REE3043 Fall 2019 Exam 2 Practice Without Answers.pdf - REE 3043 Real Estate Analysis Practice Exam 2 Fall 2019 1 a b c d e 2 a b c d e 3 a b c d e 4 a

REE3043 Fall 2019 Exam 2 Practice Without Answers.pdf - REE...

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Unformatted text preview: REE 3043 Real Estate Analysis Practice Exam 2 Fall 2019 1. a. b. c. d. e. 2. a. b. c. d. e. 3. a. b. c. d. e. 4. a. b. c. d. e. 5. a. b. c. d. e. A parcel of raw land consists of 1.5 acres. How many square feet are in this parcel? 62,925 63,450 64,750 65,340 66,210 An example of a violation of the Statute of Frauds occurs when a seller makes an oral agreement to sell her home to a buyer. grantor does not willingly sign the deed. deed is not recorded in public records. deed fails to include a “seizen” clause. grantee is not competent. A neighbor noticed someone moving into the house next door, which was rumored to have recently sold. She asked they guy moving in if he was the new owner, to which he replied, “Yep; just closed this afternoon!” According the example given in the lecture, this illustrates what type of notice? tangible notice presumptive notice demonstrable notice constructive notice actual notice A deed in which no claim of ownership is given or implied is a deed in lieu. quitclaim deed. bargain and sale deed. general warranty deed. special warranty deed. Mary owns property that abuts a lake. Her actual property boundary lines extend 30 feet into the lake from the shoreline. A sinkhole developed under the lake and caused about 80% of the water to recede from the original shoreline. The process of the water receding and, thus, uncovering additional land that Mary can now use is referred to as accretion alluvion agglomeration detritus reliction 6. Betty bought her home prior to marrying Bob. Their marriage produced three lovely children; Sally, Suzie and Sandi, whose ages are 11, 14 and 17, respectively. Sadly, Betty died. According to Florida’s constitutional homestead laws as discussed in the lectures, what type of ownership interest will convey to her surviving spouse, Bob? a. fee simple b. estate in severalty c. remainder estate d. life estate e. estate by the entireties 7. Which defines the type of interest in real property that is being conveyed? a. habendum clause b. covenant of siezen c. covenant of quiet enjoyment d. covenant of warranty forever e. granting clause 8. Jonny rented an apartment for one year under a written lease, which has subsequently expired. But Jonny remains in the apartment and faithfully sends a rent check on the first of every month to the landlord. Although the landlord has had no communication with Jonny about continuing to rent the apartment, the landlord cashes the check each month, like clockwork! According to this example scenario provided in the lecture, Jonny would be considered a. a squatter b. an adverse possessor c. a hold‐over tenant d. a tenant by estoppel e. an implied tenant 9. Typically, to which does the “rule of capture” apply? a. ground water from the aquifer b. natural gas c. coal deposits d. a subterranean vein of gold e. all of the above 10. Paula entered into a written lease agreement that outlined these specific terms: Address of the property and unit number, the move‐in date, amount of rent due, on what day of the month the rent was due, penalties for late rent payments and which numbered parking space she could use. The landlord and tenant both signed the lease agreement. What type of tenancy has been created? a. tenancy for years b. periodic tenancy c. tenancy by the entirety d. tenancy in gross e. hold‐over tenancy 11. The largest area of measure in the government rectangular survey method is a. an acre b. a hectare c. a check d. a township e. a section 12. Which is an example of a non‐freehold estate? a. fee simple b. estate in severalty c. life estate d. tenancy by the entirety e. tenancy for years 13. Which helps to ensure that a deed was voluntarily signed and conveyed by the grantor and voluntarily accepted by the grantee? a. granting clause b. reservations clause c. acknowledgement d. recordation in public records e. habendum clause 14. Which section is located due south of section 1? a. 2 b. 6 c. 7 d. 10 e. 12 15. A parcel described as “the NW ¼ of the SW ¼ of the NW ¼ and the N ½ of the SW ¼ of section 22” contains how many acres? a. 120 acres b. 90 acres c. 80 acres d. 2.5 acres e. 1.75 acres 16. Which is an example of a trade fixture? a. a fence erected on land leased by a cattle rancher b. a built‐in microwave installed by a barber shop tenant in the break room c. travertine floor tile installed by a restaurant tenant in a small retail strip center d. a hard‐wired ceiling fan installed in the bedroom by an apartment tenant e. a new sink and toilet installed in the bathroom of a beauty salon, installed by the salon’s owner 17. A common provision in about 25 states that provides for a minimum one‐third share in the non‐ homestead real property a deceased spouse is known as a. a dower share b. an elective share c. a courtesy share d. community property share e. separate property share 18. Mr. Cartwright gives Buddy permission to hunt wild game on his land, but restricts this activity to a specific ten‐acre area of Mr. Cartwright’s land. This is an example of a. a conditional easement b. a patent c. a limited interest d. a license e. a