All of the following are acceptable evidence of an owner's title EXCEPT
A. a recorded deed
To serve as public notice, where is a deed recorded?
B. the county or, in some states, the town where the property is located
5 years ago, a lien was recorded against a parcel of property by a construction company. When the lien was recorded, a man was the owner of the property and a woman was an active partner in the construction company. The property is in county A, but the lien was recorded in county B. Now, the woman is trying to buy the property from the man. A title search in county A disclosed no liens against the property. Which of the following is TRUE?
B. the woman has actual notice of the lien but not constructive notice, because of the mistake in recording
A woman purchased property from a man. Shortly after closing, the woman discovered that there were serious flaws in the title that made it unlikely that the property could be resold in the future. What can she do now?
B. because the woman has accepted the deed, her only recourse is to sue the man under any covenants contained in the deed
The reason that deeds and liens and other claims are recorded is to give
A. constructive notice
A history of all recorded liens and encumbrances is revealed in the
D. abstract
The person who prepares a certificate of title is the
D. abstractor
Which of the following would be covered in a standard title insurance policy?
B. forged documents
A title insurance policy that protects the interest of a mortgagee is referred to as a(n)
C. lender's policy
What is an effect of the Marketable Title Act in the states in which it has been adopted?
B. limits the time beyond which title records must be searched
States that recognize the lender as the owner of the mortgaged property are known as
C. title theory states
A document that indicates that a loan has been made is referred to as a
A. promissory note
A woman defaults on her mortgage, and the lender forecloses. The lender's foreclosure suit is filed on March 15, and the sale is to be held on May 10. If the woman attempts to redeem the property on May 1, which of the following statements applies?
A. the woman is exercising her equitable right of redemption
A house is listed for $250,000. A man buys it for $230,000, with a 20% down payment. He borrows the balance on a fixed-rate mortgage at 6%. The lender charges 4 points. If there are no other closing costs involved, how much money does the man need at closing?
B. $53,360
Calculate down payment
$230,000 x 20% = $46,000
Determine points charge
$230,000 x 80% x 4% = $7,360
Total the 2 amounts
$46,000 + $7,360 = $53,360
One afternoon, a client calls a real estate broker. "My lender just told me that my note and mortgage is negotiable instrument," says the client. "What does that mean?" Which of the following would be the broker's BEST response?
B. "Don't worry. That means the mortgage can be sold by the lender, but you're not affected."
A deed of trust involves all of the following terminology EXCEPT
B. mortgagor
One state is a lien theory state. A buyer purchases property from a seller and gives him a mortgage as part of the purchase price. Therefore, the buyer is the borrower, and the seller is the lender. All of the following statements are correct EXCEPT
C. the buyer has given legal title to the seller
Where a trust deed is used, the lender is the
A. beneficiary
A mortgage company charges borrowers as 1.5% loan origination fee. A man buys a house for $210,000 and pays $50,000 in cash. He applies for a mortgage to cover the balance. What will the mortgage company charge as a fee if the asking price of the house was $235,000?
B. $2,400
$210,000 - $50,000 x 1.5% = $2,400
A mortgage documents contains the following clause: "In the event of Borrower's default under the terms of this Agreement, Lender may declare the entire unpaid balance of the debt due and payable immediately." This clause is referred to as a(n)
C. acceleration clause
This month, a man made the last payment on a mortgage loan secured by a woman. The man's lender must execute a
A. satisfaction of mortgage
A woman took out a 30-year mortgage on a parcel of property in 1992. On April 1, 2010, her lender discovered that the property lies in a flood hazard area as defined by the National Flood Insurance Reform Act of 1994. The lender informed the woman of the situation on April 15. Based on these facts, which of the following statements is correct?
C. the woman has until May 30 to purchase flood insurance
if the lender discovers that a secured property is in a flood hazard area. The borrower has 45 days to purchase flood insurance. If the borrower does not purchase the flood insurance, the lender must purchase the insurance and charge back the cost of the insurance to the borrower.
A buyer purchases property from a seller for $45,000 in cash and assumes the seller's outstanding mortgage balance of $98,500. The lender executes a release for the seller. The buyer fails to make any mortgage payments, and the lender forecloses. At the foreclosure sale, the property is sold for $75,000. Based on these facts, who is liable and for what amount?
B. the buyer is solely liable for $23,500
All of the following statements are characteristic of a typical land contract EXCEPT
D. the vendee holds legal title during the contract term
The borrower defaulted on his mortgage loan, leaving an unpaid balance of $95,000. After receiving only $85,000 from the sale of the property, the lender filed for a
A. deficiency judgement
A woman was the owner of a parcel of property. When she defaulted on her loan, the trustee immediately sold the property to recover the debt. The trustee acted under the terms of the security instrument. Based on these facts, which of the following statements is TRUE?
