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mortgage broker exam > mock 4 > Flashcards

mock 4 Flashcards

1
Q

Mike has arranged for a $60,000 mortgage loan at 9.25% per annum, compounded semi-annually. Payments are to be made monthly for the year term. Payments are to begin December 1st, and Mike would like the funds to be advanced Oct. 13th. Calculate the size of the interest adjustment payment due on Nov. 1st. Assume that it is NOT a leap year.

$283.09
$268.16
$732.79
$762.54

A

$283.09

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2
Q

Nancy and Mike have always wanted to sail around the world. They have decided to purchase a sixty foot sail boat for $62,500 from the Marine Club. They made an $8,000 down payment and financed the rest. The loan calls for semi-annual payments of $3,565.65 over 20 year amortization and term. What nominal rate, compounded quarterly are they paying?

  1. 756876876%
  2. 097728474%
  3. 5763519295%
  4. 5840330208%
A

11.5840330208%

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3
Q

A $400,000 variable rate mortgage was written at 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% 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
$2,118
$1,660

A

$2,118

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4
Q

In BC, mortgage lenders and brokers must satisfy the requirements of the Business Practice and Consumer Protection Act by disclosing to the borrowers:

The annual percentage rate (APR)
The effective annual rate (EAR)
Cost of funds advanced to the borrower
The nominal rate with annual compounding

A

The annual percentage rate (APR)

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5
Q

Which of the following is not a generally accepted accounting principle?

Matching Principle
Substitution Principle
Cost Principle
Objectivity principle

A

Substitution Principle

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6
Q

What is the nominal rate of interest, compounded semi-annually that is equivalent to 11.5% per annum, compounded monthly?

  1. 8895333892%
  2. 830625%
  3. 7790667784%
  4. 233678675%
A

11.7790667784%

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7
Q

The current interest right now at the banks is 5% per annum, compounded semi annually. What is the monthly periodic rate?

  1. 4166
  2. 4218
  3. 9486
  4. 4123
A

0.4123

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8
Q

Which of the following is NOT a procedure commonly used by a large institutional lender in order to reduce the risk associated with a particular mortgage loan?

reduction of the loan-to-value ratio
increase in the interest rate charged
reduction in the gross debt service ratio
all of the above methods are commonly used

A

increase in the interest rate charged

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9
Q

You have been asked to calculate the Net Operating Income (NOI) of Opus Centre. The building has an effective gross income of $600,000, estimated monthly expenses of $2,600 and fixed annual expenses of $26,000. What is the NOI?

$542,800
$568,800
$574,000
$571,400

A

$542,800

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10
Q

You are thinking of purchasing undeveloped land for development purposes. As a sophisticated investor, you will ultimately determine the value of undeveloped land by:

estimating the value of the land when improved and subtracting the development costs.
consulting with the owner of the undeveloped land as to his estimate of the land’s value.
asking the advice of a mortgage broker as to the availability of debt financing.
considering the proximity of the property to positive externalities.

A

estimating the value of the land when improved and subtracting the development costs.

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11
Q

The risk on a graduated payment mortgage stems from:

A. the increasing indebtedness occurring in the initial years of the loan.

B. the decreasing size of the payment over time.

Only A is true
Only B is true
Both statements are true
Neither statement is true

A

Only A is true

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12
Q

Which of the following correctly completes the sentence: In a strata plan, the term “unit entitlement” refers to:

A. the value of each condominium unit relative to other units.
B. the share of the value of demolition owned by each condominium unit owner.
C. the share of real property taxes payable by each condominium unit owner.
D. the figure used to calculate a strata owner’s contribution to the common expenses of the strata corporation.

B, C and D only
A and C only
C and D only
only D

A

only D

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13
Q

A Real Estate appraiser would NOT value:

an existing rental agreement of a warehouse.
the right to use airspace at the top of a highrise office building.
the legal interest in cattle on agricultural land.
a fee simple interest in two-bedroom apartment.

A

the legal interest in cattle on agricultural land.

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14
Q

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

A

Bonused mortgage

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15
Q

When a mortgagor grants a mortgage subsequent to a first registered mortgage, the mortgagor has created:

(1) an equitable mortgage.
(2) a legal mortgage.
(3) an assignment of the first mortgage.
(4) none of the above.

A

(1) an equitable mortgage.

