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Overall Flashcards

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1
Q

Which of the following would not be an example of recasting a loan?

a) Reducing the interest rate
b) Extending the term
c) Giving a voluntary conveyance
d) Increasing the debt

A

Giving a Voluntary Conveyance

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2
Q

What does the term “mixed-use development” mean?

a) A subdivision with common areas for all residents
b) More than one use for a single building
c) An apartment complex attached to a city park
d) An industrial park in a farming community

A

More than one use for a single building

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3
Q

Before an option is exercised, which of these costs will the optionee incur?

A

Option Fee

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4
Q

Under which type of loan does the portion of payment that is applied to principal increase regularly over time?

Graduated payment
Reverse annuity
Growing Equity
Renegotiable rate

A

Growing Equity

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5
Q 
What is a leasehold mortgage called that is based mostly upon a well-known tenant’s financial strength?
Purchase money loan
Credit loan
Term loan
Secondary loan
A

Credit Loan

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6
Q

The Tax Reform Act of 1986 established an entity that can issue multiclass securities. What is this entity called?

REIT
REMIC
RESPA
REMT

A

REMIC

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7
Q

Investor Pete specializes in obtaining properties from investors in financial difficulty. What investment strategy does Pete practice?

Arbitrage
Special situation
Opportunistic
Development

A

Opportunistic

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8
Q

The entity holding title to a property during the term of a deed of trust is called what?

Trustee
Trustor
Beneficiary
Title company

A

Trustee

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9
Q

Which Texas agency licenses, regulates, and examines the trust- and insurance-funded prepaid funeral contract sellers?

Office of Consumer Credit Commissioner (OCCC)
Texas Department of Banking
Department of Savings and Mortgage Lending
Texas Department of Insurance

A

Texas Department of Banking

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10
Q

Which of the following statements is FALSE about a life estate?

Lasts only as long as the life of the owner
Upon the owner’s death, reverts to the original transferor, his or her heirs or some other designee
Cannot be mortgaged by the holder
Can be leased or sold during the holder’s lifetime

A

Cannot be Mortgaged by the Holder

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11
Q

Who is responsible for ordering the preliminary title report?

Buyer
Escrow officer
Seller
Real estate salesperson

A

Escrow Officer

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12
Q

What is the term used to describe a loan that is not government-backed?

Standard
Conventional
Normal
Junior

A

Conventional

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13
Q

Which of the following statements is FALSE?

Noninstitutional lenders have few regulations.
Institutional lenders are financial intermediaries.
Noninstitutional lenders are not subject to usury law.
Institutional lenders can make FHA and VA loans.

A

Noninstitutional lenders are not subject to usury law.

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14
Q

14 of 50 - Bill bought a property for $270,000. The value of the building on the property is $220,000. If the building has an economic life of 50 years, what is the depreciated value of the building after 5 years?

$22,000.00
$176,000.00
$198,000.00
$220,000.00

A

198,000.00

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15
Q

RESPA applies to which of these?

Second mortgage on a time-share
First mortgage on a single-family home
Primary mortgage on an office building
Settlement charges on a shopping center

A

First mortgage on a single family home

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16
Q

Al purchases a factory as an investment. He installs sprinklers in the building. What risk control technique is he practicing?

Avoiding
Limiting
Reducing
Accepting

A

Reducing

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17
Q

Which of the following is not a HUD responsibility?

FHA
Ginnie Mae
FDIC
CDBG

A

FDIC

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18
Q

What is the main advantage of a single-family home investment over other real estate investments?

Interest rates
Liquidity
Number of choices available
Management issues

A

Liquidity

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19
Q

Which of these statements is TRUE about financing large apartment complexes?

Loan terms are not longer than 20 years.
When determining a loan amount, lenders ignore debt service as a criterion.
As the size of the building increases, the loan ratio is generally reduced.
Loan fees for large buildings are usually lower than for single-family residences.

A

As the size of the building increases, the loan ratio is generally reduced

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20
Q

What is one of the primary purposes of the secondary mortgage market?

Issue second mortgages.
Lend money to banks.
Pay off defaulted loans.
Cycle back money to primary lenders.

A

Cycle back money to primary lenders

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21
Q

Which of the following statements is not true about a note?

A note establishes legal evidence of the debt incurred.
It can be secured or unsecured.
A note must be tied to a mortgage to be legal.
It can be interest-only or installment.

A

A note must be tied to a mortgage to be legal

22
Q

Which type of property is most benefited by the income capitalization approach to estimating value?

Single-family home
School
Duplex
Apartment building

A

Apartment Building

23
Q

What percent of the REIT’s assets must be made up of cash, real estate, mortgage notes, or government securities?

30
50
75
95

A

75

24
Q

The Consumer Financial Protection Bureau (CFPB) requires the use of the Closing Disclosure (CD) for which types of transactions?

Commercial transactions
All real estate transactions
Residential transactions financed by a federally-related loan
Only FHA and VA loan transactions

A

Residential transactions financed by a federally-related loan

25
Q

Alex bought a property valued at $850,000 which has an annual net operating income of $102,500. What is the capitalization rate?

  1. 09
  2. 10
  3. 11
  4. 12
A

0.12

26
Q

Which of the following lease options would be the least favorable to the tenant?

Right of first refusal
Equity participation
Lease renewal
Tenant relocation

A

Tenant relocation

27
Q

The cost recovery period for land improvements is how long?