C. the exercise of this power of sale clause is an example of nonjudicial foreclosure
The woman could have exercised her statutory right of redemption at any time prior to the trustee's sale of the property. The difference between the interest rate that the lender charges and what the investor demands can be made up by charging
D. discount points
What is the term that refers to a lender charging an interest rate that is higher than that permitted by law?
D. usury
Parties to lending agreements are referred to by different terms. Which of the following refers to the same party?
A. borrower = mortgagor
If the lender wants to call the entire note due and payable if the borrower stops making payments, the security instrument must include a(n)
C. acceleration clause
When a deed of trust is the security instrument, which party usually chooses the trustee?
D. the lender
What is the purpose of usury laws?
B. to protect consumers from lenders charging excessively high rates
How does an acceleration clause help lenders?
A. without the acceleration clause, lenders would have to sue the borrower for every overdue payment
What is a major disadvantage to lenders of accepting a deed in lieu of foreclosure?
B. the lender takes the real estate subject to all junior liens
All of the following are roles of the Federal Reserve System EXCEPT
A. make direct loans to buyers
A lender who collects payments, processes them, and follows up on loan delinquencies is said to
B. service the loan
The primary mortgage market lenders that have most recently branched out into making mortgage loans are
A. credit unions
What is the kind of real estate loan in which the interest rate is tied to the movement of an objective economic indicator?
A. adjustable-rate payment
The loan in which equal payments reduce the full amount of principal and interest to zero is a(n)
B. amortized loan
The borrower who chooses an adjustable-rate mortgage can depend on the margin to
B. remain constant for the life of the loan
To qualify for most conventional loans, the borrower's monthly housing expenses and total other monthly obligations cannot exceed what percent of the total gross monthly income?
C. 36%
What does private mortgage insurance cover?
A. protects the top 20% to 30% of the loan against borrower default
Regulation Z generally applies to
A. a credit transaction secured by a residence
Who is responsible for paying the broker or the broker's salesperson when one of them uses a computerized loan origination system to take the loan application from a borrower?
D. the borrower
A man's monthly mortgage payment is $665.50. The interest rate on the amortized loan is 6%, and the outstanding balance is $111,000. When the man makes this month's payment, what amount of the total payment will be applied to interest, and what amount to principal?
B. $555 interest; $110.50 principal
$111,000 x 6% ÷ 12 = $555 monthly interest
$665.50 - $555 = $110.50 principal
All of the following are lenders in the primary mortgage market EXCEPT
B. mortgage brokers
On loans originated after July 1999, when must a lender automatically terminate private mortgage insurance?
B. when the borrower has accumulated at least 22% equity and is current on payments
A house had a sale price of $240,000. The buyer obtained a loan for $220,000. If the lender charges 3 points, how much will the buyer pay in points?
D. $6,600
$220,000 x 6% = $6,600
On which type of loan can the borrower prepay without penalty?
D. all of the above
Under the terms of a man's adjustable-rate mortgage, the interest rate he must pay is (1) the US Treasury bill rate as of June 1 of each year, not to exceed 8.95% for any period; plus (2) 1.5 %. What is the term used to describe (2)?
A. margin
A woman bought a home. The asking price for the home was $585,000; the woman offered $565,000 and the seller accepted. The appraised value of the home is $560,000. The woman plan to pay $94,000 in cash and take out a mortgage for the remainder. What is the LTV ratio for this property?
A. 84%
A buyer is purchasing property from a seller. The seller bought the property on December 20, 1989, with an FHA loan and has lived there ever since. Because of its favorable terms, the buyer would like to assume the seller's mortgage. Is this possible?
C. yes, but the buyer will have to undergo the complete buyer qualification process
In 1967, a man served for 6 months on active duty in Vietnam. In 1998, he was killed in a skiing accident. His widow wishes to use the man's life insurance money to make a down payment on a condominium and believes she is entitled to a VA-guaranteed loan. Is she correct?
C. no, the man's death was not service-related
Which of the following makes direct loans to qualified borrowers?
D. FSA
A woman is purchasing a fully furnished condominium unit. In this situation, the woman would be MOST likely to use a
D. package loan
A real estate broker has CLO terminal in her office. Because there are more than a dozen lending institutions in the city, the broker has found that the CLO greatly streamlines the application process for her clients. She sits down at the terminal with a homebuyer and the following 3 events take place:
1. the broker explains that there is a fee for using the terminal of one-half point, based in the loan amount, and that the homebuyer may choose to finance the fee
2. the broker explains only the different kinds of services offered by the 2 local lenders who pay her a monthly screen fee to be included on the CLO system
3. the broker helps the homeowner answer the on-screen qualification questions
Which of these events is an improper use of a CLO system?
