mock 3 Flashcards by Edward Powell

When the payments will gradually increase over time:

Reverse Annuity Mortgage
Straight line principal reduction mortgage
Graduated mortgage
Variable Rate mortgage

Graduated mortgage

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Which one of the following is NOT an implied term of a mortgage?

The borrower is entitled to redeem the mortgage within a reasonable time.
The borrower is entitled to redeem the mortgage free from all conditions or terms of the mortgage contract.
The borrower is entitled to assign the mortgage.
The borrower is free from any unreasonable collateral advantage required by the lender.

The borrower is entitled to assign the mortgage.

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In the shopping behaviour model, which of the following is NOT a main classification ?

Specialty goods
Superior goods
Shopping goods
Convenience goods

Superior goods

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An appraiser has estimated the market value of a single family dwelling to be $410,000. On the day of the appraisal, the house sold for $370,000. Given that there was sufficient evidence of recent sales, was the appraiser’s estimate of value reasonable?

No, the estimate exceeds the maximum allowable error for the appraisal of the market value of a residence.
No, the appraiser’s estimate is a subjective “value to owner” and does not represent the market value.
Yes, because appraisers have no maximum allowable error when calculating the market value of a residence.
Yes, it was within the maximum error allowed for appraisers in the calculation of the market value of a residence.

Yes, it was within the maximum error allowed for appraisers in the calculation of the market value of a residence.

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Which of the following appear as debits on a Buyer’s statement of adjustments?

vendor take-back mortgage, conveyancing fees
deposit paid, real estate licensee’s commission, legal fees for discharge of an existing mortgage
assumption of 1st mortgage, deposit paid, balance due to complete
conveyancing fees, purchase price

conveyancing fees, purchase price

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Which of the following statements regarding property appraisals are true?

A. The courts provide some guidelines for an appraiser’s legal responsibilities under tort law and contract law

B. The courts have recognized that a reasonable margin of error exists when calculating damages as a result of a negligent appraisal

C. A large overvaluation of a property by an appraiser does not, by itself, establish liability on the part of the appraiser.

D. The value of real estate property can always be determined with certainty

statements B and D are true
statements A and C are true
statements B, C and D are true
statements A, B and C are true

statements A, B and C are true

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Mike bought a house two years ago, at which time he arranged a $110,000 mortgage. This loan was written at a nominal rate of 9.5%, compounded semi-annually, with a ten year term and amortization period, and monthly payments. Today Mike has received an offer from Andre to buy his house for $50,000 cash plus assumption of his mortgage. If current mortgage rates are 12% per annum, compounded semi-annually, for eight year term mortgages, what is the market value of Andre’s offer?

$149,603.19
$137,758.18
$87,758.18
$99,603.19

$137,758.18

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On the first day of the year, the West Coast bottled water company has goods costing $417,000 in its inventory. During the year, it purchases $250,000 worth of goods to add to its inventory. West Coast’s Income Statement states that the Cost of Goods Sold for the year is $242,000. How much does West Coast have in its inventory at the end of the year?

$15,000
$167,000
$425,000
$242,000

$425,000

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Which of the following is considered to be a fixture?

A. rose bush
B. fridge
C. hardwood flooring
D. a lamp

only A and C
only A, B, C
only B and C
all of the above

only A and C

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A caveat is:

A warning issued by the court.
A notice placed on the land title register at the request of a person who claims an interest in the land.
A specific type of builder’s lien.
Formal notice to anyone searching title that a court action has been commenced concerning the property.

A notice placed on the land title register at the request of a person who claims an interest in the land.

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The loan to value ratio is the ratio of:

the annual payments on the loan divided by the market value of the mortgage.
the actual amount of the mortgage (the amount paid to the borrower net of bonus or brokerage fees) divided by the actual value of the property.
the market value of the mortgage divided by the market value of the property.
the face value of the mortgage loan divided by the lending value of the property.

the face value of the mortgage loan divided by the lending value of the property.

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Which one of the following does NOT form part of the definition of market value?

Value is a price that is reasonably expected to prevail.
Value is based on the personal opinion of the value to the owner.
Value is determined at a particular point in time.
The buyer and seller must be bargaining at arm’s length

Value is based on the personal opinion of the value to the owner.

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Dan Danard wishes to purchase a house from a vendor who is willing to provide partial financing. Dan is offering an $88,000 down payment with a mortgage of $142,000 at 4% per annum, compounded semi-annually. The loan is to be fully amortized with level monthly payments over 25 years. What is the market value of this offer if the market rate for similar mortgage loans is 6% per annum, compounded semi-annually?

$115,101.97
$204,746.21
$203,101.97
$230,000.00

$204,746.21

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Which one of the following statements is FALSE?

The doctrine of precedent provides uniformity to the common law system.
The Supreme Court of Canada is not required to hear all appeals.
The Supreme Court of British Columbia may exercise both common law and equitable jurisdiction.
An appeal by a taxpayer to reduce a tax assessment would fall within the sphere of private law.

