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Superior real estate school practice exam > Practice Exam 2 > Flashcards

Practice Exam 2 Flashcards

1
Q
  1. A borrower obtaining a construction loan would most likely be obtaining what type of loan?
    A. A blanket loan
    B. An amortized loan
    C. An option loan
    D. A term loan
A

D. A term loan

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2
Q
  1. Two partes have entered into a lease agreement.
    Which of the following would terminate the lease without further liability to the parties?
    A. Death of the parties
    B. Sale of the property
    Condemnation
    D. Mutual or bilateral decision
A

D. Mutual or bilateral decision

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3
Q
  1. Licensed property managers are engaged in all of the following, EXCEPT:
    A. The creation of concessions
    B. Competitive bidding
    C. Refusing offers to purchase the property
    D. Recommending capital expenditures and planning budgets
A

C. Refusing offers to purchase the property

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4
Q
  1. The final determining the value of property is called:
    A. Substitution
    B. Reconciliation
    C. Evaluation
    D. Summation
A

B. Reconciliation

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5
Q
  1. When obtaining a loan, the lender takes into account the debt ratios of the parties obtaining the loan. Which of the following statements is correct regarding debt ratios? -
    A. Lenders utilize a housing ratio of 36% and a total debt ratio of 28%.
    B. The lender calculates the net income of the borrower.
    •C. Lenders utilize the gross income and the long-term recurring debt.
    D. Lenders calculate the tftal debt ratio based on the applicant’s car payment, utility bills, credit card payments and living expenses.
A

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

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6
Q
  1. A loan where the term of the loan is shorter than the amortized period would result in:
    A. Negative amortization
    B. A term loan
    C. A balloon payment
    D. Prepayment penalties
A

C. A balloon payment

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7
Q
  1. Which of the following would be considered securitizing documents or collateral agreements?
    A. Promissory notes and mortgages
    Mortgages and real estate tax liens
    C. Deeds of trust and mortgages
    D. A lease and a purchase contract
A

C. Deeds of trust and mortgages

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8
Q
  1. Which of the following is correct regarding an option to purchase?
    A. The option is enforceable by the optionor.
    B. The option is enforceable by the optionee.
    C. Both the optionor and the optionee may enforce the option.
    D. An option is not a contract until the option is exercised by the parties.
A

B. The option is enforceable by the optionee.

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9
Q
  1. Which of the following provides that the consumer can see a copy of their credit report once a year?
    A TILA
    B. RESPA
    C. FCRA
    D. ECOA
A

C. FCRA

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10
Q
  1. A bank makes a loan to an individual with an interest rate of 7.75% in the amount of $95,000 for a 30-year term. The payment on the loan is $880.59, which includes $150 a month for taxes and $50 per month for insurance. What is the balance on the loan after the borrower makes their first payment?
    A. $94,832.59
    B. $93,638.82
    C. $94,932.95
    D. $93,793.13
A

C. $94,932.95

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11
Q
  1. A landlord has failed to repair an air conditioner despite numerous requests from the tenant. Under NC law, the tenant may take which of the following actions?
    A. Withhold up to ½ months’ rent until the landlord remedies the situation
    B. Terminate the lease as a constructive eviction
    C. Sue the landlord for an actual eviction and breach of the lease
    D. Hire a licensed contractor to repair the AC and deduct only the amount of the repairs from their rent
A

B. Terminate the lease as a constructive eviction

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12
Q
  1. When a trust deed is paid off in full, the borrower will receive a deed of reconveyance from which party?
    A. The trustor
    B. The beneficiary
    C. The mortgagee
    D. The trustee
A

D. The trustee

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13
Q
  1. All of the following are required by the Real Estate
    Settlement Procedures Act, EXCEPT:
    A. Disclosure of the APR
    B. A Loan Estimate
    C. Use of a booklet to accompany the Loan
    Estimate
    D. A final and accurate Closing Disclosure
A

A. Disclosure of the APR

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14
Q
  1. A borrower is purchasing a home for a sales price of $178,000. The home has appraised for $185,000, and the borrower is obtaining an 80% loan. If the lender is requiring them to pay a 1% origination fee and a 1% discount fee, how much money will the borrower need at closing to cover these costs?
    A. $3,560
    B. $3,700
    C. $2,848
    D. $2,960
A

C. $2,848

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15
Q
  1. All of the following would be included in a promissory note, EXCEPT:
    A. The amount of money that the borrower is obtaining from the bank
    B. The penalties and charges if the payment is not received when due
    C. The term of the loan and the interest rate
    D. The identification of the parcel of real estate encumbered by the note
A

