What concept carried over from Spanish law into modern-day property ownership?

a. Civil law

b. Common law

c. Community property

d. None of the above

c. Community property

What are the two types of freehold estates?

a. Fee Simple and Life Estate

b. Absolute and Qualified

c. Defeasible and Life Estate

d. Fee Simple and Leasehold Estate

a. Fee Simple and Life Estate

Which of the following conditions are characteristics of a Fee Simple Absolute Estate?

a. Provides the owner with the most rights

b. Holds no limitations

c. Can be conveyed by a will

d. All of the above

d. All of the above

In reference to a life estate, a measuring life is

a. The life duration of the grantor of the life estate

b. The life duration of the person on whose life the estate is based

c. A life estate in reversion

d. None of the above

b. The life duration of the person on whose life the estate is based

All of the following characteristics are correct regarding a leashold estate EXCEPT

a. The owner of a leasehold estate possesses more bundles of rights than a freehold estate

b. The owner of the leasehold has exclusive right of possession

c. The landlord holds title to the property

d. People holding a leasehold estate are referred to as tenants or renters

a. The owner of a leasehold estate possesses more bundles of rights than a freehold estate

Which of the following are considered the lowest form of estate?

a. Fee Simple Defeasible

b. Estate at Will

c. Estate at Sufferance

d. Estate in reversion

c. Estate at Sufferance

All of the following are characteristics of a lease EXCEPT

a. Every lease is considered a contract whether it is written or oral

b. Tenants are required to sign all written contracts

c. All contracts are backed by some form of consideration

d. Written contracts may not be altered orally

b. Tenants are required to sign all written contracts

Property is considered

a. anything that can be owned

b. real

c. personal

d. All of the above

d. All of the above

An example of real property is

a. grain harvested from plants

b. a car

c. the airspace immediately above the property

d. money

c. the airspace immediately above the property

Another term for personal property is

a. chattel

b. appurtenance

c. fixture

d. MARIA

a. chattel

Property can change from real to personal and back to real property.

a. True

b. False

a. True

Which one of the following examples is not considered a fixture?

a. Ceiling fan

b. Space heater

c. Custom-made window coverings

d. Dishwasher

b. Space heater

Which one of the following is NOT considered a test of a fixture?

a. Method of attachment

b. Emblement

c. Relationship between parties

d. Adaptability

b. Emblement

Trade fixtures are considered

a. personal property

b. real property

c. both A and B

d. neither A nor B

a. personal property

Which of the following is not a characteristic of real estate?

a. Social

b. Physical

c. Tangible

d. Economic

c. Tangible

A person must live in his or her home a minimum of how many years to be eligible for the tax relief act?

a. 1

b. 2

c. 5

d. 7

b. 2

A single person may qualify for property exemption of

a. $125,000

b. $250,000

c. $500,000

d. $700,000

b. $250,000

What economic principle directly or indirectly affects real estate?

a. Interest

b. Soft Money

c. Hard Money

d. Supply and Demand

d. Supply and Demand

Which of the following is not considered one of the four key groups responsible for providing market information for real estate?

a. Internet

b. Real Estate Investment Trusts

c. Bank and insurance analysis

d. Interest

d. Interest

The use of a proportionately small amount of money to secure a large loan for the purchase of a property is called

a. leverage

b. interest

c. financing

d. collateral

a. leverage

Money can be viewed as a

a. standard of value

b. medium of exchange

c. storehouse of purchasing power

d. All of the above

d. All of the above

Disposable income is

a. any earned income such as wages, commissions or returns on investments

b. earned income less savings and short term reserves

c. earned income less bills, taxes and mortgage or rent

d. All of the above

c. earned income less bills, taxes and mortgage or rent

Our current money system is based on

a. the value system

b. the gold standard

c. paper

d. raw materials such as silver and bronze

b. the gold standard

M1 is described as

a. money market mutual fund shares and savings deposits less than $100,000

b. cash in public hands, checking accounts and demand deposits

c. large deposits at all depository institutions

d. both B and C

b. cash in public hands, checking accounts and demand deposits

Current interest rates are primarily established by

a. marketplace realities

b. government edicts

c. foreign influences

d. None of the above

a. marketplace realities

The Federal Reserve System is made up of how many districts?

a. 10

b. 12

c. 14

d. 16

b. 12

Which of the following is NOT a tactic used by the Fed to regulate the money supply?

a. Open market operations

b. Reserve requirements

c. Supply of gold

d. Discount rate

c. Supply of gold

The amount of money each member bank of the Federal Reserve has in reserves is

a. regulated by the Fed

b. accessible to make loans

c. based on a percentage of deposits that may not be used

d. both A and C

d. both A and C

The interest rate member banks must pay to the Fed to borrow money is referred to as

a. interest

b. the discount rate

c. open market operation

d. unusable funds

b. the discount rate

The directorial board of the FED is made up of how many governors?

a. 5

b. 7

c. 10

d. 12

b. 7

The Fed's board of governors is appointed by

a. the President and approved by the Senate

b. the Senate and approved by the President

c. Congress

d. each district elects one representative

a. the President and approved by the Senate

Member banks in the Federal Reserve banking system are

a. only nationally chartered banks

b. both nationally and state chartered banks

c. only state chartered banks

d. none of the above

b. both nationally and state chartered banks

Which creditors are required to abide by Regulation Z?

a. Those who make 20 non-secured loans a year

b. Those who make 3 collateral-secured loans a year

c. Those who make 27 non-secured loans a year

d. All of the above

c. Those who make 27 non-secured loans a year

Which of the following loans would be exempt from Regulation Z requirements?

a. A loan made for more $25,000 secured by real property

b. A non-secured residential loan for under $25,000

c. An agricultural loan

d. None of the above

c. An agricultural loan

Disclosures required by Regulation Z are

a. included on a separate addendum to the loan

b. included in regular type in the loan document

c. offset by a box, type style, color and bold lettering in the loan document

d. made verbally by the loan originator

c. offset by a box, type style, color and bold lettering in the loan document

Which of the following is not a disclosure to be made by Regulation Z?

a. Finance charge

b. Total sales price

c. Amount to be financed

d. Date each installment is due

d. Date each installment is due

What agency supervises the Federal Deposit Insurance Corporation (FDIC)?

a. Fed

b. Federal Reserve System

c. United States Treasury

d. Each individual region supervises their local FDIC

c. United States Treasury

Treasury bonds have terms of

a. 2-5 years

b. less than 2 years

c. 5-30 years

d. None of the above

c. 5-30 years

The state agency providing real estate loans for low-income families through approved lenders is

a. California Housing Finance Agency

b. Department of Savings and Loans

c. Department of Insurance

d. Department of Banking

a. California Housing Finance Agency

The state agency handling securities transactions is called the

a. Department of Banking

b. Department of Corporations (DOC)

c. Office of Real Estate Appraisers (OREA)

d. Department of Insurance

b. Department of Corporations

Which of the following is considered a money-restricted encumbrance?

