Ch 33 - 40

Question 1

Which of these classes are protected by the Fair Housing Laws of Illinois?

Middle Income Renters
Criminal Record Holders
Military Status
Employment Status

Answer 1

Military Status

Military status is protected by fair housing laws of IL

(A person’s active or retired military status is not a protected class under federal guidelines.)

Question 2

If a person believes he or she has been discriminated against, how long does he or she have to file a HUD complaint?

Answer 2

1 Year

The injured party has up to 1 year to file a discrimination complaint with HUD.

Question 3

What practice helps move low-income persons into previously-owned higher income owner properties?

Answer 3

Filtering Down

This is the practice known as filtering down.

Question 4

Which Fair Housing Law added sex to the list of protected classes?

Answer 4

Housing and Community Development Act

Housing and Community Development Act added sex to list of protected classes

Question 5

Does the ADA apply to ppl with AIDS

Answer 5

Yes

This act applies to people with an AIDS disease diagnosis who are considered members of a protected class under Fair Housing.

Question 6

Which Fair Housing Law added handicap individuals to the list of protected classes?

Answer 6

Fair Housing Amendments Act of 1988

Question 7

T/F: According to the TRID rule, lenders must provide:

A copy of the booklet Your Home Loan Toolkit.
A Loan Estimate of settlement costs at the time of loan application or within three business days.
A Closing Disclosure at least three days before closing.

Answer 7

True

lenders must provide all of these

Question 8

T/F: RESPA permits sharing commissions and the payment of referral fees among cooperating brokers or multiple-listing services.

Answer 8

True

RESPA permits sharing commissions and the payment of referral fees among cooperating brokers or multiple-listing services.

Question 9

T/F: Regulation Z (Truth in Lending Act) applies to all loans that are secured by a residence.

Answer 9

True

Regulation Z (Truth in Lending Act) applies to all loans that are secured by a residence.

Question 10

T/F: Regulation Z (Truth in Lending Act) applies to all loans that are secured by a residence. It also applies to Commercial loans.

Answer 10

False

Applies to loans secured by a residence. But not:

Commercial loans
or
Agricultural loans over $25,000

Question 11

T/F: In most cases the borrower has a right to cancel the transaction by notifying the lender within three days. This does not apply to residential first mortgage loans, but does apply to refinancing and home equity loans.

Answer 11

True

In most cases the borrower has a right to cancel the transaction by notifying the lender within three days. This does not apply to residential first mortgage loans, but does apply to refinancing and home equity loans.

Question 12

T/F: Any advertising is subject to Regulation Z (truth in lending) disclosure

Answer 12

True

Any advertising is subject to Regulation Z disclosure

Question 13

T/F: According to the equal credit opportunity act, Lenders are required to inform an applicant who was rejected of the reasons for the denial, in writing and within 30 days

Answer 13

True

Lenders are required to inform an applicant who was rejected of the reasons for the denial, in writing and within 30 days

Question 14

The Community Reinvestment Act was passed to prevent ____ and to encourage banks and thrifts to help meet the credit needs of all segments of their communities.

Answer 14

Redlining

The Community Reinvestment Act was passed to prevent redlining and to encourage banks and thrifts to help meet the credit needs of all segments of their communities.

Question 15

To which of the following transactions does RESPA NOT apply?

Seller-financed loans
Residential property
First or second mortgage loans
A loan that is insured by a federal agency

Answer 15

Seller-financed loans

RESPA (Real Estate Settlement Procedures Act) does not apply to seller financed loans

Question 16

Which document is required by RESPA to detail the costs that the buyer and seller will pay at closing?

Summary of Accounts
Estimate Monthly Payments
HUD-1
Closing Disclosure

Answer 16

Closing Disclosure

Closing Disclosure is the document

Question 17

Regulation Z (truth in lending) applies to which of these situations?

$35,000 farm loan
$50,000 restaurant loan
$75,000 condominium loan
$85,000 warehouse loan

Answer 17

$75,000 condominium loan

Question 18

One broker says to another “I’ll take the east side of town and your company can take the west side.” What is this an example of?

Market allocation
Tie-in arrangement
Group boycott
Price fixing

Answer 18

Market Allocation

This is a common example of market allocation where two or more licensees or firms agree to work in different targeted areas near their offices.

