POST LICENSE COURSE EXAM ACTUAL EXAM 2024 | ALL QUESTIONS AND CORRECT ANSWERS, Exams of Real Estate Management

Download POST LICENSE COURSE EXAM ACTUAL EXAM 2024 | ALL QUESTIONS AND CORRECT ANSWERS and more Exams Real Estate Management in PDF only on Docsity! POST LICENSE COURSE EXAM ACTUAL EXAM 2024 | ALL QUESTIONS AND CORRECT ANSWERS (ALREADY GRADED A+) | LATEST VERSION (JUST RELEASED) What is the next step if a lawsuit shows conclusive evidence that a particular policy of a lender or municipal government has had a disparate impact on a protected class? Select one: a. The judge then determines the monetary damages to be paid to the plaintiffs. b. The case is then referred to HUD or the DOJ for criminal prosecution; c. The plaintiff will then have to show that the policy is illegal; d. The defendant will then have to show that the policy serves some business necessity ------CORRECT ANSWER---------------d. The defendant will then have to show that the policy serves some business necessity A disabled tenant makes a request for a reasonable accommodation which the property owner believes to be unreasonable. What further obligation does the owner have to the tenant at that point? Select one: a. To investigate the possibility of a different accommodation that would achieve the same objective but create less burden for the property owner; b. To submit to mediation; c. To submit the request to a court for further consideration; d. None whatsoever. Feedback ------CORRECT ANSWER---------------a. To investigate the possibility of a different accommodation that would achieve the same objective but create less burden for the property owner; In today's economy, which of the following factors have most frequently been involved in fair housing complaints against insurance companies? Select one: a. Insurance companies have denied coverage or charged higher premiums to property owners who accept housing choice vouchers; b. Connecticut law which requires property owners to accept housing choice vouchers; c. Both of the above; d. None of the above. ------CORRECT ANSWER---------------c. Both of the above; Which of the following words or phrases in an advertisement would be considered a violation of the Fair Housing Act? Select one: a. Walking distance to public transit; b. Exclusive neighborhood; c. Desirable neighborhood; d. Mother-in-law suite. ------CORRECT ANSWER---------------b. Exclusive neighborhood; In 1968 the Supreme court ruled in the Jones vs. Mayer Co. case. The courts' decision upheld the law which provides protection on the basis of: Select one: a. Sexual discrimination; b. Racial discrimination; c. Discrimination on the basis of national origin d. Religious discrimination ------CORRECT ANSWER---------------b. Racial discrimination; Which of the following phrases in a rental advertisement would be deemed discriminatory against the disabled? Select one: a. Attractive independent living; b. Walking distance to shopping; c. Accessible for the disabled; d. None of the above. ------CORRECT ANSWER---------------a. Attractive independent living Adeline is selling her own home as a For Sale By Owner (FSBO). On Sunday, a full price offer is made by an Asian couple. Adeline refuses the offer made by the couple. On Monday, Adeline accepts an offer, $4000 below the asking price from a Caucasian family. Has Adeline violated any laws and if so which one? Select one: a. There is no violation because homeowners selling their own property are exempt from Federal Fair Housing laws; b. Adeline has violated the Federal Fair Housing Act of 1968; c. Adeline has violated the Civil Rights Act of 1866; a. Restrictive zoning that attempts to exclude African-American people from moving into the city; b. Unreasonable building codes; c. Unreasonable occupancy limits; d. Restrictions against group homes for the disabled in residential neighborhoods. ------ CORRECT ANSWER---------------Restrictions against group homes for the disabled in residential neighborhoods. Sally owned a rental home which she has never occupied. Under the federal Fair Housing Act, under what circumstance might she be able to sell this rental property and be exempt from the Fair Housing Act? Select one: a. As long as she uses the services of a real estate licensee; b. As long as she discloses the exemption from the Fair Housing Act in any advertisement; c. Under no circumstances; d. As long as she does not sell more than one such property in any two-year period. ----- -CORRECT ANSWER---------------d. As long as she does not sell more than one such property in any two-year period. What determines whether a person is a member of the familial status protected class? Select one: a. Whether a couple is married; b. Whether a person has (or will soon have) custody of a child under the age of 18; c. Whether the household includes at least three people; d. All of the above. ------CORRECT ANSWER---------------b. Whether a person has (or will soon have) custody of a child under the age of 18; In what circumstance is the owner required to pay any costs associated with a reasonable accommodation? Select one: a. In no cases; b. In all cases; c. Only if the owner receives operating subsidies from the government, such as Section 8 vouchers; d. Only if the property was built after 1991. ------CORRECT ANSWER---------------b. In all cases; Which of the following statements is/are true regarding the addition of sexual orientation and the gender identity as members of a protected class? Select one: a. It is based on a Supreme Court decision and a Presidential Executive Order; b. It is based on the protected class of sex; c. Both of the above; d. None of the above. ------CORRECT ANSWER---------------c. Both of the above; Within the first five years around ___% of agents leave the real estate business ------ CORRECT ANSWER---------------80-90% For buyers what are the five steps of the pre-qualification process ------CORRECT ANSWER---------------1. Urgency 2. Motivation 3. Financial Ability 4. Wants and Needs 5. Agency For sellers what are the five steps to the first appointment ------CORRECT ANSWER----- ----------1. Urgency 2. Motivation 3. Concerns 4. Expectations 5. Hesitations A person who may be willing to engage in a real estate transaction ------CORRECT ANSWER---------------Prospect A person who is willing to perhaps have a conversation but has no real desire to engage in a real estate transactions ------CORRECT ANSWER---------------Suspect In determining whether a person is a suspect or a prospect we must consider ------ CORRECT ANSWER---------------Urgency and motivation When setting goals, its important they be ------CORRECT ANSWER---------------Specific Measurable Attainable Realistic Timely Most common type of target market is a particular neighborhood of homes ------ CORRECT ANSWER---------------Farming A ______ analysis can be helpful in analyzing your strengths and weaknesses, which can sometimes help you pick the target market that is best for you ------CORRECT ANSWER---------------SWOT The primary objective of any type of real estate prospecting is to ------CORRECT ANSWER---------------Generate an appointment The ratio that is computed by dividing the number of homes sold in a year by the total number of homes in the farms ------CORRECT ANSWER---------------Turnover ratio A method of prospecting that will involve the telephone, but only as part of a mix of different types of contacts ------CORRECT ANSWER---------------Circle prospecting A ______ agent has more control than a _____ agent ------CORRECT ANSWER---------- -----Listing/selling This involves only one appointment with the prospective sellers. Licensee makes the presentation, show the recommended price through CMA and try to get sellers to sign the listing contract ------CORRECT ANSWER---------------1-step listing presentation Assuming the buyers ride in your car, the time spent in the car can be put in good use by ------CORRECT ANSWER---------------Discussing the positive features of the neighborhood what is the biggest difference between traditional telemarketing and circle prospecting? ------CORRECT ANSWER---------------circle prospecting requires. follow-up under what circumstance should a real estate licensee use a 1-step listing presentation ------CORRECT ANSWER---------------if the homeowner insists on it what is the most common reason why new licensees hate making cold calls on the telephone ------CORRECT ANSWER---------------fear of rejection which of the following contact methods is most likely to get people to remember you ----- -CORRECT ANSWER---------------send a handwritten thank you note after a phone conversation when answering a phone call, which of the following choices would be a key objective -- ----CORRECT ANSWER---------------to not only give information, but to get information from the caller as well what type of software is designed specifically to avoid "one and done" prospecting ------ CORRECT ANSWER---------------customer relationship management (CRM) when trying to get a listing from a seller whose previous listing was expired, which of the following choices are recommended to solicit a listing contract from that seller ------ CORRECT ANSWER---------------provide a free service, such as analysis of current market conditions situations where on party represents another party ------CORRECT ANSWER-------------- -law of agency the laws regarding agency come from what three sources in the US ------CORRECT ANSWER---------------common law, statutory law, and administrative or regulatory law stems from British laws which applied to the colonies before the Revolutionary War (precedents) ------CORRECT ANSWER---------------Common law laws passed by the state legislature or the Congress and signed by the governor. ------ CORRECT ANSWER---------------statutory laws refers to the rules and regulations adopted by various regulatory bodies ------CORRECT ANSWER---------------Administrative or regulatory law the person who hires the agent to represent them in a transaction ------CORRECT ANSWER---------------principal the person hired to represent the principal ------CORRECT ANSWER---------------agent in real estate practice, the ______ is considered the agent ------CORRECT ANSWER---- -----------broker represents the principal in all aspects of the principal's dealings, ------CORRECT