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16
Q

An offer of $235,000 is accepted, comprised of a cash down payment of $55,000 subject to a vendor supplied mortgage of $180,000 at 14% per annum, compounded semi-annually. The loan has an amortization period of 25 years, a term of five years and calls for monthly payments. Market rates of interest for equivalent mortgages are currently 19% per annum, compounded semi-annually. Mortgage payments are to be rounded up to the next higher dollar. The market value of the offer will be:

$152,861.21
$1,235,000.00
$207,861.21
$192,158.76

A

$207,861.21

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17
Q

Brent Sopul has arranged a loan of $85,000 at an interest rate of 18% per annum, compounded semi-annually with payments set at $2,157.00 per month. What is the period necessary to amortize the loan?

exactly 4.89775062693 years
exactly 4.9705036885 years
approximately 3 years
approximately 25 years

A

exactly 4.89775062693 years

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18
Q

Which of the following regarding print advertisement is False?

A reader’s eyes first focuses at the 10 o’clock position and moves upward and to the right.
The headline is the single most important part of the advertisement.
Informal balance uses a non-symmetrical arrangements
Advertisements always end with a call for action.

A

Advertisements always end with a call for action.

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19
Q

Kimmy Khamble is looking for a house in Ottawa. She can make payments of $2,200 per month over a 25 year amortization period. If current rates are 6.5% per annum, compounded semi-annually, what is Kimmy’s maximum allowable loan?

$325,825.23
$328,444.59
$ 324,767.78
$ 51,355.66

A

$328,444.59

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20
Q

Which one of the following statements regarding digital signatures is TRUE?

Digital signatures are used to authenticate the individual sending the message so as to insure the integrity of the data.
Digital signatures are codes recorded on to a CD to ensure copy protection and discourage multiple users.
Digital signatures are codes built into modems which notify receivers of where a message is coming from.
Digital signatures are tags in HTML that tell search engines information about your webpage.

A

Digital signatures are used to authenticate the individual sending the message so as to insure the integrity of the data.

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21
Q

When the payments will gradually increase over time:

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

A

Graduated mortgage

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22
Q

Deb recently sold her property for $675,000. The stabilized annual net operating income for the property is $64,000. Calculate the yield on this property.

9%

  1. 090909091%
  2. 48148148%
  3. 546875%
A

9.48148148%

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23
Q

The owner of a small building has applied for a loan at ABC Bank. The properly has a lending value of $500,000 and yielding a net operating income of $65,497 per year, where the lender requires a debt coverage ratio of 1.3 and a 70% loan-to-value ratio. The loan will be amortized over 10 years with annual payments and the interest rate is 13% per annum, compounded annually. What is the maximum 10 year loan the owner will be entitled to from ABC Bank, rounded to the nearest dollar?

$ 273,387
$ 268,832
$ 355,402
$ 350,000

A

$ 273,387

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24
Q

Which one of the following statements is NOT true?

In a conflict between common law principles and equitable principals, 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.

A

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

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25
Q

Which of the following methods of determining a promotional budget is the most difficult to apply?

Incremental Analysis
Follow-the-leader
Percentage of sale
Combined Target Strategy

A

Follow-the-leader

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26
Q

In establishing the actual value of a residential property for tax assessment purposes, the Assessor may consider:

A. the present use of the property.
B. functional obsolescence.
C. the rental value of the property.
D. selling price of the land and the improvements.

only C
B and D
A, B, and D
A, B, C and D

A

A, B, C and D

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27
Q

After an order nisi of foreclosure is granted to a petitioner and the respondent borrower fails to pay the amount due as required by the order, the petitioner may apply for:

1) an order absolute of foreclosure.
2) a judicial sale.
3) an equitable charging order.
either (1) or (2).

A

either (1) or (2).

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28
Q

The “ blend and extend” refinancing option:

involves renegotiating a first mortgage with the lender and making prepayment penalties
required one to obtain a second mortgage with higher interest rate
is illegal and not available in Canada
typically allows a borrower to take advantage of a low interest rate on their current mortgage funds as well as additional funds, while avoiding costly prepayment penalties

A

typically allows a borrower to take advantage of a low interest rate on their current mortgage funds as well as additional funds, while avoiding costly prepayment penalties

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29
Q

Fanny Mac Ltd. purchased a small commercial building for $225,000 of which $100,000 was the value of the land. Fanny, the company president, felt this was an excellent deal because she would have been willing to pay as much as $250,000. One year later Fanny sold the property for $300,000.

If, at the time of purchase, the expected economic life of the building was 10 years, there was an estimated salvage value of $25,000 at the end of that time, and Fanny uses the straight-line depreciation method, what is the depreciation expense for the year?

