CA Real Estate Finance Flashcards
Reliance on borrowed capital more than on equity funds would be known as the use of
secondary mortgage markets.
hypothecation.
disintermediation.
leverage.
Leverage
page 23
The real estate cycle begins anew when
supply equals demand.
supply exceeds demand.
demand exceeds supply.
supply and demand are ignored.
demand exceeds supply.
Page. 26
A fundamental aspect of real estate finance is the ability of borrowers to remain in possession and control of their property. This is defined as
a lien.
collateral.
leverage.
hypothecation.
hypothecation.
p.22
Real estate finance is basically a manifestation of our
supply and demand economic system.
ability to pay cash for our property.
government sponsored home ownership program.
credit system economy.
credit system economy.
p.21
One way to increase a property’s value without adding any physical improvements is to
lease it.
rezone it.
sell it.
refinance it.
Rezone it
Page. 24
The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act) was designed to
minimize the potential for fraudulent lending activities.
control interstate real estate transactions.
reduce the popularity of adjustable rate mortgages.
eliminate the use of leverage in real estate investing.
minimize the potential for fraudulent lending activities.
Page. 20
The fact that a 1,500 square foot house sells for $300,000 in Los Angeles, $85,000 in Fresno, and $45,000 in El Centro is based on the property’s fixity and its being subject to the economies of which of the following markets?
Local
International
National
Regional
Local
Page. 23
Lenders having a cash surplus in a low demand area would most likely
lower interest on deposits to reduce their surplus.
purchase loans in the secondary market.
raise the interest rates on new loans to raise profits.
sell loans in t
purchase loans in the secondary market.
Page. 25
Disintermediation occurs when
savings withdrawals exceed savings deposits.
healthy banks acquire defunct thrift institutions.
the nation’s rate of savings declines.
supply exceeds demands.
savings withdrawals exceed savings deposits.
Page. 22
The demographics of a real estate cycle would probably include all of the following inputs except the population’s
ages.
location.
family structure.
religion.
Religion
Page. 27
Economic stability is linked with the supply and costs of money. Thus, all of the following statements are correct, except the
lower the costs of money, the greater the economic activity.
more money in circulation, the greater the economic activity.
higher the costs of money, the greater the economic activity.
less money in circulation, the less the economic activity.
higher the costs of money, the greater the economic activity.
P. 43
The Federal Reserve is
controlled by the Federal Deposit Insurance Corporation.
under the Department of Housing and Urban Development.
a central banking system.
a public stock corporation.
a central banking system.
P.40
When the Federal Reserve raises its members’ reserve requirements, it is acting to Correct increase financial activities. decrease interest rates. increase the money supply. decrease financial activities.
decrease financial activities.
p.43
Deposits in banks and thrifts are insured by the
CLIC.
SAIF.
OTS.
FDIC.
FDIC.
p.50
The Federal Home Bank System Correct supervises the activities of the RTC. is under the FDIC. is now defunct. provides its members with a national market for their securities.
provides its members with a national market for their securities.
p.52
All of the following statements about the FDIC are true, except that it
may merge failed institutions with other institutions.
has been eliminated.
controls the Deposit Insurance Fund.
insures depositors accounts.
Has been eliminated
P. 50
The California Bureau of Real Estate
deals with franchising of businesses.
settles commission disputes.
investigates complaints against licensees.
provides legal advice to complainants.
investigates complaints against licensees.
P.55
The Federal Reserve is currently responsible for all of the following operations except
counteracting inflationary and deflationary movements.
stabilizing values.
maintaining sound credit conditions.
printing money.
Printing money
P.51
From an economic theory point of view, money can best be described as a
value unto itself.
standard of value.
commodity.
measurement of inflation.
Standard of value
p.36
Which agency is responsible for handling the assets of failed savings institutions? Correct U.S. Treasury. Federal Deposit Insurance Corporation. Federal Home Loan Bank. The Federal Reserve.
Federal Deposit Insurance Corporation.
Page 50
Commercial banks tend to make loans for
construction activities.
mobile homes.
the purchase of land.
subdivision improvements.
Construction activities
p.65
The pension funds tend to invest in which of the following types of real estate investments?
Mortgage-backed securities
Personal property loans
Farm loans
Home loans
Mortgage-backed securities
Page 73
State-chartered savings and loan associations regulated by the California Department of Savings and Loans are authorized to lend up to what percent of the appraised value of the collateral for a real estate mortgage loan?
100%
70%
80%
90%
100%
p.69
Life insurance companies become partners with project developers through the use of commercial loans called
participation loans.
home purchase loans.
bridge loans.
home equity loans.
Participation loans
p.71
Which of the following institutional lenders is increasing its participation in real estate finance?
Thrifts
Credit unions
Life insurance companies
Commercial banks
Credit unions
p.74
All of the following sources of funds for real estate finance are considered financial intermediaries except
savings institutions.
commercial banks.
sellers as lenders.
life insurance companies.
Sellers as lenders
p.61
Which of the following statements is true regarding life insurance companies?
Their costs of funds are higher than other fiduciaries.
Their lending policies are subject to federal control.
They are more concerned with safety than with liquidity.
They prefer small loans for diversity.
They are more concerned with safety than with liquidity.
p.71
Savings institutions, major providers of home mortgage loans, are also referred to as
co-ops.
credit unions.
trusts.
thrifts.
Thrifts
p.69
The department in a commercial bank that manages relatively large quantities of money and property for their beneficiaries is the
escrow department.
treasury department.
mortgage-lending department
trust department.