Question 19

All of the members of one board of REALTORS agree that they will not show the properties of the members of another board of REALTORS. What is this an example of?

Price fixing
Tie-in arrangement
Group boycott
Market allocation

Answer 19

Group boycott

This is a prime example of a group boycott by all members of a REALTORS board.

Question 20

Two brokers working for the same firm meet over coffee and decide to charge the same set commission rate to all of their sellers. Is this an illegal action?

No. Antitrust laws do not apply to commission rates or MLS fees.
Yes. A broker’s commission must be related to the costs involved in each transaction.
No. The brokers do not represent competing firms.
Yes. It’s a violation of antitrust laws.

Answer 20

No. The brokers do not represent competing firms.

This is not considered to be an illegal action because each broker works for the same firm.

Question 21

The ________ has the power to judge whether particular trade practices are unfair.

Answer 21

FTC

The Federal Trade Commission has the power to judge whether particular trade practices are unfair.

Question 22

What does the Clayton Act allow private individuals to do?

Answer 22

Under the Clayton Act, private individuals are permitted to sue antitrust violators. If the suits are successful, the individuals can recover three times the damages incurred plus court costs and attorneys’ fees.

Question 23

Are gender based ads for shared living acceptable?

Answer 23

Yes

Yes, gender based ads for shared living housing is acceptable.

Question 24

T/F: Internet ads, on a licensee’s home page, must contain licensee’s name, sponsoring broker’s name, company name/address, geographic location.

Answer 24

True

Internet ads, on a licensee’s home page, must contain: licensee’s name, sponsoring broker’s name, company name/address, geographic location.

Question 25

Which of the following is true regarding blind ads?

Licensees may not utilize blind ads unless they own the advertised property.
Licensees may not use blind ads regardless of who owns the property.
A blind ad is an ad that excludes the licensees name.
Blind ads placed by licensees are permitted if they do not discriminate.

Answer 25

Licensees may not use blind ads regardless of who owns the property.

Can’t use blind ads

Question 26

Licensee Judy takes a weekly ad out in the South Side Journal. Judy does not place ads in any of the other neighborhood newspapers. What might be said about Judy’s advertisement practices?

Judy is targeting her market area.
A city-wide ad would be more cost-effective.
Ads in only one local paper may appear to be discriminatory.
Judy is marketing to potential buyers who fit the profile of those already established homeowners and not practicing discrimination.

Answer 26

Ads in only one local paper may appear to be discriminatory.

Ads in only one local paper such as one associated with a particular church may be considered as discriminatory against other religious groups or protected classes.

Question 27

T/F: An internet “page” is an individual html document.

Answer 27

True

An internet “page” is an individual html document.

Question 28

T/F: CAN-SPAM Act prohibits sending unwanted commercial e-mail messages to wireless devices without express prior authorization.

Answer 28

True

CAN-SPAM Act prohibits sending unwanted commercial e-mail messages to wireless devices without express prior authorization.

Question 29

Which of the following groups are exempt from the Telephone Consumer Protection Act?

All new phone users after March 2008
Hospitals
Tax-exempt nonprofits
Out of state lottery businesses

Answer 29

Tax-exempt nonprofits

Question 30

A person paid $150,000 for a house with the intention of renting it out for $1,000 per month. The economic principle that led the person to pay this price based on the property’s ability to generate this future income is known as:

Anticipation.
Substitution.
Supply and demand.

Answer 30

Anticipation

This is the economic principle of anticipation. Or, the belief that an action today can add future value or income.

Question 31

Real estate value in general is:
The present monetary worth of benefits arising from the ownership of real estate.
The past monetary worth of benefits arising from the ownership of real estate.
The future monetary worth of benefits arising from the ownership of real estate.
Its cost value.

Answer 31

The present monetary worth of benefits arising from the ownership of real estate.

Real estate value can be determined by the present monetary worth of benefits arising from property benefits.

Question 32

Because the sale prices of the comparables are known, while the value and price of the subject are not, adjustments:

should always be exaggerated.
can be made only to the comparables’ prices, not to the subject’s.
can be made only to the subject’s prices, not to the comparables’.
always reduce the subject’s value.