ANSWER---------------universal agent less authority than a universal agent but may represent the principal in an ongoing series of continuous events, usually in one general field of endeavor. In real estate, property managers ------CORRECT ANSWER---------------general agent represents the principal in one specific transaction. ------CORRECT ANSWER------------- --special agent acts as agent for an agent and has the same duties and obligations as the agent ------ CORRECT ANSWER---------------subagent a position of trust and must put the interest of his client (Steve) above those of all others, including and especially those of himself. ------CORRECT ANSWER--------------- fiduciary obligations This means that the agent is required to act in the best interest of the client and must not put anyone else's interests ahead of those of the client. ------CORRECT ANSWER--- ------------loyalty Agents are only required to follow the ________instructions of their client. ------ CORRECT ANSWER---------------lawful In simple terms, this means that the licensee must perform the duties of the agent as would a competent real estate professional and without any negligence. ------CORRECT ANSWER---------------reasonable care and diligence If you are showing property you are listing and tell a prospective buyer that "...this property is the best for you," the relationship created could be interpreted as: ------ CORRECT ANSWER---------------implied agency When entering into listing contracts, REALTORS® must advise sellers/landlords of: ----- -CORRECT ANSWER---------------1) the REALTOR®'s company policies regarding cooperation and the amount(s) of any compensation that will be offered to subagents, buyer/tenant agents, and/or brokers acting in legally recognized non-agency capacities; 2) the fact that buyer/tenant agents or brokers, even if compensated by listing brokers, or by sellers/landlords may represent the interests of buyers/tenants; and 3) any potential for listing brokers to act as disclosed dual agents, e.g., buyer/tenant agents. (Adopted 1/93, Renumbered 1/98, Amended 1/03) REALTOR® A has a listing on a seller's home and the seller has accepted an offer. The offer is contingent upon the sale of the buyer's current home. REALTOR® B has a buyer who has made an offer. Under the Code of Ethics, what should listing REALTOR® A do? a. Ignore REALTOR® B's offer since the seller's home is already under contract. b. Reveal the existence of the contract but not the contingency. c. Reveal the existence of the contract and the contingency. d. Present the second offer to the seller without disclosing the existence of the offer or the contingency. Feedback ------CORRECT ANSWER---------------c. Reveal the existence of the contract and the contingency. A REALTOR® has a listing on a client's house. The sellers are getting a divorce and need to sell the home quickly. Under what circumstances can the REALTOR® reveal this fact to a potential buyer? ------CORRECT ANSWER---------------d. Only after getting informed consent from the seller. Act was designed to ensure that persons of any race could sign and enforce contracts and could buy and sell and lease property. ------CORRECT ANSWER---------------Civil Rights act of 1866 The Sherman Antitrust Act prohibits each of the following activities, EXCEPT: Select one: a. Commingling. b. Price fixing. c. Boycotts. d. Tying arrangements ------CORRECT ANSWER---------------a. commingling A listing agreement may be terminated by: Select one: a. The seller b. The buyer's broker c. The salesperson that obtained the listing d. Death of the salesperson ------CORRECT ANSWER---------------a. the seller Brokers must hold their client's funds in a/an: Select one: a. Office safe. b. Savings account. c. Trust or escrow account. d. Special account managed by the Board of Realtors. ------CORRECT ANSWER--------- ------c. trust or escrow account A broker has the buyer's earnest money deposit deposited in an escrow account. The amount of the deposit exceeds the amount of the broker's commission for the sale. The broker may remove his commission on this sale ONLY: Select one: a. When the buyer moves into the property. b. When the seller moves out of the property. c. When the closing is completed. d. Whenever the seller says it is ok to do so. ------CORRECT ANSWER---------------c. When the closing is completed. When legal dual agency exists, the agent is required to maintain the confidences of: Select one: a. The buyer only. b. Both the seller and the buyer. c. The seller only. d. Neither the buyer nor the seller. ------CORRECT ANSWER---------------b. Both the seller and the buyer. Fred and Wilma gave a listing contract to Broker Bob to sell their home and both signed the contract. Prior to receiving any offers, Fred died in an unfortunate bowling accident. What is the effect of Fred's death on the listing contract? Select one: a. The contract remains in effect. b. The contract would be automatically terminated by law. c. The contract would be in default. d. The contract would only be enforceable in a community property state. ------ CORRECT ANSWER---------------a. The contract remains in effect. Funds in the escrow account may be dispersed for any of the following reasons EXCEPT when: Select one: a. All principals to the transaction agree in writing to the disposition. b. A court orders disbursement of the funds. c. The seller demands forfeiture of the earnest money deposit. d. The transaction is consummated. ------CORRECT ANSWER---------------c. The seller demands forfeiture of the earnest money deposit. The death of a seller would terminate which of the following contracts? Select one: a. A purchase contract. b. A listing contract. c. Both of the above. d. None of the above. ------CORRECT ANSWER---------------b. A listing contract A broker could return the buyer's deposit from the escrow account back to the buyer in which of the following cases? Select one: a. The offer expired without any acceptance by the seller. b. The seller rejected the buyer's offer. c. The transaction was cancelled because of the buyer's inability to meet the financing contingency and the seller consented to returning the deposit. d. Each of the above. ------CORRECT ANSWER---------------d. Each of the above. The maximum fine for an individual for a violation of the Sherman Antitrust Act is: Select one: In 1968 the Supreme court ruled in the Jones vs. Mayer Co. case. The courts' decision upheld the law which provides protection on the basis of: Select one: a. Sexual discrimination; b. Racial discrimination; c. Discrimination on the basis of national origin d. Religious discrimination ------CORRECT ANSWER---------------b. Racial discrimination; Which of the following choices would be an example of a member of the "familial status" protected class under the Fair Housing Amendments Act? Select one: a. Any married couple; b. A single mother with a 19-year old child; c. A married couple with two grown children; d. A pregnant woman. ------CORRECT ANSWER---------------d. A pregnant woman. In what circumstance is the owner required to pay any costs associated with a reasonable accommodation? Select one: a. In no cases; b. In all cases; c. Only if the owner receives operating subsidies from the government, such as Section 8 vouchers; d. Only if the property was built after 1991. ------CORRECT ANSWER---------------b. In all cases; The 1988 Amendment to the Federal Fair Housing Act, Title VIII, declared it unlawful to discriminate: Select one: a. Against households with children under 18 years of age; b. On the basis of age; c. Because of sexual orientation; d. On the basis of the sex of the buyer or renter ------CORRECT ANSWER--------------- Against households with children under 18 years of age; Which of the following documents may include a question about the applicant's race? Select one: a. A mortgage application only; b. A rental application only; c. Both a mortgage application and a rental application; d. Neither a mortgage application nor a rental application. ------CORRECT ANSWER----- ----------a. A mortgage application only; If a prospective buyer (who is of a minority group) asks an agent to show her properties, the agent should: Select one: a. Show her properties in areas that are predominantly of the same minority group; b. Refer her to an agent in the firm of the same minority; c. Advise her that the firm does not handle people of her minority group and refer her to another brokerage d. Show her any property for which she is financially qualified ------CORRECT ANSWER---------------d. Show her any property for which she is financially qualified A victim of discriminatory conduct files a lawsuit and wins the case. Part of the judgment in the case is for emotional distress and loss of a housing opportunity. This part of the judgment is called: Select one: a. Consequential damages; b. Punitive damages; c. Injunctive relief; d. Declaratory relief. ------CORRECT ANSWER---------------a. Consequential damages; When HUD sends a complaint to a respondent, that respondent has how many days to submit an answer to the complaint? Select one: a. 5 days; b. 10 days; c. 15 days; d. 30 days; ------CORRECT ANSWER---------------b. 10 days; If a dark-skinned African-American refused to rent an apartment house to a lighter- skinned African-American, that would be considered: Select one: a. Discrimination on the basis of race only; b. Discrimination on the basis of color only; c. Discrimination on the basis of both race and color; d. Not to be a violation of the Fair Housing Act. ------CORRECT ANSWER---------------b. Discrimination on the basis of color only; Each of the following would be considered a "person with a disability," EXCEPT: Select one: a. An individual who currently uses illegal drugs; b. A person with a past history of mental impairment; c. A person with a learning disability; d. A person who has difficulty walking. ------CORRECT ANSWER---------------a. An individual who currently uses illegal drugs; If a landlord or property manager treats Caucasian tenants better than Latino tenants, that would be an example of: Select one: a. Overt evidence of disparate treatment; b. Comparative evidence of disparate treatment; c. Evidence of disparate impact; d. Both A and B above. Feedback ------CORRECT ANSWER---------------b. Comparative