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150 Cards in this Set

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1. An example of real estate investment with the highest cost risk would be:
A. Acquisition of a newly built warehouse.
B. Purchase of an old warehouse for conversion to condominiums.
C. Purchase of a fairly new residence.
D. Purchase of a fairly new office building.
E. Construction of a standard warehouse.
B. Purchase of an old warehouse for conversion to condominiums.
2. An example of real estate investment with the highest cash flow risk would be:
A. Leasing a warehouse to Microsoft on a long-term net basis.
B. Leasing small offices.
C. Operating a motel.
D. Leasing investment grade offices.
E. Leasing standard, mid-priced apartments.
C. Operating a motel.
3. According to Ling and Archer, real estate rental rates are determined in the _________ markets.
A. Capital
B. Space or user
C. Real estate
D. Asset
E. Brokerage
B. Space or user
4. The right to drive over an adjacent parcel of land to access your land is a(n):
A. Lien
B. Restrictive covenant
C. License
D. Easement appurtenant
E. Easement in gross
D. Easement appurtenant
5. The right to place a billboard on a parcel of land is an example of:
A. Adverse possession.
B. Restrictive covenant.
C. Community property.
D. Easement appurtenant.
E. Easement in gross.
E. Easement in gross.
6. Property rights include all EXCEPT:
A. Use and enjoyment.
B. Exclusion.
C. Reasonable value.
D. Possession.
E. Disposition.
C. Reasonable value.
7. The highest (most complete) bundle of real property rights is known as:
A. Fee simple absolute.
B. Fee simple conditional.
C. Life estate.
D. Tenancy for years.
E. Tenancy at will.
A. Fee simple absolute.
8. Forms of direct co-ownership of real estate include all EXCEPT:
A. Tenancy by the entirety.
B. Tenancy in common.
C. Condominium.
D. Limited liability company.
E. Joint tenancy.
D. Limited liability company.
9. Which of these liens always has priority over any other.
A. First mortgage.
B. Second mortgage.
C. Federal tax lien.
D. Property tax lien.
E. Mechanic’s lien.
D. Property tax lien.
10. Which of these statements about restrictive covenants is FALSE?
A. They are private rights or claims rather than government imposed.
B. They are enforced strictly through civil suit.
C. They can only be enforced by persons with a legal interest in the restricted property.
D. They seldom end.
E. They are commonly created when a subdivision is recorded (platted).
D. They seldom end.
11. Which of these statements is FALSE concerning community property?
A. It is an automatic co-ownership form that results from marriage.
B. It exists in Spanish heritage states, Louisiana and Wisconsin.
C. It creates a one-third interest for the non-acquiring spouse in all of the property of the acquiring spouse.
D. It applies to property acquired “out of the fruits of the marriage.”
E. It has grown in acceptance in modern times.
C. It creates a one-third interest for the non-acquiring spouse in all of the property of the acquiring spouse.
12. Which of these means of conveying an interest in real property is the ONLY one where a deed is sure to exist?
A. Title by adverse possession.
B. Easement by prescription.
C. Easement by estoppel.
D. Easement by necessity.
E. Foreclosure.
E. Foreclosure.
13. The type of deed regarded as having the highest quality is the one:
A. Having the most covenants.
B. Having the most witnesses.
C. Having the strongest habendum clause.
D. Backed by title insurance.
E. With bonding.
A. Having the most covenants.
14. Constructive notice of title claims in real estate is accomplished primarily by:
A. Publication in an appropriate newspaper.
B. Actual possession.
C. Recording a deed or other conveyance document in public records.
D. Purchasing title insurance.
E. Obtaining an abstract of title.
C. Recording a deed or other conveyance document in public records.
15. Description of land by the method of metes and bounds involves use of:
A. Range lines and tier or township lines.
B. Directed distances.
C. Lot numbers.
D. Sections.
E. Blocks.
B. Directed distances.
16. Which of these assertions is FALSE?
A. An acre is an area of 43,560 square feet.
B. A section is 640 acres.
C. A square mile is 640 acres.
D. A township has 25 sections.
E. An acre is approximately the size of a football field or a large supermarket.
D. A township has 25 sections.
17. Forms of evidence of title acceptable for real estate transactions include:
A. Title insurance commitment.
B. Abstract with attorney’s opinion of title.
C. The deed to the grantor.
D. A and B, but not C.
E. All three, A, B and C.
D. A and B, but not C
18. A method of land use control that has been adopted mainly since 1970 is the use of:
A. Subdivision regulations.
B. Impact fees.
C. Zoning.
D. Building codes.
E. Bulk or space regulations such as setbacks , and size or height limits.
B. Impact fees.
19. Which of these approaches to urban planning is most recent in vintage?
A. Uniform density of land use.
B. Cul-de-sac residential subdivisions.
C. Mixed use development.
D. Automobile orientation.
E. Focus mainly on protection of single family neighborhoods.
C. Mixed use development.
20. The most recent development in the law of eminent domain, in the Kelo v New London Connecticut decision of the U.S. Supreme Court, 2005, is that eminent domain can be used:
A. Only with just compensation.
B. To acquire land for actual public use only.
C. To acquire land for public purpose but private use, if the property is blighted.
D. To acquire land for public purpose but private use even if the property is not blighted.
E. Without always needing to give provide just compensation.
D. To acquire land for public purpose but private use even if the property is not blighted
21. Which of these economic conditions has NOT been regarded as a justifiable economic reason for land use controls?
A. Externalities or “spillover” effects of land use.
B. Natural monopolies in land use.
C. Information failure in structure quality and other aspects of land use.
D. Volatile value of undeveloped land.
E. Uncertainty in residential neighborhood surroundings.
D. Volatile value of undeveloped land.
22. The ability to continue using land in a manner inconsistent with current zoning law if the use preceded the zoning law is referred to as:
A. Non-conforming use.
B. Exceptional use.
C. Grandfathered use.
D. Prior use.
E. Amortized use.
A. Non-conforming use.
23. Which of these is NOT a feature of traditional zoning?
A. Separation of the community into districts by type of land use.
B. Use of bulk controls.
C. Use of planned unit developments.
D. Uniform density.
E. Use of special districts for special uses such as churches, cemeteries, automotive uses, etc.
C. Use of planned unit developments.
24. According to the diagram of Ling-Archer, which of these is determined in the capital markets?
A. Rental rates.
B. Occupancy rates.
C. Type of properties built.
D. Location of properties built.
E. Risk compensation (risk premium) for investment in real estate.
E. Risk compensation (risk premium) for investment in real estate.
25. According to the diagram of Ling-Archer, which of these exerts a strong influence in the real estate capital markets?
A. Land use controls.
B. Property tax.
C. Income tax law.
D. Construction cost.
E. Employment levels.
C. Income tax law.
26. Risks in real estate investment can be either cost risk or income risk. Investing in a new, existing office building, and renting to small, new tenants on short-term leases would constitute which combination?
A. Low cost risk, low income risk.
B. Low cost risk, high income risk.
C. High cost risk, low income risk.
D. High cost risk, high income risk.
E. Any of the above.
B. Low cost risk, high income risk.
27. Which of these real estate investments would constitute high cost risk and high income risk?
A. Convert an old building into a coffee bar.
B. Build and net-lease an office building to a financially strong company.
C. Buy and net-lease an office building to a government agency.
D. Buy an existing parking lot adjacent to the University of Florida.
E. Buy a new home, expecting to live in it for about ten years.
A. Convert an old building into a coffee bar.
28. According to Ling-Archer, which of these types of real estate investment generally has the highest overall investment risk?
A. Owner-occupied homes.
B. Rental apartments.
C. Raw (undeveloped) land.
D. Offices.
E. Hospitality (hotels and motels).
C. Raw (undeveloped) land.
29. The rights in the “bundle of rights” known as property include all EXCEPT:
A. Exclusion.
B. Acquisition.
C. Possession.
D. Enjoyment.
E. Disposition.
B. Acquisition.
30. Which of these is NOT an interest in real property?
A. Right-of-way easement.
B. Power line easement.
C. License for recreational use of land.
D. Mortgage lien.
E. Restrictive covenant.
C. License for recreational use of land.
31. In determining whether an object is a fixture (has been converted to real property), the dominant rule in modern courts of law is:
A. Manner of attachment (damaging to remove).
B. Intention of the parties (customary practice).
C. Adaptation of the item (custom fit).
D. Value of the item.
E. Length of time of installation.
B. Intention of the parties (customary practice).
32. Estates in real property are interests in property that include:
A. Right of exclusive possession.
B. Right of use.
C. Right of enjoyment.
D. Right of disposition.
E. A residential structure with a certain minimum value.
A. Right of exclusive possession.
33. Which of these statements is INCORRECT regarding community property?
A. It includes gifts to either spouse during the marriage.
B. It gives each spouse a fifty percent claim in the community property.
C. It applies to property acquired during the marriage.
D. It is growing in favor relative to dower.
E. It is found mainly in Spanish and French tradition states.
A. It includes gifts to either spouse during the marriage.
34. An example of an easement appurtenant would be:
A. A common wall easement for townhouses.
B. A railroad right-of-way.
C. A mining easement.
D. A billboard easement.
E. A cell phone tower easement.
A. A common wall easement for townhouses.
35. Restrictive covenants for a residential subdivision can be enforced by all EXCEPT:
A. Owner-residents.
B. Owner-landlords.
C. Renters.
D. Owners in adjacent subdivisions.
E. Mortgage lenders for the subdivision properties.
D. Owners in adjacent subdivisions.
36. A form of direct co-ownership that is most like individual ownership, except that multiple owners share the same bundle of rights, is:
A. Tenancy by the entirety.
B. Joint tenancy.
C. Tenancy in common.
D. Condominium.
E. Cooperative.
C. Tenancy in common.
37. The fundamental legal difference between a general warranty deed and a quitclaim deed is:
A. The amount of evidence of title.
B. The quality of evidence of title.
C. The fact that one assures good title and the other does not.
D. The number of covenants in the deed.
E. The customary use.
D. The number of covenants in the deed.
38. Which of these conveyances of real property is likely to NOT show up in a deed?
A. Easement by necessity.
B. Easement by estoppel.
C. Easement by prescription.
D. A and B, but not C.
E. All three, A, B and C.
E. All three, A, B and C.
39. Which of these can contribute to evidence of title?
A. Recorded deeds, mortgages, leases or other conveyances of real property.
B. Actual notice (actual use of the land.).
C. Oral testimony.
D. A and B, but not C.
E. All three, A, B and C.
D. A and B, but not C.
40. Which of these terms relates to a metes and bounds description of land?
A. Directed distance.
B. Base line
C. Range line
D. Township
E. Section
A. Directed distance.
41. Factors that contribute to the need for land use controls include all EXCEPT:
A. Externalities (“spill-over” effects).
B. Natural monopolies in land use.
C. Incomplete information with construction and land use.
D. Uncertainty in surrounding land use.
E. Excessive competition in land uses.
E. Excessive competition in land uses.
42. Traditional forms of land use controls include:
A. Subdivision codes.
B. Building codes.
C. Zoning.
D. A and B, but not C.
E. All three, A, B and C.
E. All three, A, B and C.
43. Features of land use controls that have become common only since 1970 include all EXCEPT:
A. Planned unit developments.
B. Land use plans that have the force of law.
C. Set-back requirements.
D. Performance standards.
E. Impact fees.
C. Set-back requirements.
44. A step in current land use controls for development that is both important to the community and risky for the developer, and required of every development project, is the:
A. Building inspection.
B. Zoning appeal.
C. Site plan review.
D. Zoning variance request.
E. Platting process.
C. Site plan review.
45. Conventional, as opposed to “new urban” features of land use planning include:
A. Focus on efficient automobile traffic.
B. Mixed use development.
C. Pedestrian oriented design.
D. Grid pattern streets.
E. Variation in land use density.
A. Focus on efficient automobile traffic.
46. In the history of use of eminent domain in the United States, there are roughly three periods:
1. Taking property for either public use or public purpose with private use if blight is present.
2. Taking property for either public use or public purpose with private use without regard to blight.
3. Taking property for public use only.
What is the chronological sequence of these practices?
A. 1, 2 and 3.
B. 1, 3, and 2.
C. 2, 1 and 3.
D. 3, 1 and 2.
E. 3, 2 and 1.
D. 3, 1 and 2.
47. Which of these statements is INCORRECT for cost-depreciation appraisal?
A. Cost of structure, new is estimated.
B. Reproduction cost is commonly used.
C. Accrued depreciation is subtracted from new structure cost.
D. Land value is estimated by market comparison.
E. Land value is depreciated before summing with structure value.
E. Land value is depreciated before summing with structure value.
48. Which of these properties is most likely to be valued primarily by the cost-depreciation approach?
A. Church.
B. Warehouse facility.
C. Single family residence.
D. Apartment complex.
E. Office building rented by government agencies.
A. Church.
49. By the Ling-Archer depiction of real estate markets, all the following would be determined in the “space” or users’ market EXCEPT:
A. Basic level of required yields
B. Rental rates.
C. Lease terms.
D. Occupancy rates.
E. Design features for properties.
A. Basic level of required yields
50. All the following tend to characterize real estate and real estate markets EXCEPT:
A. Few transactions.
B. Localized markets.
C. Low transactions costs.
D. Segmented markets.
E. Immobile assets.
C. Low transactions costs.
51. The best example of a real estate asset with low cost risk and low cash flow risk is a(n):
A. Existing warehouse net-leased to a financially strong corporation for 50 years.
B. To-be-built warehouse that will be net-leased to a financially strong corporation.
C. New, existing apartment building.
D. Older, existing apartment building.
E. To-be-built apartment building.
A. Existing warehouse net-leased to a financially strong corporation for 50 years.
52. Of these types of real estate assets, which, according to Ling-Archer, has the highest cost uncertainty?
A. New, existing structure.
B. Subdivision development, not fully permitted.
C. Subdivision development, fully permitted.
D. Building to be renovated.
E. Older, existing apartments.
B. Subdivision development, not fully permitted.
53. Of these types of real estate assets, which, according to Ling-Archer, has the highest cash flow uncertainty?
A. Investment grade commercial property.
B. Apartments.
C. Single-family rental housing.
D. Small offices.
E. Restaurant.
E. Restaurant.
54. Generally, strategies to reduce risk in real estate investment include all EXCEPT:
A. Avoid inherently risky ventures.
B. Study real estate and real estate markets regularly.
C. Do not accept advice on an uninformed basis.
D. Acquire experience from others involving the type of property of interest.
E. Keep the investment holding period short.
E. Keep the investment holding period short.
55. Tests of whether an item is a fixture include all EXCEPT:
A. Manner of attachment (does removal leave damage?)
B. Character of the article and manner of adaptation (custom designed?)
C. Intention of the parties (customary practice?)
D. Value of the item (damage to the “loser”)
E. Relation of the parties (landlord vs tenant)
D. Value of the item (damage to the “loser”)
56. An estate is an interest in real estate distinguished by including the right of:
A. Use.
B. Disposition.
C. Enjoyment.
D. Access.
E. Exclusive possession.
E. Exclusive possession.
57. The highest or most complete interest in real estate is the:
A. Tenancy for years.
B. Fee simple unconditional.
C. Life estate.
D. Freehold.
E. Fee simple absolute.
E. Fee simple absolute.
58. An example of an easement appurtenant would be an easement for:
A. A driveway across an adjacent parcel of land.
B. Access to drill for and remove oil from the land.
C. A street right-of-way.
D. A billboard easement.
E. A utility line easement.
A. A driveway across an adjacent parcel of land.
59. Which of these statements is FALSE concerning easements?
A. An easement appurtenant “runs with the land.”
B. An easement in gross can be sold independently of any land ownership interest.
C. An easement in gross can be revoked by the property owner.
D. Easements appurtenant always involve two parcels of land.
E. Easements appurtenant can be “positive” (allowing entry on a parcel of land) or “negative” (prohibiting some use of a parcel).
