Missed Test Questions

Question 1

Novation vs assignment

Answer 1

Novation is an assignment of all rights and liabilities. Requires consent.

Assignment is just some. Requires notification.

Question 2

income capitalization approach (valuation)

Answer 2

appraiser calculates
the ratio of net operating income (NOI) to the sale prices of similar properties to derive a capitalization rate. Then
the appraiser applies that capitalization rate to the calculated NOI of the subject property to develop a likely sales
price.

Question 3

Writ of Execution

Answer 3

court forces property to be sold to pay off the amount owed from a
Judgment.

Question 4

Les Pendens

Answer 4

notice to the public of a legal action, attachments are motion granted as security in
case the plaintiff does win the judgment.

Question 5

Which kind of title insurance would provide the most protection for the buyer of the property?
(a) Plain Language policy
(b) Extended Owner’s policy
(c) Standard policy
(d) ALTA Lender’s policy

Answer 5

There are many types of insurance policies, some you may know of as their
brand names. But of the choices given here, “extended” tells you it has the most coverage for the owner –
similar to the coverage in the lender’s policy.

Question 6

Truth in Lending or Reg. Z includes all the following requirements EXCEPT:
(a) Your Home Loan Toolkit
(b) Disclosure of costs
(c) Advertising restrictions
(d) Use of APR

Answer 6

Your Home Loan Toolkit” is a booklet required to be given to prospective borrowers under the Real
Estate Settlement Procedures Act (RESPA), not Truth in Lending.

Question 7

The phrase “the primary evidence of a loan” best describes:
(a) The defeasance clause
(b) The trust deed
(c) The mortgage document
(d) The promissory note

Answer 7

The promissory note is the evidence that a loan exists. The trust deed or mortgage
is the security or collateral for that loan.

Question 8

What role does the federal government play in regards to FHA loans?
(a) Pre-qualifies borrowers based on need
(b) Provides tax incentives for borrowers to make higher down payments
(c) Guarantees the first 25% of the loan value
(d) Operates an insurance program

Answer 8

FHA operates a government-backed insurance program and for-profit,
privately lenders process and close FHA insured loans.

Question 9

Z went to a trust deed foreclosure sale on an investment property that looked like a good deal. There were
other investors, but Z won the bid. Which of the following would Z expect to receive.
(a) Trust Deed
(b) Deed of Trust
(c) Sheriff’s Deed
(d) Trustee’s Deed

Answer 9

C

Deed of Trust and Trust Deed are the same thing: the collateral document the
borrower signed. A sheriff’s deed applies to foreclosure under a mortgage.

Question 10

36. J made a $100 earnest money deposit on a 4-plex and wisely used a real estate agent to assist him with the
    paperwork. The agent charged him a 2% commission. The real estate agent wisely put the deposit in the
    brokerage’s trust account. The home later sold for $50,500. How much will the escrow company pay the agent’s
    brokerage?

Answer 10

The brokerage will be sent a check for the commission amount ($1,010) less the earnest money
deposit ($100) held in the brokerage’s trust account. When the check is received, it is time for the brokerage to
withdraw the earnest money from the trust account and claim it as commission.

Question 11

Using the sales comparison method, if a subject property had an extra full bathroom ($6,000) that the
comparable property did not, but was on a less desirable lot ($5,000), the proper adjustment would be:

Answer 11

A characteristic such as having an extra bathroom in the subject property is the same as saying the
comparable is inferior so you would add $6,000 to the price of the comparable. Since the subject’s lot is not as
good as the comparable’s lot, that means the comparable is better so you subtract $5,000 from the comparable’s
price. The net effect is to add $1,000 to the comparable.

Question 12

Automated underwriting systems offer the following benefits EXCEPT:
(a) Speed and low operating cost
(b) Objective-free of discrimination
(c) Reduced closing cost to borrower
(d) Immediate feedback for correcting deficiencies

Answer 12

C
The benefit of using an automated underwriting program is the speed in
which an answer is delivered on the acceptability of a loan, and the GSE’s willingness to purchase it once closed.
To run the file through automated underwriting, the 1003 loan application must be complete, credit must be pulled
and be available. Automated underwriting systems (AUS) objectively examines the credit report and the 1003 to
make a decision in seconds, based on published and acceptable guidelines.

Question 13

Ad Valorem taxes

Answer 13

Taxes that are calculated as a percentage of the appraised value of
a property are called ad valorem taxes, meaning according to value.