evidence of disparate treatment; A fair housing complaint on the basis of excluding those with a record of criminal conviction may be based on allegations of: Select one: a. Disparate impact; b. Disparate treatment; c. Either of the above; d. None of the above. ------CORRECT ANSWER---------------Either of the above; Information gathered because of the Home Mortgage Disclosure Act would most likely be used for which type of discrimination lawsuit? Select one: a. Overt evidence of disparate treatment; b. Comparative evidence of the disparate treatment; d. No children below the age of 14 may enter the gym without being supervised by a responsible adult. ------CORRECT ANSWER---------------No children below the age of 14 may enter the gym without being supervised by a responsible adult. What is the first step in a successful disparate impact fair housing complaint based on criminal convictions? Select one: a. To show an intent to discriminate. b. To show that the policy does not have a legitimate, necessary business purpose; c. To show that a different policy could avoid the disparate impact; d. To show that the burden of the criminal conviction policy puts a heavier burden on members of a protected class. ------CORRECT ANSWER---------------d. To show that the burden of the criminal conviction policy puts a heavier burden on members of a protected class. In a fair housing investigation, "testers" are most often used to find: Select one: a. Overt evidence of disparate treatment; b. Comparative evidence of disparate treatment; c. Evidence of disparate impact; d. Both A and B above. ------CORRECT ANSWER---------------b. Comparative evidence of disparate treatment; When must the owner of an apartment complex grant a reasonable accommodation to a disabled tenant? Select one: a. When the disability is readily apparent and the accommodation is not an undue burden on the owner; b. Whenever the tenant requests one; c. When the tenant requests one and the request does not place an undue burden on the owner; d. At no time, since reasonable accommodations are always voluntary. Feedback ------CORRECT ANSWER---------------When the tenant requests one and the request does not place an undue burden on the owner; A disparate impact case has gone to trial. The plaintiffs have shown that a particular policy has had a disparate impact on a particular protected class. However, the defendant has shown that the policy serves a legitimate business necessity. What will be the next step? Select one: a. The case will be dismissed. b. The plaintiff will have to show that the policy involved a discriminatory intent on the part of the defendant; c. The plaintiff will have to show that other policies might have served the same business necessity with less disparate impact on protected classes; d. The defendant will have to prove that there was no discriminatory intent when it set the policy. ------CORRECT ANSWER---------------The plaintiff will have to show that other policies might have served the same business necessity with less disparate impact on protected classes; Claims filed with HUD for alleged Fair Housing violations must be filed within: Select one: a. 90 days; b. 180 days; c. 1 year; d. 2 years. ------CORRECT ANSWER---------------c. 1 year; Which of the following documents may include a question about the applicant's race? Select one: a. A mortgage application only; b. A rental application only; c. Both a mortgage application and a rental application; d. Neither a mortgage application nor a rental application. ------CORRECT ANSWER----- ----------a. A mortgage application only; A property owner creates the following policy: There shall be no "loud and boisterous activity on the premises, music played loud and/or with too much bass, a continuous or excessive number of guests, noisy children, or vehicles with very loud exhaust system." Is this policy likely to be found to be enforceable? Select one: a. No, primarily because of the reference to noisy children; b. Yes, it is reasonable and serves a legitimate business necessity; c. No, primarily because of the reference to loud music; d. No, primarily because of the reference to automobiles. Feedback ------CORRECT ANSWER---------------a. No, primarily because of the reference to noisy children; Sally owned a rental home which she has never occupied. Under the federal Fair Housing Act, under what circumstance might she be able to sell this rental property and be exempt from the Fair Housing Act? Select one: a. As long as she uses the services of a real estate licensee; b. As long as she discloses the exemption from the Fair Housing Act in any advertisement; c. Under no circumstances; d. As long as she does not sell more than one such property in any two-year period. ----- -CORRECT ANSWER---------------As long as she does not sell more than one such property in any two-year period. A victim of discriminatory conduct files a lawsuit and wins the case. Part of the judgment in the case is for emotional distress and loss of a housing opportunity. This part of the judgment is called: Select one: a. Consequential damages; b. Punitive damages; c. Injunctive relief; d. Declaratory relief. Feedback ------CORRECT ANSWER---------------a. Consequential damages; In past years, fair housing complaints involving insurance companies typically involved complaints regarding: Select one: a. Steering; b. Redlining; c. Blockbusting; d. Discriminatory pricing. ------CORRECT ANSWER---------------b. Redlining; A real estate licensee who works only with buyers has told a Latino buyer that the local school district is very good but offers no English as a Second Language program. The same licensee tells Caucasian buyers that the local school district is great. This licensee has: Select one: a. Done nothing wrong; b. Engaged in steering; c. Engaged in redlining; b. Indirect liability; c. Subsidiary liability; d. Employment liability. ------CORRECT ANSWER---------------a. Vicarious liability; A fair housing complaint on the basis of excluding those with a record of criminal conviction may be based on allegations of: Select one: a. Disparate impact; b. Disparate treatment; c. Either of the above; d. None of the above. ------CORRECT ANSWER---------------c. Either of the above; A lawsuit has been filed alleging discrimination in housing against a person based on a disability. The defendant has argued that the plaintiff is not disabled under the definition of a disability in the Fair Housing Act. The court considered this argument and issued an order stating that the individual is indeed disabled under the definition of a disability in the Act. This court order is an example of: Select one: a. Injunctive relief; b. Punitive relief; c. Consequential relief; d. Declaratory relief. ------CORRECT ANSWER---------------d. Declaratory relief. Which of the following choices would be an example of a member of the "familial status" protected class under the Fair Housing Amendments Act? Select one: a. Any married couple; b. A single mother with a 19-year old child; c. A married couple with two grown children; d. A pregnant woman. ------CORRECT ANSWER---------------d. A pregnant woman. If a landlord or property manager treats Caucasian tenants better than Latino tenants, that would be an example of: Select one: a. Overt evidence of disparate treatment; b. Comparative evidence of disparate treatment; c. Evidence of disparate impact; d. Both A and B above. ------CORRECT ANSWER---------------b. Comparative evidence of disparate treatment; One of the recommended fair housing practices is that real estate brokerage firms should review and evaluate the location of homes shown and sold. What is the fair housing purpose for doing this? Select one: a. To determine if steering is going on; b. To comply with the requirement to report this data to the federal government; c. Both of the above; d. None of the above. Feedback ------CORRECT ANSWER---------------a. To determine if steering is going on; Information gathered because of the Home Mortgage Disclosure Act would most likely be used for which type of discrimination lawsuit? Select one: a. Overt evidence of disparate treatment; b. Comparative evidence of the disparate treatment; c. Either of the above; d. Evidence of disparate impact. Feedback ------CORRECT ANSWER---------------d. Evidence of disparate impact. What is the biggest difference between a lawsuit regarding a disparate impact lawsuit for discrimination and a disparate treatment lawsuit? Select one: a. The plaintiff in a disparate impact case does not have to prove a discriminatory intent; b. The plaintiff in a disparate treatment case does not have to prove a discriminatory intent; c. Disparate treatment cases are generally more complicated than disparate impact cases; d. Disparate impact cases are easier to win than disparate treatment cases. ------ CORRECT ANSWER---------------a. The plaintiff in a disparate impact case does not have to prove a discriminatory intent; The concept of "preying on the powerless" is seen most vividly in: Select one: a. Fraud for profit; b. Subprime loans; c. Property flipping; d. Silent seconds. ------CORRECT ANSWER---------------b. Subprime loans; An unethical loan originator directs his marketing efforts at finding poor or elderly customers who are not sophisticated. This would be an example of: Select one: a. Redlining; b. Capping; c. Steering; d. Targeting. Feedback ------CORRECT ANSWER---------------d. Targeting. One of the most common forms of Mortgage Fraud in the US. is equity skimming. It includes all of the following, EXCEPT: Select one: a. Homeowners who are behind on payments being targeted by criminals; b. Homeowners facing foreclosure that need to sell their homes quickly c. A promise made by skimmer that will take over payments, but never pays; d. Homeowners buying less house than they can afford ------CORRECT ANSWER-------- -------Equity skimming involves getting a homeowner to sign over his or her current home, not buying a new home. The correct answer is: Homeowners buying less house than they can afford _____ is the process of attempting to make money earned illegally appear to be legitimate. Select one: a. Money laundering; b. Misrepresentation; c. Duress; d. Flipping. ------CORRECT ANSWER---------------a. Money laundering; If a