An appeal by a taxpayer to reduce a tax assessment would fall within the sphere of private law.

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Which of the following statements regarding lending value are FALSE?

A. Lending value is always equal 98% of the purchase price.
B. Lending value is an estimate of the mortgage loan a purchaser will be able to obtain.
C. Lending value is a long term conservative estimate of the value of the interest in land pledged as security.
D. Lending value is equal to market value.

Only statements A and C are false.
Only statements A, B, and D are false.
Only statements B, C, and D are false.
None of the above statements is false.

Only statements A, B, and D are false.

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The stabilized annual net income for your property is $64,000. If you set the price of $775,000, what is the yield on the property?

109375%
25806452%
48148148%
546875%

8.25806452%

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You have promised to pay your friend $10,000 four years from today. What is the present value of this $10,000, if the effective rate is 6%?

$9,786.00
$7,920.94
$12,624.77
$8,398.93

$7,920.94

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Which one of the following factors is MOST likely to affect the value of residential real property in the short run?

gonsumer pessimism or optimism relating to residential Real Estate estate trends
the supply and cost of raw materials and energy
government programs about Real Estate
shifts in age composition of the population

consumer pessimism or optimism relating to residential Real Estate estate trends

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You have been assigned the task of appraising the Oak Park community Center in Diggston, BC. The centre is located in the middle of Maple leaf estates, a townhouse subdivision on the outskirts of the town. The land on which the centre is built was purchased 8 years ago at a cost of $18,000; while similar lots today sell for $28,000. The centre, a 4,000 sq. Ft. Structure, was originally built at a cost of $38 per sq. ft. ; replacement cost (new) today would be $57 per sq. ft. You estimate that an appropriate depreciation factor would be 30%. Also, you have determined that the community centre is the highest and best use for the site.

Using the cost method of appraisal, the correct estimate of the market value of the centre would be:

$187,600
$119,000
$177,000
$170,000

$187,600

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In terms of appraisal, “recent” means:

up to three months ago.
that time period during which demand and supply conditions have remained relatively stable.
the time period that has expired since a number of properties comparable to the subject property were sold.
the time period that has expired since a number of properties similar to the subject property were listed for sale.

that time period during which demand and supply conditions have remained relatively stable.

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Velveeta Bladderhack’s lender has informed her that she can qualify for a loan under the gross debt service ratio if she extends the amortization period from 10 to 15 years. Given that she does extend the amortization period to 15 years, which of the following are true? Assume the interest rate, loan amount, and term are the same under both options.

A. The lender’s capital risk is increased.
B. Velveeta will pay off more principal in total over the duration of the loan.
C. Her monthly payments will decrease in size.
D. Her effective annual interest rate paid will not change.
E. Each monthly payment will contribute less towards paying off the principal.

A, C, D, and E are true.
A, B, C and E are true.
A, C, and E are true.
B and D are true.

A, C, D, and E are true.

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If interest is 5% compounded semiannually then what is monthly periodic rate?

4218%
9486%
4123%
4164%

0.4123%

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Which of the following would appear as a debit on the seller’s statement of adjustment?

The amount of mortgage which the buyer will assume
The legal fees involved in discharging a judgment from the seller’s title
The amount of penalty owing for overdue taxes
All of the above would appear as a debit on the seller’s statement

All of the above would appear as a debit on the seller’s statement

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Your friend recently took a marketing course and mentioned the four P’s of marketing.

The 4 P’s of marketing are also called:

Product, place, price and positioning
the communications mix
product, price, place and publicity
the marketing mix

the marketing mix

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A nominal interest rate of 8% per annum, compounded semi-annually is NOT equivalent to: an effective annual rate of 8.16% 1. 98039027186% compounded quarterly 4. 85006200803% compounded monthly 7. 844985576% compounded daily

4.85006200803% compounded monthly

One of more of the following statements describing the BC land registration system is FALSE: A. Documents transferring a fee simple title must be registered to be effective and enforceable against subsequent bona fide purchasers of the same fee simple. B. A charge registered against a fee simple title may be removed from title if it is a forged document. C. The Assurance Fund will compensate every financial loss incurred as a result of BC’s land registration system regardless of the cause of the loss. D. Unless the Land Title Act specifies the use of a particular form, any instrument sufficient to pass or create an estate or interest in land is registerable. Only A, B, and D are false. Only C and D are false. Only C is false. None of the above is false.

Only C is false.