a. Encroachment

b. Judgment

c. Easement

d. None of the above

b. Judgment

The American Land Title Association (ALTA) provides an extended title insurance policy which guards against which of the following?

a. Water rights

b. Mining claims

c. Unrecorded liens

d. All of the above

d. All of the above

What does "estate" refer to?

a. Land

b. Property

c. Ownership

d. Buildings

c. Ownership

What are the two types of freehold estates?

a. Fee simple and Life Estate

b. Absolute and Qualified

c. Defeasible and Life Estate

d. Fee Simple and Leasehold Estate

a. Fee simple and Life Estate

Which of the following conditions are characteristics of a Fee Simple Absolute Estate?

a. Provides the owner with the largest bundle of rights

b. Holds no limitations or conditions

c. Can be conveyed by a will

d. All of the above

d. All of the above

In reference to a life estate, a measuring life is

a. the life duration of the grantor of the life estate

b. the life duration of the person on whose life the estate is based

c. a life estate in reversion

d. none of the above

b. the life duration of the person on whose life the estate is based

All of the following characteristics are correct regarding a leasehold estate EXCEPT

a. the owner of a leashold estate possesses a larger bundle of rights than the owner of a freehold estate

b. the owner of the leasehold has exclusive right of possession

c. the landlord holds title to the property

d. people holding a leashold estate are referred to as tenants or renters

a. the owner of a leashold estate possesses a larger bundle of rights than the owner of a freehold estate

Which of the following are considered the lowest form of estate?

a. Fee Simple Defeasible

b. Estate at Will

c. Estate at Sufferance

d. Estate in Reversion

c. Estate at Sufferance

All of the following are characteristic of a lease EXCEPT

a. every lease is considered a contract whether it is written or oral

b. tenants are required to sign all written contracts

c. all contracts are backed by some form of consideration

d. written contracts may not be altered orally

b. tenants are required to sign all written contracts

Property is considered

a. anything that can be owned

b. real

c. personal

d. All of the above

d. All of the above

An example of real property is

a. grain that has been harvested

b. car

c. the airspace immediately above the property

d. money

c. the airspace immediately above the property

Which of the following is NOT considered a water right for a property owner?

a. Riparian

b. Right of appropriation

c. Littoral

d. Emblement

d. Emblement

Another term for personal property is

a. chattel

b. appurtenance

c. fixture

d. MARIA

a. chattel

Property can change from real to personal and back to real property

a. True

b. False

a. True

Which one of the following examples is not considered a fixture?

a. Ceiling fan

b. Space heater

c. Custom-made window coverings

d. Dishwasher

b. Space heater

Which one of the following is NOT considered a test of a fixture?

a. Method of attachement

b. Emblement

c. Relationship between parties

d. Adaptability

b. Emblement

Trade fixtures are considered

a. personal property

b. real property

c. Both A and B

d. Neither A nor B

a. personal property

All of the following are descriptions of land EXCEPT

a. lot, block and tract system

b. metes and bounds

c. U.S. government section and township survey

d. encroachment

d. encroachment

Metes and bounds land descriptions are most commonly used when

a. land is irregularly shaped and would be difficult to describe with any other system

b. developers divide up land into lots and record a plat map

c. using meridians and baselines

d. using a grid system

a. land is irregularly shaped and would be difficult to describe with any other system

A plot of land containing 36 square miles most likely describes

a. 1 township

b. 6 townships

c. 36 sections

d. Both A and C

d. Both A and C

When a person signs a promissory note to purchase property, he or she generally uses what as security?

a. Trust Deed

b. Collateral

c. Leverage

d. Both A and B

d. Both A and B

Promissory notes are considered negotiable instruments. Which of the following is also considered to be a negotiable instrument?

a. Personal Check

b. Credit Card

c. Collateral

d. None of the above

a. Personal Check

Which of the following is not considered a promissory note?

a. Adjustable note

b. Full Reconveyance

c. Straight note

d. Amortized note

b. Full Reconveyance

Which one of the following characteristics is not found in a partially amortized note?

a. Interest-only payments

b. Partial payment of principal, full payment of interest

c. Balloon payment

d. Periodic fixed payments

a. Interest-only payments

Which of the following parties in a trust holds the trust deed?

a. Trustee

b. Beneficiary

c. Trustor

d. None of the above

b. Beneficiary

In a 6-Month Certificate of Deposit Adjustable Rate Mortgage (ARM), what is the maximum the interest rate may fluctuate in a 6-month period?

a. 0.25%

b. 0.5%

c. 0.75%

d. 1%

d. 1%

In a trust deed, who holds the original deed to the property before the promissory note is paid in full?

a. The trustor

b. The trustee

c. The lender

d. Both A and B

c. The lender

Which of the following is NOT a special clause found in financial instruments?

a. Acceleration

b. Subordination

c. "Or more"

d. Redemption

d. Redemption

Which best describes the "subject to" clause?

a. A buyer takes over the existing loan from the seller without the lender's knowledge. The seller, or original owner, is responsible for the loan and may be held liable for any deficiency judgments

b. The borrower is subject to a credit check before being approved for a loan

c. The borrower is subject to a loan based on the inspection and appraisal of the property of interest

d. The buyer takes over the existing loan with the knowledge and approval of the lender

a. A buyer takes over the existing loan from the seller without the lender's knowledge. The seller, or original owner, is responsible for the loan and may be held liable for any deficiency judgments

The unsecured loan has which of the following characteristics?

a. Does not utilize a trust deed

b. Does not require any collateral

c. Does not utilize an index to determine the variable interest rate

d. Does not charge a prepayment penalty fee

b. Does not require any collateral

Which of the following is (are) considered a junior trust deed?

a. Seller financing

b. Outside financing

c. Home Equity loans

d. All of the above

d. All of the above

If a seller finances a junior trust deed to the buyer of his or her property, what options does the buyer have regarding the loan?

a. The seller may carry the note until it is paid in full

b. The seller may sell the note at a discounted rate to a mortgage broker

c. The seller may force the buyer into paying the note back earlier than originally planned, because they need the money for a new car

d. Both A & B

d. Both A & B

Louise wishes to obtain a home equity loan to remodel her living room and have money to go back to school. Her home is worth $320,000, and she currently has a first loan balance of $150,000. She wished to pull out $100,000 to cover both her remodeling project and tuition. Will a lender be willing to do this for Louise?

a. Yes. Louise has plenty of equity in her home for this loan

b. No. Louise cannot take out money for any purpose other than the purchase of property

c. No. Louise does not have enough equity in her home for this size of loan.

d. None of the above

a. Yes. Louise has plenty of equity in her home for this loan

Balloon payments

a. are used on hard money loans

b. require a large final payment to completely repay the debt

c. require a 90 to 50 day notice from the lender to the borrower that the payment is forthcoming

d. all of the above

d. all of the above

In a hybrid note

a. interest is fixed for the life of the loan

b. interest is variable for the life of the loan

c. interest is fixed for a set number of years, and then becomes variable, tied to an index

d. none of the above

c. interest is fixed for a set number of years, and then becomes variable, tied to an index