revocable easement 19. The method of land description that relies on compass directions and distance is a. subdivision lot and block b. metes and bounds c. government survey system 20. A loan in which the amortization period is longer than the term is a(n) _________________ mortgage. a. balloon b. non‐amortizing c. Option ARM d. non‐conforming e. interest‐only 21. Given the “Three C’s” of underwriting, which considers a borrower’s payment ratios? a. credit score b. capacity c. creditworthiness d. collateral 22. Calculate the maximum loan amount for which JoAnne could qualify given the following information (select the closest answer): Front end ratio: 29% Back end ratio: 43% GMI: $6,500 LTV: 90% Note rate: 5% Term: 30 years Pmt interval: Monthly Annual property taxes: $1,500 Annual hazard insurance: $1,140 a. $310,150 b. $326,200 c. $351,140 d. $367,350 e. $479,675 23. The primary function of the secondary mortgage market is to _____________________ for the primary mortgage market. a. provide standardization b. provide securitization c. provide liquidity d. provide competition e. regulate interest rates 24. What federal legislation was passed recently to regulate the practices of Wall Street in an effort to prevent another financial crisis? a. Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) b. the Real Estate Settlement Procedures Act (RESPA) c. the Depository Institutions Deregulation and Monetary Control Act (DIDMCA) d. Gramm‐Leach‐Bliley Act e. Dodd‐Frank Act 25. A lender originates a mortgage with a fixed note rate of 7%. From the time the mortgage was originated to the time it is ready to be sold, interest rates have gone down. Given this change in market interest rates, this loan should sell a. at a discount b. at the stated note rate c. at a premium 26. Which of the following is most exposed (sensitive) to “pipeline risk?” a. mortgage broker b. credit union c. commercial bank d. mortgage banker e. thrift 27. Which loan type creates the greatest risk for negative amortization for the borrower? a. ARM b. Option ARM c. Hybrid ARM d. I‐O with Balloon e. Reverse Mortgage 28. Jane has the opportunity to refinance her current 30‐year home mortgage with a new, lower rate 30‐year mortgage (both mortgages are fixed‐rate.) Her current mortgage has a balance of $350,000 with monthly P&I payments of $2,098.43. She can refinance the current mortgage balance with the new mortgage carrying the lower note rate, provided she pays two discount points upfront and loan refinancing costs of $2,600. She plans on staying in the home for at least 5 more years. By how much would her monthly P&I payment have to be reduced for her to at least break even on the decision to refinance? (Note: Jane does not itemize deductions on her income taxes.) a. $43 b. $131 c. $154 d. $160 e. $200 29. Which describes the role of a mortgage broker? a. brings borrower and lender together for a fee b. originates loans to sell c. can retain servicing rights d. only owns loans temporarily e. actually, they can do any of the above 30. According to Chapter 10 in Ling‐Archer, private mortgage insurance protects the a. mortgagor b. mortgagee c. seller d. title company e. borrower and lender equally 31. The maximum loan amount for conforming loans on single‐family homes in the majority of the United States is a. $144,000 b. $279,000 c. $312,000 d. $417,000 e. $500,000 32. If a real estate broker is holding the buyer’s good faith deposit, that money must be held in the broker’s ______________________ until the closing. a. general office account b. operating account c. escrow account d. reserve account e. actually, any account in an approved institution is okay, as long as the broker complies with the annual reconciliation requirements 33. According to Chapter 12 in Ling‐Archer, which is NOT a fiduciary duty? a. accounting for all funds b. diligence c. loyalty d. professionalism e. confidentiality 34. In Florida, a licensee providing a value estimation to a prospective seller for the purpose of obtaining a listing of their property must refer to the value estimate as a. a “Comparative Market Analysis.” b. a “Sales Estimate of Value.” c. an “Appraisal.” d. a “Broker’s Opinion of Value.” e. a “Certified Appraisal.” 35. You bought a piece of land for $60,000. After holding it for 5 years and spending a total of $3,000 in property taxes over the holding period, you decide to sell the property. What should the property sell for if you want to earn 11%? (Round your answer down to the nearest whole dollar) a. $101,012 b. $106,158 c. $108,233 d. $109,984 e. $111,031 36. The type of listing agreement that ensures the listing broker will be paid the commission regardless of who finds the buyer for the property (including the owner), is the a. open listing b. exclusive right of sale listing c. exclusive agency listing d. net listing e. it doesn’t matter; the listing broker always gets paid a commission 37. A real estate contract has been negotiated, accepted, reduced to writing and contains the legal description, price, closing date and date of occupancy. If a dispute over a contract clause arises between the parties prior to closing, the contract may be deemed unenforceable if a judge determines that a. the considerations are not equal b. there was no meeting of the minds c. the seller is not getting a good deal d. the buyer is not getting a good deal e. the