LeShaun McKenzie
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2nd half of the RES Practice Exam

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LeShaun McKenzie
Created by LeShaun McKenzie over 4 years ago
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FUNDAMENTALS OF REAL ESTATE PRACTICE SECOND EXAM

Question 1 of 45

1

Which of the following are the most typical characteristics of a junior mortgage?
I. Higher interest rate
II. Shorter repayment period
III. Must be for less loan amount relative to the first mortgage

Select one of the following:

  • III only

  • I and II

  • II and III

  • All of the above

Explanation

Question 2 of 45

1

The situation that exists when the P& I payments are not large enough to pay what is due for interest never mind any principle is called.

Select one of the following:

  • Amortization

  • Negative Amortization

  • Due on Sale

  • Accrued interest

Explanation

Question 3 of 45

1

Which party is typically protected by a private mortgage insurance policy?
I. Lender
II. Borrower

Select one of the following:

  • I only

  • II only

  • Both I and II

  • Neither I nor II

Explanation

Question 4 of 45

1

Which of the following is typically the largest source of construction loans in the market today?

Select one of the following:

  • Mortgage Broker

  • Mortgage Banker

  • Commercial Bank

  • Savings and Loans

Explanation

Question 5 of 45

1

Which of the following typically fund their mortgages and service the loans after they are made?
I. Mortgage Bankers
II. Mortgage Brokers

Select one of the following:

  • I only

  • II only

  • Both I and II

  • Neither I nor II

Explanation

Question 6 of 45

1

In regards to pledging real property as collateral for a loan, North Carolina is a ________ theory state.

Select one of the following:

  • Pure race

  • Mortgage

  • Lien

  • Title

Explanation

Question 7 of 45

1

Which of the following clauses dictate that in the event of default, the entire loan balance shall be due and payable?

Select one of the following:

  • Release Clause

  • Prepayment penalty clause

  • Acceleration Clause

  • Due on Sale Clause

Explanation

Question 8 of 45

1

Which of the following clauses effectively prohibit the assumption of a mortgage loan?

Select one of the following:

  • Prepayment Penalty Clause

  • Alienation Clause

  • Acceleration Clause

  • Release Clause

Explanation

Question 9 of 45

1

The maximum loan to value ratio that is typically allowed on an uninsured conventional mortgage is _______________?

Select one of the following:

  • 70%

  • 80%

  • 90%

  • 95%

Explanation

Question 10 of 45

1

The type of mortgage loan that typically represents the highest risk to the lender is a/an ____________ loan.

Select one of the following:

  • Construction loan

  • Blanket Mortgage

  • Adjustable Rate

  • Package Mortgage

Explanation

Question 11 of 45

1

The primary source for monies to be used in making both VA and FHA mortgage is _____________?

Select one of the following:

  • Congress appropriations

  • Private Investors

  • FHA insurance and VA funding fees

  • Federal National Mortgage Association

Explanation

Question 12 of 45

1

Which of the following statements regarding VA mortgage loans is true?
I. You must be an approved veteran to assume a VA loan.
II. The borrower must use the mortgaged property as his/her primary residence.

Select one of the following:

  • I only

  • II only

  • Both I and II

  • Neither I nor II

Explanation

Question 13 of 45

1

A real estate agent is placing an ad about a new listing in the newspaper. Which of the following will NOT require a full disclosure of all relevant financing terms under Regulation Z of the Truth in Lending Act?

Select one of the following:

  • Down Payment

  • Number of payments

  • Repayment period

  • Mortgage insurance required

Explanation

Question 14 of 45

1

An agent is in the process of determining the applicant’s qualifications for obtaining a conventional mortgage loan. Which of the following would be considered by a lender as housing expenses?
I. PITI payment
II. Monthly PMI premiums
III. Home Owner Association Fees

Select one of the following:

  • I only

  • II only

  • I and II

  • I, II and III

Explanation

Question 15 of 45

1

The clause that permits a borrower to pay off the mortgage loan, in addition to any interest and other related costs, after the foreclosure sale and retain title to his property is called the _________?

Select one of the following:

  • Right of Redemption

  • Statutory Redemption

  • Def….. Redemption

  • Equity of Redemption

Explanation

Question 16 of 45

1

The type of mortgage loan that allows the borrower to obtain fresh advances of funds, even in excess of the original amount borrowed by utilizing the existing loan document ins called a _________?