Question 14

When someone makes a statement to a qualified official that they freely and voluntarily executed a deed or
document:
(a) Acknowledge
(b) Recording
(c) Certification
(d) Habendum

Answer 14

A
Recording is to record a document with the county recorder. Habendum is a
clause in a deed. With a notary public you acknowledge that you are signing of your free will and provide proof of
who you are. A witnessed document also falls under the category of acknowledged.

Question 15

All of the following are true about residential appraisals EXCEPT:
(a) Since a borrower’s available cash for closing is generally limited and the lending guidelines are rigid, the loan
originator should carefully review the appraisal for any errors.
(b) A lender will generally limit the loan to a maximum percentage of the appraised value of the property.
(c) The appraiser’s final estimated market value readily allows for an increase in settlement costs up to 10%
before the closing.
(d) A successful closing can be highly dependent on the appraiser’s opinion of value.

Answer 15

C

The loan application process and decision to lend money is heavily dependent on the appraisal
report. The majority of buyers face difficulty coming up with enough of their own cash at closing to complete the
deal so they need every penny of the requested loan amount. A lender has strict guidelines on how much to lend
and it’s generally based on a maximum percentage of the market value of the property. Often, there is no margin
for error; the full potential market value assumed in the loan application may be necessary to have a successful
closing

Question 16

Bob the buyer has made an offer on Sam the seller’s property. That offer has been accepted. Bob is working
on finalizing his loan for the purchase as part of the contingencies of the agreement. What kind of agreement
exists between Bob and Sam?

Answer 16

the contract is passed acceptance but not yet performed it is considered an Executory
agreement. Though we may refer to these as ‘sale pending’ the proper terminology is executory.

Question 17

The difference between present value and reproduction cost is:

Answer 17

Depreciation

If the appraiser uses the cost approach to determine the value of the improvement if it was built now,
that amount needs to be depreciated to the age of the subject property

Question 18

K was hired to manage a large apartment building. He would be functioning as which type of agent?
(a) Universal
(b) General
(c) Attorney in Fact
(d) Specific

Answer 18

b

There are three types of agents: specific - hired to perform defined actions; general - hired to use
his/her expertise to meet the objectives of the client; universal - hired to do all things. The process of being an
attorney in fact could apply to any of the three.

Question 19

When a remainder estate is involved, what owner interest is involved?
(a) Joint tenancy
(b) Life Estate
(c) Community property
(d) Ownership in severalty

Answer 19

b
Severalty means one owner. Joint tenancy and community property are co-owners held as a fee
estate. A life estate right ends with the person’s life, and then it passes to the remainderman.

Question 20

A new apartment building was constructed with an elevator. Under the Fair Housing Amendment Act of 1988,
what would the owner have to do.
(a) Adapt all kitchens with sink, stove, etc. low enough for wheelchair use
(b) Make sure thermostats in all rooms are reachable from a wheelchair.
(c) Not have a “No Pets” rule in case a blind person rented one unit.
(d) Make all hallways and doorways extra wide.

Answer 20

The thermostat issue has to do with two things: 1) there is an elevator so all units are accessible;
therefore, 2) thermostats and electrical outlets have to be placed for ease of access by someone in a wheelchair.

Question 21

An All-Inclusive Trust Deed is most closely related to all of the following EXCEPT:
(a) Blanket mortgage
(b) A Uniform Real Estate Contract
(c) Subject-To loan
(d) A wraparound mortgage

Answer 21

A
Although the terms all inclusive and blanket sound similar, a blanket mortgage is used to purchase
two or more parcels of land. The remaining options refer to the seller creating a new loan with a buyer while
keeping the seller’s original financing in place on a single property.

Question 22

Which of the following requirements must be met for a REIT (real estate investment trust) to be legal?

Answer 22

(d) 100 members: 90% paid as profits

A REIT prevents double taxation. But it must meet the minimum requirements for number of members
and the amount of profits distributed.

Question 23

Which of the following do not have the ability to enter a contract?

Answer 23

An Insane person

If the court determines that a person is insane they cannot enter a contract. They are protected by
law from harming themselves. A deceased person can enter a contract if represented by the executor or an
administrator.

Question 24

Broker L lists a home and offers subagency through the MLS. Broker S takes a buyer to the house and then
writes an offer to purchase. Broker L has never met the buyer. Broker S has never met the seller. Broker S does
not have a written contract with the buyer. Which is true?
(a) Both Broker L and Broker S are agents of the seller.
(b) Broker L is the subagent of the buyer.
(c) Broker S is the agent for the buyer and seller.
(d) Broker L is the agent of the buyer.

