REAL ESTATE FINAL SOLUTION SUMMER ACTUAL KNOWLEDGE CHECK

REAL ESTATE FINAL SOLUTION SUMMER (ACTUAL KNOWLEDGE CHECK

EXAM 150 QUESTIONS AND ANSWERS)

A real estate licensee has a buyer agency agreement. What is the seller in this situation? - ANS IS A customer.

An optionor and an optionee make a contract for an option on a commercial piece of property. If the optionee decides to exercise his option, when must he perform? - ANS IS He must exercise his option under the terms of the option contract.

When can a landlord evict a disabled blind or disabled tenant from the premises? - ANS IS If the tenant has loud parties, makes too much noise, and is constantly disturbing other tenants

• Broker Carr, with ABC Real Estate Company, listed the property with a seller. Broker

Smith, with XYZ Real Estate Company, called Broker Carr, and disclosed that he was a Buyer Agent. Broker Smith wrote a contract with a buyer for the sale of the property.What, if any, is the relationship between the buyer's broker, the seller and the listing broker? - ANS IS There is not a relationship between the parties. Broker Carr represents the Seller and Broker Smith represents the Buyer.

A buyer bought a property without telling the seller of his intended purpose for the property. The contract contains no contingency clauses and it is a properly executed contract. After the closing, the buyer is unable to obtain the zoning he needs for his commercial project. What is the contract at this stage? - ANS IS Enforceable

• The seller and the buyer finally agreed to a purchase price of $203,500 with the

closing to occur on June 15. The taxes for the year in the amount of $2,500 have not been paid by the seller. (Taxes are paid in arrears). How much would the tax proration amount to, and how would it appear on a full settlement statement? Base your answer on a 365 day year, and the buyer is responsible for the day of settlement. - ANS IS $1,130.14 debit the seller and credit the buyer

A seller listed his home for six months on February 26. On April 29, a buyer made an offer on the property. The listing broker presented the offer to the seller on April 30. The seller accepted the offer on May 1, with the closing to occur on June 15. Assuming the closing took place on June 15, when did the listing expire? - ANS IS 6/15

The sellers listed their property for six months on February 26 for $522,500. They agreed to pay the listing broker a 7% commission at closing on the agreed upon sale price. A buyer made an offer on the property on March 29 for $510,000. The seller countered the offer on April 1 at $517,500, and the buyer accepted the counter offer with the closing to occur on June 15. How much commission did the seller owe the listing broker, and how would it appear on the settlement statement? - ANS IS $36,225.Debit the seller.

The seller and the buyer agreed to a purchase price of $270,000 with the closing to occur on June 15. The seller's loan balance after the June 1 payment was $170,000.with an interest rate of 6%.The monthly payment was $1,800 principal and interest.What was the loan balance the day of closing, and how much interest did the seller owe the bank? - ANS IS Loan balance $170,000; interest due $425

The buyer and seller agreed to a purchase price of $310,500. The buyer received an 80% loan. How much was the buyer's loan and how did it appear on the settlement statement? - ANS IS $ 248,400. Credit the buyer only.

A home improvement company was negotiating with a homeowner to add on two rooms to a home. The company agreed to take a second mortgage as long as the homeowner also included the rest of the property in the loan. The company and the homeowner agreed to a price and the company provided the necessary disclosure form on Monday and the homeowner signed the agreement at noon the following day. Assuming that the week had five business days, until what time could the homeowner rescind the loan? - ANS IS Friday, midnight (Three business day period)

The seller under a land contract is called - ANS IS The vendor

On an 8% straight term loan of $6,071, the borrower paid total interest of $1,700. How long did he have the loan? - ANS IS 42 months

Are recording fees and title insurance premiums part of the Truth in Lending statement?

• ANS IS No, These are considered legal, not financing fees and therefore are not part

of the Truth in Lending statement.

A mortgage broker - ANS IS arranges loans between borrowers and investors.