Select one of the following:

  • Blanket

  • Budget

  • Wrap around

  • Open-end

Explanation

Question 17 of 45

1

Under the provisions of the Truth-In-Lending Act, which of the following would not be calculated as a part of the APR (Annual Percentage Rate?

Select one of the following:

  • Discount points

  • Mortgage Insurance

  • Loan origination fee

  • Loan interest rate

Explanation

Question 18 of 45

1

The secondary mortgage market participant that is the oldest, largest, and is privately owned is ___________?

Select one of the following:

  • Federal Home Loan Mortgage Association

  • Government National Mortgage Association

  • Federal National Mortgage Association

  • Federal Housing Association

Explanation

Question 19 of 45

1

Which of the following is true of a prepayment clause in a mortgage loan?

Select one of the following:

  • The beneficiary is typically penalized when the grantor pays off the loan early

  • It is prohibited in all residential mortgage loans in North Carolina

  • It usually penalizes the early payment of the mortgage by the borrower

  • It is allowed in all residential mortgage loans in North Carolina

Explanation

Question 20 of 45

1

A foreclosure sale has just been conducted in which the following monies were due from the proceeds? Attorney fees - $1,500, unpaid property taxes - $800, first mortgage balance - $109,5000, second mortgage balance - $8,500, the property sold at the foreclosure sale for $111,800. How many of the mortgage liens will be cleared from the title a result of this sale?

Select one of the following:

  • None

  • First mortgage only

  • Second mortgage only

  • First and second mortgages

Explanation

Question 21 of 45

1

According to the Real Estate Settlement Procedures Act, the lender is required to furnish the borrower with the good faith estimate of closing costs ___________.

Select one of the following:

  • At least five days prior to closing

  • At the time of loan approval

  • Within three business days of loan application

  • No later than five days after the closing

Explanation

Question 22 of 45

1

Which of the following are NOT true regarding the Real Estate Settlement Procedures Act?

Select one of the following:

  • A lender can receive referral fees from service providers provided the borrower was not
    required to use a particular service provider.

  • The lender must provide a copy of the booklet “Settlement Costs, A HUD Guide” a the
    time of loan application

  • Must provide the borrower a copy of the closing statement on a HUD-1 form if it involves
    a federally related mortgage

  • The lender is required to furnish the borrower a copy of the closing statement 24 hours
    prior to the closing if it is available, otherwise an estimate may be provided.

Explanation

Question 23 of 45

1

How long is the typical residential appraisal considered accurate by the lender?

Select one of the following:

  • One day

  • 30 days

  • 45 days

  • 90 days

Explanation

Question 24 of 45

1

The economic principle of value that states when a buyer is confronted with two or more comparables, the buyer will generally choose the lesser priced comparable is called the theory of ___________.

Select one of the following:

  • Contribution

  • Conformity

  • Highest and best use

  • Substitution

Explanation

Question 25 of 45

1

When selecting from various comparables to utilize in preparing an appraisal using the sales comparison theory, an appraiser will generally select a comparable that has been sold in the past months.

Select one of the following:

  • One

  • Three

  • Six

  • Twelve

Explanation

Question 26 of 45

1

In which of the following valuation situations would sales comparison method be the preferred method of appraisal?
I. Residential
II. Vacant Land
III. Church

Select one of the following:

  • I only

  • II and III

  • III only

  • I and II only

Explanation

Question 27 of 45

1

An appraiser recently reduced the value of a property he/she was appraising due to its proximity to the highway. This was an example of ________.

Select one of the following:

  • Physical deterioration

  • Functional obsolescence

  • Economic obsolescence

  • Curable obsolescence

Explanation

Question 28 of 45

1

That period of time in which a property may be profitably utilized is know as its __________.

Select one of the following:

  • Actual life

  • Economic life

  • Amortized life

  • Useful age

Explanation

Question 29 of 45

1

Which of the following statements is correct concerning a comparative market analysis that is being prepared by a real estate agent?
I. An agent cannot be compensated for the preparation of a comparative market analysis.
II. A comparative market analysis will usually show a range of value rather than a specific
amount

Select one of the following:

  • I only

  • II only

  • Both I and II

  • Neither I nor II

Explanation

Question 30 of 45

1

When utilizing the income capitalization approach to valuation, the estimate of value is derived by dividing the capitalization rate into

Select one of the following:

  • Gross income

  • Effective Gross income

  • Net operating income

  • Net income after taxes and depreciation

Explanation

Question 31 of 45

1

The tenant has recently signed a lease for a fixed term of six months but with the rent being due and payable monthly. This is an example of a/an __________.