C. An easement in gross can be revoked by the property owner.
60. Which statement is FALSE concerning restrictive covenants?
A. They are enforced strictly through civil action (petition for court injunction).
B. Any citizen can seek enforcement.
C. They are commonly created as part of the recording of a subdivision.
D. They can end due to changing public policy, changing neighborhood, or neglect in enforcement.
E. Some states limit the life of restrictive covenants
B. Any citizen can seek enforcement.
61. The dominant lien against real property is:
A. The earliest mortgage lien.
B. The most recent mortgage lien.
C. A judgment lien.
D. A property tax lien.
E. A mechanic’s lien.
D. A property tax lien.
62. A form of property ownership that involves a combination of direct individual ownership and direct group ownership is:
A. Limited liability company.
B. Cooperative.
C. Condominium.
D. Joint tenancy.
E. Community property.
C. Condominium.
63. A form of automatically occurring equal co-ownership of property between husband and wife that is common in Spanish heritage states, Louisiana and Wisconsin is:
A. Tenancy in common.
B. Community property.
C. Tenancy by the entirety.
D. Dower.
E. Elective share.
B. Community property.
64. Real property deeds are distinguished in “quality” by:
A. The number of witnesses signing the deed.
B. The size of bond posted with the deed.
C. The reputation of the grantor.
D. The number and types of covenants in the deed.
E. The amount of title insurance.
D. The number and types of covenants in the deed.
65. The legal concept that all persons are bound to acknowledge and accept claims that have been placed in public records and capable of being examined by all, is the doctrine of:
A. Actual notice.
B. Constructive notice.
C. Escheat.
D. Eminent domain.
E. Recorded notice.
B. Constructive notice.
66. The highest form of deed for real estate is the:
A. General warrantee deed.
B. Special warrantee deed.
C. Quitclaim deed.
D. Bargain and sale deed.
E. Judicial deed.
A. General warrantee deed.
67. In real estate transactions evidence of title is provided by:
A. A commitment for title insurance.
B. Title abstract plus attorney’s opinion.
C. A title certificate.
D. A and B, but not C.
E. All three, A, B and C.
D. A and B, but not C.
68. Methods of land description acceptable for recorded legal documents include:
A. Metes and bounds.
B. Street address.
C. Tax parcel number.
D. A and B, but not C.
E. All three, A, B and C.
D. A and B, but not C.
69. All of the following terms are part of land description by government rectangular survey system, EXCEPT:
A. Section.
B. Tier.
C. Range.
D. Meridian.
E. Recorded Plat.
E. Recorded Plat.
70. Economic reasons that government intervention and regulation of land use has always existed include:
A. Land use externalities (“spillover” effects).
B. Unavoidable land use monopolies.
C. Incomplete information about structure quality.
D. A and B, but not C.
E. All three, A, B and C.
E. All three, A, B and C.
71. Traditional forms of land use controls include all EXCEPT:
A. Zoning.
B. Subdivision regulations.
C. Performance standards.
D. Bulk controls such as size and setbacks.
E. Building codes.
C. Performance standards.
72. In modern practice of land use regulation a step in every land development effort that is fraught with uncertainty for the developer, but extremely important to the community is the:
A. Building permit application.
B. Zoning change application.
C. Change in land use plan.
D. Site plan review.
E. Dedication application.
D. Site plan review.
73. Which of these statements is FALSE concerning traditional zoning concepts and practices.
A. Non-conforming uses are allowed if they predated the enactment of a zoning ordinance.
B. Variances from zoning requirements are allowed if the zoning requirements impose undue hardship on an owner beyond his or her control.
C. A special board of adjustment, independent from elected officials, is created to hear variance petitions.
D. Land use controls rapidly grew in type and use beginning about 1950.
E. Ultimate enforcement of zoning ordinances and other police power based land use controls rests with the elected officials of local government.
D. Land use controls rapidly grew in type and use beginning about 1950.
74. Which of these statements is true regarding public land use planning?
A. Land use plans generally began to be required and have the force of law only after 1970.
B. The most recent notion of land use planning advocates orientation to public transportation, pedestrian friendly design, and mixed uses.
C. Older notions of planning gave high priority to an automotive oriented society.
D. A and B, but not C.
E. All three, A, B and C.
E. All three, A, B and C.
75. Which of these statements is FALSE regarding the power of eminent domain.
A. The legal process of implementing eminent domain is called restitution.
B. Much controversy in recent years has revolved around the use of eminent domain for public purpose rather that the narrower public use.
C. Local governments have been accused in many cases of using eminent domain abusively to increase the local tax base.
D. Most states have enacted strong restrictions since the Kelo v. New London Ct. decision of the U.S. Supreme Court to restrict local use of eminent domain.
E. In principal, the use of eminent domain requires just compensation and due process.
D. Most states have enacted strong restrictions since the Kelo v. New London Ct. decision of the U.S. Supreme Court to restrict local use of eminent domain.