Jake Touche wants to purchase a house that is listed for $76,000. The bank’s appraiser estimates that the lending value of the property is $71,000. Jake’s gross annual income is approximately $28,000 per year. The bank applies a 70% Loan-to-Value ratio and a Gross Debt Service ratio of 30%. Property taxes amount to $1,200 per year. Assume that the lender demands a twenty-five year amortization period and monthly payments at J12 = 15%. How much can Jack borrow? $49,700.00 $46,844.60 $54,652.04 $48,148.46

$46,844.60

Consider the following statements regarding mortgage loans: A. A short-term, partially amortized mortgage permits readjustment of mortgage interest rates by the lender at maturity, allowing the lender to match the interest rates on its assets to the rates on its liabilities. B. With a fully amortized loan, the amortization period is always longer than the term of the loan. C. In a reverse annuity mortgage, the borrower makes a series of payments or advances to the lender over the term of the loan. D. The amortization period must always be expressed in months because most loans have monthly payments. Which of the above statements is/are TRUE? A only. B and D only. A, B, and C only. A, B, C, and D.

A only.

Nick dumped some toxic waste onto Maria’s backyard and the neighbor saw it. Maria traced it back to Nick and decided to press charges against him and sue for $20,000 in damages. Which of the following is TRUE? If the plaintiff decides to appeal from Small Claims Court it will go to the BC Court of Appeal If the plaintiff decides to take action, he has to bring his claim down to $3,000 in order to go to Small Claims Court the Supreme Court of Canada will hear any case If the plaintiff wants to appeal from Small Claims Court he can go to any Supreme Court anywhere in his province

If the plaintiff wants to appeal from Small Claims Court he can go to any Supreme Court anywhere in his province

A property is located in the area where there are a lot of trees. That fact that the tree roots began to destroy the foundation of the property known as: A Patent defect An encumbrance A Latent defect A fundamental mistake

A Latent defect

A property is listed for $550,000 but the market value, as estimated in a recent appraisal, is $545,000. The property’s lending value is estimated to be $540,000. Jay and Joan purchase the home for $543,000 subject to a mortgage of $432,000. What loan to value ratio was applied by the lender with whom Jay and Joan negotiated the mortgage? (Assume that the loan to value ratio was the binding constraint on the loan size). 75% 80% 70% 125%

80%

A petitioner has granted an order NISI of foreclosure and the respondent has 6 months as a redemption period. The borrower has failed to pay the amount due within the redemption period. Now, the petitioner may return to court and ask for: An order absolute of foreclosure An order granting a loan on the subject party Notation of the mortgage An assignment of the mortgage to the petitioner

An order absolute of foreclosure

Which of the following scenarios represents a method for using a manufactured home itself as security for purchase price? a) Mike transferred ownership of his manufactured home to Paul, who then gave a security agreement on the home in favor of Mike in exchange for part of the purchase price b) Alex borrowed money from his sister-in-law in order to pay for his manufactured home, and in exchange Alex gave a security agreement on the home in favour of his sister-in-law c) Ivan purchased a manufactured home from Joanne under the condition that he will make biweekly payments to her for the next 3 years, at which time Joanne will transfer legal ownership him A & B only A & C only B & C only All the above

All the above

Two neighbors, Ms. Finch and Mr. Falcon, each sold their homes last week. Ms. Finch sold her house for $150,000, while Mr. Falcon’s house only sold for $132,000. Mr. Falcon can’t understand why his house sold for less since both homes are identical in all respects. Which of the following could account for the difference in selling price? Ms. Finch had already purchased another home and needed to sell this home immediately. Mr. Falcon had already purchased another home and needed to sell this home immediately. Mr. Falcon supplied a vendor take-back mortgage of 13% while the current market rate was 16%. All of the above factors could account for the difference in selling price.

Mr. Falcon had already purchased another home and needed to sell this home immediately.

Jim and Janice have just received an inheritance of $320,000. Their plans are to purchase a house with a $270,000 down payment after travelling around the world for five years. They have found a place to invest their money at 12.5% per annum compounded monthly for a five year term. What is the maximum amount of their inheritance they can use to purchase traveller’s cheques (which will be spent on their vacation) without sacrificing their $270,000 down payment? $144,988.54 $102,440.00 $175,011.46 $320,000.00

$175,011.46

A monthly payment is divided in half and, instead of being paid once a month, is paid every two weeks. In this way, the borrower makes one extra monthly payment per year, thus paying down the principal faster and paying less interest. What is this payment called? Monthly payment Accelerated bi-weekly payment Interest only payment Interest accruing payment

Accelerated bi-weekly payment

As determined by the promotional mix, which of the following represents face-to-face communication with the potential customers: Personal selling Public relations Sales presentations Publicity

Personal selling

Which of the following statements is TRUE? A. wrap-around mortgages are commonly used in contemporary mortgage lending in Canada B. with wrap-around mortgages, the borrower makes only one payment to the wrap-around lender C. the wrap-around lender charges a higher interest rate on the wrap-around mortgage than a lender would charge on a conventional second mortgage. D. wrap-around mortgage are mathematically similar to blended rate financing A and B only B and D only C and D only All of the above