$10,000
$12,500
$20,000
$25,000

A

$10,000

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30
Q

Consider the following statements regarding the income method of appraisal.

Net Operating Income is a measure of return on the equity portion of a property’s value.
Items specific to an owner or investor are omitted in the calculation of Net Operating Income.
Net Operating Income does not consider depreciation, income tax or debt service.
The income method of appraisal is only used for apartment buildings.
Which of the above statements are TRUE?

All of the above statements are true.
Only statements A and C are true.
Only statements B and C are true.
Only statements A and D are true.

A

Only statements B and C are true.

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31
Q

Doug, an appraiser, is valuing a single family housing unit using the market comparison method. A house recently sold for $235,000, comprised of a cash down payment of $99,000 and a vendor supplied mortgage loan of $146,000 at 3.5% per annum, compounded semi-annually. The loan has an amortization period of 20 years, a term of 5 years and calls for monthly payments. Market rates of interest for equivalent mortgages are currently 4.75% per annum, compounded semi-annually. What price should Doug use if he wishes to use this sale as comparable?

$138,710.56
$237,710.56
$140,131.72
$239,131.72

A

$237,710.56

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32
Q

Ray Allen is considering a purchasing a property for two million dollars. He would like to finance the purchase with an interest only loan of $1,800,000, written at a contract rate of 7% per annum, compounded quarterly. 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 Ray’s second payment be?

$11,195.78
$8,000.00
$10,439.34
$11,599.27

A

$10,439.34

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33
Q

Which of the following statements about federal legislation governing mortgage interest rates is TRUE?

The Interest Act requires that the rate of interest chargeable under a mortgage be “reasonable”, in the prevailing market for funds.
The Criminal Code defines a criminal rate of interest as an effective annual rate in excess of 50%.
Section 10 of the Interest Act creates the right to tender prepayment of a mortgage after 5 years provided that the borrower is not a corporation, and the mortgage is not for a business purpose.
The Interest Act provides that if a mortgage agreement does not specify the rate of interest chargeable, the rate allowed by law is 5%.

A

The Interest Act provides that if a mortgage agreement does not specify the rate of interest chargeable, the rate allowed by law is 5%.

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34
Q

Which of the following most accurately describes a building scheme?

A set of restrictions on a development used by the developer in order to maintain a common overall look to a development.
A set of plans used by developers to protect purchasers’ rights to build according to their own tastes.
A set of restrictions that must be complied with if a developer is creating a subdivision of five or more lots.
A document filed with the disclosure statement on a conversion of an existing building to strata.

A

A set of restrictions on a development used by the developer in order to maintain a common overall look to a development.

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35
Q

Replacement reserve (allowance) is:

the amount of funds set aside for periodic replacement of building components that wear out more rapidly that the building itself and must be replaced during the building’s economic life

A

the amount of funds set aside for periodic replacement of building components that wear out more rapidly that the building itself and must be replaced during the building’s economic life

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36
Q

Consider the following statements regarding mortgage loans:

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.
With a fully amortized loan, the amortization period is always longer than the term of the loan.
In a reverse annuity mortgage, the borrower makes a series of payments or advances to the lender over the term of the loan.
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

A only.

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37
Q

Mr. K Cole purchased a property for $110,000 and financed part of the purchase price with a mortgage loan having a face value of $80,000, written at J4=10%, fully amortized over 25 years with monthly payments. His mortgage broker charged a brokerage fee of 4% of the face value, which was deducted from the face value of the loan. What is the cost of funds advanced to Mr. Cole, expressed as an effective annual interest rate?

  1. 4490742578%
  2. 3812890625%
  3. 8286244283%
  4. 9643104930%
A

10.9643104930%

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38
Q

The term “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 interest in land provided as security for the loan.
none of the above

A

the interest in land provided as security for the loan.

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39
Q

The principle of substitution in the comparative method of appraisal states that:

“market value” equals “value to owner”.
similar properties which have recently sold are comparable.
properties have to be identical in order to be comparable.
the market value of land plus the cost of a newly constructed building equals the market value of a property.

A

similar properties which have recently sold are comparable.

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40
Q

Common law duress consists of:

breaching a contract term during performance.
changing the terms of a contract.
actual or threatened violence or imprisonment.
undue influence.

A

actual or threatened violence or imprisonment.

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41
Q

What is the profitability index for Sunny Inn Hotel with $750,000 present value and $300,000 cost?

