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42.
|
Usury occurs when the lender 117
|
|
  Charges less than the maximum legal rate of interest.
|
|
|
Collects more than the maximum legal rate of interest.
|
|
|
Loans more than 95% of the appraised value of the property.
|
|
|
Charges the state's legal limit.
|
|
|
|
|
43.
|
The annual percentage rate (APR) is the annual cost of credit and is 118
|
|
|
A rate that includes any adjustments for service charges and discount rates.
|
|
|
The same as the contract rate in a note.
|
|
|
An estimate of the nominal interest rate on the mortgage.
|
|
|
The same as the debt service.
|
|
|
|
|
44.
|
Which of the following must be disclosed as a finance charge under Regulation Z? 118
|
|
|
Title examination fees.
|
|
|
Appraisal fees.
|
|
|
Discount points.
|
|
|
Survey fees.
|
|
|
|
|
45.
|
Which of the following is commonly referred to as Regulation B? 119
|
|
|
Equal Credit Opportunity Act.
|
|
|
Fair Credit Billings Act.
|
|
|
Fair Credit Reporting Act.
|
|
|
Truth-in-Lending Act.
|
|
|
|
|
46.
|
With respect to credit reports, an applicant may 119
|
|
|
Not correct errors on them.
|
|
|
Transfer their report from one lender to another.
|
|
|
Receive the credit information on file if denied for a loan.
|
|
|
Obtain their own report and give it to the lender.
|
|
|
|
|
47.
|
In order to prevent the practice of redlining and divestment in central city areas, Congress passed the ________________. 121
|
|
|
Fair Credit Reporting Act
|
|
|
Community Reinvestment Act..
|
|
|
National Flood Insurance Program
|
|
|
Community Divestment Act.
|
|
|
|
|
48.
|
The Community Reinvestment Act Statement must contain 121
|
|
|
The names of all loan officers.
|
|
|
Total lending policy of the institution.
|
|
|
Definition of the lender's community in which its lending activities take place.
|
|
|
Reasons for not properly serving the credit needs of the community.
|
|
|
|
|
49.
|
The largest source of funds for home loans comes from 122
|
|
|
Savings and loan associations.
|
|
|
Private lenders.
|
|
|
Commercial banks.
|
|
|
Life insurance companies.
|
|
|
|
|
50.
|
Mortgage bankers may be involved in the following activities except 125
|
|
|
Writing insurance policies.
|
|
|
Loan origination.
|
|
|
Bring together the user of capital (borrower or mortgagee).
|
|
|
Loan servicing.
|
|
|
|
|
51.
|
A loan for $645,500 would be considered a 128
|
|
|
Grande loan.
|
|
|
Jumbo loan.
|
|
|
Super loan.
|
|
|
Ineligible loan.
|
|
|
|
|
52.
|
Funds to finance Freddie Mac (FHLMAC) operations and mortgage purchase programs come from 128
|
|
|
Participation certificates.
|
|
|
Convertible subordinated debentures.
|
|
|
Loans from u.s. treasury.
|
|
|
Both A and B.
|
|
|
|
|
53.
|
Freddie Mac purchase loans from 128
|
|
|
Loan brokers.
|
|
|
Real estate brokers.
|
|
|
Approved seller/servicers.
|
|
|
Investment bankers.
|
|
|
|
|
54.
|
A firm that specializes in the details of loan origination is known as what? 124
|
|
|
A mortgage banker.
|
|
|
A mortgage broker.
|
|
|
A portfolio lender.
|
|
|
A commercial broker.
|
|
|
|
|
55.
|
GNMA receives its funds from 128
|
|
|
Federal National Mortgage Association.
|
|
|
Freddie Mac.
|
|
|
U.S. Treasury and mortgage operations.
|
|
|
Residential Funding Corporation.
|
|
|
|
|
56.
|
Private mortgage insurance (PMI) typically needs to be carried 131
|
|
|
If the loan amount is more than 80%.
|
|
|
If the loan-to-value ratio is more than 70%.