B and D only

Given the following information, calculate the cash proceeds to Vanessa the vendor from Paul the purchaser: Price: $150,000 Deposit to brokerage: $ 15,000 Financing: 1st mortgage of $71,000 to be assumed 2nd mortgage of $34,000 has been arranged Taxes: Unpaid and overdue in the amount of $1,095 A penalty is owing of $105. These will be paid by the conveyancer. Commission: 6% of sale price Conveyancing Fees: $600 Adjustment, completion and possession dates: August 31st Note: Assume that it is NOT a leap year. 143. Calculate the cash proceeds of sale to Vanessa, as vendor, from Paul, the purchaser. $ 69,169.00 $ 69,538.00 $ 69,204.38 $ 140,169.00

$ 69,169.00

Gord is being sued for creating a private nuisance. He makes the following arguments: A. The damage he has created is trifling and of little consequence. B. The activity complained of was going on before the plaintiff moved there. C. There is no other suitable place in which he can conduct the activity complained of. D. The activity is authorized by statute and cannot be carried on without creating a nuisance. Which one of the above is a valid argument in Gord’s defence to the lawsuit? A, B, C, and D. Only A and D. Only B and D. Only A and C.

Only A and D.

A borrower approaches Ripley Finance Company about a mortgage on an income-producing property. The property produces an annual net operating income of $112,500. The lending value of the property is $880,000. Ripley will only lend to a maximum of 75% loan-to-value ratio, and requires a minimum debt coverage ratio of 1.125. Ripley’s terms are J12 = 12%, a term and amortization period of 15 years, and monthly payments. Given these constraints, calculate the maximum allowable loan (rounded to the nearest dollar). $624,912 $660,000 $976,426 $634,728

$660,000

An investor invests $7,200 in a savings account which bears interest at rate of 20% per annum, compounded daily. What amount will be on hand at the end of 2 years? $10,368.00 $10,705.79 $10,541.42 $10,739.96

$10,739.96

Whenever the amount advanced to a borrower is less that the face value of the mortgage , the loan is referred to as a: Bonused mortgage Vendor take back mortgage Assumed mortgage Graduated mortgage

Bonused mortgage

The Big Shoe company pays $15,500 for an asset which the income Tax Act allows capital cost allowance at 4% per a year. The asset is expected to have a useful life of 10 years and will have a salvage value of 1,500. Calculate the depreciation expense for accounting purposes for the asset’s 5th year if the accountant chooses to use straight-line depreciation. $6,020 $1,656 $1,400 $1,565

$1,400

You have a partially completed appraisal report that you need to fill in. The subject property has 4 bedrooms and 4 bathrooms. The house next door is similar in all respects except for the number of bedrooms and bathrooms. It sold for $234,000 and was adjusted -$4,000 for bedrooms and +$5,700 for bathrooms. If the market value of a bedroom is $4,000 and the market value of a bathroom is $5,700, you can conclude that the comparable has: 5 bedrooms and 3 bathrooms. 4 bedrooms and 4 bathrooms. 3 bedrooms and 5 bathrooms. fewer bedrooms and fewer bathrooms than the subject.

5 bedrooms and 3 bathrooms.

The doctrine of privity of contract: creates the right of a third party to sue on a contract. only applies to contracts creating an interest in land. does not apply to bare licences. does not apply to contracts where an interest in land is created

does not apply to contracts where an interest in land is created

Which one of the following statements about fixtures and chattels is FALSE? To determine whether an item is a fixture or a chattel, the courts have devised a two-part test. Where an item has been affixed for the enhancement of the use of the premises, that is evidence the item is a chattel. The two-part test examines the degree of fixation of an item and the purpose of affixation of the item. Where an item is affixed slightly to the premises it will be considered, based on the first impression, to be a fixture.

Where an item has been affixed for the enhancement of the use of the premises, that is evidence the item is a chattel.

Which of the following statements regarding alternative repayment and the refinancing method is/are false? A. To a borrower, inflation can cause a serious problem known as “wilting” B. In graduated payment mortgages, payments are decreased during the loan term. C. In a variable rate mortgage, the interest rate is changed periodically but the required payment is never changed. D. From the borrower’s perspective, the reverse annuity mortgage allows a means by which the equity rich mortgagor may postpone selling his residence. only b only a and d only a, b and c all of the above

only a, b and c

Roberto makes an offer of $546,000 to purchase a house in Vancouver, subject to obtaining an acceptable first mortgage. A lender, who has appraised the property at $536,000, requires a 75% loan-to-value ratio and a 32% gross debt service ratio. Net taxes are $6,365 per annum and Roberto has a gross income of $130,000 per year. What is the maximum amount this lender will advance if the rate is J2 = 5.75%, the amortization period is 25 years, and payments are to be made monthly? $469,783.37 $554,500.00 $409,500.00 $402,000.00