lender advertised a loan with an exceptionally low teaser rate without disclosing that the rate only applies for the first month of the loan, the advertisement: Select one: a. Would be legal, but unethical as bait and switch advertising; b. Would be both illegal and unethical as bait and switch advertising; c. Would be legal, but unethical; d. None of these choices. ------CORRECT ANSWER---------------Since the property was sold for less than fair market value shortly before the bankruptcy filing, it will most likely be viewed as a fraudulent transfer. The fact that the sale was to a family member reinforces this likelihood. The correct answer is: A fraudulent transfer; Which of the following statements is NOT true of mortgage fraud-for-property? Select one: a. The applicant might overstate his or her income; b. The applicant often has no intention of ever repaying the loan; c. The transaction might involve a "silent second;" d. The applicant often makes significant misrepresentations on the application. ------ CORRECT ANSWER---------------In a fraud-for-property scheme, the applicant usually fully intends to repay the loan. The applicant is lying in order to get a loan for which the applicant would not otherwise qualify. They typically intend to live in the property and intend to make the required payments. The correct answer is: The transaction might involve a "silent second;" The "ability to repay" test of the Dodd-Frank Act was designed to address: Select one: a. The foreclosure crisis; b. Abuses in the subprime mortgage market; c. High interest rates; d. Excess competition. ------CORRECT ANSWER---------------b. Abuses in the subprime mortgage market; Charlie is paid $10,000 to pretend to be the purchaser of a home. He fills out the loan application and attends the closing, but the property is actually owned by someone else. Charlie has acted as a: Select one: a. Straw buyer; b. Property flipper; c. Holder of a throw-away second; d. Intermediary buyer. ------CORRECT ANSWER---------------a. Straw buyer; The practice of purchasing a home not from any rational economic analysis but from purely speculative expectations regarding future appreciation relates to which of the following theories: Select one: a. Greater Fool Theory; b. Hot Potato Theory; c. Constant Appreciation Theory; d. Rapid Appreciation Theory; Feedback ------CORRECT ANSWER---------------The greater fool theory is expressed by the idea that there will always be some fool willing to pay an even higher price later. It is based on a speculative fever rather than a rational economic analysis. The correct answer is: Greater Fool Theory; The Georgia Residential Mortgage Fraud Act applies to what type of residential properties? Select one: a. Single-family residences only; b. 1-2 unit residential properties only; c. 1-3 unit residential properties only; d. 1-4 unit residential properties. ------CORRECT ANSWER---------------d. 1-4 unit residential properties. An individual pays someone to pose as a home buyer, using their personal information and credit score to purchase a property. The scammers then take over the title and mortgage. The mortgage lender thinks they are loaning money to the person posing as the home buyer, when in actuality, the home will be owned by someone else. This fraudulent activity involves a _____ buyer. Select one: a. Straw; b. First time; c. Subprime; d. Silent. ------CORRECT ANSWER---------------a. Straw; Which of the following statements best defines the practice of "steering" in originating mortgage loans: Select one: a. Refusal to originate loans in geographic areas which are predominantly populated by minority groups; b. Directing borrowers to loans which offer higher compensation to the loan originator without regard to the suitability to the borrower; c. Directing marketing efforts to poor, elderly or otherwise unsophisticated borrowers so as to take advantage of them; d. Charging excessive fees. ------CORRECT ANSWER---------------Steering is the practice of directing borrowers to loans which offer higher compensation to the MLO (such as subprime loans) without regard to suitability. The correct answer is: Directing borrowers to loans which offer higher compensation to the loan originator without regard to the suitability to the borrower; The subprime market includes: Select one: a. Predatory lending practices least visible in the subprime market; b. Respectable sub prime lenders serving no important social function; c. Predatory lenders that target elderly offering loan terms to drain equity; d. Predatory lenders take advantage of highly-educated home buyers. ------CORRECT ANSWER---------------Sadly, the subprime market includes a number of predatory lenders that target the elderly. The correct answer is: Predatory lenders that target elderly offering loan terms to drain equity; Directing a borrower toward a subprime loan when that borrower did not need a subprime loan is an example of: Select one: a. Steering; b. Targeting; c. Redlining; d. Capping. ------CORRECT ANSWER---------------a. Steering; Which of the following documents would be considered part of the mortgage process under the Georgia Residential Mortgage Fraud Act? Select one: a. The Uniform Residential Mortgage Loan Application; b. Payroll stubs; c. Bank statements; d. All of the above. ------CORRECT ANSWER---------------d. All of the above When people violate their ethical standards, they often try to explain that the action was not unethical, or at least was a lesser violation than what it might first appear to be, through a process called: Select one: a. Justification; income. Sam takes no action and the lender discovers the overstatement. Has Sam violated the Georgia Residential Mortgage Fraud Act? Select one: a. No. b. No, because it was the borrower who overstated the inome; c. Yes, because Sam knew of the overstatement; d. Only if it can be proved that Sam knew of the overstatement ------CORRECT ANSWER---------------Sam has participated in mortgage fraud, which is a violation of the law. However, the Georgia Residential Mortgage Fraud Act only applies to a pattern of mortgage fraud and this is apparently his first violation, and therefore the Georgia Residential Mortgage Fraud Act does not apply. The correct answer is: No. A mortgage loan applicant claims to work for a major corporation such as General Electric. He submits paycheck stubs for purposes of documenting his income. These paycheck stubs are handwritten, not printed. Which of the following statements is most correct: Select one: a. This is a possible indication of asset misrepresentation; b. This is a strong indication of income misrepresentation; c. This is a strong indication of occupancy misrepresentation; d. Federal laws forbid the lender or MLO from drawing any conclusion from this fact. Feedback ------CORRECT ANSWER---------------The likelihood of a major corporation hand-writing its paycheck stubs is almost nonexistent, so this would be a strong indication of misrepresentation. It would be income misrepresentation. The correct answer is: This is a strong indication of income misrepresentation; A buyer is having trouble coming up with a down payment. The buyer borrows $40,000 from a relative one year before buying a house and uses that money for the down payment. The relative agrees to do this without any written contract. This is an example of a: Select one: a. Throw-away second; b. Silent second; c. Distributed second; d. Mortgage flip. Feedback ------CORRECT ANSWER---------------b. Silent second; Which of the following statements is NOT true of mortgage fraud-for-property? Select one: a. The applicant might overstate his or her income; b. The applicant often has no intention of ever repaying the loan; c. The transaction might involve a "silent second;" d. The applicant often makes significant misrepresentations on the application. ------ CORRECT ANSWER---------------c. The transaction might involve a "silent second;" Which of the following statements about subprime loans is FALSE: Select one: a. Not all subprime loans are predatory, but most predatory loans are subprime; b. Subprime loans can serve a legitimate purpose; c. Subprime loans generally have a higher risk of foreclosure than other loans; d. If a subprime loan is deemed predatory as to one borrower, it would be deemed predatory as to all borrowers. ------CORRECT ANSWER---------------d. If a subprime loan is deemed predatory as to one borrower, it would be deemed predatory as to all borrowers. Sandy purchases property from Ben. Sandy later discovers that Ben did not hold the title to the property and had no right to sell the property. Ben was guilty of ______ and is liable for damages suffered by Sandy in the purchase of the property Select one: a. Title fraud; b. Mortgage fraud; c. Title withholding; d. Misrepresentation. ------CORRECT ANSWER---------------a. Title fraud; Which of the following statements is the LEAST important determinant of whether a loan is suitable to a particular mortgage loan applicant: Select one: a. The borrower's likely future income; b. The borrower's financial reserves; c. The borrower's financial sophistication; d. The compensation to the mortgage loan originator. ------CORRECT ANSWER---------- -----d. The compensation to the mortgage loan originator. The "throw away second:" Select one: a. Is typically recorded, but sellers are asked to sign a release at closing table; b. Has payments that are always made and are expected to be paid; c. Has three different contracts of sale; d. Is a scheme with 3 settlements sheets and commission on lower selling price. ------ CORRECT ANSWER---------------A "throw away second" involves a recorded second mortgage, but the seller agrees to sign a release at the closing table and the funds are never advanced and the loan is never repaid. The correct answer is: Is typically recorded, but sellers are asked to sign a release at closing table;` A large law firm would most likely seek to lease: Select one: a. An executive suite; b. Open space; c. A traditional office space d. Class C properties ------CORRECT ANSWER---------------The correct answer is: A traditional office space In an appraisal, what is the difference between a condition of sale adjustment and a market condition adjustment? Select one: a. Market conditions adjustments