1) 0.4
2) 2.5
3) 450,000
4) No solution

A

2) 2.5

42
Q

Your brother Frank and his wife Helene are purchasing a new home. They have arranged financing from Helene’s wealthy aunt. The mortgage calls for an interest rate of 4% per annum, compounded annually. In order to calculate the monthly payment on the mortgage, they have asked for your help to calculate the equivalent interest rate per month. The equivalent interest rate per month is:

  1. 3333333333%
  2. 330589032%
  3. 339512858%
  4. 32737397822%
A

0.32737397822%

43
Q

An investor has decided to establish a bank account in order to accumulate sufficient capital at the end of 7 years to purchase a boat. If the account pays interest at 16% per annum, compounded annually and the investor makes deposits of $8,000 at the end of each year, how much capital will he have accumulated at the end of 7 years?

$32,308.52
$113,920.74
$22,609.76
$91,310.99

A

$91,310.99

44
Q

The Wangs are retired and have decided to supplement their income, and have approached the bank regarding a reverse annuity mortgage (RAM). Their home has a market value of $500,000, and the mortgage is to be written at 8% per annum, compounded monthly. The bank decides the loan must not exceed 60% of the market value of the property. The Wangs are to receive $1,000 per month. How many full payments will be received by the Wangs during the term of the loan?

147
98
142
165

A

165

45
Q

Which of the following statements is TRUE?

Using a technology called encrypting, protecting information on the Internet is accomplished by scrambling it into an unreadable format called decrypting.
Cryptography can be used to protect email messages, credit card information and corporate data.
Using a technology called photography, protecting information on the Internet is accomplished by scrambling it into an unreadable format called deciphering.
Using a technology called cryptography, protecting information on the Internet is accomplished by scrambling it into an unreadable format called encrypting.

A

Using a technology called cryptography, protecting information on the Internet is accomplished by scrambling it into an unreadable format called encrypting.

46
Q

Under the Land Title Act in British Columbia, a mortgage is registered on the title as:

a charge.
an agreement for sale.
a right to purchase.
a restrictive covenant.

A

a charge.

47
Q

The purpose of a code of ethics is to:

A: provide guidelines to ensure that human actions are morally fair as well as lawful.

B: replace the rigidity of the legal system for professionals.

C: provide a remedy through the courts to people who have been wronged by a professional.

D: maintain the reputation of the profession in the eyes of the public.

A and D only.
A and B only.
B and C only.
All of the above.

A

A and D only.

48
Q

Which of the following statements about foreclosure of a mortgage is False?

The right of foreclosure refers to right of a mortgagee to apply to court for an order putting an end to the mortgagor’s equitable right to redeem the property after default.
After an order absolute, if the mortgagee sells the property for an amount in excess of the total debt, including the costs of foreclosure, the mortgagee is required to pay over the excess to the mortgagor’s account.
After granting of an order absolute, the mortgagee has no right to enforce the borrower’s personal covenant to pay unless the court first reopens the order absolute.
After the granting of an order nisi of foreclosure, the property may be sold by judicial sale or alternatively, at the end of the redemption period, the petitioner may apply to the court for an order absolute, after which the petitioner is entitled to have the title to the property transferred into his to her name.

A

After an order absolute, if the mortgagee sells the property for an amount in excess of the total debt, including the costs of foreclosure, the mortgagee is required to pay over the excess to the mortgagor’s account.

49
Q

In the comparative method of appraisal, it is MOST important that the subject building and the comparable buildings be:

Recently constructed of average quality construction.
Of the same general architectural style.
Similar with respect to factors judged important by buyers and sellers.
Inclusive of similar types and quality of fixtures.

A

Similar with respect to factors judged important by buyers and sellers.

50
Q

A property recently sold for $800,000. The stabilized annual net operating income for the property is $88,000. Calculate the yield on this property.

11%
9.0909090909%
12.563145456%
None of the above.

A

11%

51
Q

A monthly payment can be divided in half, and, instead of being paid once a month, can be paid every two weeks. This way the borrower makes one extra monthly payment per year, thus paying down the principal faster and paying less interest. This type of payment is called:

Monthly payment
Accelerated biweekly payment
Interest only payment
Interest accruing payment

A

Accelerated biweekly payment

52
Q

Which one of the following is NOT required in a contract of purchase and sale?

the names of the parties
a description of the property being sold
the purchase price
the rate of commission payable

A

the rate of commission payable

53
Q

Which of the following is a liability on a financial statement?