76. New forms of land use controls, increasingly adopted in recent years include:
A. Impact fees.
B. Performance standards.
C. Special permits.
D. A and B, but not C.
E. All three, A, B and C.
D. A and B, but not C.
77. A claim to title that reasonable, informed persons would regard as valid is referred to as a:
A. Marketable title.
B. Clear title.
C. Valid title.
D. Insurable title.
E. Authentic title.
A. Marketable title.
78. In residential sales comparison appraisal, which of these would be an acceptable procedure?
A. Use listing (asking) prices from a local real estate multiple listing service.
B. For comparables, use residences half as large as the subject.
C. Adjust comparables for structure characteristics as the first adjustment step.
D. Use comparables from another nearby subdivision.
E. Use a forced sale property as a comparable.
D. Use comparables from another nearby subdivision.
79. The preferred method of property appraisal, when it can be applied, is:
A. Sales comparison.
B. Income capitalization.
C. Gross rent multiplier.
D. Cost-depreciation approach.
E. Discounted cash flow analysis.
A. Sales comparison.
80. From an appraiser’s perspective, which of these is NOT a property expense?
A. Property management fees
B. Debt service (loan payment)
C. Utility expenses
D. Security expenses
E. Reserves for replacement.
B. Debt service (loan payment)
81. Which of these methods of valuation is LEAST LIKELY to be used for valuing an existing small strip shopping center?
A. Sales comparison
B. Discounted cash flow analysis (DCF)
C. Direct capitalization
D. Rent multiplier
E. Constant growth capitalization
A. Sales comparison
82. Examples of land use externalities include:
A. Emissions of smoke, particles, noise, etc.
B. Increased storm runoff due to land development.
C. Holdouts in land acquisition for a road right-of-way.
D. A and B, but not C.
E. All three, A, B and C.
D. A and B, but not C.
83. In conducting a market comparison appraisal, the most important step, according to Archer, is:
A. Selecting the comparables.
B. Making the adjustment for market conditions.
C. Making the adjustment for location.
D. Making the adjustment for size.
E. Making the adjustment for non-realty items.
A. Selecting the comparables.
84. In cost appraisal, a worn out carpet would be an example of:
A. Replacement cost.
B. Reproduction cost.
C. Physical deterioration.
D. Functional obsolescence.
E. External obsolescence.
C. Physical deterioration.
85. The latest development in techniques of valuation for single family residences is:
A. Form appraisals.
B. Narrative appraisals.
C. Regression appraisal.
D. Automated valuation models (AVM).
E. Letter appraisals.
D. Automated valuation models (AVM).
86. Many appraisers believe that the direct capitalization method is preferred to the discounted cash flow method in income capitalization appraisal because:
A. It requires less arithmetic.
B. It is does not require a computer.
C. It is more understandable.
D. It lets the market, rather than the appraiser, make more of the necessary assumptions.
E. It is quicker.
D. It lets the market, rather than the appraiser, make more of the necessary assumptions.
87. Since 1989, professional appraisal practice in the United State must follow the steps and guidelines given by:
A. CERCLA
B. Freddie Mac and Fannie Mae
C. URAR
D. USPAP
E. RERC
D. USPAP
88. In cost appraisal, an old, small bathroom would be an example of:
A. Replacement cost.
B. Reproduction cost.
C. Physical deterioration.
D. Functional obsolescence.
E. External obsolescence.
D. Functional obsolescence.
89. In selecting comparables for a market comparison appraisal all of the following are important criteria for good comparables EXCEPT:
A. Must be properties that buyers would consider as a substitute for the subject property.
B. Must be in the same subdivision.
C. Should enable a minimum of adjustments.
D. Must be actual sales.
E. Must be an “arm’s length transaction.
B. Must be in the same subdivision.
90. In the prescribed sequence of adjustments for market comparison comparables, which of these adjustments would come first?
A. Adjustment for location.
B. Adjustment for size.
C. Adjustment for quality features.
D. Adjustment for neighborhood.
E. Adjustment for market conditions.
E. Adjustment for market conditions.
91. The preferred method of appraisal, where it can be used, is:
A. Sales comparison.
B. Income capitalization.
C. Reproduction cost.
D. Replacement cost.
E. Gross rent multiplier.
A. Sales comparison.
92. In creating an appraiser’s reconstructed operating statement, which of these is NOT treated as an operating expense?
A. Mortgage payment.
B. Property taxes.
C. Insurance.
D. Management expense.
E. Reserves for replacements.
A. Mortgage payment.
93. Which of these statements is true concerning cost-depreciation appraisal?
A. The land is valued by market comparison.
B. Depreciation deductions are taken for physical deterioration, functional obsolescence and external obsolescence.
C. The concept of cost used normally is replacement cost.
D. A and b are true, but not c.
E. All are true, a, b and c.
D. A and b are true, but not c.
94. Which statement is FALSE regarding the property tax?
A. It has been accused of being uneven across different geographic areas.
B. It is the primary source of revenue for local governments.
C. As a revenue source it tends to be cyclical and unreliable.
D. There normally are multiple taxing authorities simultaneously imposing property taxes on a property.
E. Properties commonly exempt from property tax include government owned property, homesteads, property owned by religious or non-profit organizations.