$402,000.00

In establishing the actual value of a residential property for tax assessment purposes the assessor may consider : A. Land value B. Economic obsolescence C. Outstanding balance of the mortgage purposes D. Present use A and D B and C A, B, and D A, B, and C

A, B, and D

Truck driver Nick dumped toxic waste on Henry’s backyard. Henry’s neighbour saw it and they trace it back to Nick and decide to press charges against him and sue for $20,000 in damages. Which of the following is TRUE? If the plaintiff decides to appeal from Small Claims Court, it will go to Court of Appeal If the plaintiff decides to take action, he has to bring his claim down to $3,000 in order to go to Small Claims Court If the plaintiff decides to appeal, he will use a response to a civil claim form If the plaintiff wants to appeal from Small Claims Court, he can go to any Supreme Court anywhere in his province

If the plaintiff wants to appeal from Small Claims Court, he can go to any Supreme Court anywhere in his province

You have a partially completed appraisal report that you need to fill in. The house next door to the subject property is similar in all respects except for the number of bedrooms and numbers of bathrooms. This comparable has 3 bedrooms and 4 bathrooms and was adjusted +$4,200 for bedrooms and -$2,600 for bathrooms. If the market value of a bedroom is $4,200 and the market value of a bathroom is $2,600, it can be concluded that the subject property has: 4 bedrooms and 3 bathrooms. 4 bedrooms and 2 bathrooms. 2 bedrooms and 3 bathrooms. 3 bedrooms and 2 bathrooms.

4 bedrooms and 3 bathrooms.

A owes B $1,000. B assigns the debt to C. For this to be a statutory assignment three requirements are necessary. Which one of the following is NOT one of them? The assignment from B to C must be for the entire amount. The assignment from B to C must be in writing. The notification from C to A must be in writing. The notification from A to B must be in writing.

The notification from A to B must be in writing.

Which of the following is NOT an element of the tort of negligent misrepresentation? a statement of fact or opinion given negligently. reasonable reliance on the statement by the person to whom it is given. a contractual relationship between the parties. no qualification by the speaker that he or she disclaims any liability for the accuracy of the statement.

a contractual relationship between the parties.

Which of the following is not an activity included in the definition of a mortgage broker under the Mortgage Brokers Act? A person who carries on a business of lending money on secured in whole or in part by mortgages, whether the money is the mortgage broker’s own or that of another person. A person who, on behalf of another, in any manner acquires or disposes of real estate A person who carries on a business of buying and selling mortgages or agreements for sale. A person who, in any one year, received an amount of $1,000 or more in fees or other consideration, excluding legal fees, for arranging mortgages for other persons.

A person who, on behalf of another, in any manner acquires or disposes of real estate

A vendor is willing to sell his house for $96,000. He demands 24 monthly payments, and payment of the outstanding balance in the amount of $75,000 with the 24th payment. He wishes to earn an effective annual rate of 15% on his money. What is the monthly payment required? $1,955.72 $7,336.27 $1,008.85 $1,887.47

$1,887.47

Which of the following steps is part of “pleading”: Judgment Discovery Response to a Civil Claim Garnishing order

Response to a Civil Claim

Precedents form a major part of the common law system. Another major source of our law is legislation. Which of the following could be called “legislation”? the Land Title Act the Principle of Specific Performance the Equity of Redemption all of the above

the Land Title Act

“Replacement Cost” is best defined as: The cost incurred when the building was erected The amount of funds set aside for periodic replacement of building components that wear out more rapidly than the building itself The cost of providing an exact replica of the subject property The cost of providing a building which would represent the modern equivalent of the subject property

The cost of providing a building which would represent the modern equivalent of the subject property

How would prepaid expenses and income taxes payable be classified on the Balance Sheet? Prepaid expenses – current assets; income taxes payable – noncurrent liabilities Prepaid expenses – current assets; income taxes payable – current liabilities Prepaid expenses – noncurrent assets; income taxes payable – noncurrent liabilities Prepaid expenses – noncurrent assets; income taxes payable – current liabilities

Prepaid expenses – current assets; income taxes payable – current liabilities

Which of the following statements regarding mortgage broker origination software is/are true? A. mortgage broker origination software allows mortgage application approvals to be granted very quickly. B. mortgage broker origination software does not help eliminate many of the data errors which occur in re-keying information. C. mortgage broker origination software connects mortgage brokers to lender online system and can be set up with the lenders guidelines to help mortgage brokers determine which lender is suitable for the application they are currently dealing with. D. mortgage broker origination software is designed to streamline the application process between mortgage brokers and lenders only c only b and d only a, c and d all of the above.

only a, c and d

Which one of the following statements is NOT true? In a conflict between common law principles and equitable principles, equitable principles will prevail. In a conflict between common law principles and statute law, statute law will prevail. In a conflict between statute law and equitable principles, equitable principles will prevail. In a conflict between equitable principles and statute law, statute law will prevail.