parties used a form contract instead of having an attorney draft the contract 38. Most real estate contracts will require the buyer and seller to coordinate the payment of expenses such as advance rents, property taxes, and interest on assumed loans between them. Splitting these types of expenses appropriately between the buyer and seller is called a. allocating b. prorating c. apportioning d. proportioning e. partitioning 39. Mary is buying John’s house and the closing is set for July 22nd. This year’s property taxes are expected to be $7,400. If the day of closing belongs to the buyer and this is a non‐leap year, the closing agent will a. debit seller $3,264.11; credit buyer $3,264.11. b. debit seller $3,264.11; credit buyer $4,135.89. c. debit seller $3,284.38; credit buyer $3,284.38. d. debit seller $4,115.62; credit buyer $4,115.62 e. none of the above 40. One of the main differences between residential mortgage loans and permanent financing of commercial real estate lies in the allocation of liability in the case of default. In commercial real estate, a “bankruptcy remote” special‐purpose entity is created that shields the actual borrower from personal liability. When a lender cannot lay claim to the personal assets of the defaulted borrower, this type of loan is commonly referred to as a: A. nonrecourse loan B. mini‐perm loan C. partially amortizing loan D. interest‐only loan 41. Some commercial mortgages have adjustable, or floating, interest rates. The index rate to which the contract rate is tied is typically which of the following for commercial mortgages? A. The yield on a constant maturity Treasury security of the same term B. The cost of funds index (COFI) C. The London Interbank Offer Rate (LIBOR) D. The interest rate on a comparable maturity level‐payment mortgage 42. If mortgage rates decline significantly, borrowers may decide to prepay the principal on their loan even if they face prepayment penalties. One way that lenders protect themselves from prepayments in such circumstances is by requiring the borrower who prepays to purchase for the lender a set of U.S. Treasury securities whose coupon payments replicate the cash flows the lender will lose as a result of the early retirement of the mortgage. This process is referred to as: A. Lockout B. Yield‐maintenance C. Defeasance D. Curtailment 43. The yields on commercial mortgages have been approximately 2 percent higher, on average, than the yields on comparable maturity treasury securities over the past 15 years. Often considered the signature risk of commercial mortgage lending, this spread primarily represents: A. Default risk B. Interest rate risk C. Pipeline risk D. Fallout risk 44. The use of financial leverage by real estate investors can be a double‐edged sword. All of the following statements regarding the use of financial leverage by real estate investors are true EXCEPT: A. The use of financial leverage by real estate investors mitigates the impact that limited financial resources would otherwise have on their pursuit of investment opportunities. B. The use of financial leverage by real estate investors will increase the internal rate of return (IRR) on equity as long as the cost of borrowing is less than the unlevered IRR. C. The use of financial leverage reduces the real estate investor’s exposure to default risk. D. The use of financial leverage by real estate investors makes the realized return on equity more sensitive to changes in rental rates and resale values. 45. Relative to residential loans, the underwriting process for commercial loans is more complicated. The commercial loan underwriting process focuses first on which of the following? A. Individual borrower’s credit quality B. Income producing potential of the collateral property C. Individual borrower’s wages D. Individual borrower’s personal assets 46. Real estate private equity funds can focus investment on anything from “Class A” real estate to redevelopment in the urban center. On the risk‐return spectrum, which of the following private equity fund categories tends to have a heavier development component and often involves investment in riskier property types and locations? A. Core B. Value Added C. Opportunistic D. Full platform 47. A group of persons or legal entities who come together to carry out a particular activity are more commonly referred to as a: A. Syndicate B. Security C. Trust D. Broker 48. All of the following constitute indirect ownership of real estate private equity EXCEPT: A. limited partnership B. limited liability company C. tenancy in common D. real estate investment trust 49. When fund managers collect contributions from multiple sources and “commingle” them to purchase properties, this is referred to as the use of commingled real estate funds. Which of the following institutional investors utilize commingled real estate funds for approximately one‐half of their investments in real estate? A. Investment banks B. Life insurance companies C. Real estate advisory firms D. Pension funds 50. The choice of ownership form for pooled equity investments depends heavily on federal tax considerations. Which of the following ownership structures suffers from the major disadvantage of double taxation? A. C Corporation B. Subchapter S Corporation C. General Partnership D. Limited Liability Company ...
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