C. As a revenue source it tends to be cyclical and unreliable.
95. Which statements is FALSE concerning the cost approach to appraisal?
A. The concept of cost normally used is reproduction cost.
B. Physical, external and functional depreciation are subtracted from the estimated structure cost.
C. The value of land is estimated by market comparison.
D. R.S. Means or Marshall Swift cost estimating services are commonly used to estimate cost.
E. The method is the preferred choice where it can be used.
E. The method is the preferred choice where it can be used.
96. All of these statements about valuation by the sales comparison approach are correct EXCEPT:
A. It is the preferred method when circumstances permit its use.
B. It applies primarily to standard construction residences and undeveloped land.
C. It relies on the use of comparable properties, both sold and unsold.
D. Prices of comparables are adjusted for their differences from the subject.
E. The method is no better than the validity of the comparables used.
C. It relies on the use of comparable properties, both sold and unsold.
97. In making adjustments to a comparable to arrive at a final adjusted sales price, the proper sequence for the following adjustments would be:
A. Financing terms, market conditions, location.
B. Financing terms, location, market conditions.
C. Location, market conditions, financing terms.
D. Market conditions, location, financing terms.
E. Location, financing terms, market conditions.
A. Financing terms, market conditions, location.
98. All of these statements about valuation by the cost approach are correct EXCEPT:
A. It normally uses reproduction cost rather than replacement cost.
B. It adjusts estimated cost, new, for three types of depreciation.
C. It is the “last resort” approach to valuation.
D. It values land by the comparable sales method.
E. An example of where it would be the only method available is a typical office building leased for government use.
E. An example of where it would be the only method available is a typical office building leased for government use.
99. Which of these issues in a mortgage loan is most likely to be addressed in the note rather than the mortgage?
A. Acceleration clause
B. Late payment fee
C. Due on sale clause
D. Escrow clause
E. Property description
B. Late payment fee
100. Which of these types of mortgage loans is most likely to be non-recourse?
A. FHA loan
B. Conventional home loan
C. Jumbo home loan
D. Sub-prime home loan
E. Shopping center loan
E. Shopping center loan
101. With a non-recourse mortgage loan, in case of default the lender has legal recourse:
A. Only through the note.
B. Only through the mortgage.
C. Through both the note and the mortgage.
D. Through neither the note nor the mortgage.
E. Can be any of the above.
B. Only through the mortgage.
102. The legal process of severing competing claims to title for a mortgaged property after default on the loan is known as:
A. Truncation.
B. Foreclosure.
C. Liquidation.
D. Bankruptcy.
E. Exculpitation.
B. Foreclosure.
103. The Real Estate Settlement Procedures Act does all the following for most home sales involving mortgage financing EXCEPT:
A. Requires the use of a uniform or standard closing statement.
B. Prohibits “kick-backs” for settlement related services.
C. Requires disclosure of APR (annual percentage rate) for the mortgage loan.
D. Requires that the closing statement be available for inspection a day before the closing.
E. Requires a preliminary estimate of closing costs shortly after a loan application.
C. Requires disclosure of APR (annual percentage rate) for the mortgage loan.
104. Which of these terms can apply to both a fixed rate loan and an adjustable rate loan?
A. Index rate
B. Margin
C. Teaser rate
D. Points
E. Periodic cap
D. Points
105. An important participant in the secondary market (rather than primary market) for home mortgage loans is:
A. Commercial banks.
B. Thrifts (savings banks and savings and loan associations).
C. Mortgage brokers.
D. Mortgage bankers.
E. Fannie Mae
E. Fannie Mae
106. Which of these protects a home mortgage borrower against losses due to default?
A. FHA insurance.
B. GNMA guarantees.
C. Private mortgage insurance.
D. Veterans Affairs Guarantee.
E. None of these.
E. None of these.
107. Private mortgage insurance normally is required by the lender for conventional home loans in excess of:
A. 50 percent of value.
B. 75 percent of value.
C. 80 percent of value.
D. 90 percent of value.
E. 95 percent of value.
C. 80 percent of value.
108. An emerging type of home mortgage loan that is targeted to older, retired households with constrained income but substantial home equity is the:
A. Reverse mortgage.
B. Home equity loan.
C. “Piggy back” mortgage.
D. Sub-prime mortgage.
E. Contract for deed.
A. Reverse mortgage.
109. APR is an important concept for comparing the cost of alternate home mortgage loans. Its greatest practical limitation is:
A. It assumes the loan is allowed to go to maturity while most home loans are prepaid early.
B. It does not account for points.
C. It does not account for “third party” borrowing costs.
D. It is an IRR.
E. It is a before tax computation.
A. It assumes the loan is allowed to go to maturity while most home loans are prepaid early.
110. A mortgage clause that is necessary in order for foreclosure to be a practical alternative for the lender is the:
A. Due-on-sale clause.
B. Escrow clause.
C. Insurance clause.
D. Acceleration clause.
E. Preservation and maintenance clause.
D. Acceleration clause.
111. A deed used primarily to clear up competing or ambiguous claims of ownership is the:
A. General warranty deed.
B. Special warranty deed.
C. Deed of bargain and sale.
D. Quitclaim deed.
E. Executor’s deed.
D. Quitclaim deed.
112. An important class of home mortgage loans today is “conforming” loans. These are loans that:
A. FHA will insure.
B. Private mortgage insurers will insure.
C. GNMA will guarantee.
D. Fannie Mae and Freddie Mac will purchase.
E. Are not subprime.
D. Fannie Mae and Freddie Mac will purchase.
113. Due to the law of agency, a real estate salesperson assisting a prospective buyer in searching for a home typically owes their primary allegiance to:
A. The seller.
B. The prospective buyer.
C. The brokerage firm they represent.
D. The brokerage firm that listed the property under consideration.
E. The local association of real estate brokers.
A. The seller.
114. Duties or fiduciary responsibilities of an agent include all EXCEPT:
A. Disclosure.
B. Confidentiality.
C. Obedience.
D. Caution.
E. Loyalty.
D. Caution.
115. For common, simple real estate sales transactions the best source of a contract usually is:
A. One written by yourself.
B. One written by the attorney of either party in the transaction.
C. A form contract from a standard office supply company or mail-order supplier.
D. A current model contract form from Freddie Mac or Fannie Mae
E. A current form from the local association of Realtors.
E. A current form from the local association of Realtors.
116. Which of these mortgage terms applies to both adjustable and fixed rate home mortgages?
A. Margin
B. Index
C. Change date
D. Periodic cap
E. Annual percentage rate
E. Annual percentage rate
117. Which of these loans is most likely to have a prepayment penalty?
A. Conforming loan.
B. FHA loan.
C. Subprime loan.
D. Home equity credit line.
E. Loan eligible for purchase by Freddie Mac.
C. Subprime loan.
118. A mortgage clause that makes all payments on a loan due when one payment is in default is the:
A. Insurance clause.
B. Acceleration clause.
C. Due-on-default clause.
D. Due-on-sale clause.
E. Habendum clause.
B. Acceleration clause.
119. The primary law that prohibits many forms of discrimination in consumer and home mortgage lending is the:
A. Federal Truth-in-lending Act.
B. Federal Fair Housing Act.
C. Real Estate Settlement Procedures Act.
D. Equal Credit Opportunity Act.
E. Home Mortgage Disclosure Act.
D. Equal Credit Opportunity Act.
120. A form of secured real estate debt without an actual mortgage is the:
A. Contract for Deed.
B. Deed of trust.
C. Purchase with assumption.
D. Purchase “subject to.”
E. Subprime loan.
A. Contract for Deed.
121. Among the possible interest rates underlying an adjustable rate mortgage, as listed below, the most commonly used, historically, is the:
A. Three Month LIBOR rate.
B. One-year constant maturity Treasury rate.
C. Ten-year Treasury bond rate.
D. Average fixed rate for home mortgages.
E. Thrift Cost-of-funds index.
B. One-year constant maturity Treasury rate.
122. Which of these statements about mortgage insurance is FALSE?
A. It is required for most home mortgage loans that exceed 80 percent of value.
B. Private mortgage insurance normally covers the first 20 percent of loan losses.
C. Mortgage insurance protects the borrower against the risk of default.
D. Mortgage insurance protects the lender against loss from default.
E. Private mortgage insurance must be terminated when the mortgage is paid down to 78 percent of original appraised value.
C. Mortgage insurance protects the borrower against the risk of default.
123. An exculpatory clause results in a _______________ mortgage loan.
A. subordinated
B. convertible
C. hybrid
D. non-recourse
E. recourse
D. non-recourse
124. A type of mortgage that is designed specifically to enable older homeowners to liquidate the equity in their homes is the:
A. Home equity mortgage.
B. Senior mortgage.
C. Reverse mortgage.
D. Options ARM.
E. Hybrid mortgage.
C. Reverse mortgage.
125. A mortgage that starts with a fixed rate for some number of years and then converts to an adjustable rate mortgage is the:
A. Options ARM.
B. Hybrid mortgage.
C. Convertible mortgage.
D. Balloon mortgage.
E. Interest only mortgage.
B. Hybrid mortgage.
126. APR for a home mortgage loan is computed as:
A. The average contract rate on the loan.
B. The initial interest rate on the loan.
C. The lender’s yield to maturity on the loan.
D. The borrower’s effective borrowing cost to maturity.
E. The borrower’s actual effective borrowing cost.
D. The borrower’s effective borrowing cost to maturity.
127. In a mortgage, what feature traditionally was a right of the mortgagor only if explicitly provided in the mortgage, but has been reversed by many state legislatures so that it is automatically a right of the mortgagor unless explicitly prohibited?
A. Right of prepayment
B. Right of defeasance
C. Right to additional borrowing secured by the mortgage
D. Right to create additional mortgages
E. Right for a buyer to assume the mortgage
A. Right of prepayment
128. The Real Estate Settlement Procedures Act (RESPA) requires all of the following for most purchase money home mortgage loans, EXCEPT:
A. Uniform closing statement.
B. Calculation of APR.
C. Prohibition of “kick-backs” from service vendors (appraisers, mortgage insurers, etc.).
D. Prior estimate of closing costs.
E. Right of borrower to inspect closing statement in advance.
B. Calculation of APR.
129. Which of these was the original creator of mortgage insurance (circa 1938)?
A. MGIC (Mortgage Guarantee Insurance Corporation)
B. FHA
C. VA
D. GNMA (“Ginnie Mae”)
E. Fannie Mae
B. FHA
130. Which of these is NOT a characteristic of conventional mortgage loans?
A. May be “conforming” or “non-conforming.”
B. Usually requires mortgage insurance if over 80 percent of value.
C. Uses government-provided mortgage insurance.
D. Has the most restrictive or conservative qualifying standards among standard loan types.
E. Can be a fixed-rate loan or an ARM.
C. Uses government-provided mortgage insurance.
131. Which statement is FALSE regarding private mortgage insurance?
A. Typically is paid for by the borrower.
B. Protects the lender against losses due to default.
C. Protects the borrower against losses due to default.
D. Typically covers the first 20 percent of a loan loss.
E. It followed the creation of FHA insurance.
C. Protects the borrower against losses due to default.
132. A dramatic development in home mortgage underwriting since 1995 is the use of:
A. Statistical indices of creditworthiness.
B. Automated valuation systems.
C. Uniform mortgage documents.
D. A and B, but not C.
E. All three, A. B and C.
D. A and B, but not C.
133. In the government rectangular survey system, which types of lines run north and south, six miles apart?
A. Meridians.
B. Range lines.
C. Base lines.
D. Tier lines.
E. Check lines.
C. Base lines.
134. For the sale and purchase of a home, which of these sources of contract forms is likely, for most cases, to be most effective:
A. Contract written by the other party’s attorney.
B. Contract written by both parties (non-attorneys).
C. Form contract from a local business supply store.
D. Form contract from a real estate textbook.
E. Recent form contract from the area local real estate board.
B. Contract written by both parties (non-attorneys).
135. Which of these terms is NOT typically associated with an adjustable rate mortgage loan?
A. Teaser rate
B. Margin
C. Index rate
D. Yield maintenance
E. Periodic cap
D. Yield maintenance
136. Requirements that distinguish a contract for purchase and sale of real estate from non-real estate contracts include:
A. Competent parties.
B. Consideration.
C. Must be in writing.
D. Offer and acceptance.
E. No defect in mutual assent.
C. Must be in writing.
137. Remedies of a buyer in case of seller default on a real estate sales contract include:
A. Suit for damages.
B. Rescission.
C. Specific performance.
D. A and b, but not c.
E. All three: a, b and c.
E. All three: a, b and c.
138. A prepayment penalty is most likely to be associated with which of these types of loans?
A. FHA
B. VA
C. “conforming” conventional loan
D. “Jumbo” conventional loan
E. Home equity loan
D. “Jumbo” conventional loan
139. Which of these statements is TRUE about standard (prime) conventional home loans?
A. They are non-recourse.
B. Fannie Mae and Freddie Mac will purchase them at any size (amount).
C. If they are over 80 percent loan-to-value they usually require mortgage insurance.
D. They never have a prepayment penalty.
E. They seldom have an escrow clause requiring deposits of tax and mortgage payments as part of the regular payment.
C. If they are over 80 percent loan-to-value they usually require mortgage insurance.
140. An alternative to a mortgage for securing a purchase loan for property, often used for raw land and for marginal homes and borrowers, is the:
A. Purchase money mortgage.
B. Contract for deed.
C. Quitclaim deed.
D. Reverse mortgage.
E. Subprime loan.
B. Contract for deed.
141. Private mortgage insurance generally is required for conforming conventional home mortgage loans that are:
A. Larger than $100,000.
B. Longer than five years.
C. Greater than 80 percent of value.
D. Greater than 95 percent of value.
E. In marginal economic locations.
C. Greater than 80 percent of value.
142. In real estate brokerage, the use of designated agents, the use of transaction brokers, and laws requiring agency disclosure are all attempts to deal with what problem that naturally arises in residential brokerage?
A. Excess competition.
B. Price fixing.
C. Dual agency.
D. Excessive fees.
E. Discrimination.
C. Dual agency.
143. In a contract for sale and purchase of land (a real estate contract) a special recourse of the seller if the buyer backs out is:
A. Equitable title.
B. Specific performance.
C. Liquidated damages.
D. Suit for damages.
E. Rescission.
C. Liquidated damages.
144. Which of these is most likely to be regarded as a capital expenditure rather than an operating expense?
A. Replacement of broken windows.
B. Landscape expense.
C. Pressure washing of walls.
D. Upgrade of insulation.
E. Painting.
D. Upgrade of insulation.
145. All of these are characteristics of modern home mortgage lending EXCEPT:
A. Most new home loans now are securitized.
B. The variety of home loan types has diminished in the last decade.
C. Traditional, manual, methods of loan underwriting largely have been replaced by automated underwriting.
D. The two main secondary mortgage market institutions have owned, or own, around half of all home mortgage loans outstanding.
E. The mortgage origination and mortgage servicing industry has become far more concentrated since 1990.
B. The variety of home loan types has diminished in the last decade.
146. All the following are true of FHA EXCEPT:
A. It is strictly a loan insurance program, protecting the lender against losses from default.
B. FHA created the first widely available fully amortized home loan.
C. FHA insures a variety of loan types, including adjustable rate loans and graduated payment loans.
D. FHA insures only the first 20 percent of losses for an eligible loan.
E. FHA is a program of the United States Government.
D. FHA insures only the first 20 percent of losses for an eligible loan.
147. A conventional loan that does not meet the requirements for purchase by Fannie Mae or Freddie Mac is known as a ___________ loan.
A. Sub-prime loan.
B. Jumbo loan.
C. Non-marketable loan.
D. Non-conforming loan.
E. Hybrid loan.
D. Non-conforming loan.
148. In some states, a defaulted mortgagor can recover foreclosed property after foreclosure sale by “making whole” the mortgagee through paying off the balance due plus legal costs. This right is known as:
A. Equity of redemption.
B. Statutory right of redemption.
C. Right of defeasance.
D. Right of acceleration.
E. Right of recovery.
B. Statutory right of redemption.
149. Home mortgage lenders typically find the length and cost of foreclosure to be less in:
A. “Deed of Trust” states.
B. Mortgage states.
C. Contract for deed states.
D. Judicial foreclosure states
E. “Power of sale” states.
E. “Power of sale” states.
150. A claim to title that is regarded by legal authorities as being free from reasonable doubt is called a ________ title.
A. valid
B. safe
C. insurable
D. marketable
E. defendable
D. marketable