Trust department
p.66
Which institutional lender has the most flexibility in mortgage lending activities?
thrifts.
credit unions.
life insurance companies.
commercial banks.
Thrifts
p.69-70
Mortgage banking services include providing
trust departments.
savings accounts.
checking accounts.
real estate loans.
Real estate loans
p.87
Mortgage brokers assume a large part of the responsibility for
appraisals.
loan underwriting.
insuring loans.
qualifying borrowers.
Qualifying Borrowers
P.81
Mortgage brokers earn most of their profits from
collection fees.
loan interest.
placement charges.
insurance premiums.
Placement charges
P.81
Mortgage bankers
specialize in commercial lending.
manage real estate loans.
originate home mortgage loans.
match borrowers with lenders.
Manage real estate loans
p.83
Individuals participate as lenders in real estate mainly by creating
senior loans.
junior loans.
insured loans.
guaranteed loans.
junior loans.
p.104
The payments on revenue bonds come from
income from developments.
property taxes.
income taxes.
special assessments.
income from developments.
P.96
Private loan companies deal mainly in
senior financing.
FHA-insured home loans.
junior financing.
owner carry-back loans.
Junior financing
P.100
Real estate investment trusts are created for all of the following reasons except to
limit personal liability.
pool funds for larger investments.
avoid double taxation.
avoid probate costs.
Avoid probate costs
p.90
The payment for the entire amount of principal due at the end of a mortgage loan term is called a(n)
zero coupon.
equity.
balloon.
balance.
Balloon
p.83
All of the following terms are associated with a syndicate except
limited partner.
active income.
general partner.
blue-sky laws.
Active income
p.91
A veteran’s total monthly obligations equal $1,500. What is the gross monthly income required to qualify for the loan?
$5,172
$4,166
$3,658
$1,500
$3,658
P.148
The FHA is responsible for which of the following actions?
Guaranteeing new loans
Issuing new loans
Refinancing existing loans
Insuring new loans
Insuring new loans
p.128
All of the following statements describe the advantages of the FHA, except:
there are different loan types.
they have high L/V ratios.
it has lower than market interest rates.
there is no prepayment penalties.
it has lower than market interest rates.
P.130
According to Fannie Mae and Freddie Mac guidelines, private mortgage insurance is required on conventional loans when the loan-to-value ratio is in excess of
20%
80%
40%
60%
80%
p.116
Which document stipulates the DVA loan amount that establishes the maximum loan available on a specific property?
Certificate of entitlement
Certificate of eligibility
Borrowers’ financial statement
Certificate of reasonable value
Certificate of reasonable value
P.147
Most loans today are
DVA loans.
FHA loans.
owner carry-back loans.
conventional loans.
conventional loans.
p.112
The FHA allows second mortgages to be acquired on the collateral property, but the second mortgage must not contain
maturities in excess of five years.
variable payments.
a prepayment penalty.
loan-to-value limits.
A prepayment penalty
p.142
Under the CAL-VET program, during the period that the veteran is living in the home and making payments, the veteran
is party to a land contract.
has full legal title.
has no equitable interest in the property.
is a tenant in a leasehold estate.
Is party to a land contract
p.154
Property serving as collateral for an FHA-insured loan
cannot be valued at $250,000 or above.
must meet certain minimum standards of acceptability.
need not be appraised
must be located within a 50-mile radius of the lender.
must meet certain minimum standards of acceptability
p.128
A conventional guaranteed loan may be insured by
a private insurance company.
the DVA.
the FHA.
a title insurance company.
A private insurance company
p.115
All of the following developments are exempt from the provisions of the Interstate Land Sales Full Disclosure Act except
residential subdivisions sold exclusively in one state.
cemetery land.
subdivisions of 25 or more lots to be sold nationally.
subdivisions of five acres or more.
subdivisions of 25 or more lots to be sold nationally.
P.185
Farm and ranch loans are unique types of real estate finance because their success depends to a large degree on the
nation’s economic circumstances.
borrower’s credit.
property’s productivity.
local zoning ordinances.
Property’s productivity
p.164
The Department of Housing and Urban Development includes all of the following functions except the
management of the FHA.
Supervision of the FDIC.
supervisor of the GNMA.
member of the President’s cabinet.
Supervision of the FDIC
p.167
The required property reports delivered to potential buyers of lots in subdivisions under HUD’s jurisdiction must include information on all of the following items except
roads.
schools.
churches.
utilities.
Churches
P.185
The Community Reinvestment Act is designed primarily to
require banks to meet the needs of all residents in the neighborhoods.
require banks to make subprime loans.
require banks to make low interest rate loans.
finance urban renewal projects.
require banks to meet the needs of all residents in the neighborhoods.
P.189
Which of the following types of loans is NOT exempt from California’s usury ceilings?
Credit union loans
Loans from real estate brokers secured by real property
Business loans
Mortgage loans made by savings associations
Business loans
P.192
The USDA Rural Development Program aims to
reverse the trend of job loss.
protect rural areas from rezoning.
restrict the import of agricultural products.
stabilize credit costs to ranchers.
reverse the trend of job loss.
P.166
The federal regulator of the Farm Credit System is the
U.S. Treasury.
Department of Housing and Urban Development.
Farm Credit Administration.
Farmers Home Administration.
Farm Credit Administration.
P.165
Community Redevelopment Agencies are sometimes funded by which of the following programs?
State income taxes
Tax-increment financing
Rental overrides
Federal income tax rebates
Tax-increment financing
P.193
Which of the following entities controls the Farm Credit System?
Its members
HUD
The Fed
The U.S. Treasury
It’s members
p.165