Answer 24

A
It helps a lot with these types of questions to diagram the players on paper. Utah says a licensee
must represent one or both of the parties in a real estate transaction. Since it says S does not have a contract
with the buyer, and it does say the listing was published across the MLS, both brokers represent the seller - L as
agent, S as subagent. NOTE: It doesn’t matter for the test that no one does it this way anymore. It is a legal
concept and still can be done this way.

Question 25

If the net operating income of a subject property is $1 million per year and the capitalization rate for similar income properties in that particular market is 10%, what is its estimated value using the income capitalization approach.

Answer 25

The income capitalization approach uses the formula; Income/Capitalization=Value. So, $1 million/10%=$10 million

Question 26

D purchased a lot and subsequently built a house, planted a tree and built a garage/workshop separate from the house. Which term describes this process?

Answer 26

Severance is the opposite of accession, like cutting the tree down. Hypothecation is using something as collateral without giving up possession, an an encroachment is someone else invading your territory.

Question 27

A lessee agreed to pay property tax and hazard insurance as well as rent. This lease is:

Answer 27

Net Lease With a gross lease the owner would pay the taxes and insurance. A tenant with a percentage lease pays a percentage of the profits along with the base lease. A proprietary lease is the right to occupy in a co-op granted because of purchasing stock in the corporation which owns the property.

Question 28

When an apartment building is sold, how should the renters' security deposits be handled on the HUD 1 statement?

Answer 28

They will be a debit to the seller and a notation in the buyer's credit section. They cannot be a credit in the buyer's financial column or the buyer would be using other people's money to purchase the property. They will be "noted" but will not be "computed."

Question 29

A buyer wants to assume a loan without taking on any personal liability for the loan. In the purchase offer, relative to the loan he should state he will: (a) Hypothecate and accelerate the loan (b) Subordinate to the seller's interest (c) Assume the loan and make the payments (d) Take title on a "subject to" basis

Answer 29

d Anyone who has a loan has liability. By taking title to the property on a subject-to basis, the existing loan stays in the seller's name. A foreclosure or late payments wouldn't go against the buyer's name, but if the property gets foreclosed, it's the buyer's loss -- so there's no way out of that part of the liability.

Question 30

The key difference between a promissory note and a mortgage is:

Answer 30

Promissory notes are signed by people personally obligated to repay the loan.

Question 31

H gives a life estate to her mother's doctor, which states that the doctor will have the property for as long as "Mom" is alive. Mom is very healthy, but the doctor is now dead. What happens?

Answer 31

The property goes to the doctor's heirs This is a life estate Pur Autre' Vie (based on the life of another). The doctor (holder of the life estate) is dead, but what about Mom, upon whose life it is based? If she's still alive, the life estate is still alive and will go to the doctor's heirs.

Question 32

was three years into a five-year lease and wanted to move elsewhere. T was willing to sublet the property. Which is true? (a) T is the only one who could be liable for damage to the property. (b) S could increase the rent and make a profit. (c) T pays rent directly to the owner. (d) S has no further liability for rents or damages.

Answer 32

b This is a sublet. S still has the primary liability and responsibility for rent payments to the lessor and for any damages.

Question 33

K and N owned homes in the same subdivision, bought the same year and the same size lot and type of floor plan. K found out N's taxes were $480 less. Where would K appeal to get lower taxes?

Answer 33

The Board of Equalization The Board of Adjustment is where you would go to get a variance if you wanted to do something different than allowed by zoning. You want your taxes to be equal to your neighbor's, so you go to the Board of Equalization.

Question 34

Which of the following statements about deeds is FALSE? (a) A notary is not required (b) All the grantees must sign the deed (c) Title is conveyed at the time the deed is delivered and voluntarily accepted (d) All the grantors must sign the deed

Answer 34

b All the grantors must sign the deed but grantees generally do not sign the deed. The grantor's signature and two witnesses are generally required, however a notary is not required - except in many states all documents must be notarized in order to be recorded in the public records. The deed conveys title to the property when it is delivered and voluntarily accepted by the grantee(s).

Question 35

A property description that uses angles and degrees is referred to as:

Answer 35

Metes and bounds A street address is an example of an informal description. The other three answers are the correct names of the three methods for legal descriptions.