relate to whether the sale was an arm's length transaction where conditions of sale usually related to how long ago the sale occurred. b. Conditions of sale adjustments relate to whether the sale was an arm's length transaction where market conditions usually related to how long ago the sale occurred. c. There is no difference between the two. d. Conditions of sale relate to the type of property interest conveyed while market conditions relate to the financing of the property. ------CORRECT ANSWER--------------- Conditions of sale adjustments relate to whether the sale was an arm's length transaction where market conditions usually related to how long ago the sale occurred. The correct answer is: Conditions of sale adjustments relate to whether the sale was an arm's length transaction where market conditions usually related to how long ago the sale occurred. he formula used to calculate the value of a property under the income approach is: Select one: a. Potential gross income divided by capitalization rate = value. b. Effective gross income divided by capitalization rate = value. c. Net operating income divided by capitalization rate = value. d. Net operating income divided by potential gross income = value. Which of the following choices is the most accurate definition of the term "replacement costs?" Select one: a. Replacement costs are based on the labor costs, material costs, administrative costs and profit allowance required to construct a building. b. Replacement costs are the costs of building an exact duplicate of an existing structure. c. Replacement costs are the costs of building a building that would serve the same purpose as the existing structure. d. Replacement costs are computed by totaling the installed costs of each component part of the exiting structure. ------CORRECT ANSWER---------------c. Replacement costs are the costs of building a building that would serve the same purpose as the existing structure. Which of the following items NOT would be tax deductible on a small rental property? Select one: a. Property taxes; b. Depreciation; c. Special Assessments related to the installation of a sidewalk in the neighborhood; d. Operating costs ------CORRECT ANSWER---------------c. Special Assessments related to the installation of a sidewalk in the neighborhood; Which type of buyer of a single family residence would be LEAST likely to "fall in love" with a property? Select one: a. A first-time buyer; b. A person who is buying a house as a rental property; c. A person who is moving to the area due to a job transfer; d. A person who is buying a vacation home. ------CORRECT ANSWER---------------b. A person who is buying a house as a rental property; Most individuals who purchase a rental house have what expectations about their investment? Select one: a. Tax benefits during the holding period and appreciation in the future; b. High levels of positive cash flow; c. Tenants who will buy the house after a stated period of years; d. All of the above. ------CORRECT ANSWER---------------a. Tax benefits during the holding period and appreciation in the future; The largest of the industrial buildings, often with ceilings of 50 feet or more are: Select one: a. Warehouses; b. Distribution centers; c. Light manufacturing d. Flex buildings. ------CORRECT ANSWER---------------b. Distribution centers; The economic rent of a property or a unit is also known as the: Select one: a. Market rent. b. Contract rent. c. Actual rent. d. Statutory rent. ------CORRECT ANSWER---------------a. Market rent. The article cited in the text about hotel investment makes each of the following points, EXCEPT: Select one: a. First time hotel investors would be best advised to build a new hotel rather than purchasing an existing one; b. Investors carefully investigate the town in which to place a hotel before considering specific sites; c. Hotels should not be considered a passive investment; d. Marketing efforts are crucial for any hotel ------CORRECT ANSWER---------------a. First time hotel investors would be best advised to build a new hotel rather than purchasing an existing one; What is the impact of the "strict liability" standard for cleanup of environmental contamination? Select one: a. It means that the current and all past owners of a property must share in the clean-up costs of any contamination. b. It means that only the owner which caused the contamination is liable for the clean- up costs of any contamination. c. It means that the current owner is responsible for the clean-up costs of any contamination regardless of which owner caused the contamination. d. It means that no owner is responsible for the clean-up costs of any contamination unless it can be determined who was responsible for the contamination. ------CORRECT ANSWER---------------c. It means that the current owner is responsible for the clean-up costs of any contamination regardless of which owner caused the contamination. The most common type of industrial property in the United States is: Select one: a. Distribution centers; b. Warehouses; c. Light industrial; d. Flex buildings. Feedback The most common type of industrial property in the United States is light industrial. The correct answer is: Light industrial; ------CORRECT ANSWER---------------c. Light industrial; A subject property has 1,500 square feet of living space. A nearby comparable sale has 1,650 square feet of living space. The appropriate adjustment would be $5,000. This adjustment would be: Select one: a. Added to the sale price of the subject property. b. Subtracted from the sale price of the subject property. c. Added to the sale price of the comparable sale. d. Subtracted from the sale price of the comparable sale. ------CORRECT ANSWER----- ----------d. Subtracted from the sale price of the comparable sale. After an appraiser has made the appropriate adjustments when using the sales comparison approach, the appraiser will: Select one: a. Reconcile the indicated values. b. Average the indicated values. c. Stabilize the indicated values. d. Find the mean of the indicated values. ------CORRECT ANSWER---------------a. Reconcile the indicated values. Which of the following types of retail centers would draw its customers from the population within 3 miles of the store? Select one: a. Strip center; b. Neighborhood center; b. Neighborhood center; c. Community center; d. Regional mall. ------CORRECT ANSWER---------------c. Community center; The Environmental Protection Agency estimates that what percentage of dry cleaners currently in operation have contamination issues? Select one: a. 45%. b. 55%. c. 65%. d. 75%. ------CORRECT ANSWER---------------d. 75%. The discounted cash flow approach to appraising income properties is based on the concept of: Select one: a. Substitution. b. Disintermediation. c. Contribution. d. Time value of money ------CORRECT ANSWER---------------d. time value of money Why do lenders require higher financial reserves for loans for a rental house? Select one: a. To discourage loan applications for rental properties; b. Due to the requirements of federal law; c. As a matter of tradition; d. Because of the risk of a vacancy causing an extended period of time with no rental income. ------CORRECT ANSWER---------------If the tenant leaves and it takes several months to get a new tenant, the owner could go a long period of time with no rental income, so financial reserves become very important. The correct answer is: Because of the risk of a vacancy causing an extended period of time with no rental income. A call center which never gets in-person visits from consumers or customers would be most likely to rent space in which of the following types of office buildings? Select one: a. Class A; b. Class B; c. Class C; d. Class D Feedback Since there is no need to impress clients or customers at this location, it would be most likely to rent space in a Class C building, which is the lowest of the ratings. There is no Class D space. The correct answer is: Class C; ------CORRECT ANSWER---------------Since there is no need to impress clients or customers at this location, it would be most likely to rent space in a Class C building, which is the lowest of the ratings. There is no Class D space. The correct answer is: Class C; In what circumstance will some of the interest paid on a mortgage securing a rental house NOT be tax deductible: Select one: a. In all cases; b. If the owner is in the highest tax bracket; c. In no cases; d. If there has been a "cash-out" refinancing. ------CORRECT ANSWER--------------- Interest on a mortgage on a rental property is normally tax deductible except to the extent there has been a "cash-out" refinancing. The correct answer is: If there has been a "cash-out" refinancing. In the market for single family residences, an "institutional investor" is one who: Select one: a. Invests at least $1 million per year for 5 years; b. Purchases at least 5 homes in a year c. Purchases at least 10 homes in a year d. Invests at least $3 million per year for 5 years. ------CORRECT ANSWER--------------- c. Purchases at least 10 homes in a year A retail center that typically has between 30,000 and 125,000 square feet of retail space and is anchored by a supermarket is known as a: Select one: a. Strip center; b. Neighborhood center; c. Community center; d. Regional mall. ------CORRECT ANSWER---------------b. Neighborhood center; A single family residence rents for $1,500 and recently sold for $187,500. What is its monthly gross rent multiplier? Select one: a. 125. b. 135. c. 150. d. 155. ------CORRECT ANSWER---------------a. 125. A Phase I Environmental Site Assessment would include each of the following, EXCEPT: Select one: a. An onsite inspection of the property. b. Interviews of knowledgeable persons such as previous owners and managers who would know the past history of the property. c. A check of local government records to review past land uses and building permits. d. Taking soil samples and obtaining lab tests. ------CORRECT ANSWER---------------d. Taking soil samples and obtaining lab tests. If you purchase a unit in a cooperative complex, what do you own? Select one: a. Your individual unit only; b. Only an undivided interest in the entire complex; c. Shares of stock in a corporation that owns the entire complex; d. Your individual