|
|
|
If the loan-to-value ratio is more than 95%.
|
|
|
If the loan-to-value ratio is less than 80%.
|
|
|
|
|
57.
|
Ordinarily the best source for obtaining construction financing is the 131
|
|
|
Private lender.
|
|
|
Life insurance company.
|
|
|
Commercial bank.
|
|
|
Savings and loan associations.
|
|
|
|
|
58.
|
The role of the FHA is to 131
|
|
|
Lend money.
|
|
|
Insure a lender.
|
|
|
Insure a borrower.
|
|
|
Establish loan standards.
|
|
|
|
|
59.
|
The money in a VA loan comes from 132
|
|
|
FHA.
|
|
|
An approved lending institution.
|
|
|
Federal government.
|
|
|
Department of Defense.
|
|
|
|
|
60.
|
In order to qualify for VA entitlement, a veteran needs to apply for 132
|
|
|
A certificate of eligibility.
|
|
|
A Veteran status.
|
|
|
Junior financing.
|
|
|
A certificate of fair value.
|
|
|
|
|
61.
|
Private mortgage insurance claims are paid by 131
|
|
|
Foreclosure.
|
|
|
Acquisition of the loan from the lender.
|
|
|
Paying the amount of insurance coverage to the lender.
|
|
|
Both B and C.
|
|
|
|
|
62.
|
"Balloon payment" is a term commonly associated with 130
|
|
|
Junior loans.
|
|
|
Most institutional loans.
|
|
|
Negotiable instruments.
|
|
|
Government-backed loans.
|
|
|
|
|
63.
|
Standard home loans that are not insured or guaranteed by an agency of the U.S. government are referred to as what? 131
|
|
|
FHA loans.
|
|
|
VA loans.
|
|
|
Conventional mortgage loans.
|
|
|
Home equity loans.
|
|
|
|
|
64.
|
A wraparound mortgage 135
|
|
|
May be a first lien.
|
|
|
Can be only a junior lien.
|
|
|
Is always negotiated at a higher rate than senior indebtedness.
|
|
|
Always requires the maker to make payments on senior debt.
|
|
|
|
|
65.
|
If the buyer of a home wanted to include in the terms of a mortgage the financing of such items as a stove, refrigerator and air-conditioning, the mortgage used would be a (an) 135
|
|
|
Open mortgage.
|
|
|
Wrap-around mortgage.
|
|
|
Package mortgage.
|
|
|
Blanket mortgage.
|
|
|
|
|
66.
|
Which of the following statements is false about a participation mortgage? 139
|
|
|
When more than one mortgagee lends on a real estate project, such as with a large commercial project.
|
|
|
This financing technique is aimed at those people who only plan to live in a house for a short period of time.
|
|
|
It involves more than one borrower being responsible for a mortgage, such as with a cooperative apartment.
|
|
|
It represents an agreement between a mortgagee and a mortgagor which provides for the lender having a certain percentage ownership in the project once the lender makes the loan.
|
|
|
|
|
67.
|
Under ______________ the interest rate charged by the lender can vary according to some reference index not controlled by the lender, such as the interest rate on 1-year United States T-bills or the 11th District Cost of funds Index. 138
|
|
|
Rollover mortgages
|
|
|
Flexible payment mortgages.
|
|
|
Variable rate mortgages.
|
|
|
Graduated payment mortgages.
|
|
|
|
|
68.
|
A type of mortgage where a buyer pays a seller monthly and the seller pays the lender is. 135
|
|
|
A buydown.
|
|
|
A wraparound mortgage.
|
|
|
Margin.
|
|
|
A balloon payment.
|
|
|
|
|
69.
|
A note where payments are adjusted over time is most likely to be 141
|
|
|
A standard mortgage instrument.
|
|
|
An adjustable mortgage instrument.
|
|
|
A fixed rate mortgage.
|
|
|
A jumbo mortgage.
|
|
|
|
|
70.
|
In reverse mortgage, the homeowner has the option to receive 138
|
|
|
Monthly payments.