Question 36

Each of the following entities make loans in the primary mortgage lending market EXCEPT: (a) Countywide Mortgage Lending Corporation (b) Big Time Federal Credit Union (c) Sallie Mae (d) Hometown Savings Association

Answer 36

C The primary mortgage lending market consists of commercial banks, savings associations, credit unions, mortgage bankers/lenders and mortgage brokers. Sallie Mae is not in the mortgage lending business.

Question 37

Tom wants to clear $90,000 when he sells his property. He must pay a 7% commission, $250 in closing cost, and $300 to the attorney who assisted in the transaction. What should he sell the property for?

Answer 37

$97,365 Always have to go "bottom up" on this. Work from the top down and you'll be close, but no cigar! FIRST is the selling price, our "I don't know" so the question mark goes there. LAST is the net. But the seller doesn't only need the $90,000, but also enough to cover closing costs and the attorney. So $90,550 is what he really needs to net. For LAST, what % equals the "net?" It sells for the magic 100%, 7% comes out for commission, so 93% equals the net. Divide the one below the line by the one above, or $90,550 by 93% to get the answer.

Question 38

How long must a broker retain rejected offers?

Answer 38

3 years following the year of the transaction. This answer applies to all the brokerage records. Don't just keep the simple number 3 years in your mind.

Question 39

*Refer to the Closing Disclosure tool link in the upper-right corner of this exam for this question. If the seller gave a financial credit to the buyer, what line would show the amount the seller is paying?

Answer 39

Line N.08 shows the credit the seller is paying; line L.05 is showing the amount the buyer is being credited by the seller's credit

Question 40

If the owner and principal broker of Jones Real Estate Co. decides to open a separate property management company, which does NOT apply?

Answer 40

A) There must first be more than six property management accounts. Remember that number only applies to the need to open a separate property management trust account.

Question 41

If a person owns a share in a stock cooperative, so they have the right to live in their individual unit undisturbed, what do you call their rights?

Answer 41

A co-op is an ownership of stock in the corporation that owns the property. The owner of the stock has a proprietary lease. Tenancy for years is a lease with the time frame spelled out at the beginning. Fee simple defeasible (or qualified) is ownership with strings attached, and a PUD is housing with CC&R's.

Question 42

Why is a real estate license not sufficient when selling investment opportunities in a large real estate project that will involve multi-use properties?

Answer 42

Investment opportunities need a securities license. Selling a parcel, or a partial parcel of real estate needs a real estate license.

Question 43

In relation to one's water rights, the term "littoral"

Answer 43

Equate "littoral" with boundary issues where tides are involved (oceans and large lakes).

Question 44

If, upon examination by the Division's representative, gross mismanagement of the records is found, which of the following would NOT be a possibility? (a) The Division could freeze the trust account. (b) If there is an audit, the broker must pay for it. (c) An audit by an independent CPA can be required. (d) The Division could appoint a receiver.

Answer 44

a The Division does not have the legal authority to freeze a bank account. They could, however, issue a Cease and Desist order. Even the court could not freeze the account, but appoint a receiver.

Question 45

In a condominium subdivision, who owns the supporting structure of each individual unit?

Answer 45

All tenants own it as tenants in common. In any kind of condominium, used for any purpose, the owner owns the air space of his/her own unit, and an undivided interest in the common area (which includes the structure itself.)

Question 46

Which of the following activities would require the person to have a real estate license for property management activities? (a) Q is renting empty units, collecting rents, and handling maintenance in return for reduced rent. (b) J is a secretary of a property management company and occasionally shows an empty apartment. (c) L collects rents from the triplex next door for his good friend and there is no compensation. (d) Mary is collecting rents for her widowed mother who just pays her a token $25.

Answer 46

d Remember the guideline: Someone assisting another in a real estate transaction and receiving compensation (no matter how small) for it needs a license. Memorizing the exceptions to needing a property management license will also be helpful for the test.

Question 47

The term for Utah's water law, which determines who gets to have rights to use and distribution of water, is:

Answer 47

Prior appropriation These are all terms that apply to water issues: littoral rights relate to boundaries when tides are involved; riparian rights are used in non-arid states; beneficial use is a principle for deciding who gets the water.

Question 48

A double contract would most likely be created between a:

Answer 48

buyer and seller It is two contracts between the buyer and seller, only one of which is shown to the lender. Even if the agent or lender suggested it, it is still a purchase contract between buyer and seller.