unit and an undivided interest in the common areas. Feedback ------CORRECT ANSWER---------------c. Shares of stock in a corporation that owns the entire complex; The type of specialized-purpose center that typically have upscale national-chain specialty stores with dining and entertaining in an outdoor setting is known as a: Select one: a. Lifestyle center; b. Power center; c. Factory outlet; d. Theme/Festival; ------CORRECT ANSWER---------------a. Lifestyle center; Which of the following statements is the most accurate answer to the question of how capitalization rates are set? Select one: A title commitment from a title insurance company for an ALTA policy would show which of the following: Select one: a. Liens against the property. b. Easements or encroachments affecting the property. c. Both of the above. d. None of the above. ------CORRECT ANSWER---------------c. Both of the above. A Phase II Environmental Site Assessment would include: Select one: a. Soil samples. b. Water samples. c. Subsurface soil borings. d. All of these choices. ------CORRECT ANSWER---------------d. All of these choices. The cost approach to appraisal is based primarily on the principle of: Select one: a. Anticipation. b. Substitution. c. Progression. d. Contribution. ------CORRECT ANSWER---------------b. Substitution. What is the formula for calculating depreciation under the age-life approach? Select one: a. Effective age divided by actual age. b. Effective age divided by economic life. c. Actual age divided by economic life. d. Economic life divided by actual age. ------CORRECT ANSWER---------------b. Effective age divided by economic life. What is the purpose of an access agreement in the purchase of commercial property? Select one: a. To prevent any modifications to the access areas of the property prior to closing of the purchase. b. To allow the seller access to the property for a specified period of time after closing to remove any remaining personal property. c. To allow the buyer access rights to the property before the closing so that desired inspections can be made. d. To allow local building inspectors access to the property. ------CORRECT ANSWER-- -------------c. To allow the buyer access rights to the property before the closing so that desired inspections can be made. A corporate investor who is considering the purchase of a commercial building would use the Weighted Average Cost of Capital to determine the: Select one: a. Capitalization rate. b. Discount rate. c. Remainder rate. d. Sample rate. Feedback The Weighted Average Cost of Capital (WACC) is used to determine the discount rate in a discounted cash flow analysis. The correct answer is: Discount rate. ------CORRECT ANSWER---------------The Weighted Average Cost of Capital (WACC) is used to determine the discount rate in a discounted cash flow analysis. The correct answer is: Discount rate. The recapture of depreciation is taxed at what rate? Select one: a. 25%; b. The taxpayer's ordinary income rate; c. The taxpayer's short term capital gains rate; d. 10%. ------CORRECT ANSWER---------------a. 25%; An investor purchased a rental home for $375,000. The lot was valued at $100,000. What would be this investor's depreciation deduction for a full year? Select one: a. $13,636; b. $9,625; c. $10,000; d. $7,051. ------CORRECT ANSWER---------------c. $10,000; (recovery period of 27.5 yrs) A paired sales analysis is used: Select one: a. Primarily to value industrial properties. b. To determine construction costs. c. In a discounted cash flow analysis. d. To determine the adjustment necessary for a particular characteristic of a property in the direct sales comparison approach. ------CORRECT ANSWER---------------. To determine the adjustment necessary for a particular characteristic of a property in the direct sales comparison approach. Which of the following is deducted from effective gross income to arrive at the net operating income? Select one: a. Management costs only. b. Depreciation only. c. Both management costs and depreciation. d. Neither management costs nor depreciation. ------CORRECT ANSWER---------------a. Management costs only. The article cited in the text about hotel investment suggests that it is a bad idea to build a new hotel on the lowest end of the cost spectrum â€" such as rates below $100. What is the primary rationale for this? Select one: a. The gross income cannot be sufficient to support the costs; b. These hotels are most sensitive to economic downturns; c. Existing competing hotels will always be able to undercut your room rates; d. None of these choices. ------CORRECT ANSWER---------------c. Existing competing hotels will always be able to undercut your room rates; The income approach to appraisal is based primarily on the principle of: Select one: a. Anticipation. b. Substitution. c. Progression. d. Contribution. Feedback The income approach is based primarily on the principle of anticipation which states that the value of a property can be determined as a function of the anticipated income the property is likely to generate. The correct answer is: Anticipation. ------CORRECT ANSWER---------------Anticipation b. The type of financing used for particular types of industrial buildings. c. An intermediate financing between the property owner and the mortgage lender. d. A type of financing using the issuance of preferred stock by the corporation buying the property. ------CORRECT ANSWER---------------c. An intermediate financing between the property owner and the mortgage lender. A use and occupancy clause in a commercial lease prohibits a tenant from committing "waste." In this context, waste means: Select one: a. Excessive amounts of garbage which raises the landlord's operating costs. b. Using excessive amounts of water or electricity. c. A change in the condition of real property caused by a tenant that damages or destroys the value of the property. d. None of the above. ------CORRECT ANSWER---------------The correct answer is: A change in the condition of real property caused by a tenant that damages or destroys the value of the property. Each of the following statements about markets is correct, EXCEPT: Select one: a. A market is a medium that allows buyers and sellers of a specific good or service to interact in order to facilitate an exchange. b. Many markets exist in physical locations. c. All markets require personal interaction between the buyer and the seller. d. There are both wholesale and retail markets. Feedback ------CORRECT ANSWER---------------c. All markets require personal interaction between the buyer and the seller. The simplest, most desirable type of mezzanine financing, and the one least often available is: Select one: a. Assignment of the ownership. b. A cash flow note. c. A second mortgage. d. An equity position. Feedback ------CORRECT ANSWER---------------c. A second mortgage. A commercial mortgage loan has a prepayment penalty which starts at a higher level, decreases each year for several years, then disappears. This is called a(n): Select one: a. Interest guarantee. b. Lockout. c. Defeasance. d. Step-down. ------CORRECT ANSWER---------------d. Step-down. Which of the following documents would provide the most information about the tenants in a commercial building that is to be the collateral for a commercial mortgage loan? Select one: a. Proforma. b. Rent roll. c. Loan application. d. Form 1003. ------CORRECT ANSWER---------------The rent roll would show a great deal of information about each specific tenant. (Forrm 1003 is the Uniform Residential Loan Application and would not be used in a commercial transaction.) The correct answer is: Rent roll. The government purchases portion of the Gross Domestic Product would include: Select one: a. Defense spending. b. Transfer payments. c. Interest on the federal debt. d. All of the above. ------CORRECT ANSWER---------------a. Defense spending. Which of the following statements about subleases or assignments is TRUE? Select one: a. A sublessee will make the rent payments to the sublessor. b. An assignee will make the rent payments to the assignor. c. A sublease must expire at the same time as the sublessor's lease. d. When a lease is assigned, the original tenant is automatically free from any liability for the monthly rent. ------CORRECT ANSWER---------------a. A sublessee will make the rent payments to the sublessor. What is the actual difference between a renewal of a lease and an extension of a lease? Select one: a. A renewal is for the same duration as the original lease while an extension is only for one year. b. An extension is for the same duration as the original lease while a renewal is only for one year. c. A renewal requires the renegotiation of the entire lease while an extension just extends the lease out into the future under the same terms, except that the rent may change. d. An extension requires the renegotiation of the entire lease while a renew just extends the lease out into the future under the same terms, except that the rent may change. ---- --CORRECT ANSWER---------------A renewal requires the renegotiation of the entire lease while an extension just extends the lease out into the future under the same terms, except that the rent may change. Which of the following statements is true regarding the Debt Yield Ratio that is NOT also true of the Debt Service Coverage Ratio? Select one: a. A higher ratio is better for the lender. b. The ratio is not affected by the interest rate or amortization period of the loan. c. The ratio can be an important consideration in underwriting the loan. d. The ratio is used more often for commercial loans than for residential loans. ------ CORRECT ANSWER---------------The correct answer is: The ratio is not affected by the interest rate or amortization period of the loan. The statement "the ratio is not affected by the interest rate or amortization period of the loan" is true of the Debt Yield Ratio but is not true of the Debt Service Coverage Ratio. Lower interest rates or longer amortization periods will reduce the annual debt service which would reduce the DSCR but will not affect the Debt Yield Ratio. A retail space includes 12,000 square feet of usable square feet and 15,000 square feet of rentable square feet. What is the load factor? Select one: a. 30%. b. 25%. c. 15%. d. 