In a conflict between statute law and equitable principles, equitable principles will prevail.

In order for a person to make a successful claim against the Assurance Fund, he has to prove three of the following. Indicate the EXCEPTION He or she lost an interest in land He or she cannot recover that interest or estate by court action The person who deprived the injured party of his or her interest passed the interest to a bona fide purchaser for valuable consideration If the land Title Act had not been passed, he or she would have recovered the interest by the court action

The person who deprived the injured party of his or her interest passed the interest to a bona fide purchaser for valuable consideration

Which one of the following statements is TRUE? The doctrine of precedent does not provide uniformity to the common law system The Supreme Court of Canada is required to hear all appeals. The Supreme Court of British Columbia may exercise both common law and equitable jurisdiction. An appeal by a taxpayer to reduce a tax assessment would fall within the sphere of private law.

The Supreme Court of British Columbia may exercise both common law and equitable jurisdiction.

A term in the mortgage provides that if a mortgagor is in default of any payments on the property, the mortgagee may pay the amount owing and add the same amount to that year, carrying interest at the same specified rate; this term is known as: The repayment clause The acceleration clause The omnibus clause The personal covenant

The omnibus clause

Kevin and Sara are looking to buy their first home in Salmon Arm. They have been saving money for a long time but will need a mortgage loan to help with the purchase. They believe that current interest rates will decrease in the future. Given the information presented, which of these mortgage options would be most appropriate to recommend in this situation? Graduated Payment Mortgage Variable Rate Mortgage Reverse Annuity Mortgage Sinking Fund Assisted Mortgage

Variable Rate Mortgage

A $300,000 variable rate mortgage was written at 5.5% per annum, compounded semi-annually, to be fully amortized over 25 years with monthly payments rounded to the next higher dollar. The mortgage contract specified that the interest rate could be adjusted, on each anniversary of the mortgage, to the current market rate. Two years later, the market rate decreased to 4.5% per annum, compounded semi-annually. Calculate the required payments, rounded to the next higher dollar, after the second year, assuming the amortization period is not to be extended and the contract allows variable payments. $1,671 $1,832 $1,967 $1,660

$1,671

The term stare decisis means: on the surface let the former decision stand. beyond the powers. decisions must be equitable.

let the former decision stand.

Vendor V offers to sell a property to a buyer A and gave a time limit 12 noon next day. At 11am (next day) buyer B gives an offer to buy and V accepts. At 11:30 am, A accepts the original offer. What is the result? V entered into a contract with both A and B V could have revoked his offer to A and avoided the problem Both A and B are entitled to contractual remedies against V All of the above three statements are true

All of the above three statements are true

A Seller just agreed to sell her home to a Buyer and is packing her belongings and getting ready to move out. Which of the following items can she most likely take with her? her built-in counter top stove her television, which is mounted onto the wall in the living room The laminate flooring that was installed in her kitchen one month ago the expensive faucets in her bath tub in the master bedroom

her television, which is mounted onto the wall in the living room

Gross potential revenue: $75,000 Operating expenses: $ 24,000 Vacancy and bad debt allowance: 4% And capitalization rate of 15%, how much should the investor pay for a property? $320,000 $220,000 $340,000 $321,909

$320,000

Which of the following are powers of the Registrar of Mortgage Brokers under the Mortgage Brokers Act? A. The Registrar has the power to investigate any complaints regarding a breach of Mortgage Brokers Act. B. The Registrar has the power to investigate criminal fraud. C. The Registrar’s powers of investigation allow him or her to enter, inspect all books of account and other records, and to seize any relevant information from a mortgage broker. D. The Registrar has the power to freeze the trust funds of any mortgage broker pending the outcome of the investigation. only a, c, and d only a and c only a, b and c all of the above.

only a, c, and d

Gary Broker has arranged a mortgage for the Smiths in the amount of $110,000. The loan call for quarterly payments based on 25 year amortization period and a contract rate of 10% per annum, compounded annually and a 5-year term. Included in the face amount is Gary’s $2,200 commission and legal fees of $1,500. What is the cost of funds advanced to Smiths, expressed as an effective annual rate? 10. 4720599804% 10. 5414996612% 10. 9744747596% 10. 965581237%

10.965581237%

Which one of the following situations is/are consistent with the existence of an ongoing joint tenancy under current BC law? A. Brad and Naomi are co-owners of Windy Field. The document transferring the property to them does not expressly state how they hold the property or what interest each owns. B. Susan, Scott, and Sarah are co-owners of Greenfields Farm. Susan and Scott each have a quarter share in the farm, while Sarah has a half share. C. Jack was co-owner of Bluefields. When Jack died, the surviving co-owners of Bluefields automatically became its only co-owners. D. Greg, a co-owner of Blackfields Farm together with Leah, executes a conveyance to himself and registers the conveyance in the land title office. To this day, Greg and Leah are co-owners. A, B, and C. B and D. Only C. C and D.

