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Prelicensing Course > Midterm #2 > Flashcards

Midterm #2 Flashcards

1
Q

A borrower obtaining a construction loan would most likely be obtaining what type of loan?

A. A blanket loan
B. An amortized loan
C. An option loan
D. A term loan

A

D. A term loan

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2
Q

Two parties have entered into a demise agreement. Which of the following would terminate the demise without further liability to the parties?

A. Death of the parties
B. Sale of the property
C. Condemnation
D. Mutual or bilateral decision

A

D. Mutual or bilateral decision

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3
Q

Licensed property managers are engaged in all of the following, EXCEPT:

A. The creation of concessions
B. Competitive bidding
C. Refusing offers to purchase the property
D. Recommending capital expenditures and planning budgets

A

C. Refusing offers to purchase the property

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4
Q

The final action taken by an appraiser in determining the value of property is called:

A. Substitution
B. Reconciliation
C. Evaluation
D. Summation

A

B. Reconciliation

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5
Q

When obtaining a loan, the lender takes into account the debt ratios of the parties obtaining the loan. Which of the following statements is correct regarding debt ratios?

A. Lenders utilize a housing ratio of 36% and a total debt ratio of 28%
B. The lender calculates the net income of the borrower
C. Lenders utilize the gross income and the long-term recurring debt.
D. Lenders calculate the total debt ratio based on the application’s car payment, utility bills, credit card payments and living expenses

A

C. Lender utilize the gross income and the long-term recurring debt

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6
Q

A loan where the term of the loan is shorter than the amortized period would result in:

A. Negative amortization
B. A term loan
C. A balloon payment
D. Prepayment penalties

A

C. A balloon payment

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7
Q

Which of the following would be considered securitizing documents or collateral agreements?

A. Promissory notes and mortgages
B. Mortgages and real estate tax liens
C. Deeds of trust and mortgages
D. A lease and a purchase contract

A

C. Deeds of trust and mortgages

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8
Q

Which of the following is correct regarding an option to purchase?

A. The option is enforceable by the optionor.
B. The option is enforceable by the optionee.
C. Both the optionor and the optionee may enforce the option
D. An option is not a contract until the option is exercised by the parties

A

B. The option is enforceable by the optionee

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9
Q

which of the following provides that the consumer can see a copy of their credit report?

A. TILA
B. RESPA
C. FCRA
D. ECOA

A

C. FCRA

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10
Q

When a trust deed is paid off in full, the borrower will receive a deed of reconveyance from which party?

A. The trustor
B. The beneficiary
C. The mortgagee
D. The trustee

A

D. The trustee

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11
Q

All of the following are required by the Real Estate Settlement & Procedures Act, EXCEPT:

A. Disclosure of the APR
B. A loan estimate
C. Use of a booklet to accompany the loan estimate
D. A final and accurate Closing Disclosure

A

A. Disclosure of the APR

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12
Q

All of the following would be included in a promissory note, EXCEPT:

A. The amount of money that the borrower is obtaining from the bank
B. The penalties and charges if the payment is not received when due
C. The term of the loan and the interest rate
D. The identification of the parcel of real estate encumbered by the note

A

D. The identification of the parcel of real estate encumbered by the note

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13
Q

All of the following would be important to a lender in determining the qualifying ratios of a borrower, EXCEPT:

A. The amount of net income the borrower has after taxation
B. The amount of gross monthly income that the borrower earns
C. Th amount of monthly debt that is recurring for car payments and credit cards
D. The amount of the borrower’s principal, interest, taxes and insurance payment on a monthly basis

A

A. The amount of net income the borrower has after taxation

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14
Q

The loan to value ratio calculation measures:

A. The equity that exits in the property
B. the difference between the value of the home and all the liens that exist on the property
C. The total of the liens against the property as a percentage of the total property value
D. The total value remaining in the property after subtracting the percentage of the liens against the property

A

C.. The total of the liens against the property as a percentage of the total property value

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15
Q

Which of the following is a correct statement regarding the risk of loss regarding the transfer of real property:

A. The risk of loss remains upon the grantor until the contract has been fully executed
B. Risk of losses changes with possession of the property
C. Risk of loss travels with ownership of the property
D. The risk of loss will be transferred from grantee to grantor on the settlement date

A

C. Risk of loss travels with ownership of the property

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16
Q

All of the following would be protected under Equal Credit Opportunity Act, EXCEPT:

A. A married couple
B. A recipient of public assistance income
C. A migrant worker
D. An immigrant of Chinese ancestry

A

C. A migrant worker

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17
Q

In NC, when does a borrower get possession of the home and the seller receive their proceeds from the sale?

A. At the time of settlement.
B. Once the buyer has fully executed and signed the warranty deed.
C. Once the closing attorney has verified and received the payment of all monies from the borrower and the lender has funded the loan.
D. At the time of closing, which is defined as recordation of the deed.

