CA Real Finance Flashcards

Terms Definitions
Chapter 6
Chapter 6
Chapter 10
chapter 10
FHA stands for?
Federal Housing Administration
Truth-in-Lending
The Federal Reserve Boards "Regulation Z"" which requires disclosure of certain loan terms to the borrower" before the obligation is effective. "
the relationship which is created whenon person authorizes another to act on his behalf, is called
agency
What government agency insures deposits made to commercial banks?
 
a. FDIC
b. REIT
c. FIRREA
d. OTS
a. FDIC
which of the following organizatins has the responsibilty of identifying special flood hazard areas
FEMA
for self contained apprasial reports, information must be
described
the sales associate, affiliated with a broker, who brings about a sale is paid by the
broker
Hypothecation
describes the pledging of property as security payment of the loan without surrendering the property
Banks borrow money from the Federal [email protected]___________ rates
Discount
The lender is the
 
a. Trustor
b. Trustee
c. Beneficiary
d. Both A and C
c. Beneficiary
Another term for personal property is
 
a. chattel
b. appurtenance
c. fixture
d. MARIA
a. chattel
Freddie Mac was created in
 
a. 1938
b. 1970
c. 1968
d. none of the above
b. 1970
Mortgagee
A bank or other financial institution that lends money to the borrower. The borrower is considered the mortgagor.
when subdivision and development of the subject site represents the highest and best use of the property the___method may be used
land developement
"B" and "C" paper loans are considered
sub prime loans
A freehold estate can be
sold or inherited
Developing and reporting an appraisal review is covered in
Standard 3
net operating income divided by the capitalization rate equals
value
Mortgage
1) To hypothecate as security, real property for the payment of a debt. The borrower (mortgagor) retains possession and use of the property. (2) The instrument by which real estate is hypothecated as security for the repayment of a loan.
a broker who must perform as promised in the listing conract and not depart from the principal's instructions owes the client a duty of:
faithfulness
if, in showing a property, the salesperson said, "in my opinion, this house is absolutely the greatest in the world," the salesperson
is puffing
broker commissions for the sale of real property are usually based on
selling price
interest
a charge by the lender for using money
All of the following are descriptions of land EXCEPT
 
a. lot, block and tract system
b. metes and bounds
c. U.S. government section and township survey
d. encroachment
d. encroachment
Which of the following is NOT considered a water right for a property owner?
 
a. Riparian
b. Right of appropriation
c. Littoral
d. Emblement
d. Emblement
A single person may qualify for property exemption of
 
a. $125,000
b. $250,000
c. $500,000
d. $700,000
b. $250,000
A fire insurance policy was prepaid for three years. Assume it is currently September 1, 2004 and the policy will expire November 15, 2005. The policy costs $400 per year. How much of the unused portion of the policy is left?
 
a. $521
b. $501
c. $49
d. $483
The best way to describe a construction loan is
 
a. temporary
b. permanent
c. fixed
d. variable
a. temporary
Real estate investments involve a large amount of money, agents, representatives, service providers and others to complete the transaction. Which of the following persons would not be helpful in aiding an investor in his or her transaction?
 
a. Genera
a. General contract
Property is considered
 
a. anything that can be owned
b. real
c. personal
d. All of the above
d. All of the above
Syndication
When the purchase of real estate is made primarily for investment purposes financing is often conducted by a group instead of by an individual. One person may not have sufficient capital for the purchase of the desired equity, therefore, two or more persons may join in the purchase and take title in common (trusteeships are often used). Pooling money in this fashion makes it possible for a person of limited financial means to share in the profits of a real estate investment.
the money, labor, and material are the ____ to build a property
cost
Developing and reporting a real property appraisal is covered in
Standards 1, 2
Appraisers' overvaluation of real estate help cause the
saving the loan crisis
the operating expenses ratio for incoem producing property can be calculated by dividing operating expenses by
effective gross income
while appraising in the metropolitan area which type of legal description is an appraiser most likely to encounter
recorded map system
you have been given the following home price of 160,000, 240,000, 260,000, 300, 000 what would the mean home price be for this set of homes
250,000
which method of estimating building costs is also known as the square foot method?
comparative unit method
all of the following are trypical appurtenances except
trade fixtures
Ballon Mortage
One in which the scheduled payment will not fully amortize the loan over the mortgage term. Therefore, it requires a final pay called a balloon payment, larger than the uniform payments, to fully satisfy the debt
under the fair housing law of 1968, apartment managers may discriminate against which of the following categories of people
pet owners
a rental property produces 2k month in rents and consumes $800 per month in operating expenses. the mortgage payment is $1,500 per month. for the investor, this property produces a
negative flow
Who is the "Monetary manager" in charge of the maintenance of sound credit?
The Federal reserve
Which of the following is considered back-end debt?
 