Depreciation expense
Accumulated depreciation
Salaries payable
Both 1 and 3

A

Salaries payable

54
Q

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

A

$10,739.96

55
Q

Given that all other factors are identical, the shorter the term of the contract on a bonused, partially amortized mortgage:

the lower the effective annual yield.
the higher the effective annual yield.
the higher the required monthly payment.
the lower the outstanding balance at the term’s end.

A

the higher the effective annual yield.

56
Q

Which of the following message sources would be considered the most credible?

Sales Promotion
Word of Mouth
Personal Selling
Email

A

Word of Mouth

57
Q

You have just won $300,000 in a provincial lottery. You have decided to go to Cuba for a surf holiday and return in one year. When you get back you want to purchase a lot for $225,000. While you are away, you can invest your money at 5% per annum, compounded monthly. What is the maximum amount of your winnings you can spend on your holidays without sacrificing $225,000 down payment?

$78,837.14
$132,699.93
$85,714.29
$85,951.15

A

$85,951.15

58
Q

A fee simple owner in B.C. who is the victim of a fraudulent conveyance of his or her land will lose the right to have the transfer set aside when:

the transfer of the property to the dishonest person has been registered in the land title office.
25 years have passed since the transfer.
the title to the property has been transferred to a good faith purchaser for valuable consideration.
a mortgage is registered against the property.

A

the title to the property has been transferred to a good faith purchaser for valuable consideration.

59
Q

George Ryker purchases a mortgage contract which will provide him with 60 monthly payments of $956. The outstanding balance of the loan in the amount of $89,900 will be paid on the same day as the 60th payment. If George pays $75,689 for this contract, what is his yield expressed as a monthly periodic rate?

  1. 58404489253%
  2. 35507837547%
  3. 46077536547%
  4. 40182220098%
A

1.46077536547%

60
Q

A vendor is willing to sell his house, by way of a take-back mortgage, for $90,000. 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 rate of 15% on his money. What is the monthly payment required?

$1,664.80
$7,048.03
$1,599.23
$720.60

A

$1,599.23

61
Q

In which one of the following mortgage repayment schemes, do the monthly mortgage payments increase on a regular basis?

reverse annuity mortgage
graduated payment mortgage
straight line principal reduction mortgage
interest accruing mortgage.

A

graduated payment mortgage

62
Q

Whenever the amount advanced to a borrower is less than the face value of the mortgage and a brokerage fee is charged, the loan is referred to as a:

Bonused mortgage
Portable mortgage
Vendor take back mortgage
BPCPA mortgage

A

Bonused mortgage

63
Q

How much should Brent Coates be willing to pay for a property that is expected to sell for $250,000 in 5 years if he desires a yield of no less than J2 = 10%?

$195,881.54
$196,385.82
$186,553.85
$153,478.31

A

$153,478.31

64
Q

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.

A

the matching principle.

65
Q

“Reproduction cost” is best defined as:

the current construction cost of a building which would provide the same utility as the subject property.
the current cost of moving the building to a site where the building would represent the highest and best use of that site.
the current cost of constructing an exact replica of the subject property.
the original cost of construction, adjusted for inflation.

A

the current cost of constructing an exact replica of the subject property.

66
Q

Wally Walters has decided to sell his property, but first he wants to determine what the market value is. Unfortunately for Wally, he lives in a sparsely inhabited region where no similar properties have sold for quite some time. However, he does know the replacement cost (new) of his 2,600 square foot house is $42.50 per square foot. The land value estimate using the comparative method is $41,500.

Mr. Wally has not taken good care of his home, so it has depreciated in value. There has been only been $16,300 of curable physical depreciation. The bathroom and kitchen fixtures, however, are outdated and their replacement cost is $13,200.

What is the market value of his property?

$122,500
$81,000
$152,000
$135,700

A

$122,500

67
Q

Which of the following is NOT a possible meaning of the term “common law”?

The law created by the courts as opposed to statute law
The principles derived from the common law courts in England as opposed to the principles derived from the courts of Chancery.
The laws created by the Federal government in accordance with its power under the Constitution.
The system of law which relies upon the principle of stare decisis for its development.

A

The laws created by the Federal government in accordance with its power under the Constitution.

68
Q

Lisa has arranged a mortgage with a face value of $200,000, a contract rate of J2 = 8.5%, an amortization period of 25 years, a term of 5 years, and monthly payments. However, the bank is advancing only $195,000 because the face value includes a $5,000 brokerage fee. What is the interest rate per annum, compounded annually, charged on the funds actually received by the borrower?