Only C.

Which of the following properties would use “cost method” to determine market value? A 3 story office tower located in an outer suburb A newly-constructed temple of contemporary design A vacant lot which possesses latent value A 10 year old single family home which represents the property’s highest and best use

A newly-constructed temple of contemporary design

The purpose of a code of ethics is to: A. defend a minimum standard of conduct for professionals B. maintain the reputation of the profession in the eyes of the public. C. set out remedies for the profession through the courts. D. replace the rigidity of the legal system for professionals. only A only B C and D only All of the above

only B

Loan to Value Ratio is: Maximum Loan divided by Lending Value Minimum Loan multiplied by Gross Debt Service Ratio Maximum Loan divided by Debt Coverage Ratio Minimum Loan multiplied by Lending Value

Maximum Loan divided by Lending Value

The term collateral security, as used in mortgage lending, refers to: the amount of the down payment made by the borrower. a particular type of mortgage clause that is unenforceable. the mortgagee’s right of foreclosure None of the above

None of the above

Yaletown Developments Ltd. intends to purchase an old warehouse and redevelop it by splitting it into 12 condominium lofts. The company will invest $700,000 cash to purchase the warehouse and can get an interest accruing construction loan to cover the cost of redevelopment. Construction is expected to take 8 months. At the end of the construction period, all of the lofts will be sold and the loan will be paid off, leaving Yaletown Developments with a cash flow of $775,000. If the project takes place as planned above, what effective annual yield will Yaletown Development earn on its investment? 16. 4945193220% 10. 7142857143% 15. 8645461051% 15. 3641521545%

16.4945193220%

In applying the cost method of appraisal to the valuation of a single family residence built in 1945, the value of improvements is determined by: The current costs of constructing an exact replica of the property being appraised. The construction costs for a builder of average efficiency measured in 1945 dollars. The actual construction costs, or if unavailable, historic construction cost data. The current costs of constructing a modern equivalent of the subject property.

The current costs of constructing a modern equivalent of the subject property.

In order to advertise to a wider audience, you have decided to create your own website. However, since you are embarking on website design for the 1st time, you made sure that you read general guidelines that you should follow: A. Due to the global nature of internet advertising, adequate contact information of the employing brokerage should be included on the licensee’s website B. Licensees can keep expired listings on their websites so that consumers have it for comparison purposes C. Licensees must not give the impression that they are licensed in a province or state they are not D. In order to increase contact with potential clients, licenses can advertise other licensees’ listings directly on their websites without permission from the listing licensees Only C Only A and C Only B and D Only A and D

Only A and C

Which of the following factors is MOST likely to affect the value of residential real property in the short run? consumer pessimism and optimism relating to residential real estate trends the supply and cost of raw materials government programs effecting real estate shifts in age composition of the population

consumer pessimism and optimism relating to residential real estate trends

Ann feels that her mortgage interest rate is harsh and unconscionable, she can apply to : Employment Standards Act Business Practices and Consumer protection Act (BPCPA) Interest Act Mortgage Broker Legislation

Business Practices and Consumer protection Act (BPCPA)

A loan contract was written for a face value of $75,000 at J2 = 6% with a 20-year amortization and a 3-year term. Payments were to be made monthly in the amount of $534.15 and the outstanding balance at the end of the term was $68,565.67. A brokerage fee of $2,000 was deducted from the face value, so the funds actually advanced to the borrower were $73,000.00. What is the effective annual rate of interest on the funds advanced? 6. 9537620373% 5. 92634551784% 7. 17972600066% 9. 01939166441%

7.17972600066%

Joe purchaser approaches the owner of a house that is listed at a price of $150,000. Joe offers a cash down payment of $40,000 if the vendor will take back mortgage for the balance at a rate of J2=10%, to be fully amortized over 25 years with monthly payments. The current market rate is J2=14%. What is the market value of the offer? $83,819.72 $96,583.72 $123,819.72 $154,299.93

$123,819.72

Which one of the following statements is TRUE? When calculating legal fees, the purchaser is responsible for the portion of the year after and including the adjustment date. Taxes will never appear as a credit item on the vendor’s statement of adjustments and as a debit item on the purchaser’s statement of adjustments. Where the licensee acts only for the vendor, RE commission always appears as a debit on the vendor’s statement of adjustments and does not appear on the purchaser’s statement of adjustments. Under the standard form contract of purchase and sale, risk always passes to the purchaser at 12:01am on the possession date.

Where the licensee acts only for the vendor, RE commission always appears as a debit on the vendor’s statement of adjustments and does not appear on the purchaser’s statement of adjustments.