A

D. At the time of closing, which is defined as recordation of the deed.

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18
Q

In appraising, with which of the following properties would an appraiser be most likely to use the cost approach?

A. A home that is older than 40 years
B. A 4-unit investment property
C. A one of a kind shopping mall
D. A municipal building

A

D. A municipal building

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19
Q

Which of the following is correct regarding a property where the promissory note is secured by a deed of trust?

A. The trustee holds legal title and the beneficiary holds bare title.
B. The trustor holds bare title and the trustee holds equitable title.
C. The trustor holds equitable title and the trustee holds legal title.
D. The trustee holds bare title and the beneficiary holds equitable title

A

C. The trustor holds equitable title and the trustee holds legal title.

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20
Q

Which of the following is required by Regulation Z?

A. providing the borrower with a loan estimate within 3 days of loan application
B. Use of a closing Disclosure at the time of settlement
C. The inclusion of APR when using trigger terms in advertising
D. Consumer access to a copy of their credit report at least once a year

A

C. The inclusion of APR when using trigger terms in advertising

21
Q

Which of the following is a true statement about an amortized loan?

A. The longer the amortized period, the greater the amount of principal paid.
B. The shorter the amortized period, the lower the amount of principal paid
C. The shorter the amortized period, the greater the amount of interest paid
D. The longer the amortized period, the greater the amount of interest paid

A

D. The longer the amortized period, the greater the amount of interest paid

22
Q

When a transfer of property involves a purchase money mortgage, how would the purchase money mortgage appear on the Closing Disclosure Statement:

A. Credit to the buyer, not appearing on the seller side
B. Credit the buyer, debit the seller
C. Debit the buyer, not appearing on the seller side
D. Debit the buyer, credit the seller

A

B. Credit the buyer, debit the seller

23
Q

A property manager has negotiated leases and had them signed on behalf of the property owner. Under NC law, these leases must be provided to the property owner:

A. Immediately, but never later than 5 days after signing
B. Within 30 days of signatures
C. The property manager is not permitted to sign leases on behalf of the owner
D. Within 45 days of signature

A

D. Within 45 days of signature

24
Q

The NC Good Funds Act requires attorneys and settlement agents to:

A. Refuse personal checks at closing
B. Disperse funds after recording
C. Disperse funds upon settlement
D. Verify only funds that exceed $10,000

A

B. Disperse funds after recording

25
Q

All of the following are required by Dodd-Frank Act and enforced by the Consumer Financial Protection Bureau, EXCEPT:

A. The borrower’s Closing Disclosure must be received by the borrower at least 3 business days prior to settlement
B. The borrower must receive a Loan Estimate from the lender within 3 business days of loan application
C. There are two separate Closing Disclosures, one for the seller and one for the buyer.
D. The seller’s Closing Disclosure must be received by the seller at least 3 business days prior to settlement

A

D. The seller’s Closing Disclosure must be received by the seller at least 3 business days prior to settlement

26
Q

A borrower who has insufficient down payment should consider which of the following types of financing?

A. 203(b) financing
B. HELOC financing
C. Seller carry back financing
D. Blanket financing

A

C. Seller carry back financing

27
Q

Which of the following transactions would require compliance with RESPA?

A. A loan obtained on a parcel of vacant land
B. An investor purchasing a 4 - unit residential property
C. A retired couple paying cash for a single - family residence vacation home
D. A loan on a multi-family apartment complex

A

B. An investor purchasing a 4 -unit residential property

28
Q

The Federal Reserve sets or regulates all of the following, EXCEPT:

A. The discount rate
B. Asset and reserve amounts for banks
C. Federal funds rate
D. Interest rates charged to consumers

A

D. Interest rates charged to consumers

29
Q

The document that demonstrates memebers of the military will have a portion of their loan guaranteed by the Veteran’s Administration is:

A. DD-214
B. Certificate of Reasonable Value
C. Estoppel Certificate
D. Certificate of Eligibility

A

D. Certificate of Eligibility

30
Q

Enforcement of RESPA and Regulation Z occurs by:

A. Federal Reserve
B. HUD
C. CFPB
D. Interstate Banking Regulation Commission

A

C. CFPB

31
Q

The provision in a lease that ensures that the lessee will have occupancy of the unit against all others who claim a superior interest in the property is known as the:

A. Covenant of possession
B. Covenant against encumbrances
C. Covenant of quiet enjoyment
D. Covenant against ejectment

A

C. Covenant of quiet enjoyment

32
Q

In a non-judicial foreclosure, the process is initiated by:
A. The beneficiary filing a lis pendens
B. The trustee instructing the beneficiary to issue a notice of default
C. The trustor issuing a notiec of default and a notice of sale
D. The beneficiary instructing the trustee to issue a notice of default and a notice of sale

A

D. The beneficiary instructing the trustee to issue a notice of default and a notice of sale

33
Q

When a mortgage note is in default and the lender demands that the entire balance be paid, the mortgagee is exercising their rights of:

A. Alienation
B. Foreclosure
C. Acceleration
D. Forfeiture

A

C. Acceleration

34
Q

All of the following would be considered operation expenses in the calculation of next operating income, EXCEPT:

A. Property management fees
B. Principal and interest for loans on the property
C. Liability insurance
D. maintenance fees and costs

A

B. Principal and interest for loans on the property

35
Q

All of the following entities operate in the primary mortgage market, EXCEPT:

A. Commercial banks and lenders
B. Pension plans and insurance companies
C. Credit unions and savings institutions
D. Fannie Mae and Freddie Mac

A

D. Fannie Mae and Freddie Mac

36
Q

A loan in which the lender makes regular periodic payments to the borrower is best referred to as a:

A. Graduate payment loan
B. Negative Amortization loan
C. Reverse Annuity mortgage
D. Wraparound financing

A

C. Reverse Annuity mortgage

37
Q

All of the following advertisements would be considered to contain a “trigger term” under TILA, EXCEPT:

A. Low monthly payment of $650
B. Low interest rate of 5.8%
C. Competitive APR of 7.8%
D. Own a home for just $10,000

A

C. Competitive APR of 7.8%

38
Q

In a contract for deed, the legal title to the property is retained by:

A. the vendor
B. the vendee
C. the beneficiary
D. the trustor

A

A. The vendor

39
Q

Which of the following is an accurate statement when using the comparison method of appraising:

A. The adjustments are always made to the subject property
B. Inferior comparables are always adjusted downwad
C. the three comparables are averaged together to achieve reconciliation
D. The property with the fewest number of adjustments is most similar to the subject property

A

D. The property with the fewest number of adjustments is most similar to the subject property

40
Q

The best definition of an estate for years is a leasehold interest that:

A. Exists for a period longer than 12 months
B. requires notice to terminate the agreement
C. Contains a definite period of time
D. contains periodic automatic renewal provisions

A

C. Contains a definite period of time

41
Q

The type of agency agreement that exists between a property manager and the owner of the property would best be classified as:

A. Implied agency
B. Exclusive agency
C. General agency
D. Special agency

A

C. General agency

42
Q

What would be the proper closing disclosure entry when a borrower assumes a mortgage obligation of the seller?

A. Credit the seller and credit the buyer
B. Credit the buyer and debit the seller
C. Credit the seller and debit the buyer
D. Debit the buyer and debit the seller

A

B. Credit the seller and debit the buyer

43
Q

Provisions that call for the release of certain parcels when a specified amount of money is paid would be found in which type of loan?:

A. Blanket loan
B. An adjustable rate loan
C. A construction loan
D. A term loan

A

A. Blanket loan

44
Q

The loan clause that most likely would prevent the grantor and grantee from selling a property without paying off an existing mortgage would be:

A. Acceleration clause
B. Subordination clause
C. Encumbrances clause
D. Alienation Clause

A

D. Alienation Clause

45
Q

What is the primary source for the rules that regulate the obligations and duties property owners and tenants owe to each other?

A. Fiduciary obligations
B. Provisions in the Residential Rental Agreements Act
C. The NC Real Estate Commission
D. Basic obligations owed to customers

A

B. Provisions in the Residential Rental Agreements Act

46
Q

Jerry was renting a residential property. At the beginning of a 12-month lease term, he had paid the landlord a total of $2,000 as a security deposit. Halway through the lease, Jerry died. What is the correct disposition of the security deposit and the lease agreement?

A. The lease is terminated but the landlord may keep the security deposit.
B. Jerry’s estate is liable for the lease obligation and the landlord may keep the deposit and apply it to unpaid rent.
C. The lease is terminated and the landlord must return the deposit to Jerry’s heirs.
D. The lease and the deposit must be turned over to probate so they can be distributed to the proper heirs.

A

B. Jerry’s estate is liable for the lease obligation and the landlord may keep the deposit and apply it to unpaid rent.

47
Q

The secondary market would best be defined as:

A. the market in which loans are originated
B. the market where loans are bought and sold
C. the market where commercial banks and savings and loans are located
D. the market in which stock portfolios of loan products are purchased

A

B. The market where loans are bought and sold

48
Q

Which of the following statements is correct regarding the cost approach?

A. Land value - Cost of the Building = Value of the Property
B. Land Value + Depreciation - Cost of the Building = Value of the Property
C. Land Value + Appreciation + cost of the building - depreciation = value of the property
D. Land Value + Cost of the Building - Depreciation + Appreciation = Value of the property

A

C. Land Value + Appreciation + cost of the building - depreciation = value of the property

49
Q

When the landlord breaches a lease, the tenant is entitled to:

A. Constructive eviction
B. Actual eviction
C. Punitive damages
D. Summary ejectment

A

A. Constructive eviction

Prelicensing Course (6 decks)

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