  1. 99584102075%
  2. 7419910768%
  3. 1889756495%
  4. 37617459675%
A

9.37617459675%

69
Q

Jacob Lipsey plans to pay $105,000 for a parking lot that he feels will sell at the end of 5 years for $135,000. What yield, expressed as a nominal rate with semi-annual compounding, will Jacob earn?

10.1799598805%
5.15474967973%
5.08997994025%
There is no possible solution for this problem

A

5.08997994025%

70
Q

Mr. K. Cole purchased a property for $100,000 and financed part of the purchase price with a mortgage loan having a face value of $80,000, written at J4=10%, fully amortized over 25 years with monthly payments. His mortgage broker charged a brokerage fee of 4% of the face value, which was deducted from the face value of the loan. What was the effective annual interest rate Mr. Cole paid on the funds advanced?

  1. 449174257%
  2. 381289062%
  3. 828624428%
  4. 964310493%
A

10.964310493%

71
Q

Long story about guy Nick who dumped some toxic waste to someone backyard and the neighbor saw it. 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 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 BC Court of Appeal will always rehear all cases
If the plaintiff wants to appeal from Small Claims Court, he can go to any Supreme Court anywhere in his province

A

The BC Court of Appeal will always rehear all cases

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

72
Q

A loan has a face value of $450,000, a term of 5 years, and an interest rate of 9% per annum, compounded annually with payments set at $12,000.00 per quarter. What is the period necessary to amortize the loan?

approximately 20 years
exactly 78.4757458906 years
approximately 20 quarters
None of the above.

A

approximately 20 years

73
Q

Which of the following is characteristic of a mortgage as an investment?

Mortgages are widely traded in the secondary mortgage market
It requires a low degree of administrative work
It requires a high initial outlay of capital
All of the above are characteristic of a mortgage as an investment

A

It requires a high initial outlay of capital

74
Q

Courtney has offered to purchase a house from a vendor who is willing to provide partial financing. Her offer is a $75,000 down payment plus a mortgage of $250,000 at 6% per annum, compounded semiannually. The loan is to be fully amortized with level monthly payments over twenty years. What is the market value of this offer if the market rate for similar mortgage loans is 7.75% per annum, compounded semi-annually?

$ 222,949.58
$ 293,887.37
$ 297,948.32
$ 297,949.58

A

$ 293,887.37

75
Q

Which one of the following does NOT result from the immobility of land?

the need for debt financing
a vulnerability to outside environmental factors
an inability to move a listed property to a better resale market
the necessity for owners to travel in order to take advantage of services provided by different parcels of land

A

the need for debt financing

76
Q

Which of the following statements regarding mortgagees is FALSE?

A mortgagee may require the addition of a guarantor to provide a separate personal covenant as a third party in addition to the borrower’s personal covenant to pay.
Where the property secured is a condominium, a mortgagee may require the borrower to grant to the mortgagee the right to vote at meetings of the strata corporation on various matters affecting the security of the mortgage.
Although a number of remedies are usually available to a mortgagee in the event of borrower default, the lender usually has complete discretion in deciding the most suitable remedy to use in the circumstances.
Once the mortgage terms have been agreed to by the mortgagor and the mortgagee, the mortgagee is bound to advance the total amount of the funds when requested by the borrower, regardless of the terms of the mortgage.

A

Once the mortgage terms have been agreed to by the mortgagor and the mortgagee, the mortgagee is bound to advance the total amount of the funds when requested by the borrower, regardless of the terms of the mortgage.

77
Q

Michael Pearce recently inherited $775,000 from an anonymous source. He is considering investing his money in real estate and is interested in a $1,050,000 apartment called the Golden Palisades. He has hired you to analyze the profitability of this investment property and has requested that you calculate the annual effective gross income for the building. Golden Palisades has 30 suites with expected monthly rents of $915 per unit. The building has an estimated vacancy rate of 2% and a bad debt expense of 1.5%. What is the annual effective gross income?

$322,812
$329,400
$317,871
$317,978

A

$317,871

78
Q

Which of the following is NOT a true statement?

Both arbitration and mediation can produce non-binding resolutions.
The neutral third party in both arbitration and mediation may impose a solution on the two parties.
The rules of evidence do not apply to arbitration and mediation.
Both arbitration and mediation are less formal than the Courts.

A

The neutral third party in both arbitration and mediation may impose a solution on the two parties.