10%. Feedback ------CORRECT ANSWER---------------Start with the rentable square footage of 15,000; divide that by the 12,000 square feet of usable square feet for a result of 1.25; subtract 1 for a result of 0.25, then multiply that by 100 for a result of 25%. The correct answer is: 25%. Question 19 Incorrect 0.00 points out of 1.00 Flag question Question text If the money supply grows too quickly, the most likely risk could be: Select one: a. Inflation. b. Recession. c. High interest rates. d. Excessive unemployment. ------CORRECT ANSWER---------------a. Inflation. Under Regulation Z, which of the following types of loan originator compensation would be considered to be based on the terms or conditions of the loan: Select one: a. A higher compensation if the applicant accepts a prepayment penalty clause. b. A higher compensation if the applicant has a credit score above 720. c. A higher compensation if the applicant accepts a prepayment penalty clause and/or has a credit score above 720. d. All of these choices would be considered to be compensation based on the terms or conditions of the loan. ------CORRECT ANSWER---------------d. All of these choices would be considered to be compensation based on the terms or conditions of the loan. The finance charge, as computed under the Truth in Lending Act, would include each of the following, EXCEPT: Select one: a. Mortgage insurance premiums. b. Discount points. c. Appraisal fees. d. Loan origination fees. ------CORRECT ANSWER---------------c. Appraisal fees. The new Loan Estimate Form combines what previous forms? Select one: a. The GFE and initial TIL. b. The GFE and HUD-1. c. The TIL and HUD-1. d. The GFE and Special Information Booklet. ------CORRECT ANSWER---------------a. The GFE and initial TIL. Under Regulation Z, if a loan is subject to the Loan Estimate disclosure requirement, the earliest the loan could possibly close is: Select one: a. 3 business days after the Loan Estimate is delivered or mailed; b. 5 business days after the Loan Estimate is delivered or mailed; c. 7 business days after the Loan Estimate is delivered or mailed; d. 10 business days after the Loan Estimate is delivered or mailed. ------CORRECT ANSWER---------------c. 7 business days after the Loan Estimate is delivered or mailed; Bigcity Bank requires mortgage applicants to obtain a lender's policy of title insurance in order to obtain a mortgage loan. ABC Title Insurance is given as a recommended provider for the policy, with an estimated fee, but the consumer has the right to obtain coverage from another provider if so desired. The fee would be paid to the provider, not the lender. If the applicant chooses to obtain coverage from a different provider, what error tolerance factor would this estimate be subject to? Select one: a. This fee would not be subject to the error tolerance requirements. b. This fee would be subject to the 15% error tolerance requirements. c. This fee would be subject to the 10% error tolerance requirements. d. This fee would be subject to the zero error tolerance requirements. ------CORRECT ANSWER---------------Since the applicant exercised the right to shop for another provider, this title insurance premium would not be subject to any error tolerance requirements. (There is no 15% error tolerance category.) The correct answer is: This fee would not be subject to the error tolerance requirements. Each of the following loans would be subject to the Real Estate Settlement Procedures Act, EXCEPT: Select one: a. A conventional refinancing loan on a duplex. b. An FHA loan. c. A first mortgage that is made by a bank and held in its portfolio. d. An agricultural loan. ------CORRECT ANSWER---------------d. An agricultural loan. If a lender failed to give a borrower the Loan Estimate, the borrower could rescind the loan for up to: Select one: a. 30 days; b. Three years; c. One year; d. The maturity date of the loan. ------CORRECT ANSWER---------------b. Three years; Each of the following actions are recommended to those who have or are considering a Marketing Services Agreement, EXCEPT: Select one: a. The fees charged should not change unless the services there is an objective change in the services provided. b. The MSA partner should be designated as a "preferred provider" to consumers. c. The market value of the services provided should be determined or verified by a neutral third party. d. The contract should be carefully reviewed by an attorney who is well-versed and experienced with matters dealing with RESPA. ------CORRECT ANSWER---------------b. The MSA partner should be designated as a "preferred provider" to consumers. The form which replaced the HUD-1 or HUD1-a form is the: Select one: a. RESPA Disclosure. b. Closing Disclosure. c. Uniform Settlement Statement. d. None of these. Feedback ------CORRECT ANSWER---------------b. Closing Disclosure. Which of the following statements about Marketing Services Agreements (MSAs) is FALSE? Select one: a. The CFPB has released clear guidance on what it considers to be an acceptable MSA. b. When the CFPB reviews an MSA, it will want to see evidence that the promised services were actually provided. c. The CFPB believes that MSAs present the risk of steering consumers to the MSA partner. d. None of these statements is false. ------CORRECT ANSWER---------------a. The CFPB has released clear guidance on what it considers to be an acceptable MSA. Which of the following choices is the primary determinant of whether or not an affiliated company will be considered a "sham affiliate?" Select one: a. Whether the firm uses a DBA instead of its actual name. b. Whether the referring affiliate's ownership percentage or income distribution is a function of referrals generated. c. Both of the above. d. None of these statements. ------CORRECT ANSWER---------------c. Both of these statements. The loan amount in a mortgage loan could increase if: Select one: a. It is an adjustable rate mortgage. b. It has a negative amortization feature. c. It has a balloon payment. d. Any of these choices. ------CORRECT ANSWER---------------b. It has a negative amortization feature. One of the loan options that must be disclosed when using the safe harbor provisions of the Regulation Z prohibition against steering is a loan with the lowest interest rate without a number of unfavorable factors. One of these factors relates to a balloon payment. Which of the following statements is correct regarding loans with balloon payments which are presented as an option for this disclosure category: Select one: a. The loan cannot have a balloon payment at any time. b. The loan cannot have a balloon payment in the first 10 years of the loan. c. The loan cannot have a balloon payment in the first 7 years of the loan. d. The loan cannot have a balloon payment in the first 5 years of the loan. ------ CORRECT ANSWER---------------The correct answer is: The loan cannot have a balloon payment in the first 7 years of the loan. What would be the consequences of a loan originator's failure to comply with the safe harbor provisions of the Regulation prohibition against steering: Select one: a. The loan originator would likely face fines and/or suspension or revocation of his or her mortgage loan originator license or registration. b. The loan originator would be deemed to have violated the prohibition against steering. c. The loan originator would be guilty of a misdemeanor. d. The loan originator would lose the protection of having been deemed to have complied with the prohibition against steering. Feedback ------CORRECT ANSWER---------------The correct answer is: The loan originator would lose the protection of having been deemed to have complied with the prohibition against steering. The Loan Estimate Form must be delivered to or mailed to the consumer no later than the third business day after: Select one: a. Initial substantive contact. b. Consummation of the loan. c. The consumer's acceptance of the proposed loan. d. Receipt of the application. ------CORRECT ANSWER---------------d. Receipt of the application. Which of the following practices are recommended when establishing a Marketing Services Agreement (MSA)? Select one: a. Entering into an MSA with an affiliated company. b. Entering into an MSA with a month-to-month term. c. Including fees for allowing access to the firm's sales meetings. d. None of the above. ------CORRECT ANSWER---------------d. None of the above. What is the CFPB's primary concern about Marketing Services Agreements (MSAs)? Select one: a. These MSAs are flatly prohibited. b. Many of these agreements are, in effect, a way to attempt to circumvent the prohibition against kickbacks and referral fees. c. These agreements need the prior approval of the CFPB, which often does not occur. d. None of these choices. ------CORRECT ANSWER---------------b. Many of these agreements are, in effect, a way to attempt to circumvent the prohibition against kickbacks and referral fees. Shortly after a loan is consummated an error was discovered in the Closing Disclosure that changed the amount paid by the borrower. The creditor would have _____ to deliver or mail a revised Closing Disclosure. Select one: a. 30 days from the borrower's receipt of the Closing Disclosure. b. 30 days from the creditor's discovery of the error. c. 60 days from the borrower's receipt of the Closing Disclosure. d. 60 days from the creditor's discovery of the error. ------CORRECT ANSWER------------ ---b. 30 days from the creditor's discovery of the error. The new Closing Disclosure Form combines what previous forms? Select one: a. The GFE and final TIL. b. The final TIL and HUD-1. c. The final TIL and Special Information Booklet. d. The GFE and HUD-1 ------CORRECT ANSWER---------------b. The final TIL and HUD- 1. Once the Loan Estimate is delivered or mailed, the loan cannot be consummated for at least: Select one: a. 3 business days; b. 5 business days; c. 7 business days; d. 10 business days. ------CORRECT ANSWER---------------c. 7 business days; A bank owns a large number of REO properties. It maintains a practice that it will only give listings on these properties to real estate licensees who have referred borrowers to that bank. This practice is: Select one: a. Not a violation of RESPA. b. Not a violation of RESPA so long as the licensees use their best efforts