is called

A. Drain

B. Swale

C. Gutter

D. Downspout

A

D. Downspout

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17
Q

The overall purpose and intent of a site inspection is to:

A. Determine a property’s value

B. Identify costly repairs

C. Identify risks of the property that may reduce cash flow generated by the property

D. Determine possible areas for concern within the management company

A

C. Identify risks of the property that may reduce cash flow generated by the property

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18
Q

What is a RUBs Rent?

A

RUBS (Ratio Utility Billing System) a method of determining a resident’s utility bill based on factors like unit square footage, the number of people living in a unit, or some combination thereof. It is a utility reimbursement fee. May include trash

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19
Q

Which if the following is part of the underwriter’s role in the review physical condition of the property?

A. Identify the assessor’s opinion of remaining useful life of the property and compare this to the appraiser’s opinion of remaining economic life.

B. Identify the assessor’s opinion of remaining useful life and compare to his/her own opinion of the remaining useful life.

C. Ask the management company to determine the remaining useful life.

D. Not be concerned with the remaining useful life.

A

A. Identify the assessor’s opinion of remaining useful life of the property and compare this to the appraiser’s opinion of remaining economic life

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20
Q

The following underwriter risks: Deferred Maintenance, Routine Maintenance, Capital Replacement and Renovation can all be categorized under:

A. Elements of Design

B. Elements of Capital Needs

C. Elements of Property Condition

D. None of the above

A

C. Elements of Property Condition

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21
Q

The American with Disabilities Act (ADA):

A. Covers public accommodations, not the inside of dwelling units; applies whether there is a HUD loan or not.

B. Covers design standards for properties that receive public assistance, such as Section 8 housing.

C. Deals with discrimination against families and protected minorities.

D. Provides assistance to people with disabilities.

A

A. Covers public accommodations, not the inside of dwelling units; applies whether there is a HUD loan or not.

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22
Q

When estimating the cost of repairs an underwriter will:

A. Use a comparable as a reliable cost when hiring someone to complete the work.

B. Decide if the estimates are acceptable and where they are coming from.

C. Hire someone to make the repairs.

D. Determine what was the cost for similar repairs in the past.

A

B. Decide if the estimates are acceptable and where they are coming from.

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23
Q

Which of the following is NOT a true statement regarding the CNA process?

A. The analysis must contain a year by year scheduling of anticipated capital items and associated costs

B. The CNA requires the results of an onsite inspection.

C. HUD will no longer require that the CNA be prepared, submitted and reviewed by a third party assessor.

D. All CNA’s must be prepared by an independent third party assessor.

A

C. HUD will no longer require that the CNA be prepared, submitted and reviewed by a third party assessor.

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24
Q

The reserve for replacement schedule is to be completed by which of the following:

A. Underwriter

B. Third party independent assessor

C. Appraiser and third party assessor

D. HUD regional office

A

A. Underwriter

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25
Q

The estimated time period for the reserve for replacement schedule is:

A. Minimum 10 years

B. Minimum 15 years

C. Lessor of 20 years or 2 years plus remaining term of insured mortgage

D. Maximum 35 years

A

C. Lessor of 20 years or 2 years plus remaining term of insured mortgage

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26
Q

Which of the following defines Estimated Useful Life (EUL)?

A. Period of years in which a property of average condition of use may be expected to remain serviceable for its intended purpose.

B. Period of time the improvements contribute value to the property over a period of time, whether the property’s income potential decreases over time.

C. The result obtained by subtracting the age of the property from its remaining economic life.

D. The result obtained by subtracting the age of the property less depreciation.

A

A. Period of years in which a property of average condition of use may be expected to remain serviceable for its intended purpose.

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27
Q

Select all that apply. The Financial Factors Form of Assessment requires the underwriter to determine which of the following:

  1. Construction materials
  2. Inflation rates
  3. Interest rates
  4. Annual deposit
  5. Initial Deposit
A
  1. Inflation rates
  2. Interest rates
  3. Annual deposit
  4. Initial Deposit
28
Q

What specific roles are included in “Specified Capacity”

A

Borrower Owner
Management Agent
General Contractor

29
Q

What must a foreign national have in place to be considered an active principal?

A

Need SSN or EIN
Acceptable Immigration Status
Live in US
Adequate Financial Capacity

30
Q

If a shell entity or a wholly owned entity is a General Partner or Managing Member of the mortgagor entity, do you need to complete a mortgage credit review? What about a 2530?

A

Mortgage Credit - No
2530 - Yes. Cannot be considered an “excluded entity”. The GP or MM of the mortgagor entity is signing every legal document related to the loan, therefore the entity must be registered

31
Q

When must you complete an organizational chart for a management agent?

A

When there is an Identity of Interest (IOI)

32
Q

Does HUD allow internally prepared statements to be submitted for review?

