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Real Estate Exam > Ch 40 - 56 > Flashcards

Ch 40 - 56 Flashcards

1
Q

A permanent long-term mortgage loan that is not government-backed is a

personal loan.
conventional loan.
primary loan.
commercial loan.

A

conventional loan.

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2
Q

To be eligible for an FHA-insured loan, a property must be

no more than ten years old.
built by FHA-approved contractors.
under 2500 square feet in living area.
appraised by an FHA-approved appraiser.

A

appraised by an FHA-approved appraiser.

appraised by an FHA-approved appraiser.

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3
Q

Norm is buying a furnished condo in Chicago. Which type of mortgage is specifically designed for property and contents?

All Inclusive Mortgage
Package Mortgage
Short Sale Mortgage
Wrapped Mortgage

A

Package Mortgage

Package mortgage is best

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4
Q

Loan ____ is the lender’s process of assessing risk in giving a loan

A

Underwriting

Loan underwriting is the lender’s process of assessing risk in giving a loan

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5
Q

The ____ ratio establishes borrowing capacity by limiting the percent of gross income a borrower may spend on housing costs.

A

Income ratio

The income ratio establishes borrowing capacity by limiting the percent of gross income a borrower may spend on housing costs.

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6
Q

A _____ rate guarantees the borrower a specific loan rate for a specific amount of time like 5 or 10 days for so long as they fund during that same time period.

A

Lock in

A “lock-in” rate guarantees the borrower a specific loan rate for a specific amount of time like 5 or 10 days for so long as they fund during that same time period.

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7
Q

The Equal Credit Opportunity Act protects against discrimination in all of the following areas EXCEPT

physical handicap.
religion.
age.
color.

A

physical handicap.

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8
Q

RESPA requires that a lender, within three days of receiving the loan application, must give a borrower

a HUD Uniform Settlement Statement.
an itemized bill for all settlement costs.
a Loan Estimate form.
a copy of the full text of the law.

A

a Loan Estimate form.

Lender must give loan estimate form within 3 days

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9
Q

What does a demand feature mean in a mortgage loan?

A demand feature would not allow the lender to require early repayment.
A demand feature would allow the lender to require early repayment.
A demand feature would allow the borrower to make an early repayment with a penalty.
A demand feature would allow the borrower to shorten the life of the loan by making double monthly payments.

A

A demand feature would allow the lender to require early repayment.

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10
Q

What is typically deposited into a mortgage loan escrow account?

Out-of-pocket money to be paid by the buyer at closing
Money held for certain future payments, such as insurance and taxes
Money required to pay for broker compensation.
Money for loan service fees

A

Money held for certain future payments, such as insurance and taxes

Money that is held or impounded in a loan escrow account can be used to make property tax and homeowners insurance payments.

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11
Q

Which of the following statements best describes the term “consummation” as defined under Regulation Z?

The time that a consumer becomes contractually obligated on a credit transaction
The window of time that a consumer has to a accept or reject a credit transaction
The amount of time that a mortgage loan is viable
Three business days prior to acceptance of the loan

A

The time that a consumer becomes contractually obligated on a credit transaction

“Consummation” is the time when a consumer becomes contractually obligated to start making future payments on a loan.

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12
Q

On a mortgage Loan Estimate, how are loan amounts and interest rates that might be changed after the closing indicated?

Check marks
Fill in the blanks
Yes or no statements
Plus or minus marks

A

Yes or no statements

The potential loan amount and interest rate changes are indicated by “yes” or “no” statements.

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13
Q

In what type of foreclosure does a lender give a borrower a notice of default in a form prescribed by the state?

Judicial foreclosure
Strict foreclosure
Standard foreclosure
Non-judicial foreclosure

A

Non-judicial foreclosure

The notice of default is the official starting point for a non-judicial foreclosure that’s generally handled outside of a courtroom.