Sellers who finance a buyer with a wrap-around loan typically do which of the following?

a. Carry back a note on the property

b. Charge the buyer a higher interest rate then he or she currently pays on the original trust deed

c. Collect the money directly from the buyer for the AITD

d. Require a high down payment from the buyer

b. Charge the buyer a higher interest rate then he or she currently pays on the original trust deed

Which of the following loans allow individual properties to be released from the responsibilities of the loan, provided there is a sufficient payment?

a. Blanket loan

b. Wrap-around loan

c. Open-ended loan

d. Unsecured loan

a. Blanket loan

Which of the following mortgage types best describes a loan similar to the wrap-around loan or all-inclusive trust deed?

a. Graduated payment adjustable mortgage

b. Rollover mortgage

c. Shared appreciation mortgage

d. Contract of Sale

d. Contract of Sale

What is the term for selling a property at market value, below what is owed on the loan?

a. Short Pay

b. Walk away

c. Foreclosure

d. Trustee's sale

a. Short Pay

Which of the following is a cost associated with obtaining a home equity line?

a. Appraisal fee

b. Pest inspection fee

c. Transaction fee

d. Both A and C

d. Both A and C

Which of the following parties in a trust holds the trust deed?

a. Trustee

b. Beneficiary

c. Trustor

d. None of the above

b. Beneficiary

The lender is the

a. Trustor

b. Trustee

c. Beneficiary

d. Both A and C

c. Beneficiary

Who is responsible for foreclosing a property in the event of default on the loan?

a. Trustor

b. Trustee

c. Lender

d. Courts

b. Trustee

Assignment of rents allows

a. the lender to take possession of a foreclosed property and collect rent from any tenants

b. the owner in default to continue to collect rents from any tenants on property until all payments are caught up

c. the tenants of a foreclosed property to forego paying rent, as the owner no longer has control of the building

d. none of the above

a. the lender to take possession of a foreclosed property and collect rent from any tenants

How many days does the trustor have to reinstate the promissory note before the date of the trustee's sale?

a. 10 days

b. 7 days

c. 5 days

d. 3 days

c. 5 days

What or who gives the trustee the power to foreclose or reconvey the deed to property?

a. Owner of property

b. Lender

c. Trust

d. Courts

c. Trust

A judicial foreclosure is used in which of the following situations?

a. Trust deeds

b. Mortgages

c. Both A and B

d. Neither A nor B

c. Both A and B

A notice of default must be sent to the trustor within how many days after it is recorded?

a. 5

b. 10

c. 15

d. 30

b. 10

A person who purchases property at a trustee's sale will receive what kind of deed?

a. Sheriff's deed

b. Certificate of sale

c. Trust deed

d. Both A and B

d. Both A and B

What is the redemption period?

a. The time during which junior lien holders or the mortgagee's successors may repurchase a property after a foreclosure sale

b. The act of seeking a personal judgment against the person defaulting on the promissory note

c. The time by which a bidder must pay the amount in full for the property he or she is purchasing

d. The time between the notice of sale and the actual sale of the foreclosed property

a. The time during which junior lien holders or the mortgagee's successors may repurchase a property after a foreclosure sale

A deficiency judgment is allowed in which of the following situations?

a. With a defaulted trust deed

b. With a defaulted mortgage

c. Both A and B

d. Neither A nor B

b. With a defaulted mortgage

In a trustee's sale, which of the following parties is not required to be notified when the notice of default is recorded?

a. Trustor

b. Junior lien holders

c. Beneficiary

d. State Controller

c. Beneficiary

When the seller makes a junior trust deed, it is sometimes called

a. carryback

b. foolish

c. novation

d. conveyance

a. carryback

A non-judicial foreclosure is also known as

a. reconveyance

b. power of sale

c. deficiency judgment

d. trustee's sale

b. power of sale

How many days does the trustor have to repay the debt in order to reinstate the note on a foreclosed property?

a. 10 days

b. 7 days

c. 5 days

d. 0 days, as he or she may redeem property until the date of the sale

c. 5 days

A junior lienholder holds what type of a lien?

a. Property tax lien

b. Second or any subsequent trust deed

c. Lien on personal property such as furnishings or a car note

d. None of the above

b. Second or any subsequent trust deed

Which of the following are benefits of a trust deed to the lender?

a. No redemption after foreclosure

b. Trust deeds never expire

c. Short foreclosure process

d. All of the above

d. All of the above

Which of the following can be foreclosed on by either judicial action or by a trustee's sale?

a. Trust deed only

b. Mortgage only

c. Both A and B

d. Neither A nor B

a. Trust deed only

Which of the following is not a method of foreclosure?

a. Nonjudicial

b. Strict

c. Sheriff

d. Judicial

c. Sheriff

Which of the following liens is not eliminated in a foreclosure?

a. Junior lien

b. Property tax lien

c. First trust deed

d. None of the above

b. Property tax lien

Which primary participant in the secondary mortgage market guarantees investors that they will receive payment for the security they hold by making late payments for the borrower, if necessary?

a. Ginnie Mae

b. Fannie Mae

c. Freddie Mac

d. Office of Federal Housing Enterprise Oversight

a. Ginnie Mae

New real estate loans are created by

a. primary lenders

b. Ginnie Mae

c. Freddie Mac

d. Fannie Mae

a. primary lenders

Today, most loans created by the various fiduciary sources will be

a. warehoused

b. kept in the lender's portfolio

c. sold in the secondary market

d. refinanced

c. sold in the secondary market

The secondary mortgage market is made up of

a. small loans made by lending institutions

b. private investors

c. the sale of real estate promissory notes

d. None of the above

c. the sale of real estate promissory notes

Which of the following is not a participant in the secondary mortgage market?

a. the VA

b. OFHEO

c. Freddie Mac

d. Ginnie Mae

a. the VA

Fannie Mae buys

a. only single-family detached residences

b. single family residences made up of 1-4 units

c. any type of residential property regardless on the number of units

d. any type of property

b. single family residences made up of 1-4 units

The loan cap on a Fannie Mae purchase is

a. no more than 80% of the HUD area average housing price

b. determining every 5 years

c. determined annually

d. $500,000

c. determined annually

Which of the following is the purpose of Freddie Mac?

a. Buy and Sell conventional loans

b. Guarantee securities issued by FHA approved lenders

c. Make legislative recommendations

d. Buy securities from the general public

a. Buy and Sell conventional loans

The system that is being used by Fannie Mae to process loans is

a. REMIC

b. FICO

c. Desktop Underwriter

d. Loan Prospector

c. Desktop Underwriter

Which is not a rule for credit scoring?