a. Car payment
b. Mortgage insurance premiums
c. Hazard insurance
d. Principal
a. Car payment
Julia bought a house for $200,000 and later sold the house for $280,000. What is the rate of profit she made on this transaction?
 
a. 40%
b. 140%
c. 71%
d. None of the above
a. 40%
What economic principle directly or indirectly affects real estate?
 
a. Interest
b. Soft Money
c. Hard Money
d. Supply and Demand
d. Supply and Demand
Thrifts include all of the following except
 
a. Credit Unions
b. insurance companies
c. Mutual savings banks
d. Savings and Loan Associations
b. insurance companies
Who renders an opinion of title's condition based on the abstract report?
 
a. An attorney
b. A judge
c. The California Department of Real Estate
d. California Association of Realtors
a. An attorney
The state agency handling securities transactions is called the
 
a. Department of Banking
b. Department of Corporations (DOC)
c. Office of Real Estate Appraisers (OREA)
d. Department of Insurance
b. Department of Corporations
An appraiser is required to take continuing education classes every
 
a. year
b. 2 years
c. 3 years
d. 4 years
d. 4 years
Purchase Money Mortgage
Deed of trust, mortgage or land contract given to the seller to secure payment of the balance of the purchase price or a deed of trust, mortgage or land contract on an owner-occupied dwelling of four units or less, given to a lender to secure repayment of a loan that was used to purchase the property.
Savings and Loan Associations
Established to promote "thrift" and home ownership by loaning out the depositors' deposits, in the form of residential home mortgages.
Secondary Mortgage Market
Market place for the sale and purchase of existing trust deeds and mortgages. See also FNMA, GNMA, FHLMC, etc.
which of the following is not a license level
residential license
____ is the idea that the sales prices of the comparables chosen for the appraisal should not all be higher than the value of the subject property nor should they wll be lower
bracketing
a property manager lives on the property free of charge, which type of leasehold is there
estate at will
which of the following is not a common type of surface coating
vinyl
the band of investment method is used to determine the
capalization rate
Conventional Loan
A loan made with real estate as security, and not involving government participation in the form of insuring (FHA) or guaranteeing (VA) the loan. The lender (institution or private party) looks solely to the credit of the borrower and the security of the property to assure payment of the debt.
licensees must provide written disclosure of their agency representation to customers and clients:
during or immediately following the first significant contract
What are Community Development Block Grants used for?
Helps communities with economic developments and job opportunities & Housing rehabs
Which of the following can be foreclosed on by either judicial action or by a trustee's sale?
 
a. Trust deed only
b. Mortgage only
c. Both A and B
d. Neither A nor B
a. Trust deed only
Which one of the following examples is not considered a fixture?
 
a. Ceiling fan
b. Space heater
c. Custom-made window coverings
d. Dishwasher
b. Space heater
Which of the following mortgage types best describes a loan similar to the wrap-around loan or all-inclusive trust deed?
 
a. Graduated payment adjustable mortgage
b. Rollover mortgage
c. Shared appreciation mortgage
d. Contract of Sale
d. Contract of Sale
Open-end loans are ideal for
 
a. builders or construction companies
b. farmers
c. investors
d. both A and B
d. both A and B
Which one of the following is NOT one of the forces affecting value of property?
 
a. Economic influences?
b. Political regulations
c. Environmental and physical conditions
d. Scarcity
d. Scarcity
Which one of the following loan types is not allowed when using a VA guaranteed loan?
 
a. Fixed-term
b. Seller-financed loan
c. Adjustable-rate mortgage
d. Graduated payment mortgage
b. Seller-financed loan
Coinsurance differs from partial coverage insurance in what way?
 
a. No difference in coverage, just variations in policy requirements
b. Partial coverage covers a percentage of loss; coinsurance covers both a portion of loss and a part of loss incur
b. Partial coverage covers a percentage of loss; coinsurance covers both a portion of loss and a part of loss incurred beyond the insured amount
Fannie Mae is able to maintain the flow of funds available for the purchase of mortgage loans from the private market by issuing
 
a. bonds
b. stocks
c. mortgage-backed securities
d. none of the above
 
c. mortgage-backed securities
Land Contract
A contract for the sale of real or personal property in which possession is delivered to the buyer, title to remain vested in the seller until all the conditions of the contract have been fulfilled. (See CONDITIONAL SALES CONTRACT)
an outmoded room layout in a home is an example of
functional obsolesence
which of the following is not a type of depreciation
accelerated depreciation
in regard to real estate, transferability refers most directly to
the rights associated with ownership
Good Faith Estimate
Any act done with honest intent. Bona Fide.
Land Contract
A contract for the sale of real or personal property in which possession is delivered to the buyer, title to remain vested in the seller until all the conditions of the contract have been fulfilled. (See CONDITIONAL SALES CONTRACT)
Loan origination fee
a fee charged to the borrower by the lender for making a mortgage loan..usually a % of the loan
Of the four methods used to estimate the cost of a new building, which is the most detailed account of the value?
 