On June 1st, Matt offered to buy Jason’s property for $230,000 and Jason accepted. Since the Cottage was on a secluded island, neither party was aware that just two days prior, the property had been completely destroyed by flood. Jason has no insurance and is seeking to enforce the contract. Which of the following statements is TRUE? Matt and Jason are relieved of their future obligations under the contract by frustration The doctrine of mutual mistake allows Matt to rescind the contract. This is an example of common mistake and the contract is void A court will set aside the contract based on “non est factum” (it is not my deed) or unilateral mistake since Jason did not know the nature of the document he was signing and could not have known the cottage was no longer standing.

This is an example of common mistake and the contract is void

If you were to become a limited partner in a business, you should know that: Limited partners may still take part in the day-to-day operations of the partnership Limited partners can actively be engaged in managing the business without any consequence to his or her partnership status. Limited partners have their liabilities to creditors limited to the amount of money they have invested in the business Limited partners are not involved in the day-to-day operations of the business and are taxed at a lower rate than general partners with respect to dividend distribution

Limited partners have their liabilities to creditors limited to the amount of money they have invested in the business

A term which makes the redemption date so distant as to result, in practical terms, in the mortgage not being redeemable will also be: enforceable if the borrower has independent legal advice. void. enforceable in all cases. a collateral advantage.

void.

Wes Gentely is a mortgage broker arranging a mortgage loan with a face value of $475,000. He has calculated that the total cost of credit to the borrower will be $120,000, and the average outstanding principal over the 5 year term of the loan (P) will be 462,500. What is the Annual Percentage Rate (APR) that Wes Gentely must disclose on the disclosure statement? Note: APR = (100 X C) / (T X P). 7. 91666666666% 8. 6021553763% 5. 18918918919% 20. 5405405405%

5.18918918919%

John is a member of a mortgage brokerage professional association and just been found by a disciplinary committee to have breached the association’s by-laws. Which of the following penalties are likely to be available for the association to impose on John? A. Suspension of the use of the association’s member services. B. Required performance of community service. C. Imprisonment for offenses which are also criminal in nature. D. A fine a, b and d only a and d only b and c only all of the above.

a and d only

Alomar and Carter Development Co. has recently won the contract to build a new baseball stadium in Kelowna for the Little League World Series. The stadium is to be built over the next three years and will be able to hold over 7,000 fans. The company has received a construction loan in the amount of $2,500,000 written at the rate of 17% per annum, compounded monthly, with a 3 year term, a 25 year amortization period and annual interest only payments. What is the amount of annual interest only payments? $466,586.30 $459,729.33 $425,000.00 $35,416.67

$459,729.33

The practice of recognizing expenses as they are incurred, rather than when they are paid for, is a characteristic of: the cost principle. the recognition principle. the matching principle. the conservation principle.

the matching principle.

Which of the following statements about federal legislation governing mortgage interest rate is FALSE? The Interest Act provides that if a mortgage agreement requires interest payments but does not specify the rates of interest, then the effective rate allowed by law is 5% The Criminal Code defines a criminal rate of interest as an effective annual rate in excess of 60% Section 10 of the Interest Act provides an individual with the right of prepayment of his or her outstanding mortgage at the expiry of five years term or not payable for more than 5 years from the date of the mortgage for the borrower The Interest Act allows borrowers the right to attack the rate of interest being charged on a mortgage

Section 10 of the Interest Act provides an individual with the right of prepayment of his or her outstanding mortgage at the expiry of five years term or not payable for more than 5 years from the date of the mortgage for the borrower

When one-half of the monthly payment is paid every two weeks, it helps to pay down the principal faster and pay less interest; this is called: Accelerated bi-weekly payment Constant monthly payments Constant bi-weekly payments Accelerated monthly payments

Accelerated bi-weekly payment

Bob Allen is considering purchasing a property for one million dollars. He would like to finance the purchase with an interest only loan of $800,000, written at a contract rate of 12% per annum, compounded annually. If the term of the loan is ten years and payments are to be made at the end of each month, what will be the size of the payment? $11,195.78 $8,000.00 $7,519.01 $7,591.04

$7,591.04

The position a product or service holds within its consumers’ minds is best known as: product positioning. product mapping. product assessment. product differentiation.

product positioning.

Which one of the following is inconsistent with generally accepted accounting principles? Expenses are recognized at the time they are incurred. Assets are revalued upwards to account for the effect of inflation. Fiscal year ends cannot be changed at will. Revenues are recognized at the time they are earned.

Assets are revalued upwards to account for the effect of inflation.

An estimate of gross potential rents is achieved by: comparing all rents for similar space. comparing rents for recently leased similar space. projecting future rental increases. totaling current rents in the subject building.

comparing rents for recently leased similar space.

A balloon payment is any payment of: interest over and above regular interest payments, but only when it occurs during the term of the loan principal over and above the regular payments, whether it occurs during or at the end of the loan term principal over and above the regular periodic payments, but only when it occurs at the end of the loan term interest over and above regular interest payment, whether it occurs during or at the end of the loan term

principal over and above the regular payments, whether it occurs during or at the end of the loan term