79
Q

Lenders who are attempting to ration mortgage funds could:

increase their gross debt service ratio.
decrease their interest rate on mortgage loans.
decrease their maximum loan to value ratio
increase the maximum amortization period available on mortgage loans

A

decrease their maximum loan to value ratio

80
Q

You have been assigned the task of appraising a small apartment building. The building is 10,000 square feet, and construction costs today are $98 per square foot, land value is $200,000, and total depreciation on the structure to date is estimated to be 10%. The gross potential rents for the building are estimated at $120,000. Also the average capitalization rate in the area is 12%. Using the cost method of appraisal, what will be the market value of a property?

$1,082,000
$1,090,909
$1,180,000
$1,300,000

A

$1,082,000

81
Q

An appraiser is trying to calculate the market value of an income producing property. In order to determine the market value, however, she must find the yield of several comparable properties. The following information is for a similar income producing property:
Sale Price $964,000
Gross Potential Revenue $100,000
Operating Expenses $17,750
Vacancy Rate 4%
Find the Yield of this comparable property.

  1. 11721992%
  2. 5673834%
  3. 98734768%
  4. 5347528%
A

8.11721992%

82
Q

Ross is the registered owner of Hillside Farms. Chandler forges and registers a transfer of Hillside Farms to himself. Chandler then borrows $75000 from Friends Trust Co. The loan is secured against Hillside Farms by way of a mortgage and the mortgage is registered. Which one of the following statements is false?

a. Friends Trust Co may obtain its $75000 back from the Assurance Fund
b. Ross can recover Hillside Farms but the title to the property will remain encumbered by the Friends Trust Co. Mortgage.
c. Ross can have Friends’ mortgage removed from title.
d. Because Friends Trust Co. Dealt with Chandler, the registered owner in fee simple, the principle of indefeasibility will protect them.

only d is false
a and b are false
a, b, and d are false
all of the statements are false

A

a, b, and d are false

83
Q

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.

A

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

84
Q

Two years ago, Erma bought a beautiful lakefront estate for $750,000. Erma made the purchase with a $250,000 down payment and financed the remainder with a mortgage loan written at a contract rate of J2 = 12.5%, amortized over 20 years with monthly payments, and with a five year term. She now wants to sell the property and Ernie has made an offer of a $240,000 down payment and the assumption of the mortgage payments. If the current market interest rate for similar mortgages is J4 = 10%, what is the market value of Ernie’s offer?

$ 754,542.06
$ 800,099.28
$ 783,126.30
$ 514,542.06

A

$ 783,126.30

85
Q

A property is listed for $133,333 but the market value, as estimated in a recent appraisal, is $127,500. The property’s lending value is estimated to be $112,000.

Jay and Joan purchase the home for $128,500 subject to mortgage of $84,000. 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.)

67.5%
70%
72%
75%

A

75%

86
Q

Which of the following is most correct? Value in exchange is:

The value at which a vendor will trade his/her property for another.
The sale price.
The minimum price a vendor will accept.
A range of mutual profit.

A

The sale price.

87
Q

Horold the borrower and Maude the lender sign a standard mortgage contract in which Harold promises to pay the instalment of principal and interest as they fall due. One term of the mortgage allows Maude to exercise the remedies of an ordinary creditor, separately from foreclosure application, in case of a default. This term is known as:

equity of redemption
creditor’s covenant
interesse termini
personal covenant

A

personal covenant

88
Q

Four years ago, Gussy Dup brought a small apartment in a very fashionable district of New Yawk. Gussy felt his purchase was a bargain at $340,000, especially considering his down payment was only $100,000 and he was able to obtain a mortgage for the remaining $240,000 at J2 = 5%, amortized over 25 years with annual payments. However, Gussy has now lost his job and must sell his apartment. He has received an offer of $50,000 cash plus assumption of the existing mortgage. The market rate for similar 21 year mortgages is J2 =3%

Calculate the market value of the offer.

$297,634.92
$347,634.92
$311,197.81
$313,571.25

A

$313,571.25

89
Q

An appeal from the small claims court would go to:

the British Columbia Court of Appeal, with leave.
the Small Claims Supreme Court.
the British Columbia Supreme Court
the Small Claims Tribunal.

A

the British Columbia Supreme Court

90
Q

A local mortgage broker arranged a mortgage in the amount of $210,000. The borrower has agreed to pay a brokerage fee in the amount of $7,200 which is to be added to the loan amount, giving a face value of $217,200 for the loan. The mortgage bears interest at a contract rate of 17 ¾% per annum, compounded semi-annually. The mortgage has an amortization period and term of 20 years and calls for monthly payments rounded to the next higher cent.