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14
Q

T/F: If a bankruptcy proceeding begins before a foreclosure proceeding, the foreclosure proceeding is delayed until completion of the bankruptcy process.

A

The foreclosure action will be stayed, or delayed, until the completion of the bankruptcy filing and discharge.

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15
Q

In what type of foreclosure is the lender required to file suit asking a court to order the borrower to pay the mortgage debt by a certain date or the lender will automatically gain full title to the property?

Standard
Judicial
Strict
Non-judicial

A

Strict

A lender would be required to file a Strict foreclosure action.

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16
Q

Does a deed in lieu of foreclosure require public notice?

A

No

It avoids public notice of the foreclosure.

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17
Q

T/F: Statutory Right of Redemption is the right of a defaulted property owner to recover the property after the sale.

A

True

The right of a defaulted property owner to recover the property after the sale.

18
Q

T/F: When a notice of reinstatement occurs, the lender must dismiss the suit and continue the mortgage.

A

True

dismiss suit and continue mortgage

19
Q

T/F: A court proceeding, directly or indirectly, is required in most Illinois foreclosure actions.

A

True

A court proceeding, directly or indirectly, is required in most Illinois foreclosure actions.

20
Q

T/F: The first step in a judicial foreclosure is

acceleration of the loan (demand mortgage paid in full)

A

True

Step #1 is the acceleration of the loan, or when the lender demands that entire unpaid mortgage balance is to be paid in full by the borrower.

21
Q

Would annual income be included in a consumers credit report

A

No

The consumer’s annual income would not be listed in their credit reports.

22
Q

When a seller signs a listing agreement, who are the actual contract parties?

Seller and Licensee
Seller and MLS Association
Broker and Licensee
Seller and Managing Broker

A

Seller and Managing Broker

Seller and managing broker are two contract parties

23
Q

T/F: With an Exclusive Right to Sell agreement, even if the owner sells the house himself, the agent still gets paid.

A

True

The Exclusive Right to Sell agreement gives the most protection to a licensee. Even if the owner sells the home by himself, the listing agent still gets paid.

24
Q

Can either party enforce a void contract?

A

No

A void contract is an agreement that does not meet the tests for validity, and therefore is no contract at all. If a contract is void, neither party can enforce it.

25
Q

T/F: A valid contract is either enforceable (legal) or unenforceable (illegal and void)

A

True

A valid contract is either enforceable (legal) or unenforceable (illegal and void)

26
Q

A sponsoring broker must keep all escrow records for ________ years

A

5 years

The escrow records must be kept and stored for at least 5 years.

27
Q

When a broker makes a change to an escrow account, what action must be taken?

Broker must inform the county Clerk of the change.
Broker must tell all pending transaction holders of the change.
Broker must submit the change to the Real Estate Division of IDFPR.
Broker must inform all office licensees of the change.

A

Broker must submit the change to the Real Estate Division of IDFPR.

The broker must submit the change notice to the IDFPR.

28
Q

John a sponsoring broker may transfer escrow monies needed for a particular closing to that transaction’s closing agent up to ____ business days prior to the scheduled closing date.

A

2 business days

Escrow funds must be transferred no later than two (2) business days before the closing date.

29
Q

What is the legal requirement regarding the number of escrow accounts that can be opened?

A

There is no legal limit.

There is no legal limit in regard to the number of open escrow accounts.

30
Q

Which of the following statements are TRUE regarding earnest money?

Must be in the form of cash or a check.
Earnest money is required with all contract offers
Personal property can be offered as an earnest deposit.
Earnest money is also known as evidence trust account money.

A

Personal property can be offered as an earnest deposit.

Personal property, or other items of value, may be offered as an earnest deposit.

31
Q

If any dispute between the parties arises regarding the deposited escrow money, the sponsoring broker should _________.