Question 49

It is June 18, and your license expired May 30. Which is NOT true? (a) You are out of luck! Start over. (b) You are now an inactive licensee. (c) You can renew by paying extra during June. (d) You can comply with additional requirements and renew till October 31.

Answer 49

a You are not "out of luck" until six months after your renewal date. The first month (when you are now inactive) you do the usual requirements, plus an additional fee. The following five months there are additional requirements. After that, forget it!

Question 50

Which of the following options would NOT satisfy the points requirement for a broker applicant to get their license? (a) A combination of 45 points from sales and 15 points from property management. (b) 60 points that come from selling properties. (c) 60 points for property management while employed by the owner. (d) A combination of 45 points from real estate and 15 points from optional allowed activities.

Answer 50

c The points verify that you have experience handling real estate transactions while representing the interests of the public. To only do transactions for your employer doesn't satisfy that requirement.

Question 51

*Refer to the Closing Disclosure tool link in the upper-right corner of this exam for this question. Did the buyer and seller share the costs for settlement, and what line indicates that fact? (a) No, C.05 (b) No, H.07 (c) Yes, C.05 (d) Yes, H.07

Answer 51

No. The settlement fees are shown in section C, line 05.

Question 52

The maximum amount that would be paid from the Utah Recovery Fund for a single transaction of a dishonest licensee is:

Answer 52

Memorize two numbers in regard to this act: $15,000 maximum for one transaction, and $50,000 maximum for one licensee

Question 53

Which of the following is a requirement for a licensed person to be a commissioner? (a) Have a broker's license for three years. (b) Be a principal broker for three years. (c) Be an active licensee for five years. (d) Have a sales agent license for three years.

Answer 53

c Four of the commissioners are licensees and can have either a sales agent or broker license -- for five years previous; the other commissioner is at-large, meaning not a licensee in real estate.

Question 54

A plumber did some work on a home. After waiting a few weeks while the owner kept promising to pay, the plumber decided to place a mechanic's lien against the property. Which of the following would accomplish that?

Answer 54

Perfect a lien at the county recorder's office. An unlawful detainer pertains to evicting a tenant. A lis pendens is filed when foreclosing under a mortgage.

Question 55

Assuming a REPC is accepted on January 25th and a check for $1,000 earnest money is given the same day, what is the latest it can be deposited into the Brokerage Trust Account?

Answer 55

Utah law says earnest money must be deposited within 3 days, unless the contract says otherwise. We know that the REPC says the deposit must be made within 4 days after Acceptance. However, Section 21 of the REPC dictates that the clock begins on the day after Acceptance. Therefore, the 4-day timeframe begins on January 26th, which is the first day; January 29th is final day to deposit the earnest money.

Question 56

A person owns a condo and does not pay the taxes. What happens?

Answer 56

It jeopardizes the owner's position The condo issue may have sent you off track. The fact is that any owner of real property who does not pay the property taxes can end up with the property sold at auction.

Question 57

A timeshare development company wants to hire a licensed real estate agent to sell timeshare interests. Which of the following is true? (a) The agent must disclose to all purchasers he/she has a license. (b) Since the agent is licensed, no further action is needed. (c) The agent must register with the R. E. Division (d) A special license is needed to market timeshares.

Answer 57

c Even a person with a real estate license must register with the R. E. Division to sell timeshares. If licensed, the registration fee is waived.

Question 58

A broker in Vernal lists a property in Roosevelt under an exclusive right to sell listing. The selling broker does not sell through the listing broker. This could create: (a) Double commission (b) Double contract (c) Dual disposition (d) Dual agency

Answer 58

a Dual (limited) agency is representing both parties. It is legal if the correct documentation is used. Double contracts means two contracts for one transaction and is illegal. Dual disposition . . . Your guess is as good as mine!

Question 59

You list a home that has an old well on it. The seller knows nothing about it. It is not being used now, but the seller doesn't know who has the water rights. Where would you check to find out.

Answer 59

Division of Water Rights. There are two possible right answers to questions about water rights (on the test and in real life): Division of Water Rights or the State Engineer's Office

Question 60

When a dispute concerning a commission arises between a broker and a sales agent, the complaint should be handled by which of the following?

Answer 60

the courts This would be a contract dispute and should be handled in the courts.

Question 61

*Refer to the Closing Disclosure tool link in the upper-right corner of this exam for this question. Did the seller assist the buyer with the costs of the sale in any way?