a. Don't automatically disqualify someone because of a sub-par score

b. Work with the applicant to clear fixable items

c. Be aware of potential errors in electronic credit files

d. Disregard the score factor codes for sub-par scores

d. Disregard the score factor codes for sub-par scores

The largest single investor in the mortgage industry today is

a. Freddie Mac

b. Fannie Mae

c. Ginnie Mae

d. the VA

b. Fannie Mae

Which of the following is exempt from federal income tax?

a. REITs

b. MISMOs

c. REMICs

d. FHLMCs

Freddit Mac is governed by an 18-member board of directors. Who elects these members?

a. Stockholders of Freddie Mac

b. President of the United States

c. Congress

d. Both A and B

d. Both A and B

Fannie Mae is able to maintain the flow of funds available for the purchase of mortgage loans from the private market by issuing

a. bonds

b. stocks

c. mortgage-backed securities

d. none of the above

c. mortgage-backed securities

The flex 97 affordable housing loan program is part of

a. Fannie Mae

b. Freddie Mac

c. Ginnie Mae

d. REIT

a. Fannie Mae

Fannie Mae uses an electronic underwriting program achieving an estimated loan approval within 60 seconds to 30 minutes. In addition to this electronic underwriting system, the originator of the loan must also fax which of the following alternative verification information

a. three years of W2's

b. 2 monthly bank statements

c. pay stubs

d. All of the above

c. pay stubs

Which credit scores qualify for the best interest rate loans?

a. 710+

b. 620-710

c. 520-620

d. Any score over 500

a. 710+

Freddie Mac was created in

a. 1938

b. 1970

c. 1968

d. none of the above

b. 1970

The tandem plan combines

a. Ginnie Mae and Freddie Mac

b. Freddie Mac and Fannie Mae

c. Ginnie Mae and Fannie Mae

d. Ginnie Mae and REMIC

c. Ginnie Mae and Fannie Mae

Which of the following is not a credit reporting agency?

a. Experian

b. Equifax

c. Transunion

d. FICA

d. FICA

What conditions caused the restructuring of real estate finance and mortgage options available to consumers?

a. Disintermediation

b. High interest rates

c. Short money supply

d. All of the above

d. All of the above

Which of the following institutions is considered a non-institutional lender?

a. Credit Unions

b. Insurance Company

c. Mortgage Company

d. Commercial Banks

c. Mortgage Company

Where does the majority of real estate loan funding come from?

a. Personal savings accounts

b. Mortgage companies

c. Insurance companies

d. Non-financial institutions

a. Personal savings accounts

What is the minimum number of investors required for a REIT?

a. 100

b. 75

c. 125

d. 50

a. 100

What is the primary function of a mortgage company?

a. Originates loans with its own money

b. Connect borrowers with lenders who can provide the necessary funds or programs for their loan needs

c. Service loans they have originated or sold

d. All of the above

d. All of the above

Which of the following is considered a non-financial institution?

a. Universities

b. Trust departments of banks or mortgage investment companies

c. Title company

d. All of the above

d. All of the above

Commercial banks receive their funding from what source?

a. Checking accounts

b. Certificates of Deposit

c. Other intermediaries

d. All of the above

d. All of the above

The majority of loans made by commercial banks are

a. long-term loans of 15 or more years

b. short-term loans of 1-3 years

c. construction loans

d. both B and C

d. both B and C

What government agency insures deposits made to commercial banks?

a. FDIC

b. REIT

c. FIRREA

d. OTS

a. FDIC

Disintermediation occurred when

a. people took their money out of Savings and Loan Associations and deposited it into savings accounts at commercial banks

b. people began depositing their money into Savings and Loan Associations for the high rate of return they promised

c. people took their money out of Savings and Loan Associations to deposit it into investments with higher rates of interest

d. people began investing in real estate

b. people began depositing their money into Savings and Loan Associations for the high rate of return they promised

Which of the following is not a reason for the fall of Savings and Loan Associations during the 1980's and 1990's?

a. Fraud

b. Low interest rates

c. Junk Bonds

d. Cutbacks in defense spending

b. Low interest rates

The tax reform of 1969 did all of the following except

a. raised the minimum tax rate from 10% to 15%

b. reduced deductions for bad debts

c. taxed net bond gains as ordinary income

d. classified bad debt deduction as a tax preference item

a. raised the minimum tax rate from 10% to 15%

In 1982, the Garn-St. Germain Depository Institutions Act

a. eliminated the advantage savings associations had over commercial banks by disallowing the additional 0.25% interest on deposits

b. increased business opportunities for savings and loan associations

c. authorized emergency rescue programs to help troubled savings associations

d. all of the above

b. increased business opportunities for savings and loan associations

Congress sought to reform the banking system in the U.S. through what act?

a. OTS
b. FDIC

c. FIRREA

d. RTC

c. FIRREA

Which one of the following methods is NOT used by the Fed to regulate the nation's money supply?

a. Reserve requirements

b. Open market operations

c. Sell loans on the secondary mortgage market

d. Change the discount rate

c. Sell loans on the secondary mortgage market

How many banks make up the Fed?

a. 10

b. 12

c. 15

d. 20

b. 12

The reserve requirement the Fed requires is

a. a percentage of deposits

b. allowed to be loaned out to customers

c. may be raised or lowered

d. both A and C

d. both A and C

Thrifts include all of the following except

a. Credit Unions

b. insurance companies

c. Mutual savings banks

d. Savings and Loan Associations

b. insurance companies

The process by which a mortgage company will use funding from a commercial bank to make a loan, with the intention of selling that loan to an investor, is called

a. warehousing

b. origination

c. secondary mortgage market

d. none of the above

a. warehousing

Mortage companies

a. always use conventional loans

b. always use government-backed loans such as VA loans

c. use both government-backed and conventional loans

d. don't use outside loans at all, but only use their own funds for loans

c. use both government-backed and conventional loans

What is the purpose of a FHA loan?

a. To guarantee the loan

b. To insure the loan

c. Both A and B

d. Neither A nor B

b. To insure the loan

Who or what funds Cal-Vet loans?

a. Voter-approved bonds

b. Outside funding

c. California Department of Veterans Affairs

d. Traditional banks and mortgage companies

a. Voter-approved bonds

Under a VA-guaranteed loan, for how long may a traditional single-family dwelling be financed?

a. 25 years

b. 20 years

c. 35 years

d. 30 years

d. 30 years

Which one of the following loan types is not allowed when using a VA guaranteed loan?

a. Fixed-term

b. Seller-financed loan

c. Adjustable-rate mortgage

d. Graduated payment mortgage

b. Seller-financed loan

Which of the following is not a type of default insurance?

a. Self-insurance

b. Partial coverage insurance

c. Third party guaranty insurance

d. Full coverage insurance

c. Third party guaranty insurance

With self-insurance, the entire risk falls with

a. lender

b. buyer

c. seller

d. seller and buyer

a. lender

Coinsurance differs from partial coverage insurance in what way?