The Smiths' purchased a residence for $750,000. They made a down payment of $150,000 and agreed to assume the seller's existing mortgage, which had a current balance of $230,000. The Smiths' financed the remaining $370,000 of the purchase price by executing a second mortgage whereby the seller became a mortgagee. This type of loan is called a - ANS IS part purchase mortgage

On a $500,000 loan the borrower is required to pay two points. How much does the borrower have to pay the lender? - ANS IS $510,000.00

The discount points charged by a lender on a federal VA or FHA loan are a percentage of the - ANS IS loan amount.

An increase in the availability of money would lead to which effect? - ANS IS Interest rates would go down.

When the amortized payment of a mortgage remains constant over the period of the loan but leaves an outstanding balance to be paid at the end, this payment is called - ANS IS a balloon payment.

In an installment land contract, what type of title did the seller retain? - ANS IS Legal

Which of the following is true of a second mortgage? - ANS IS It is usually issued at a higher rate of interest.

Usury MOST nearly means - ANS IS illegal interest.

A borrower bought a $174,000 house with no down payment. The loan was probably - ANS IS a VA loan.

A house sold for $420,000. The buyer made a 20% down payment. Monthly interest on the loan was $1,400. What was the interest rate on the loan? - ANS IS • 5%

Which of the following describes a mortgage that requires principal and interest payments at regular intervals and is called the liquidation of debt by periodic installment until the debt is satisfied? - ANS IS Amortized loan

Which is the most common form of mortgage? - ANS IS Amortized loan

Under RESPA, a copy of Real Estate Settlement Costs And You must be given - ANS IS at the time of loan application, or within 3 days of application.

Which of the following is a closing expense paid by the seller? - ANS IS The broker's commission

An impound or reserve account MOST benefits whom? - ANS IS The lender

What are impound or reserve accounts also known as? - ANS IS Escrow accounts

The HUD-1 form is - ANS IS a statement of actual charges and adjustments.

A VA loan may be granted for the purchase of a one-family to four-family property if - ANS IS the veteran agrees to live there.

Which of the following would usually occur in a sale-and-leaseback transaction? - ANS IS The property is sold on the condition that the new owner lease it back to the seller at the time title passes.

A standardized yardstick expressing the true annual cost of borrowing is expressed as the what? - ANS IS APR

RESPA would prohibit which of the following acts? - ANS IS A: paying of kickbacks

Illumination:

RESPA concerns itself only with educating consumers about the true costs of borrowing and standardizing lending practices. As such, referral "fees" are prohibited.

In most states, by paying the debt after a foreclosure sale, the mortgagor has the right to regain the property. What is this right called? - ANS IS Statutory right of redemption

The lender is required, under RESPA, to provide a detailed "Good Faith Estimate (GFE)" statement at the time of loan application or within three business days to - ANS IS the buyer.

In which of the following markets may a lender sell a loan that a mortgage banker has previously originated? - ANS IS Secondary market

Though 30 year loans are more common, 15 year loans are considered standard, conventional loans. - ANS IS Yes.

Under an FHA graduated payment mortgage, which of the following fluctuates over the term of the loan? - ANS IS Monthly payments

Who are graduated payment mortgages aimed to> - ANS IS Particularly at young families who expect to see their earnings rise over the next five to ten years.

The maximum permissible "loan to value ratios" are - ANS IS based on sale price or appraised value, whichever is lower.

Are there any state-mandated qualifying requirements for conventional loans? - ANS IS No, Not only are guidelines not uniform, qualification standards can vary enormously from lender to lender.

A buyer wants to take out an FHA loan. The broker should refer the buyer directly to - ANS IS any approved lending institution such as a bank or savings and loan association.

An owner advertised "beautiful acreage; only $5,000 down; owner will personally finance down payment." Would this be in violation of the Truth in Lending Act? - ANS IS No. Owners are not covered by Regulation Z.

What is Regulation Z? - ANS IS is the part of the Truth in Lending Act of 1968 that promulgates rules that protect consumers against misleading practices by the lending industry.

A mortgage company makes a number of loans to be assembled into one package and sold to permanent investors. This process is an example of interim financing to the mortgage company and is called - ANS IS warehousing.