Answer 61

No You would look through page 2 to see if the seller contributed to the buyer's loan costs or title costs. Typically, inspections and home warranties do not constitute a buyer's cost for the closing.

Question 62

Refer to the Closing Disclosure tool link in the upper-right corner of this exam for this question. If the seller gave a financial credit to the buyer, what line would show the amount the seller is paying?

Answer 62

Line N.08 shows the credit the seller is paying; line L.05 is showing the amount the buyer is being credited by the seller's credit

Question 63

Which of the following is NOT required for an unlicensed auctioneer to conduct an auction of real property? (a) A principal broker is present at the auction. (b) The earnest money is deposited in the broker's trust account. (c) The Real Estate Purchase Agreement is used and filled out by a licensee. (d) A principal broker has reviewed and initialed all documents prior to the auction.

Answer 63

The broker looking over documents BEFORE the transaction happens doesn't help at all. All the other three answers are required if the auctioneer does not have a license.

Question 64

Sales agent Q is working with Company X who is going to buy a large parcel of land and subsequently subdivide it and sell the individual smaller parcels. Q should inform Company X

Answer 64

X should inquire through the R. E. Division to determine if they need to register under the Land Sales Practices Act.

Question 65

In Utah, what is the statutory period for obtaining a prescriptive easement?

Answer 65

20 years

Question 66

The Real Estate Recovery Fund had to pay money on a real estate licensee. What happens to the agents license?

Answer 66

It is automatically revoked.

Question 67

Under what circumstances could a real estate broker receive a referral fee from the dealer who sells a manufactured house?

Answer 67

As long as it is disclosed to the purchaser, this is an acceptable practice. It must be paid to the broker, and from the broker to the agent

Question 68

If a principal broker dies, and it is a sole proprietorship, what should be done with the records of the company?

Answer 68

The Division should be notified as to where the records will be stored. (This is only for sole proprietorship)

Question 69

The buyer wants J, the agent, to write up the offer as a seller carry back for the financing of the sale. What statement is applicable to this situation? (a) It is illegal, and if J values his/her license, J won't do it. (b) J must disclose to both parties there might be a "due on sale" clause and its effect. (c) J. should request an estoppel certificate for disclosure to the buyer. (d) J should request the loan documents from the lender, review them, then give an opinion about the legality of this approach.

Answer 69

B Memorize this standard and be sure you do it, always. You do not have to review the loan and give an opinion. Estoppel certificate is a document from the lender giving all pertinent details of the terms of the loan.

Question 70

In the relationship between the lender and the real estate licensee, what is NOT allowed? (a) The licensee may refer clients to specific lenders. (b) The licensee can arrange a meeting for the lender to propose a financing plan to the client. (c) A referral fee may be paid, not to exceed $50. (d) The lender may send a copy of the loan estimate to the agent.

Answer 70

All the choices listed are appropriate except for the agent receiving money from the lender.

Question 71

Refer to the Closing Disclosure tool link- How much did the buyer pay for title insurance?

Answer 71

In this transaction, the buyer paid for their own Owner's policy (line H.07) along with the lender's policy (line C.04), totaling $1,500.

Question 72

Which of the following best describes the Marketable Record Title Act?

Answer 72

Nullifies most liens over forty years old. This is not an automatic process, however, and you should be sure you know what liens could be removed and which have to stay in place.

Question 73

The statutory requirement for becoming a broker is: (a) Have five years' experience as a real estate salesagent. (b) Post $1,000 bond. (c) Be a member of the Board of Realtors. (d) Have three years' full-time experience as a real estate licensee or its equivalent.

Answer 73

D

Question 74

If a person living in a condominium project did not pay their homeowner fee, what might the consequences be? (a) A lien would be placed against the property. (b) A condemnation action would be initiated. (c) They will forfeit their ownership. (d) It would become fee simple defeasible.

Answer 74

A The only allowed recourse for not paying the fee is a lien placed against the property. That lien could later lead to a foreclosure if payment is not made subsequent to the lien placement.

Question 75

If a person owns a share in a stock cooperative, so they have the right to live in their individual unit undisturbed, what do you call their rights?

Answer 75

Proprietary lease A co-op is an ownership of stock in the corporation that owns the property. The owner of the stock has a proprietary lease. Tenancy for years is a lease with the time frame spelled out at the beginning. Fee simple defeasible (or qualified) is ownership with strings attached, and a PUD is housing with CC&R's.