a. No difference in coverage, just variations in policy requirements

b. Partial coverage covers a percentage of loss; coinsurance covers both a portion of loss and a part of loss incurred beyond the insured amount

c. Coinsurance covers a percentage of loss; partial coverage covers a percentage of the loss and an additional portion of loss incurred beyond the insured amount

d. Partial insurance only covers a portion of the loss; coinsurance covers the entire loss

b. Partial coverage covers a percentage of loss; coinsurance covers both a portion of loss and a part of loss incurred beyond the insured amount

Any person may qualify for which type of government-guaranteed loan?

a. FHA

b. VA

c. Cal-Vet

d. Any of the above

a. FHA

In an FHA guaranteed loan, who pays for the Mutual Mortgage Insurance?

a. Lender

b. Federal government

c. Borrower

d. Seller

c. Borrower

A graduated payment mortgage

a. allows the buyer to pay only a percentage of the interest on the note for the first five years

b. increases the borrower's monthly payment after 5 years until the borrower has paid the note in full

c. both A and B

d. neither A nor B

c. both A and B

A borrower interested in an FHA loan will apply directly to

a. the Federal Housing Administration

b. the Department of Housing and Urban Development

c. an approved lender

d. either A or C

c. an approved lender

Who is eligible for a VA loan?

a. Any person

b. Any person who has served in the United States military

c. Only those persons honorably discharged from military service and or their spuses

d. Only active servicemen or women

b. Any person who has served in the United States military

A VA loan requires what percentage of down payment?

a. 0%

b. 2%

c. 5%

d. 15%

d. 15%

Which of the following is not acceptable form of financing for a VA loan?

a. Fixed Term

b. Growing equity mortgage

c. Adjustable-rate mortgage

d. Wrap around trust deed

d. Wrap around trust deed

VA loans will cover a mobile home as long as:

a. it is at least a "double-wide" mobile home

b. it is off the chassis and permanently attached to a lot

c. the home is 350 square feet or more

d. None of the above

d. None of the above

In 2006, a VA loan may not exceed

a. $378,000

b. $417,000

c. $463,000

d. $504,000

b. $417,000

Cal-Vet benefits may be extended to

a. an active or formerly active duty service man or woman

b. an honorably discharged service man or woman

c. a disabled service man or woman

d. all of the above

c. a disabled service man or woman

Cal-Vet loans

a. do not have a maximum amount

b. are tied to the HUD area average housing price

c. are based on maximums set in the bonds used to finance these loans

d. have maximums based on Ginnie Mae guarantees

b. are tied to the HUD area average housing price

The maximum purchase price that can qualify for a Cal-Vet loan is

a. unlimited

b. $322,700

c. $300,000

d. $70,000

a. unlimited

Private mortgage insurance is generally required when

a. when borrowers finance 70% of their home

b. when borrowers finance more than 80% of their home

c. when borrower's finance 50% to 75% of their home

d. for any note amount

b. when borrowers finance more than 80% of their home

What federal law expanded the 1866 Civil Rights Act to include more than just discrimination on the basis of race?

a. Jones v. Mayer

b. Fair Housing Act

c. Unruh Act

d. Civil Rights Act of 1968 and 1988

d. Civil Rights Act of 1968 and 1988

The act of getting people to sell their homes in an area by telling them a minority group is moving in is called

a. steering

b. redlining

c. panic selling

d. blockbusting

d. blockbusting

Which state law protects citizens against discrimination when seeking a private residence, whether a single-family home or an apartment?

a. Unruh Civil Rights Act

b. California Civil Code Section 54-55.1

c. California Fair Employment and Housing Act

d. Housing Financial Discrimination Act

c. California Fair Employment and Housing Act

Which one of the following categories is NOT protected from discrimination under the Equal Credit Opportunity Act?

a. sex

b. color

c. religion

d. sexual orientation

d. sexual orientation

Under the truth in lending act, how many days does a buyer have to rescind a loan?

a. 1

b. 3

c. 5

d. 10

b. 3

Which of the following is NOT considered one of the five most important disclosures under the Truth in Lending Act?

a. Annual percentage rate

b. Finance charge

c. Total amount of payments

d. Right to rescind

d. Right to rescind

The three C's include all of the following except

a. collateral

b. credit

c. character

d. capacity

b. credit

At what age does a credit score change based on age?

a. 58

b. 60

c. 62

d. None of the above

d. None of the above

Who or what agency enforces the fair housing laws?

a. HUD

b. CAR

c. California Supreme Court

d. NAR

a. HUD

The Fair Housing Act protects people from all of the following except

a. redlining

b. blockbusting

c. discrimination based on age

d. landlords refusing to rent to a person with bad credit

d. landlords refusing to rent to a person with bad credit

The Truth in Lending Act is also called

a. RESPA

b. HUD

c. Regulation Z

d. Regulation B

c. Regulation Z

The Age Discrimination in Employment Act protects people who are

a. 40 or older

b. 45 or older

c. 50 or older

d. 53 or older

a. 40 or older

If a consumer feels he or she has been discriminated against, he or she should

a. complain to the creditor

b. join others and file a class action suit (if applicable)

c. check with the state attorney general

d. All of the above

d. All of the above

Regarding age, which of the following is a false statement?

a. The creditor may favor candidates 62 or older based on a credit-scoring system

b. A creditor may favor candidates under 35 based on a credit-scoring system

c. The borrower is too young to sign contracts if he or she is younger than 18

d. A creditor may consider a borrower's age if he or she is close to retirement and his or her income may drop upon retirement

b. A creditor may favor candidates under 35 based on a credit-scoring system

Which of the following is a false statement?

a. Creditors must include public assistance as valid income

b. Creditors must include retirement or pension as valid income

c. Creditors may exclude alimony or child support as valid income

d. Creditors may not consider men and women's salaries to be different

c. Creditors may exclude alimony or child support as valid income

Good credit is important to obtain. Which of the following is a way to build a good credit rating?

a. Open a checking or savings account

b. Obtain a credit card or store charge card, making all payments on time

c. Secure a loan with a co-signer

d. All of the above

d. All of the above

The Federal Deposit Insurance Corporation insures accounts up to:

a. $50,000

b. $100,000

c. $200,000

d. $350,000

b. $100,000

Which of the following is not one of the most important disclosures regarding Regulation Z?

a. Total amount of the payments including interest

b. Amount to be financed

c. Name of the creditor

d. Annual percentage rate

c. Name of the creditor

When filing a complaint, which of the following is not necessary?

a. Institution's name and address

b. Complainant's name, address and telephone number

c. Description of the complaint

d. Amount of grievance if applicable

d. Amount of grievance if applicable

Which of the following are allowed on a high rate, high loan fee?

a. Balloon payments

b. Default interest rates higher than the pre-default rate

c. Rebates of interest

d. Consolidation of two periodic payment or more

d. Consolidation of two periodic payment or more

Which one of the following is not considered a reason for obtaining an appraisal of property?