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

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16
Q
  1. All of the following are subject to the North Carolina Vacation Rental Act, EXCEPT:
    A. A single-family residence the homeowner has rented out to an Illinois resident for leisure purposes for a 30-day period.
    B. An Outer Banks condominium that is rented out for three months during the summer to a Michigan resident on vacation.
    C. A Wilmington Beach property rented out for 6 months of the year to a single tenant.
    D. A Pinehurst home rented out during the golf tournament to a spectator coming to watch the tournament from California.
A

C. A Wilmington Beach property rented out for 6 months of the year to a single tenant.

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17
Q
  1. All of the following would be important to a lender in determining the qualifying ratios of a borrower,
    ЕХСЕРТ:
    A. The amount of net income the borrower has after taxation
    B. The amount of gross monthly income that the borrower earns
    C. The amount of monthly debt that is recurring for car payments and credit cards
    D. The amount of the borrower’s principal, interest, taxes and insurance payment on a monthly basis
A

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

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18
Q
  1. On a regular basis, a property manager has a home serviced to change the filters and to check the operation of the HVAC system. This type of maintenance would be considered:A. Deferred maintenance
    B. Corrective maintenance
    C. Preventative maintenance
    D. Functional obsolescence maintenance
A

C. Preventative maintenance

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19
Q
  1. A home measures 2,600 square feet and is located on 2 acres of land. The original value of the land was $36,000, and it has appreciated 3% per year for the last 10 years. The home had an original value of $60 per square foot and has depreciated 20%. What is the current value of the property?
    A. $171,600
    B. $192,000
    C. $185,300
    D. $156,000
A

A. $171,600

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20
Q
  1. The loan to value ratio calculation measures:
    A. The equity that exits in the property
    B. The difference between the value of the home and all the liens that exist on the property
    C. The total of the liens against the property as a percentage of the total property value
    D. The total value remaining in the property after subtracting the percentage of the liens against the property
A

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

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21
Q
  1. The funds for FHA and VA loans are provided by:
    A. Governmental entities
    B. The Federal Reserve
    C. Local banks and lenders
    D. Approved secondary market originators
A

C. Local banks and lenders

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22
Q
  1. Property managers have all of the following responsibilities, EXCEPT:
    A. Realize the highest profit consistent with the owner’s instructions
    B. Creation of a budget sufficient to cover the expenses on the property
    C. Absorbing personal liability for losses associated with the property
    D. Screening tenants to minimize credit losses
A

C. Absorbing personal liability for losses associated with the property

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23
Q
  1. The clause that defeats the lender’s collateral agreement or securitizing
    instrument once the
    promissory note has been paid in full is referred to as:
    A. Satisfaction of mortgage
    B. Reconveyance of deed
    C. Defeasance
    D. Subordination
A

C. Defeasance

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24
Q
  1. Which of the following is a correct statement regarding the risk of loss regarding the transfer of real property?
    A. The risk of loss remains upon the grantor until the contract has been fully executed
    B. Risk of losses changes with possession of the property
    C. Risk of loss travels with ownership of the property
    D. The risk of loss will be transferred from grantee to grantor on the settlement date
A

C. Risk of loss travels with ownership of the property

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25
Q
  1. All of the following would be protected under the Equal Credit Opportunity Act, EXCEPT:
    A. A married couple
    B. A recipient of public assistance income
    C. A migrant worker
    D. An immigrant of Chinese ancestry
A

C. A migrant worker

26
Q
  1. Which of the following would be an example of economic obsolescence?
    A. A leaky roof and weathered fascia boards
    B. A poor floor plan with five bedrooms and one bath
    C. An outdated kitchen
    D. Factories and excessive noise in the surrounding neighborhood
A

D. Factories and excessive noise in the surrounding neighborhood

27
Q
  1. A borrower obtains a loan in the amount of $68.000 at 9% for 30 years. Their payment on the loan is $547.14. Which of the following statements is true regarding the borrower’s first payment?
    A. The first payment will include more principal than interest.
    B. 3510 will go toward principal ard $37.14 will
    C. $37.14 will go toward principal and $510 will go toward interest.
    D. The first payment will be an interest-only payment.
A

C. $37.14 will go toward principal and $510 will go toward interest.

28
Q
  1. In North Carolina, when does a borrower get possession of the home and the seller receive their proceeds from the sale?
    A. At the time of settlement.
    B. Once the buyer has fully executed and signed the warranty deed.
    C. Once the closing attorney has verified and received the payment of all monies from the borrower and the lender has funded the loan.
    D. At the time of closing, which is defined as recordation of the deed.
A

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

29
Q
  1. In appraising, with which of the following properties would an appraiser be most likely to use the cost approach?
    A. A home that is older than 40 years
    B. A 4-unit investment property
    C. A one-of-a-kind shopping mall
    D. A municipal building
A

D. A municipal building

30
Q

30.Which of the following is correct regarding a property where the promissory note is secured by a deed of trust?
A. The trustee holds legal title and the beneficlary holds bare title.
B. The trustor holds bare title and the trustee holds equitable title.
C. The trustor holds equitable title and the trustee holds legal title.
D. The trustee holds bare title and the beneficiary holds equitable title.