15 years
25 years
27.5 years
39 years

A

15 years

28
Q

Jim Smith wants to purchase a vacation home and have it double as an investment. What is the maximum amount of time per year that Jim and his family can stay in the home and still be able to take the depreciation?

14 days
30 days
45 days
60 days

A

14 days

29
Q

Which of the following would probably not be a use of a junior loan?

Purchase of property through the VA
Home improvement
Down payment on conventional loan
Land improvement

A

Purchase of property through the VA

30
Q

The successful bidder at a judicial foreclosure sale receives which of these documents?

Deed in Lieu of Foreclosure
Certificate of Sale
Trustee’s Deed
Warranty Deed

A

Certificate of Sale

31
Q

Which of the following is typically not a short-term mortgage loan?

Single-family home loan
Construction loan
Home improvement loan
Manufactured home loan

A

Single family home loan

32
Q

Which of the following default types would be considered a technical default?

Failure to make payments of principal and interest
Failure to pay taxes
Failure to keep property in good repair
Failure to make hazard insurance premiums

A

Failure to keep property in good repair

33
Q

Which statement about syndication is FALSE?

Most investors belonging to syndicates invest a lot of their own money.
Syndication offers small investors the opportunity to invest in real estate ventures that would otherwise be outside their financial means.
A typical real estate syndicate combines the money of individual investors with the management of a sponsor.
A syndicate is able to acquire real estate that could not be purchased by an individual alone.

A

Most investors belonging to syndicates invest a lot of their own money.

34
Q

What is the most important aspect of a credit report?

It shows how many accounts a person has.
It shows the number of late payments.
It shows the outstanding balances on all the borrower’s accounts.
It shows the borrower’s attitude about handling credit and debt.

A

It shows the borrower’s attitude about handling credit and debt.

35
Q

Fannie Mae and Freddie Mac are able to replenish their own funds by doing what?

Borrowing from the Federal Reserve Bank
Borrowing from each other
Selling mortgage-backed securities
Requesting grant funds through HUD

A

Selling mortgage-backed securities

36
Q

How is the payoff of a construction loan normally accomplished?

With a takeout loan
With cash flow generated from an income property
Through the sale of the completed project
By floating a bond

A

With a takeout loan

37
Q

Sam Frank is a retired Army officer who wants to purchase a new home using a VA loan. In 2000, Sam used his VA guarantee of $36,000 when he purchased his current home. Based on the VA’s maximum guarantee of $104,250 and his partial eligibility, how much of a loan can Sam get with no money down?

$68,250
$155,000
$208,500
$273,000

A

$273,000

38
Q

The type of estate that has a definite beginning and ending date is known as what?

Estate at will
Estate from year to year
Life estate
Estate for years

A

Estate for years

39
Q

n Texas, what is the maximum late payment penalty allowed?

10%
5%
15%
no restrictions

A

No restrictions

40
Q

Mary is getting a $120,000 loan at 6.5 percent and will pay 3 discount points. What will the effective interest rate be?

  1. 0665
  2. 0675
  3. 06875
  4. 0695
A

0.06875

41
Q

Which statement is not true about the Farm Credit System?

It is designed to serve the needs of farmers and ranchers.
FCS banks lend money from their deposits.
It helps people buy rural homes.
FCS banks offer crop insurance.

A

FCS banks lend money from their deposits

42
Q

Why do lenders collect reserve funds at the property closing?

To get a higher yield on their investment
To be sure money will be available for tax and insurance payments
To have extra money that will accrue interest
To hedge against increases in taxes or insurance premiums

A

To be sure money will be available for tax and insurance payments

43
Q

What are the steps in the sales comparison approach to estimating value?

Select nearby comparables, adjust the subject property for the differences and estimate the value.
Obtain price data, apply the collected data to the subject and estimate the value.
Choose appropriate comparable properties, adjust the comparables for the differences and estimate the value.
Identify sale prices, apply an appreciate rate and estimate the value

A

Choose appropriate comparable properties, adjust the comparables for the differences and estimate the value

44
Q

What is the term used for an agreement between the borrower and a permanent lender relative to future delivery of a takeout loan upon completion of construction?

Construction contract
Building loan agreement
Take-out commitment
Tri-party agreement

A

Take-out commitment

45
Q

Who is the person who grants approval for the loan, rejects the loan, or in some cases, agrees to approve the loan if certain conditions are met?

Lender
Seller
Processor
Underwriter

A

Underwriter

46
Q

What is a disadvantage of a graduated-payment loan?

The borrower has no control over the payment increases.
This plan could result in negative amortization.
Graduated payment loans cannot be refinanced.
A borrower cannot sell the property until the loan is converted.

A

This plan could result in negative amortization

47
Q

After analyzing the neighborhood, an appraiser will study all of the physical aspects of the specific property being appraised except for which of the following?

Highway accessibility
Arrangement and design
Visual appeal
Physical durability

A

Highway accesibility

48
Q

Commercial banks participate in real estate finance though all but which of the following methods?

Trust department operations
Secondary mortgage market
Mortgage banker activities
Ownership of other lending enterprises

A

Secondary mortgage market

49
Q

With which kind of lease does the tenant not know the actual change in the rent amount in advance?

Flat
Step-up
Percentage
Indexed

A

Indexed

50
Q

What is the maximum annual amount a single taxpayer can give to a person without incurring a gift tax liability?

$10,000.00
$12,000.00
$14,000.00
$26,000.00

A

$14,000.00

Finance (16 decks)

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