a. Taxation

b. Insurance

c. Financing and credit

d. Fair market value

d. Fair market value

Which best describes the appraisal process?

a. Appraisal is a mathematical science by which the appraiser determines the exact dollar amount a property is worth

b. Appraisal is the process by which the appraiser arrives at an estimate of the property's present worth

c. Appraisal is the process by which the appraiser arrives at the exact worth of a property

d. None of the above

b. Appraisal is the process by which the appraiser arrives at an estimate of the property's present worth

There are certain types of sales that would not determine, or represent, the fair market value of a property. Which one of the following is NOT one of these special circumstances.

a. Death

b. Divorce

c. Cash Sale

d. Bankruptcy

c. Cash Sale

Which one of the following terms best fits the definition "The price a property would bring if freely offered in an open market with both a willing buyer and seller?"

a. Market value

b. Utility value

c. Market price

d. Objective value

c. Market price

Which of the following is not a necessary element of value?

a. Price

b. Cost

c. Both A and B

d. Neither A nor B

b. Cost

Which one of the following is NOT one of the forces affecting value of property?

a. Economic influences?

b. Political regulations

c. Environmental and physical conditions

d. Scarcity

d. Scarcity

The desirability of having a south or west-facing front describes which of the following factors?

a. Exposure

b. Corner influence

c. Shape

d. Location

a. Exposure

A development where all homes are constructed with similar architectural style, of similar age and built from similar materials (e.g., all brick, or all adobe style) to keep the value of the homes high, best illustrates the principle of

a. contribution

b. conformity

c. balance

d. highest and best use

b. conformity

Which of the following characteristics does NOT determine a property's highest and best use?

a. Most profitable use

b. Physically possible use

c. Regression

d. Legally permissible uses

c. Regression

Which one of the following factors is not a factor affecting the market value of property?

a. Age of home

b. Anticipation

c. Supply and demand

d. Conformity

a. Age of home

Which of the following is NOT one of the three appraisal techniques used to determine the value of a property?

a. Sales comparison approach

b. Cost approach

c. Square foot method

d. Income capitalization approach

c. Square foot method

An appraiser must gather which of the following types of data when arriving at the value of a property?

a. Regional

b. City

c. Neighborhood

d. All of the above

d. All of the above

An appraiser is required to take continuing education classes every

a. year

b. 2 years

c. 3 years

d. 4 years

d. 4 years

The sales comparison approach is based on what factors?

a. Sales of other homes in the neighborhood

b. Cost of replacing the home

c. Cost of building a new home

d. None of these

a. Sales of other homes in the neighborhood

Which of the following is considered physical deterioration?

a. Termite damage

b. Damage from severe weather

c. Damage from normal wear and tear

d. All of the above

d. All of the above

Which one of the following is NOT an appraisal report form?

a. Short form

b. Final conclusion

c. Letter form

d. Narrative

b. Final conclusion

When is the cost approach most appropriately used in appraising a property's value?

a. When determining the value of a new structure or very specialized structure, such as a church or hospital

b. When determining the value of a single-family dwelling

c. When determining the value of an income property

d. None of the above

a. When determining the value of a new structure or very specialized structure, such as a church or hospital

Of the four methods used to estimate the cost of a new building, which is the most detailed account of the value?

a. Square-foot method

b. Index method

c. Unit-in-place cost method

d. Quantity survey method

c. Unit-in-place cost method

What are the two methods of computing depreciation?

a. Straight line and effective age

b. Observed condition and economic life

c. Economic life and straight line

d. Straight line and observed condition

d. Straight line and observed condition

If a seller finances a junior trust deed to the buyer of his or her property, what options does the buyer have regarding the loan?

a. He or she may carry the note until it is paid in full

b. He or she may sell the note at a discounted rate to a mortgage broker

c. He or she may force the buyer into paying the note back earlier than originally planned, because he or she needs the money for a new car

d. Both A and B

d. Both A and B

The Graduated Rate Mortgage is also known as

a. a flexible rate mortgage

b. an adjustable rate mortgage

c. step up mortgage

d. none of the above

a. a flexible rate mortgage

Balloon payments

a. are used on hard money loans

b. require a large final payment to completely repay the debt

c. require a 90-150 day notice from the lender to the borrower that the payment is forthcoming

d. all of the above

d. all of the above

Sellers who finance a buyer with a wrap-around loan typically do which of the following?

a. Carry back a note on the property

b. Charge the buyer a higher interest rate then he or she currently pays on the original trust deed

c. Collect the money directly from the buyer for the AITD

d. Require a high down payment from the buyer

b. Charge the buyer a higher interest rate then he or she currently pays on the original trust deed

Which of the following loans allow individual properties to be released from the responsibilities of the loan, provided there is a sufficient payment?

a. Blanket loan

b. Wrap-around loan

c. Open-ended loan

d. Unsecured loan

a. Blanket loan

Which of the following mortgage types best describe a loan similar to the wraparound loan or all-inclusive trust deed?

a. Graduated payment adjustable mortgage

b. Rollover mortgage

c. Shared appreciation mortgage

d. Contract of Sale

d. Contract of Sale

What is the term for selling a property at market value, below what is owed on the loan?

a. Short Pay

b. Walk away

c. Foreclosure

d. Trustee's sale

a. Short Pay

In a graduated payment mortgage

a. The last few years of payments will be lower than the first

b. the first few years of payments will be lower than the last

c. the payment arrangements are ideal for people getting ready to retire as they might anticipate a lower income in the future

d. none of the above

b. the first few years of payments will be lower than the last

In an adjustable rate mortgage, an increase in interest rates will

a. cause an increase in the payments

b. cause a decrease in the payments

c. cause no change to the payments

d. either A or B, depending on the prime rate

a. cause an increase in the payments

An index is

a. another name for interest

b. another name for the prime rate

c. the starting point of a borrower's applicable interest rate for an adjustable

d. rate mortgage

c. the starting point of a borrower's applicable interest rate for an adjustable

An adjustable rate mortgage will also have what feature?

a. Interest rate cap

b. Payment cap

c. Margin

d. All of the above

d. All of the above

The shared appreciation mortgage traditionally involves the borrower and what other party to share in the increase of value in the property?

a. Co-signer

b. Lender

c. Builder

d. None of the above

b. Lender

Which of the following is not considered one of the innovative payment plans?

a. Lease-purchase

b. Wraparound trust deed

c. Growing equity mortgage

d. Zero percent financing

b. Wraparound trust deed

A lease-purchase is the same as an option to purchase

a. True

b. False

b. False

A reverse annuity mortgage

a. offers an adjustable interest rate

b. has the same requirements as a traditional home loan

c. does not require any payments until the allowed stipulated balance has been achieved

d. is ideal for young families

c. does not require any payments until the allowed stipulated balance has been achieved