a. Square-foot method
b. Index method
c. Unit-in-place cost method
d. Quantity survey method
c. Unit-in-place cost method
Loans which allow a borrower to secure additional funds from a lender under the terms of an original note are called
 
a. open-end loans
b. construction loans
c. blanket loans
d. all of above
d. all of above
A judicial foreclosure is used in which of the following situations?
 
a. Trust deeds
b. Mortgages
c. Both A and B
d. Neither A nor B
c. Both A and B
Which of the following loans would be exempt from Regulation Z requirements?
 
a. A loan made for more $25,000 secured by real property
b. A non-secured residential loan for under $25,000
c. An agricultural loan
d. None of the above
c. An agricultural loan
Due on Sale Clause
Provision in a mortgage or deed of trust allowing the lender to demand immediate payment of the loan balance upon sale of the property. See ALIENATION CLAUSE.
when reconciling the appraiser should
analyze all relevant data to detemine a final value based on the applicable appraisal approaches
Prepayment Privilage
The right a debtor has to pay off all, or a part of, the debt, without a penalty or fee being charged, before the debt becomes due.
the amount of commission to be paid the broker for selling a property is
stated in the listing contract
Name the 5 different types of loans
1. Conventional2. FHA3. VA4 Owner financing 5. USDA
If a seller finances a junior trust deed to the buyer of his or her property, what options does the buyer have regarding the loan?
 
a. He or she may carry the note until it is paid in full
b. He or she may sell the note at a discounted rate to a mort
d. Both A and B
A person who purchases property at a trustee's sale will receive what kind of deed?
 
a. Sheriff's deed
b. Certificate of sale
c. Trust deed
d. Both A and B
d. Both A and B
Which of the following is considered a non-financial institution?
 
a. Universities
b. Trust departments of banks or mortgage investment companies
c. Title company
d. All of the above
d. All of the above
which type of legal description refers to subdivision map
the lot, block, and tract system
whichof the following would be considered an example of improvements
a retail building that has been permanently attached to the land
the mission of the Appraisal subcommittee is
ensure that real estate appraisers are sufficently trained and tested
disclosure to the customer of which of the following would NOT require the informed consent of the client
the client's financial inability to perform if the offer is accepted
What is an open end loan?
secures a note executed by the borrow to the lenderinterest rate is fixed, but interest on future advances charged at market rate
How much does a bank have to keep in reserve?
3%of what is deposited
What are the two types of freehold estates?
 
a. Fee simple and Life Estate
b. Absolute and Qualified
c. Defeasible and Life Estate
d. Fee Simple and Leasehold Estate
a. Fee simple and Life Estate
Which best describes the appraisal process?
 
a. Appraisal is a mathematical science by which the appraiser determines the exact dollar amount a property is worth
b. Appraisal is the process by which the appraiser arrives at an estimate of the propert
b. Appraisal is the process by which the appraiser arrives at an estimate of the property's present worth
Regarding age, which of the following is a false statement?
 
a. The creditor may favor candidates 62 or older based on a credit-scoring system
b. A creditor may favor candidates under 35 based on a credit-scoring system
c. The borrower is too young
b. A creditor may favor candidates under 35 based on a credit-scoring system
a metes and bounds description of land starts at
a well marked point of beginning
the purpose of a trust account is to
hold money belonging to clients and customers
if o'malley deeds property to o'halloran on the condition that no englishmen live there, what is the status of the deed
the deed is valid but the condition is unenforcable
Which of the following is a false statement?
 
a. Creditors must include public assistance as valid income
b. Creditors must include retirement or pension as valid income
c. Creditors may exclude alimony or child support as valid income
d. Creditors
c. Creditors may exclude alimony or child support as valid income
the availablity of high paying jobs in an area tends to
have a positive effect on property value in that area
which of the following is the correct formula for interst
interest = principal x rate x time
a real estate broker had a while couple interested in one of his listings but he inflated the price in talking to them and they did not make an offer. later, the broker solicited an offer from a black couple and induced them to offer less than the listed
yes, and the white couple could seek judicial recourse
Sellers who finance a buyer with a wrap-around loan typically do which of the following?
 
a. Carry back a note on the property
b. Charge the buyer a higher interest rate then he or she currently pays on the original trust deed
c. Collect the money d
b. Charge the buyer a higher interest rate then he or she currently pays on the original trust deed
an agent, in the couse of listing a property, was told by the seller that he would not sell to persons of a certain race. the agent should
refuse to take the listing with that exception
In reference to a life estate, a measuring life is
 
a. The life duration of the grantor of the life estate
b. The life duration of the person on whose life the estate is based
c. A life estate in reversion
d. None of the above
b. The life duration of the person on whose life the estate is based
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