C. 2 only
The Equal Credit Opportunity Act prohibits lenders from discrimination against credit applicants on the basis of all of the following factors EXCEPT
C. past credit history
Lenders that make conventional loans to sell in he secondary mortgage market follow the standardized forms and guidelines issued by Fannie Mae and
A. Freddie Mac
Because some of the principal is still owned at the end of the term, a balloon payment loan is a(n)
D. partially amortized loan
A feature of an adjustable-rate mortgage that limits the amount the interest rate may increase at any one time is a
B. periodic rate cap
What is a type of loan in which payments are made by the lender to the borrower and is usually repaid from the sale of the property?
D. reverse mortgage
What helps lenders reduce the risk on a conventional mortgage loan with a high LTV?
B. private mortgage insurance
A tenant pays for his own utilities and makes one payment each month to the landlord who pays the taxes, insurance on the building, and maintenance. What type of lease arrangement is this?
A. gross
Some tenants want to buy the house they are renting. However, they do not have enough money for the down payment. The landlord agreed to put part of the tenants' rent toward the purchase price. The landlord and tenants have agreed to a(n)
B. lease purchase
The expiration date of a one-year lease is September 30. On July 1, the house is sold to a family that wants to live in the rental property. Assuming the lease does not include a sale clause, how soon can they move in?
C. October 1, present year
A woman rents an apartment from a man under a one-year written lease. The expiration date of the lease is May 1. How much notice must the man give the woman to recover possession when the lease expires?
D. no notice required
2 years ago, a woman rented a parcel of property to a man. The agreement stated only that the man agreed to pay the woman $500 per month. What type of tenancy does the man have?
A. periodic
A man rents an apartment under a 2-year written lease from a landlord. 3 months after signing the lease, the man is transferred to another country for a year. During this period, he leases the apartment to a woman. The woman mails monthly rent checks to the man, who continues to make monthly rental payments to the landlord. In this situation, the woman has a
C. sublease
A tenant lives in an apartment building owned by a landlord. Vandals break into the building and destroy the central air-conditioning system. The tenant's apartment becomes uncomfortably warm. The next day, the tenant sues the landlord for constructive eviction. Under these facts, will the tenant win?
D. no, the premises are not unusable, the condition was not due to the landlord's conscious neglect, and the tenant has not abandoned the apartment
In August, a tenant signs a 1-year lease in an apartment complex. Rent payments are due on the 15th of each month. On December 12, the apartment complex is sold to a new owner. On March 14, the building burns. Which of the following statements accurately describes the tenant's obligations?
A. the tenant is not required to continue paying rent after March 14, because the premises have been destroyed
A woman signs a lease to rent an apartment. Her lease runs from October 1 until November 1 of the following year. A man signs a 2-year lease to rent an apartment in a new building that will be ready for occupancy in 15 months. Which of these leases must be in writing to satisfy the statute of frauds?
C. both the man's and the woman's
A tenant signed a 1-year lease with a landlord on April 10. On the following March 1, the landlord asked the tenant whether the lease would be renewed. The tenant did not response but was still in the apartment on April 11. What can the landlord do?
A. the landlord may either evict the holdover tenant or accept a rent check, creating a holdover or periodic tenancy
If a tenant remains in possession of leased property after the expiration of the lease term, without paying rent and without the landlord's consent, what is the tenant's status?
B. trespasser
A woman wanted to rent an apartment from a man. Because of a physical disability, it would be necessary for the woman to have all the door-knobs replaced with lever-type handles. In this case, which of the following statements is TRUE?
B. the man is legally obligated to permit the modifications to be made at the woman's expense
A man operates a small store in a shopping center. Under the terms of the lease, the landlord pays all operating expenses. The man pays a base rent of $1,000 per month, plus 15% of monthly gross profits over $10,000. The man has a
A. percentage lease
When a landowner leases unimproved land to a tenant, who agrees to erect a building on the land, the lease is usually referred to as a(n)
D. ground lease
A man rented a house from a landlord. During the lease term, the man moved out of the state without telling the landlord. The man assigned the lease to a woman, who failed to make any rental payments. In this situation, which of the following statements is TRUE?
A. the man is still liable to the landlord for the outstanding rent, because the landlord did not release the man when the lease was assigned to the woman
What is the purpose of a security deposit held by a landlord?
A. it compensates the landlord in the event of rent default or premises damage
Who owns the building that is erected on land that has a ground lease?
C. lessee
What must a landlord do before commencing a lawsuit for actual eviction?
A. serve notice on the tenant
A tenant has a lease on a top-floor apartment in a building owned by a landlord. The building is old, and the landlord has been planning to replace the roof. However, she has not yet replaced it. In spring, a heavy rainstorm created a roof leak that badly damaged the tenant's apartment. The landlord laid a tarp on the roof to prevent more water coming in. However, after 2 months, the landlord had still not repaired the damage to the apartment. The tenant moves out and claims construction eviction. Can she win this case?
C. no, because the apartment was not uninhabitable
A lease that provides for specified rent increases at set future dates is called a(n)