Loans which allow a borrower to secure additional funds from a lender under the terms of an original note are called

a. open-end loans

b. construction loans

c. blanket loans

d. all of above

d. all of above

The best way to describe a construction loan is

a. temporary

b. permanent

c. fixed

d. variable

a. temporary

Open-end loans are ideal for

a. builders or construction companies

b. farmers

c. investors

d. both A and B

d. both A and B

Mobile homes can be financed like traditional real property when

a. they are still attached to their chassis and mobile

b. they are attached to a pick-up truck

c. they are permanently attached to a foundation

d. All of the above

c. they are permanently attached to a foundation

The wraparound trust deed

a. takes priority to the original loan

b. allows the seller to retain the title to the home

c. allows the seller to finance the buyer, providing a loan encompassing all payments including the first or any subsequent trust deed

d. usually has a lower interest rate than a traditional loan

c. allows the seller to finance the buyer, providing a loan encompassing all payments including the first or any subsequent trust deed

Which of the following is not a component of a full title report?

a. Physical inspection of the collateral property

b. Survey

c. Borrower's credit check

d. Search of the records of past documentation or interests to the collateral

c. Borrower's credit check

What documentation notifies any interested party of another's interest in the same party?

a. Recordation

b. Recorded deed

c. Recorded mechanic's lien

d. Recorded collateral

c. Recorded mechanic's lien

Which of the following methods assure a property's good title?

a. Abstract and Opinion of Title

b. Title insurance

c. Recorded deed

d. Both A and B

d. Both A and B

An abstract of title will

a. show any hidden title hazards

b. show all recorded instruments pertinent to the property

c. be accepted as an official document

d. both A and C

b. show all recorded instruments pertinent to the property

Who renders an opinion of title's condition based on the abstract report?

a. An attorney

b. A judge

c. The California Department of Real Estate

d. California Association of Realtors

a. An attorney

There are how many different types of title insurance in California?

a. 1

b. 2

c. 3

d. 5

b. 2

The value of the property exchanged between buyers and sellers is covered by

a. the California Land Title Association

b. the American Land Title Association

c. both A and B

d. neither A nor B

a. the California Land Title Association

Risks such as forgeries, incompetency of involved parties, and surveying errors are covered under

a. a standard title insurance policy

b. an expanded title insurance policy

c. every title insurance policy issued

d. construction insurance

b. an expanded title insurance policy

An error or issue regarding the title to property is called a

a. fault

b. cloud

c. mistake

d. both A and B

d. both A and B

A survey will reveal which of the following?

a. Encroachments

b. Easements

c. Errors in legal descriptions

d. All of the above

d. All of the above

Which of the following is not a mandatory disclosure in a real estate transaction?

a. Condominium Documents Disclosure

b. Foreign Real Estate Tax

c. Lead paint disclosure

d. Local requirements resulting from city and county ordinances

c. Lead paint disclosure

Which of the following is not a required disclosure in the transfer disclosure statement?

a. Flooding drainage or drainage issues near or affecting the property

b. Disclosure of a death due to AIDS

c. Easements, common drives or shared walks or fences with neighbors

d. Zoning violations and insufficient setbacks

b. Disclosure of a death due to AIDS

Which group is exempt from providing a transfer disclosure statement?

a. The transfer of property from one co-owner to another

b. the sale of property in a foreclosure sale

c. Selling or buying from the government

d. All of the above

b. the sale of property in a foreclosure sale

Pest inspection reports are divided into how many different portions?

a. 1

b. 2

c. 4

d. 5

b. 2

Which of the following would not exempt a property from the requirements of the special studies zone?

a. Alterations worth over 50% of the total value of the structure

b. Structures in existence prior to May 4, 1975

c. Single-family, wood-frame or steel structures not over two stories high, provided the dwelling is not part of a development consisting of four or more dwellings

c. Single-family, wood-frame or steel-frame structures for which geologic reports have been approved, to be built in subdivisions authorized by the Subdivision Map Act

a. Alterations worth over 50% of the total value of the structure

The environment hazard disclosure requires sellers of property to disclose which of the following?

a. Formaldehyde

b. Lead-based paint

c. Termites

d. Underground storage tanks

c. Termites

Flood zones are defined as areas with the potential to flood once every

a. 500 years

b. 100-500 years

c. 100 years

d. 50 years

c. 100 years

Before the transfer of title to a condominium, the seller must provide the buyer with

a. a copy of the subdivision restrictions

b. a financial statement of the homeowner's association

c. a written statement from the homeowner's association regarding any unpaid assessments if any

d. all of the above

d. all of the above

Within how many hours of the receipt of his or her loan application must a borrower receive a written statement detailing the expected maximum costs he or she must pay in order to secure a loan?

a. 48

b. 60

c. 72

d. 96

c. 72

Lenders generally charge a placement fee of what percentage of the original loan amount?

a. 1-3%

b. 2-4%

c. 3-5%

d. 4-6%

a. 1-3%

Analyzing the risk associated with a mortgage is called

a. loan-to-value

b. underwriting

c. income ratio

d. risk analysis

b. underwriting

What factors make a loan attractive to an investor?

a. Low risk of default and profitable

b. Profitable and easy to sell in the secondary mortgage market

c. Easy to sell in the secondary mortgage market and low risk of default

d. All of the above

a. Low risk of default and profitable

An underwriter analyzes

a. a borrower's ability to repay a debt

b. a property being pledged as collateral to see if it sufficient to cover the debt

c. the loan, to be certain it qualifies to be sold on the secondary mortgage market

d. all of the above

d. all of the above

Lenders wishing to sell their loans in the secondary mortgage market must follow the guidelines set by

a. Ginnie Mae

b. Freddie Mac

c. Fannie Mae

d. both B and C

d. both B and C

Which of the following is not a risk category analyzed when underwriting a loan?

a. Credit history

b. Employment

c. Number of dependents

d. Loan-to-value ratio

c. Number of dependents

From an underwriter's point of view, an appraisal of property is most useful for

a. determining property taxes for the property

b. determining the loan-to-value ratio of the property

c. determining the value of the property in an open market

d. determining the tax base for the neighborhood

b. determining the loan-to-value ratio of the property

A large loan-to value ratio poses a

a. smaller risk for the lender

b. larger risk for the lender

c. smaller risk for the borrower

d. larger risk for the borrower

b. larger risk for the lender

A down payment is generally used to

a. lower the monthly payments on the mortgage

b. establish equity or interest in the property being purchased

c. secure a loan

d. none of the above

b. establish equity or interest in the property being purchased

Verification of Deposit not only determines the existence of funds to be used for a down payment, but also

a. the account the funds will come from

b. the credit history

c. the amount of time the funds have been in the account

d. both A and B

c. the amount of time the funds have been in the account

Which of the following is not a reason for an underwriter to do a verification of employment?

a. Verify at least 4 years of employment with the current employer

b. Salary is consistent with the application

c. Overtime and bonus income is likely to occur

d. Probability of continued employment with the same employer

a. Verify at least 4 years of employment with the current employer

A credit history will help determine

a. a borrower's ability to repay the note

b. a borrower's willingness to repay the note based on making past payments on time

c. both A and B

d. neither A nor B

c. both A and B

A lender will generally not make a loan when the debt-to-income ratio is greater than

a. 28%

b. 32%

c. 36%

d. 39%

c. 36%

Which of the following is considered back-end debt?