Question 76

A promissory note for earnest money should be made out in the name of the:

Answer 76

seller

Question 77

The age of an improvement can be discussed from several viewpoints. Which would be considered to be the longest? A) Effective life (b) Physical life (c) Economic life (d) Service life

Answer 77

It might not be economically viable, yet is still standing: physical life.

Question 78

What do you call the person who signs a document on behalf of another? (a) Client (b) Attorney in Fact (c) Power of attorney (d) Customer

Answer 78

b Explanation: The person IS an attorney in fact. S/he is that because s/he HAS the authority of a power of attorney document.

Question 79

Which of the following is NOT a method for creating an easement? (a) A neighbor's use for 7 years (b) Mutual Agreement (c) Prescription (d) Implication

Answer 79

a The wrong answer is referring to adverse possession. All the other three are ways to create easements.

Question 80

Which of the following entities is only in the secondary mortgage market, and not in both primary and secondary? (a) Private individuals (b) GNMA (Government National Mortgage Association) (c) Insurance companies (d) Banks

Answer 80

b GNMA, FNMA, FHLMC only function in the secondary money market, buying loans already in place.

Question 81

Which of the following terms is NOT applicable to an adjustable rate mortgage? (a) Cap (b) Index (c) Discount (d) Margin

Answer 81

c Discount in relation to loans applies when an investor buys an existing loan for less than its face value.

Question 82

People who execute a document are referred to as:

Answer 82

Signatories To execute a document refers to the placing of signatures therefore puts the contract into effect. Executor is the person who carries out the will; "testator" wrote the will; a notary public verifies your signature. A person who signs any document is the signatory.

Question 83

What is the risk to a lender who accepts a deed in lieu of foreclosure?

Answer 83

They would accept the deed subject to any junior liens. This is a perfectly legal arrangement, but carries risks for the lender. It is sometimes called a "friendly foreclosure."

Question 84

The three tools used by the Federal Reserve to reduce the supply of money are:

Answer 84

Increase the reserve requirement, raise the discount rate, sell securities in the open market. When the Federal Reserve wants to reduce the supply of money, it will sell securities in the open market, raise the discount rate and raise the reserve requirement.

Question 85

Using the sales comparison method, if a subject property had an extra full bathroom ($6,000) that the comparable property did not, but was on a less desirable lot ($5,000), the proper adjustment would be:

Answer 85

Add $1,000 to the comparable property.

Question 86

Mrs. Hawkins has a contractual obligation to pay Mr. Cooper, her agent, a 5% brokerage fee for his services. The borrower has a loan of 80% LTV, and discount points of 2%. The seller's title costs are $1,500 and the seller is required to pay at closing an extra $750 to re-shingle the roof for the buyer. Assuming these are the only closing costs for the buyer and seller, what is the minimum selling price of the home if Mrs. Hawkins wants to net $65,000?

Answer 86

$70,789.47 This is another question where you must work backwards. The information regarding the buyer's closing costs is irrelevant. The seller needs to net $65,000. To this we need to add our closing costs first (again the buyer's discount fees are not subtracted from what the seller is to receive and are not included in the seller's closing costs). Sales agents are commissioned on the selling price of the home and not the price of the home plus the closing costs. That is why we add the closing costs first in this equation. At this point, if there was no agent commission owed, the minimum selling price would merely be the net required by the seller ($65,000) plus the closing costs ($2,250). Giving us a total of $67,250. The next step is more tricky... A common mistake is dividing by 5% using this calculation will get you a ridonculous number. The trick to this question is to remember that we are wanting what is net to the seller. In this case, we are going to take 100%, minus the 5% commission, for 95% which is left over for the seller. Now we can use the $67,250 divide this figure by 95% and you have the minimum selling price of the home.

Question 87

What is the right of a mortgagor to regain clear title to the property upon full payment of the debt after the foreclosure sale?

Answer 87

Redemption The word "redeem" means to save. To save the property from being lost to the defaulting borrower, payment in full would have to be made.

Question 88

HUD oversees each of the following federal laws or programs EXCEPT: (a) Real Estate Settlement Procedures Act (b) FHA (c) GNMA (d) Truth-in-Lending

Answer 88

Truth-in-Lending TILA is administered by the Federal Trade Commission (FTC). HUD oversees the Fair Housing Act, RESPA, FHA, Ginnie Mae, and administers low income housing assistance programs to over 2.1 million households.