to sell the properties. c. A violation of RESPA. d. Not a violation so long as the referral comes after the licensee has sold the property. ------CORRECT ANSWER---------------c. A violation of RESPA. Each of the following would be considered a loan from a "federally-related lender, EXCEPT: Select one: a. VA loans; b. Mortgage loans made by banks and sold to Fannie Mae. c. Mortgage loans made by private individuals. d. Mortgage loans made by mortgage companies and sold to Fannie Mae. ------ CORRECT ANSWER---------------c. Mortgage loans made by private individuals. If a loan has a demand feature, the lender can: Select one: a. Require financial disclosures from the borrower. The owner of a house tells the listing broker that he is HIV positive but he does not want prospective buyers to know this. One of the prospective buyers tells the listing broker that he has heard the seller is HIV positive and asks the broker if this is true. The broker Select one: a. must tell the prospective buyer that it is true. b. must honor his seller's confidentiality and tell the prospective buyer that it is not true. c. can tell the prospective buyer that he does not know. d. can tell the prospective buyer that this is an illegal question. ------CORRECT ANSWER---------------a. must tell the prospective buyer that it is true. Which of the following statements about property managers is NOT true? Select one: a. They must all be licensed. b. They maintain the property. c. They manage relations among tenants. d. They develop budgets. Feedback Property managers who are employed by the owner do not need to be licensed, so choice 'a' is the FALSE statement. The correct answer is: They must all be licensed. ------CORRECT ANSWER--------------- a. They must all be licensed. A broker must disclose the types of agency relationships offered and how compensation might be shared with other brokers. Select one: a. prior to signing a contract for sale. b. prior to showing the property. c. prior to signing a listing agreement. d. within a reasonable time. ------CORRECT ANSWER---------------c. prior to signing a listing agreement. A firm got a real estate license on December 7th, 2022. The firm's license would expire on: Select one: a. December 7, 2024. b. December 31, 2024. c. December 7, 2026. d. December 31,2026. ------CORRECT ANSWER---------------d. December 31,2026. A salesperson runs an advertisement which includes the name and phone number of the brokerage firm. Which of the following statements is correct? Select one: a. Only the name of the firm must be printed in a size equal or greater than that of the salesperson. b. Only the phone number of the firm must be printed in a size equal or greater than that of the salesperson. c. Both the name and the phone number of the firm must be printed in a size equal to or greater than that of the salesperson. d. Neither the name nor the phone number of the firm must be printed in a size equal to or greater than that of the salesperson. ------CORRECT ANSWER---------------c. Both the name and the phone number of the firm must be printed in a size equal to or greater than that of the salesperson. A prospective applicant for a real estate salesperson's license takes the state exam and passes it in September 2020. In October 2021 the person submits his application for a real estate license. Select one: a. This person must pay a fee equal to 2 times the original fee. b. This person must retake the 75 hour required education prior to submitting his application. c. This person must complete post-license education before submitting his application. d. This person must retake the state licensing exam. ------CORRECT ANSWER----------- ----The correct answer is: This person must retake the state licensing exam. Which of the following statements about offers is TRUE? Select one: a. An offer becomes a sales contract as soon as it is accepted. b. An offer must be accompanied by earnest money. c. Licensees must present all written and oral offers up to time of closing. d. Licensees must present all written offers up to time of closing. ------CORRECT ANSWER---------------Licensees must present all written offers up to time of closing. If a landlord and a tenant have a dispute in Georgia Select one: a. they may appeal to the real estate commission for a resolution. b. they must agree to binding arbitration. c. they may sue in a court of competent jurisdiction. d. they must be represented by a licensed Georgia attorney. ------CORRECT ANSWER- --------------c. they may sue in a court of competent jurisdiction. REALTOR® A has a listing on a seller's home and the seller has accepted an offer. The offer is contingent upon the sale of the buyer's current home. REALTOR® B has a buyer who has made an offer. Under the Code of Ethics, what should listing REALTOR® A do? Select one: a. Ignore REALTOR® B's offer since the seller's home is already under contract. b. Reveal the existence of the contract but not the contingency. c. Reveal the existence of the contract and the contingency. d. Present the second offer to the seller without disclosing the existence of the offer or the contingency. ------CORRECT ANSWER---------------c. Reveal the existence of the contract and the contingency. A REALTOR® has a listing on a client's house. The sellers are getting a divorce and need to sell the home quickly. Under what circumstances can the REALTOR® reveal this fact to a potential buyer? Select one: a. Under no circumstances. b. Without restriction. c. Only if the buyer asks about the seller's motivation for selling. d. Only after getting informed consent from the seller. ------CORRECT ANSWER---------- -----d. Only after getting informed consent from the seller. A Realtor® who enters into a brokerage agreement with a buyer is obligated to disclose to the client each of the following issues, EXCEPT: Select one: a. That the seller's agent is forbidden by the Code of Ethics to reveal the terms and conditions of any offer made by the buyer to anyone other than the seller; b. The potential for additional or offsetting compensation from other brokers, from the seller or landlord, or from other parties; c. Any potential for the buyer/tenant representative to act as a disclosed dual agent, e.g., listing broker, subagent, landlord's agent, etc.; d. The Realtor®'s company policies regarding cooperation. ------CORRECT ANSWER- --------------that the seller's agent is forbidden by the Code of Ethics to reveal the terms and conditions of any offer made by the buyer to anyone other than the seller; In Case Study 2-15 the FHA contacted a REALTOR® to discuss a suspicion that local brokers had been engaged in defrauding the FHA by overstating the value of homes in the area. The REALTOR® knew that this was going on and some other brokers who had done so but refused to list any names for fear of retribution. How should the REALTOR® have handled this? Select one: a. Report the issue to the local police. b. Keep the information to himself. c. Report the matter to the Grievance Committee. d. File a criminal complaint to the US Attorney General. ------CORRECT ANSWER-------- -------c. Report the matter to the Grievance Committee. REALTOR® who is selling his or her own property is obligated to comply with the duties imposed by the Code of Ethics in which of the following circumstances: Select one: a. When the sale does NOT involve the MLS or cooperation with other licensees. b. When a cooperating broker who is not a REALTOR® is the procuring cause of the sale. c. Both of the above. d. None of the above. ------CORRECT ANSWER---------------Standard of Practice 1-1 states that REALTORS®, when acting as principals in a real estate transaction, remain obligated by the duties imposed by the Code of Ethics. The correct answer is: Both of the above. Under the Code of Ethics, REALTORS® may act as a dual agent: Select one: a. Under no circumstances. b. Only with informed consent. c. Without restriction. d. Only with the prior specific approval of the state regulatory agency. ------CORRECT ANSWER---------------Only with informed consent. A set of moral values and principles that provide a measure to determine the "rightness" or "wrongness" of actions are: Select one: a. Standards. b. Ethics. c. Regulations. d. Laws. ------CORRECT ANSWER---------------b. Ethics. In the Code of Ethics, REALTORS® have obligations to: Select one: a. Clients. b. Customers. c. Other REALTORS®. d. All of the above. ------CORRECT ANSWER---------------d. All of the above. The Code of Ethics permits REALTORS® to receive compensation from both parties to a transaction: Select one: a. Under no circumstances. b. Without restriction. c. Only with the informed consent of either principal. d. Only with the informed consent of both principals. Feedback ------CORRECT ANSWER---------------d. Only with the informed consent of both principals. Under what circumstances would the Code of Ethics hold that the termination of a nearby bus stop be an adverse material fact which must be disclosed? Select one: a. Under all circumstances. b. Under no circumstances. c. If it was a heavily used bus stop. d. If the nearby bus stop was a crucial feature to the buyer. ------CORRECT ANSWER--- ------------d. If the nearby bus stop was a crucial feature to the buyer. A seller's house is in escrow. The listing broker receives a better offer from another buyer. The seller wants to cancel the current contract and accept this later offer. The Code of Ethics would require this listing broker to: Select one: a. Explain the risks involved and recommend the best option. b. Tell the seller to accept the second offer. c. Tell the seller to seek legal counsel about how to proceed. d. Ask the first buyer to rescind the contract. ------CORRECT ANSWER---------------: Tell the seller to seek legal counsel about how to proceed. A property manager is able to purchase supplies for the apartment complex at wholesale prices. The property manager marks that up to retail prices when charging the expense to the property owner. This practice would be ethical: Select one: a. In all cases. b. In no cases. c. If fully disclosed to the owner and consent is obtained. d. As long as the markup is no more than 10%. ------CORRECT ANSWER--------------- The correct answer is: If fully disclosed to the owner and consent is obtained.