A

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

31
Q
  1. Which of the following is required by RegulationA. Providing the borrower with a loan estimate within 3 days of loan application
    B. Use of a Closing Disclosure at the time of settlement
    C. The inclusion of APR when using trigger terms in advertising
    D. Consumer access to a copy of their credit report at least once a year
A

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

32
Q
  1. Which of the following is a true statement about an amortized loan?
    A. The longer the amortized pertod, the greater the amount of principal paid.
    B. The shorter the amoitized period, the lower the amount of principal paid.
    C. The shorter the amoitized period, the greater the amount of interest paid
    D. The longer the amortized period, the greater the amount of interest paid.
A

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

33
Q
  1. When a transfer of property involves a purchase money mortgage, how would the purchase money mortgage appear on the Closing Disclosure Statement?
    A. Credit to the buyer, not appearing on the seller side
    B. The buyer, debit Seller
    C. Debit the buyer, not appearing on the seller side
    D. Debit the buyer, credit the seller
A

B. The buyer, debit Seller

34
Q
  1. Jill is an unlicensed employee of a property management entity. Which of the following is Jill not permitted to do under NC Licensing Law?
    A. Show units to prospective tenants
    B. Collect rents and late fees from current tenants
    C. Explain lease provisions and have tenants sign leases
    D. Negotiate a reduced amount for a security deposit with a prospective tenant
A

D. Negotiate a reduced amount for a security deposit with a prospective tenant

35
Q
  1. A property manager has negotiated leases and had them signed on behalf of the property owner.
    Under North Carolina law, these leases must be provided to the property owner:
    A. Immediately, but never later than 5 days after signature
    B. Within 30 days of signature
    C. The property manager is not permitted to sign leases on behalf of the owner
    D. Within 45 days of signature
A

D. Within 45 days of signature

36
Q
  1. The North Carolina Good Funds Act requires attorneys and settlement agents to:
    A. Refuse personal checks at closing
    B. Disperse funds after recording
    C. Disperse funds upon settlement
    D. Verify only funds that exceed $10,000
A

B. Disperse funds after recording

37
Q
  1. All of the following are required by the Dodd-Frank Act and enforced by the Consumer Financial
    Protection Bureau, EXCEPT:
    A. The borrower’s Closing Disclosure must be received by the borrower at least 3 business days prior to settlement.
    B. The borrower must receive a Loan Estimate from the lender within 3 business days of loan application.
    C. There are two separate Closing Disclosures, one for the seller and one for the buyer.
    D. The seller’s Closing Disclosure must be received by the seller at least 3 business days prior to settlement.
A

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

38
Q
  1. A borrower who has insufficient down payment should consider which -of the following types of financing?
    A. 203(b) financing
    B. HELOC financing
    C. Seller carryback financing
    D. Blanket financing
A

C. Seller carryback financing

39
Q
  1. A borrower obtained a $147,975 loan, which represented a 75% LTV. What was the purchase price of the property?
    A. $111,000
    B. $184,968
    C. $197,300
    D. $210,000
A

C. $197,300

40
Q

40.Which of the following transactions would require compliance with RESPA?
A. A loan obtained on a parcel of vacant land
B. An investor purchasing a 4-unit residential property
C. A retired couple paying cash for a single-family residence vacation home
D. A loan on a multi-family apartment complex

A

B. An investor purchasing a 4-unit residential property

41
Q
  1. The Federal Reserve sets or regulates all of the following, EXCEPT:
    A. The discount rate
    B. Asset and reserve amounts for banks
    C. Federal funds rate
    D. Interest rates charged to consumers
A

D. Interest rates charged to consumers

42
Q
  1. The document that demonstrates members of the military will have a portion of their loan guaranteed by the Department of Veterans Affairs is:
    A. DD-214
    B. Certificate of Reasonable Value
    C. Estoppel Certificate
    D. Certificate of Eligibility
A

D. Certificate of Eligibility

43
Q
  1. Enforcement of RESPA and Regulation Z occurs by:
    A. Federal Reserve
    B. HUD
    C. CFPB|
    D. Interstate Banking Regulation Commission
A