If the mortgage is to be sold to an investor for $225,000 immediately after the loan is initiated, the investor will earn the following nominal interest rate, with semi-annual compounding:

  1. 0265603822%
  2. 354586295%
  3. 452236868%
  4. 7513197783%
A

17.0265603822%

91
Q

Wendy Ember has offered $150,000 for a house, providing he is able to obtain acceptable financing. The lender has appraised the house at $138,000. The lender requires a loan to value ratio of 70% and a gross debt service ratio of 30%. Net property taxes are $900 per year and Wendy’s yearly gross income is $38,000. If the interest rate is J12 = 10.2%, the amortization period is 25 years, and payments are made monthly, what is the maximum amount this lender will advance?

$96,600
$102,943
$96,368
$94,816

A

$94,816

92
Q

Three years ago, Jim bought a house at which time he arranged a mortgage in the amount of $120,000. The loan was written at a rate of 9.75% per annum, compounded semi-annually, with a 5 year term, a 25 year amortization period and monthly payments. Jim has just received an offer from Alice to buy his house. Alice offers to provide $25,000 cash and to assume the existing financing for the remainder of the term. If current lending rates for 2 year term mortgages are 12.75% per annum, compounded semi-annually, what is the market value of Alice’s offer?

$135,171.62
$110,171.62
$132,556.52
$137,055.66

A

$135,171.62

93
Q

An investment corporation purchased an apartment building on Jan. 31, 1997 for $2,300,000. Of that $2,300,000, $620,000 was attributed to the building and $1,680,000 to the land. Depreciation was to be claimed at $7,500 per year for the life of the building. The building component of the property was valued on Jan. 31, 2003, to be $980,000. What would be the net amount of the building appearing on the corporation’s Statement of Assets and Liabilities as of Jan. 31, 2003?

$980,000
$935,000
$575,000
$1,635,000

A

$575,000

94
Q

The residual method of appraisal is the most suitable method for use where the subject property:

is an apartment block in an area currently zoned for residential duplexes only.
is vacant land.
represents the highest and best use of the site and there is a large volume of market data available.
has latent value.

A

has latent value.

95
Q

Michael Pearce recently inherited $775,000 from an anonymous source. He is considering investing his money in real estate and is interested in a $1,050,000 apartment called the Golden Palisades. He has hired you to analyze the profitability of this investment property and has requested that you calculate the annual effective gross income for the building. Golden Plisades has 30 suites with expected monthly rents of $915 per unit. The building has an estimated vacancy rate of 2% and a bad debt expense of 1.5%. What is the annual effective gross income?

$322,812
$329,400
$317,871
$317,978

A

$317,871

96
Q

A potential borrower with an annual income of $24,000 and net real property taxes of $1,000 per annum has been told by a mortgage lender that the largest loan available will be $52,171. What is the maximum gross debt service ratio allowed by the lender given that the loan has monthly payments and is to be written at 10% per annum, compounded semi-annually and amortized over 25 years?

25%
27.5%
28.5%
30%

A

27.5%

97
Q

The following statements concern the rights and preferences of the petitioner and respondents in a foreclosure. Which of these statements is FALSE?

If the value of the property is less than the amount of mortgage debt owed to the petitioner, the mortgagor would want the property to be foreclosed, while the petitioner would want the property to be sold in a judicial sale.
Where the value of the property exceeds the total amount of mortgages, the respondents would want a judicial sale, but the petitioner would prefer the property to be foreclosed.
Where the court orders a judicial sale, the petitioner may make an offer, and if the court approves the offer, the petitioner will become registered owner, and still be able to sue the mortgagor for any shortfall between the sale price and the mortgage debt.
Where the value of the property being foreclosed exceeds the total amount of the mortgages, both the petitioner and the respondents will desire a judicial sale of the property.

A

Where the value of the property being foreclosed exceeds the total amount of the mortgages, both the petitioner and the respondents will desire a judicial sale of the property.

98
Q

A credit report is:

A critical factor used to determine an applicant’s annual gross income.
A record identifying an applicant’s habits regarding their financial commitments.
The evaluation of an applicant’s ability to meet the terms of a mortgage.
Established by private lenders during the application process.

A

A record identifying an applicant’s habits regarding their financial commitments.

99
Q

A property is located in an area where most of the houses are connected to the sewer. The fact that the property in question is only connected to a septic tank creates a situation known as:

An encumberance
A patent defect.
A unilateral mistake.
A latent defect.

A

A latent defect.

100
Q

Which one of the following is termed functional incurable obsolescence in a building?

worn carpeting
no air conditioning
narrow hallways
poor landscaping

A

narrow hallways

mortgage broker exam (13 decks)

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