|
|
|
A lump sum payout.
|
|
|
A line of credit.
|
|
|
Any combination of the above.
|
|
|
|
|
71.
|
Which of the following is not a potential type of index interest rate used in an adjustable rate mortgage? 138
|
|
|
Cost of Living indexes.
|
|
|
5-year U.S. Treasury rate.
|
|
|
11th District cost of funds index.
|
|
|
LIBOR rate.
|
|
|
|
|
72.
|
Under __________________, the homeowner has the option to receive monthly payments, a lump sum payout, a line of credit, or any combination. 137
|
|
|
Adjustable Rate Mortgages (ARM)
|
|
|
Reverse Annuity Mortgages (RAM)
|
|
|
Flexible Loan Insurance Program (FLIP)
|
|
|
Graduated Payment Mortgages (GPM)
|
|
|
|
|
73.
|
Which of the following is an example of real assets? 159
|
|
|
Corporate stocks.
|
|
|
Condos.
|
|
|
Bonds.
|
|
|
Derivatives.
|
|
|
|
|
74.
|
A principal disadvantage of real estate is that it does not provide a hedge against 161
|
|
|
Inflation.
|
|
|
Interest rate risk.
|
|
|
Purchasing power risk.
|
|
|
Market risk.
|
|
|
|
|
75.
|
Using your credit to purchase an asset (such as property or stocks) of substantial appreciation is called 162
|
|
|
Plottage.
|
|
|
Leverage.
|
|
|
Amortization.
|
|
|
Unearned increment.
|
|
|
|
|
76.
|
Current income is derived from income property by 163
|
|
|
Appreciation.
|
|
|
Rental payments.
|
|
|
Depreciation.
|
|
|
Tax write-offs.
|
|
|
|
|
77.
|
The return on investment typically comes from two sources: __________ and current income. 163
|
|
|
Capital gains.
|
|
|
Selling price.
|
|
|
Liquidity.
|
|
|
Purchase price.
|
|
|
|
|
78.
|
An advantage to buying a home to the person who is to occupy it as his or her personal dwelling is its 167
|
|
|
Relatively low maintenance.
|
|
|
Equity buildup.
|
|
|
Liquidity.
|
|
|
Depreciation write-off.
|
|
|
|
|
79.
|
Which of the following is not an advantage of buying over renting? 167
|
|
|
Mobility.
|
|
|
Appreciation.
|
|
|
Tax deductibility.
|
|
|
Tax savings.
|
|
|
|
|
80.
|
The home price should not exceed ___________________ your family’s annual gross income. 170
|
|
|
Times 2 ?.
|
|
|
35% of.
|
|
|
40% of.
|
|
|
50% of.
|
|
|
|
|
81.
|
Reasons for investing in real property do not include 174
|
|
|
Relatively low risk.
|
|
|
Income tax benefits.
|
|
|
Appreciation potential.
|
|
|
Inflation hedge.
|
|
|
|
|
82.
|
Depreciation taken as a deduction on annual income tax is a form of 174
|
|
|
Tax shelter.
|
|
|
Tax evasion.
|
|
|
Tax increment.
|
|
|
Tax rebates.
|
|
|
|
|
83.
|
Which of the following is a disadvantage of real estate investing? 175
|
|
|
Leverage.
|
|
|
Equity buildup.
|
|
|
Limited marketability.
|
|
|
Tax shield.
|
|
|
|
|
84.
|
Investment techniques that persons in high income brackets use for the purpose of reducing income tax liability through tax loss write-offs are known as 174
|
|
|
Tax assessments.
|
|
|
Tax evasion.
|
|
|
Tax shelters.
|
|
|
Tax impounds.
|
|
|
|
|
85.
|
The market value of property less all liens and charges against the property is referred to as 174
|
|
|
Leverage.
|
|
|
Equity.
|
|
|
Appreciation
|
|
|
Margin.
|
|
|
|
|
86.
|
Disadvantages of investing in real property do not include which of the following? 175
|
|
|
Limited marketability.