C. CFPB|

44
Q
  1. A borrower has $60,000 in gross income, a P&I payment of $980, annual taxes in the amount of $2,400, an annual homeowner’s insurance premium of $600, a car payment of $380 and monthly credit card payments of $350. Which of the following is the correct statement in terms of the borrower’s qualifications
    I. The housing ratio is acceptable
    Il. The total debt ratio is acceptable
    A. I only
    B. II only
    C. Both I and Il|
    D. Neither I nor Il
A

A. I only

45
Q
  1. The provision in a lease that ensures that the lessee will have occupancy of the unit against all others who claim a superior interest in the property is known as the:
    A. Covenant of possession
    B. Covenant against encumbrances
    C. Covenant of quiet enjoyment
    D. Covenant against ejectment
A

C. Covenant of quiet enjoyment

46
Q
  1. In a non-judicial foreclosure, the process is initiated by:
    A. The beneficiary filing a lis pendens
    B. The trustee instructing the beneficiary to issue a notice of default
    C. The trustor issuing a notice of default and a notice of sale
    D. The beneficiary instructing the trustee to issue a notice of default and a notice of sale
A

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

47
Q

47.When a mortgage note is in default and the lender demands that the entire balance be paid, the mortgagee is exercising their rights of:
A. Alienation
B. Foreclosure
C. Acceleration
D. Forfeiture

A

C. Acceleration

48
Q
  1. The market cap rate is 6.8% and a property has been valued at $200,000. What was the net operating income for the property?
    A. $136,000
    B. $13,600
    C. $29,411
    D. $2,941,176
A

B. $13,600

49
Q
  1. All of the following would be considered operating expenses in the calculation of net operating income, EXCEPT:
    A. Property management fees
    B. Principal and interest for loans on the property
    C. Liability insurance
    D. Maintenance fees and costs
A

B. Principal and interest for loans on the property

50
Q
  1. All of the following entities operate in the primary mortgage market, EXCEPT:
    A. Commercial banks and lenders
    B. Pension plans and insurance companies
    C. Credit unions and savings institutions
    D. Fannie Mae and Freddie Mac
A

D. Fannie Mae and Freddie Mac

51
Q
  1. A loan in which the lender makes regular periodic payments to the borrower is best referred to as a:
    A. Graduated payment loan
    B. Negative amortization loan
    C. Reverse annuity mortgage
    D. Wraparound financing
    considered to contain a “trigger term” under TILA, EXCEPT:
A

C. Reverse annuity mortgage

52
Q
  1. All of the following advertisements would be considered to contain a “trigger term” under TILA,
    ЕХСЕРТ:
    A. Low monthly payment of $650
    B. Low interest rate of 5.8%
    C. Competitive APR of 7.8%
    D. Own a home for just $10,000
A

C. Competitive APR of 7.8%

53
Q
  1. In a contract for deed, the legal title to the property is retained by:
    A. The vendor
    B. The vendee
    C. The beneficlary
    D. The trustor
A

A. The vendor

54
Q
  1. Which of the following is an accurate statement when using the comparison method of appraising?
    A. The adjustments are always made to the subject property.
    B. Inferior comparables are always adjusted downward.
    C. The three comparables are averaged together to achieve reconciliation.
    D. The property with the fewest number of adjustments is most similar to the subject property.
A

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

55
Q

55.Under the North Carolina tenant security deposit Act, the maximum amount of security deposit that can be collected from a tenant when the term of a lease is for one year is:
A. Two weeks’ rent
B. Two months’ rent
C. One and ½ months’ rent
D. One months’ rent

A

B. Two months’ rent

56
Q
  1. The best definition of an estate for years is a leasehold interest that:
    A. Exists for a period longer than 12 months
    B. Requires notice to terminate the agreement
    C. Contains a definite period of time
    D. Contains periodic automatic renewal provisions
A

C. Contains a definite period of time

57
Q
  1. The type of agency agreement that exists between a property manager and the owner of the property would best be classified as:
    A. Implied agency
    B. Exclusive agency
    C. General agency
    D. Special agency
A

C. General agency

58
Q

58.What would be the proper Closing Disclosure entry when a borrower assumes a mortgage . obligation of the seller?
A. Credit the seller and credit the buyer
B. Credit the buyer and debit the seller
C. Credit the seller and debit the buyer
D. Debit the buyer and debit the seller

A

B. Credit the buyer and debit the seller

59
Q
  1. Provisions that call for the release of certain parcels when a specified amount of money is paid would be found in which type of loan?
    A. Blanket loan
    B. An adjustable rate loan
    C. A construction loan
    D. A term loan
A

A. Blanket loan

60
Q
  1. The loan clause that most likely would prevent the grantor and grantee from selling a property without paying off an existing mortgage would be:
    A. Acceleration clause
    B. Subordination clause
    C. Encumbrances clause
    D. Alienation clause
A

D. Alienation clause

Superior real estate school practice exam (2 decks)

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