a. Car payment

b. Mortgage insurance premiums

c. Hazard insurance

d. Principal

a. Car payment

Total housing expenses typically should not exceed what percent of the gross monthly income?

a. 25%

b. 28%

c. 31%

d. 36%

b. 28%

Occasionally a lender will make a loan to a borrower with a debt to income ratio over 36% if

a. the borrower makes a larger down payment than normal

b. the borrower has a large net worth

c. the borrower has a lot of cash savings

d. all of the above

d. all of the above

Which of the following expenses are used to determine debt-to-income ratio?

a. Alimony

b. Car loan

c. Credit Cards

d. Property taxes

d. Property taxes

Loan-to-value ratios are typically expressed as

a. a percentage

b. a fraction

c. a dollar figure

d. none of the above

a. a percentage

The lender must give the borrower the escrow statement within how many days from closing?

a. 7

b. 14

c. 30

d. 45

d. 45

The borrower receives the annual escrow statement

a. twice a year

b. once a year

c. only at closing

d. every other year

b. once a year

The Truth-In-Lending Act disclosure must be given to the borrower

a. within 3 days of the application

b. 3 days before closing

c. 1 day before closing

d. at closing

a. within 3 days of the application

Which of the following is not a reason for investing in real estate

a. objectives

b. capacity

c. availability

d. soundness

c. availability

Which of the following is a type of return on investment?

a. Return on taxes

b. Appreciation

c. Cash flow

d. All of the above

d. All of the above

Depreciation is based on

a. deterioration of the structure

b. useful life of the property

c. age of structure

d. all of the above

b. useful life of the property

1031 Exchanges involves

a. like-kind property

b. no gain's or losses recognized

c. boot

d. all of the above

d. all of the above

Which of the following is not a factor in investing?

a. Cost to rehabilitate the structure

b. Rent control

c. Size of structure

d. Historic tax credits

c. Size of structure

Which one of the following is not one of the stages in investing?

a. Gathering resources

b. Computing capital gain

c. Negotiating terms

d. Preparation and planning

b. Computing capital gain

Which of the following documents shoudl you prepare when planning to invest in property?

a. Complete tax returns for the last 3 years

b. Landlord contract information to verify rent history and copies of cancelled rent checks for the past 24 months

c. Most recent two statements for all bank and asset accounts

d. Both A and C

d. Both A and C

Real estate investments involve a large amount of money, agents, representatives, service providers and others to complete the transaction. Which of the following persons would not be helpful in aiding an investor in his or her transaction?

a. General contract

b. Accountant

c. Insurance agent

d. Loan officer

a. General contract

Which of the following is not a step in locating the right property?

a. Review the business plan

b. Prioritize preferences

c. Obtain title search on each property

d. Obtain loan pre-approval

c. Obtain title search on each property

A pre-qualification involves

a. the processing of a full loan application

b. is weighted with more importance than a pre-approval

c. is the minimum certification an agent will require

d. conditional on the borrower finding an acceptable property

c. is the minimum certification an agent will require

Your credit score is

a. not affected by a creditor running your score

b. hurt every time your credit is run

c. improved every time your credit is run

d. none of the above

b. hurt every time your credit is run

Which of the following is not considered a step in making a profitable investment?

a. Attorney review

b. Make a smart offer

c. Prepare a business plan

d. Updated loan approval

c. Prepare a business plan

Which of the following is a goal of the due diligence investigation?

a. Calculating the value of the property

b. Verifying the property's condition, income and expenses

c. Confirming that it meets the investor's minimum requirements

d. All of the above

A professional inspection of a property will reveal

a. functional condition

b. structural condition

c. economical condition

d. all of the above

d. all of the above

Which of the following steps is not considered a step in a successful purchase?

a. Relax

b. Take over

c. Study

d. Obtain closing instructions

c. Study

Carrying costs include

a. purchase price

b. operating income

c. operating expenses

d. all of the above

c. operating expenses

Which of the following is not one of a development market's cycles?

a. New Construction

b. Saturation

c. Demolition

d. Absorption

c. Demolition

Which of the following is considered an operating expense?

a. Trash collection

b. Purchase price

c. Operating income

All of the above

a. Trash collection

All of the following factors affecting return on investment except

a. liquidity

b. risk

c. cost

d. management

c. cost

Real estate investors can exploit tax advantages in which of the following areas?

a. Operating losses

b. Depreciation

c. Capital gain

d. All of the above

d. All of the above

Tom borrowed $4,000 for 1 year. He paid $480 interest. What rate did he pay?

a. 15%

b. 12%

c. 10%

d. 9%

b. 12%

Amy signed a note for $10,000 payable in 12 months. The note had an interest rate of 9% when it was due. The note was later sold to a private investor at a 15% discount. What is the rate of return on the amount invested by the investor?

a. 25.89%

b. 28.24%

c. 32.44%

d. 35.47%

b. 28.24%

George has a savings account and wishes to make $120 per month off the interest. If the account is currently paying him 5% interest, how much money should Steve leave in the account?

a. $25,800

b. $28,800

c. $30,800

d. $32,800

b. $28,800

How much money will Julia have in her savings account at the end of year 10, assuming the initial balance is $7,000 with a rate of 4%? (Rounded up)

a. $9,360

b. $10,190

c. $10,360

d. $11,280

c. $10,360

What is the present worth of 8,000 dollars 10 years from now at a discount rate of 5%? (Rounded to the nearest dollar)

a. $4,753

b. $4,825

c. $4,901

d. $4,911

d. $4,911

A fire insurance policy was prepaid for three years. Assume it is currently September 1, 2004 and the policy will expire November 15, 2005. The policy costs $400 per year. How much of the unused portion of the policy is left?

a. $521

b. $501

c. $497

d. $483

d. $483

Julia bought a house for $200,000 and later sold the house for $280,000. What is the rate of profit she made on this transaction?

a. 40%

b. 140%

c. 71%

d. None of the above

a. 40%

An apartment complex brings in $800 per unit, with 9 units. June is interested in purchasing the property as an investment property, and needs a 9% rate of return or capitalization rate. How should June pay for the complex?

a. $960,000

b. $80,000

c. $106,667

d. $550,000

a. $960,000

If a property shows a $17,000 net annual cash flow at a capitalization rate of 12%, its value would be calculated as (rounded to the nearest whole dollar)

a. $138,583

b. $141,667

c. $143,762

d. $144,215

b. $141,667

Assuming a fixed cost requirement of $115,000 annually and a variable cost ratio of 19% per rental dollar, the gross income needed to break even would be (rounded to the nearest dollar)

a. $141,158

b. $141,667

c. $142,762

d. $142,215

b. $141,667