A

Yes, but Un‐audited financial statements must be certified by the principal of the borrower and the last complete fiscal year must be a CPA or IPA “reviewed” statement. **“Audited,”
and “Reviewed,” are defined professional standards for reports understood by CPAs.

33
Q

Does HUD require that all Borrower’s use GAAP for their property and business accounting?

A

Yes, but personal statements do not need to follow GAAP accounting

34
Q

What influences rental rates?

A

Market inventory
Unit features
Amenities
Quality
Location

35
Q

What are the property performance ratios and how are they calculated?

A

Property performance ratios are important credit risk metrics the underwriter uses to determine if the operations of the property are producing sufficient income from the operations to support the debt service (P&I and MIP)

Physical occupancy
Economic vacancy
Breakeven Occupancy
Operating Expense Ratio
Debt service coverage ratio

36
Q

Define specified capacity.

A

The term “specified capacity” is defined as specific roles: borrower/owner; management agent; or general contractor. These may be individuals or entities and at least one material person must be identified as a controlling for each specified capacity.

37
Q

What liquidity ratios?

A

Current Ratio

Quick Ratio

Net Worth

Working Capital

Debt Ratio

38
Q

How do you calculate Net Worth?

A

Net Worth = Assets - Liabilities

39
Q

How do you calculate working capital?

A

Working Capital = Current Assets - Current Liabilities

40
Q

What is the Debt Ratio

A

Debt Ratio = Total Debt / Total Assets

41
Q

What is the Quick Ratio formula?

A

Quick Ratio = (Current Assets - Inventory) / Current Liabilities

42
Q

What is the current ratio formula?

A

Current Ratios = (Current Assets / Current Liabilities)

43
Q

Should the soil/earth nearby the building foundation be lower than the foundation?

A

Yes

44
Q

What does negative gradient mean?

A

A negative gradient means that the line slopes downwards toward the building. will cause surface water from rainfall to run towards the foundation

45
Q

Why are retaining walls built?

A

Retaining walls are often found in places where extra support is needed to prevent the earth from moving downhill with erosion. The most basic function of a retaining wall is to battle gravity

46
Q

What can happen when the parking lot is at the same height as the sidewalk?

A

Stormwater and roll over the sidewalk and towards building foundations

47
Q

What is the difference between a retention pond and a detention pond?

A

Retention ponds always have water in them, whereas detention ponds are designed to hold water during periods of heavy rain.

48
Q

What do detention ponds prevent?

A

Down stream flooding

49
Q

What is the maximum rise in inches of a ramp?

A

30-inches

50
Q

True or False: Sewer lines and systems are self‐sustaining and require no maintenance?

A

False, many problems can occur

51
Q

What is the function of a sewer lift station?

A

Pump sewage against gravity towards municipal lines

52
Q

What type of roofing quickly removes stormwater from the structure?

A

Sloped roof

53
Q

What is the most common problem with flat roofs?

A

Drainage/Standing water

54
Q

What type of roofing is more expensive?

A

Hi-rise flat roofing

55
Q

What is typically the cheapest foundation style to build?

A

Slab on grade foundations are typically the cheapest foundations to build.

56
Q

Does the building framing rest on the foundation or does the foundation rest on the framing?

A

The foundation is the lowest part of the structure, every part of the building ultimately rests on the foundation

57
Q

Foundations have pressures exerted upon them from what direction?

A

All directions, superstructure weight from above, soils from side walls, and upheaval and settlement from below,

58
Q

Does an AC unit take part in heating the interior air?

A

No

59
Q

What plumbing supply material is rated for hot water, CPVC or PVC?

A

CPVC

60
Q

What product has a longer EUL, tank water heaters or tankless water heaters?

A

Tankless

61
Q

What method do CNA vendors use to understand the approximate property wide ages of the appliances and finishes?

A

Extrapolation

62
Q

What is an elevator sheave?

A

A toothed pully/wheel equipment that works with motor and ropes

63
Q

What kind of elevator uses a sheave?

A

Traction/hoist elevator

64
Q

Why are the ages of building components important?

A
  • EUL = “Estimated Useful Life” ‐ HUD Published Tables
  • Remaining Useful Life (RUL) versus Adjusted RUL
  • Based upon condition, maintenance practices, climate, and degree of use, component RULs can be Adjusted/extended (testing of equipment may be required)
  • Single‐Year vs. Spread/Duration - Function of CNA e‐Tool v3.0
65
Q

Can the immediate repair and future capital needs schedules be adjusted after a Firm Commitment has been issued?

A

Yes. If amendments to the CNA are necessary after firm commitment, the HUD reviewer must “un‐approve” a CNA e‐Tool, by changing its status from Approved to Returned. Once the CNA has been Returned, the lender can make adjustments(creating a new version) and resubmit. The amended CNA will likely need to be reviewed again by the HUD reviewer and must be approved before closing.

MBA Exam (23 decks)

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