Select one of the following:

  • Month to Month tenancy

  • Periodic tenancy

  • Estate at will

  • Estate for years

Explanation

Question 32 of 45

1

A tenant has signed a six-month lease that stipulates it shall convert to month to month if the tenant continues to occupy and pay rent beyond the initial term. The maximum deposit that can lawfully be charged by the landlord is _________ worth of rent.

Select one of the following:

  • One month

  • One and an half months

  • Two months

  • Six months

Explanation

Question 33 of 45

1

The theory of retaliatory eviction

Select one of the following:

  • Allows the landlord to evict a tenant due to non-payment

  • Protects the tenant for 12 months after the tenants good faith refusal to pay rent

  • Protects the tenant from eviction after he has asserted his legal rights under the lease

  • Allows the landlord to evict the tenant after the tenant has cause excessive damage to
    the property

Explanation

Question 34 of 45

1

A land lord can utilize the tenant’s security deposit for all EXCEPT which of the following?

Select one of the following:

  • Punitive damages due to wear and tear

  • Non-payment of rent

  • Costs of Re-renting the property

  • Liens against the property incurred by the tenant

Explanation

Question 35 of 45

1

Which of the following is a legal remedy available to a residential landlord in North Carolina?

Select one of the following:

  • Self-Help eviction

  • Summary ejectment

  • Constructive eviction

  • Retaliatory eviction

Explanation

Question 36 of 45

1

A non-licensed, salaried employee is working in a real estate management office. Which of the following functions can this person NOT legally perform?

Select one of the following:

  • Showing available units

  • Collecting of rent checks

  • Negotiating terms of a lease

  • Typing a preprinted form lease

Explanation

Question 37 of 45

1

A property manager’s typical responsibilities to the owner/landlord is/are to:
I. Obtain the highest possible net operating income from the property
II. Maintain and help maximize the value of the owner’s investment
III. Re-invest the owner/landlords income

Select one of the following:

  • I and II

  • I and III

  • II and II

  • I, II and III

Explanation

Question 38 of 45

1

What are the continuing benefits of homeownership as far as tax deductibility?
I. Mortgage interest
II. Property Taxes
III. Repairs and Maintenance

Select one of the following:

  • I and II

  • I and III

  • II and III

  • I, II and III

Explanation

Question 39 of 45

1

Discount points incurred in the purchase of a residential property can typically be

Select one of the following:

  • Prorated over the life of the mortgage loan

  • Deducted in the year in which paid

  • Added to the basis to determine adjusted basis

  • Used to reduce the total amount of capital gain

Explanation

Question 40 of 45

1

The adjusted basis will usually consist of all of the following EXCEPT

Select one of the following:

  • Purchase price

  • Closing Costs

  • Cost of capital improvements since purchase

  • Discount points

Explanation

Question 41 of 45

1

A homeowner purchased a house valued at $100,000 and obtained a $60,000 homeowner’s policy of insurance. He incurred a loss of $60,000.00 due to fire. How much will the insurance company pay him for the loss?

Select one of the following:

  • $36,000

  • $45,000

  • $48,000

  • $60,000

Explanation

Question 42 of 45

1

The type of homeowner’s policy that is referred to as “All Risk” is the

Select one of the following:

  • HO-2

  • HO-3

  • HO-4

  • HO-6

Explanation

Question 43 of 45

1

The type of homeowner’s policy that is referred to as the “Tenants Policy” is the

Select one of the following:

  • HO-2

  • HO-3

  • HO-4

  • HO-6

Explanation

Question 44 of 45

1

The type of homeowner’s policy that is referred to as the “Condominium Policy” is the

Select one of the following:

  • HO-2

  • HO-3

  • HO-4

  • HO-6

Explanation

Question 45 of 45

1

The item that adds coverage for specific items or perils that are not covered by other provisions of the insurance policy is an

Select one of the following:

  • Condition

  • Exclusion

  • Endorsement

  • Insurable interest

Explanation

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