Always refund the money to the first party who formally request the return of the funds.
Split the monies in thirds, one third to the buyers, one third to the sellers, and one third to the sponsoring broker.
Place the monies in an escrow account titled “Contested Escrow Funds Fiduciary Account” (CEFFA) which must be non-interest bearing.
Not release the money without a written release from both parties or both parties’ duly authorized agents (power of attorney or attorney at law).

A

Not release the money without a written release from both parties or both parties’ duly authorized agents (power of attorney or attorney at law).

The funds should not be released without full written releases from both parties.

32
Q

Which of these statements about purchase offers is true?

The offer must be in writing, but the acceptance can be oral.
The offer can be oral, but the acceptance must include all of the terms in writing.
Both the offer and the acceptance must be in writing to be binding
Neither offer nor acceptance must be in writing, but the deed for title transfer must be in writing.

A

Both the offer and the acceptance must be in writing to be binding

To be most effective, both the offer and acceptance must be in writing for these contracts to be binding and truly enforceable.

33
Q

Which document itemizes the estimated taxes, insurance premiums, and other charges anticipated to be paid from the Escrow Account during the first twelve months of the loan?

Initial Escrow Statement
Escrow Debit Statement
List of Accounts
Itemized Escrow Accounts Payable

A

Initial Escrow Statement

The completed Initial Escrow Statement is provided to assist parties with clearly identifying the estimated taxes, insurance, and other charges for the transaction.

34
Q

What document must be completed by a creditor if a mortgage loan is assigned to another loan service?

Servicing Transfer Statement
Service Agreement
Agreement of Service
Transfer of Loan Balance Agreement

A

Servicing Transfer Statement

The creditor or lender would sign the Servicing Transfer Statement before assigning or selling off the loan to another party for loan servicing.

35
Q

A type of lease when the tenant pays for the taxes, insurance, maintenance and repairs is called what?

Simple Lease
Triple Net Lease
Quad Lease
Expense Lease

A

Triple Net Lease

This is a Triple Net Lease example that’s typically found with prime commercial properties in desirable urban regions.

36
Q

Which kind of lease has no time limit?

Estate for years

Estate from period to period
Estate at sufferance

A

Estate at will

An Estate at will has no time limit for so long as it continues to be mutually agreed to by the landlord and tenant.

37
Q

Which of the following summarizes the general terms of a ground lease?

The landlord sells the ground to another, then leases it back.
A tenant buys the landlord’s ground, then leases the improvements.
The landlord leases the ground floor of the building to a commercial tenant.
The tenant leases the ground from the landlord.

A

The tenant leases the ground from the landlord.

The tenant leases the ground from the landlord in ground lease

38
Q

Who may file for a constructive eviction?

The Landlord
The Courts

The Tenant’s Neighbors.

A

The Tenant

It is the tenant who can file for constructive eviction due to issues related to things like the landlord not keeping the property in good shape

39
Q

T/F: With a sublease agreement, the original tenant is still primarily liable for the timely payments even if they’ve moved out.

A

True

With a sublease agreement, the original tenant is still primarily liable for the timely payments even if they’ve moved out.

40
Q 
A tenant living in cooperative owned housing, would hold what type of lease?
Index Lease
Branch Lease
Shared Lease
Proprietary Lease

The tenant would hold a Proprietary Lease in a cooperative unit. A co-op unit is owned by a corporation that is held by individuals with corporation shares in their entire building.

A

Proprietary Lease

The tenant would hold a Proprietary Lease in a cooperative unit. A co-op unit is owned by a corporation that is held by individuals with corporation shares in their entire building.

41
Q

What method is used to remove a tenant who is in default in paying rent?

Foreclosure
Condemnation
Lock out
Suit for eviction

A

Suit for eviction

A Suit for eviction is used to remove a defaulted tenant.

42
Q

Which of the following must a broker legally provide to an employee?

Pension plan
Unemployment insurance
Health insurance
Sales commission

A

unemployment insurance

The employer must provide his or her employees with unemployment insurance benefit options.

Real Estate Exam (26 decks)

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