|
|
|
Management headache.
|
|
|
High transaction cost.
|
|
|
Tax shelters.
|
|
|
|
|
87.
|
The principle of maximizing the use of other people's money (OPM), providing a large percentage of return on a relatively small outlay is called 174
|
|
|
Liquidity.
|
|
|
Appreciation.
|
|
|
Cash flow.
|
|
|
Leverage.
|
|
|
|
|
88.
|
_______________ is not a type of real estate investment property: 175
|
|
|
Raw land.
|
|
|
Real Estate Investment Trust (REIT) .
|
|
|
Land to be developed.
|
|
|
Income property.
|
|
|
|
|
89.
|
Real Estate Investment Trusts (REIT) are characterized as 176
|
|
|
Equity trusts.
|
|
|
Mortgage trusts.
|
|
|
Appreciation.
|
|
|
Any of the above.
|
|
|
|
|
90.
|
____________________ is not an advantage of a REIT. 176
|
|
|
Tax benefits.
|
|
|
Pooling interests.
|
|
|
Less distribution of earnings.
|
|
|
Diversification.
|
|
|
|
|
91.
|
REITs differ from other real estate investments because 176
|
|
|
Their income is tax-exempt.
|
|
|
Their shares are publicly traded.
|
|
|
They only offer capital gains.
|
|
|
The investor is guaranteed income.
|
|
|
|
|
92.
|
The amount to be deducted from potential gross income to allow for vacancies should be 178
|
|
|
5% of potential gross income.
|
|
|
10% if the building is more than 10 year old.
|
|
|
Will range between 0 and 10%.
|
|
|
Will vary with each property.
|
|
|
|
|
93.
|
Specialists in marketing of income properties generally apply which of the following approaches to valuation? 179
|
|
|
Market comparison.
|
|
|
Replacement cost.
|
|
|
Capitalization of net income.
|
|
|
Reproduction cost
|
|
|
|
|
94.
|
If the capitalization rate is 9 percent and the net operating income is $150,000.00, the indicated value would be 180
|
|
|
$135,000.00.
|
|
|
$166,667.00.
|
|
|
$202,500.00.
|
|
|
$150,000.00.
|
|
|
|
|
95.
|
Leverage is best illustrated by which of the following? 180
|
|
|
Use of borrowed money to purchase real property.
|
|
|
Buying as much acreage as possible for cash.
|
|
|
Buying a parcel of raw land with a large down payment.
|
|
|
Leasing rather than purchasing.
|
|
|
|
|
96.
|
As the degree of risk increases, the income generated by a piece of property will be capitalized at a 180
|
|
|
Higher rate which will produce a higher value.
|
|
|
Higher rate which will produce a lower value.
|
|
|
Lower rate which will produce a higher value.
|
|
|
Lower rate which will produce a lower value.
|
|
|
|
|
97.
|
A previously appraised building with a net income of $5,000 was valued at $50,000. What is the current estimate of value if the capitalization rate has increased by one percentage point? 180
|
|
|
|
|
98.
|
Which of the following will result in a capitalization rate of 20%? 180
|
|
|
Potential gross income $50,000; value $250,000.
|
|
|
Effective gross income $50,000; value $250,000.
|
|
|
Net income $50,000; value $250,000.
|
|
|
Cash flow $50,000; value $250,000.
|
|
|
|
|
99.
|
Certain terms used in real estate investments have applications similar to those used in security analysis. For example, the price-earnings (P/E) ratio found in the analysis of stocks is equivalent to _____________ in real estate investment analysis. 180
|
|
|
Earnings on sales price.
|
|
|
Gross income (rent) multiplier.
|
|
|
Net spendable.
|
|
|
Cost recovery.
|
|
|
|
|
100.
|
The ____________________ is the interest rate which is charged business borrowers having the highest credit rating. 200
|
|
|
Fund rate.
|
|
|
Discount rate.
|
|
|
Prime rate.
|
|
|
Yield.
|
|
|
|