Answer 32

can be made only to the comparables’ prices, not to the subject’s.

can make adjustments to comparable

Question 33

If a comparable sold for $200,000 but lacks a garage valued at $10,000, while the subject has one, the adjusted value of the comparable is

$190,000.00
$200,000.00
$210,000.00

The adjusted value of the sales comparable may be increased to $210,000.

Answer 33

$210k

The adjusted value of the sales comparable may be increased to $210,000.

Question 34

T/F: As a rule, the fewer the total number of adjustments, the smaller the adjustment amounts, and the less the total adjustment amount: the more reliable the comparable.

Answer 34

True

less adjustments, smaller adjustments, means more reliable the comparable

Question 35

If a comparable is better than the subject in some characteristic:

an amount is deducted from the sale price of the comparable.
no adjustment is necessary.
an amount is added to the sale price of the comparable.
all of the comparables must be adjusted accordingly.

Answer 35

an amount is deducted from the sale price of the comparable.

A better comparable property than the subject property may have a value amount deducted from the sales price of the comparable.

Question 36

One of the principal factors for adjustment in a CMA or sales comparison appraisal is

location of mortgage lender.
current residence of buyer.
number of occupants.
time of sale.

Answer 36

number of occupants.

time of sale.

Question 37

The process of securing a loan by pledging a property without giving up ownership of the property is called ______

Answer 37

Hypothecation

The process of securing a loan by pledging a property without giving up ownership of the property is called hypothecation.

Question 38

A _____ conveys title to the property in question from the borrower (trustor) to a trustee as security for the loan

Answer 38

Deed of trust

A deed of trust conveys title to the property in question from the borrower (trustor) to a trustee as security for the loan

Question 39

T/F: Then lender of a promissory note is the “payee”

Answer 39

True

The lender is the payee.

Question 40

After a mortgage note has been paid in full, the lender must execute a document called a

Answer 40

Satisfaction of mortgage

After a mortgage note has been paid in full, the lender must execute a document called a satisfaction of mortgage.

Question 41

T/F: Within a deed of trust transactions, the trustor/borrower conveys the title to a third party trustee who has the most control of the trust deed up until the loan in paid off in full to the beneficiary/lender.

Answer 41

True

Within a deed of trust transactions, the trustor / borrower conveys the title to a third party trustee who has the most control of the trust deed up until the loan in paid off in full to the beneficiary / lender.

At that point, the deed will be reconveyed or transferred back to the owner.

Question 42

Ginnie Mae operates by:

purchasing mortgages from conventional lenders.
guaranteeing to lenders that monthly payments on mortgage loans will be made.
issuing conventional mortgage loans.
selling insurance to the FHA.

Answer 42

guaranteeing to lenders that monthly payments on mortgage loans will be made.

Ginnie Mae is one of the main secondary market investors. They help guarantee to lenders that monthly mortgage payments will be made on time by the borrowers as they work to minimize or spread the risk by “pooling” mortgage loans with other larger loan packages.

Question 43

Freddie Mac issues securities known as _____

Answer 43

Guaranteed Mortgage Certificates.

Question 44

T/F: Fannie mae is the primary market’s largest investor

Answer 44

False

Secondary market investor

Fannie Mae is the largest secondary market investor. They purchase loans from the primary mortgage market after they are funded by banks and others.

Question 45

T/F: A “Satisfaction piece” is a document executed by a lender as evidence that a loan has been repaid in full.

Answer 45

True

A document executed by a lender as evidence that a loan has been repaid in full.

Question 46

When financial institutions use funds from depositors to make mortgage loans, the process is called

interference.
syndication.
intermediation.
disintermediation.

Answer 46

intermediation.

This process is known as intermediation. The bank is effectively the “middleman” who moves money from one customer to another one.

Question 47

What kind of mortgage allows the lender to change the interest rate at specified intervals and by a specified amount.

Answer 47

An Adjustable Rate Mortgage

Question 48

T/F: The Federal Housing Administration (FHA) lends money

Answer 48

False

The Federal Housing Administration (FHA) does not lend money, but insures permanent long-term loans made by others.

Question 49

T/F: For VA-Guaranteed Loans, the VA reimburses the lender for losses up to the guaranteed amount if foreclosure sale proceeds fail to cover the loan balance.

Answer 49

True

VA reimburses the lender for losses up to the guaranteed amount if foreclosure sale proceeds fail to cover the loan balance.