Texas Principles Of Real Estate II Final Exam 120 Questions & Answers: Latest Updated, Exams of Real Estate Management

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Texas Principles Of Real Estate II Final

Exam 120 Questions & Answers: Latest

Updated 2023 - 2024 (VERIFIED ANSWERS)

Ricky, a borrower, has a mortgage loan that has just been bought by a new investor. Ricky panics, as his loan conditions are bound to change with the new owner. Evaluate if Ricky's fear is accurate, and why/why not. - ANSWER>>Ricky shouldn't worry; even though the loan is being sold by the lender, Ricky will most likely not be affected at all Rex purchased an investment property with the intention of renting it out. To finance it, he set up a partially amortized loan with a balloon payment. What risk could this pose for him as the borrower? - ANSWER>>If his property fails to gain anticipated value, Rex could be caught with insufficient funds to pay for the larger, final balloon payment. Who is the representative of the title insurance company who reviews the title insurance commitment, prepares the Closing Disclosure, and conducts the closing? - ANSWER>>Closing agent Alicia has two people interested in the lots she is selling. She gives them both a copy of the property report. She is required to do so under what Act? - ANSWER>>The Interstate Land Sale Full Disclosure Act A tenant has recently signed a lease for a new commercial property. According to the lease terms, the tenant pays a monthly rent, and the landlord covers maintenance and other property expenses. This lease is a: - ANSWER>>Gross lease What legislation mandates a nationwide licensing and registration system for residential mortgage loan originators (MLOs)? - ANSWER>>SAFE Act (The Secure and Fair Enforcement for Mortgage Licensing Act)

What is a primary advantage of a REMIC? - ANSWER>>They offer stability with the variety of mortgages they contain Tumi needs to know what her loan principal will be. The property costs $400,000 and she is able to make a $65,000 down payment. What is her loan principal? - ANSWER>>$335, Joselyn is buying a new condo in New York City. She will close on March 1. The condo has an annual insurance premium of $8,640. How much of that premium will Joselyn be responsible for if it is calculated on a 360-day year? - ANSWER>>$ 7200 Which of the following is an example of something that would be listed on a Closing Disclosure as a credit to the buyer? - ANSWER>>The balance of the buyer's new loan What is the name for the form that itemizes services and fees charged to the borrower by the lender when applying for a real estate loan? This is the same form that is received by the consumer no later than three business days before consummation of the loan. - ANSWER>>Closing disclosure What entity consists of 11 district banks that are regulated by the Federal Housing Finance Agency? - ANSWER>>The Federal Home Loan Bank (FHLB) system Property owner John illegally disposes of toxic waste by burying it underneath his property. The chemicals leak into a nearby lake and contaminate the water. The EPA can order John to take responsibility for the cleanup under what law? - ANSWER>>CERCLA Which of the following has a long lease term and is often used in the development of commercial property? - ANSWER>>Ground lease

What is a fee simple subject to a condition subsequent estate? - ANSWER>>An estate in which the property MUST be used for a specific purpose and if it's not, the real estate reverts back to the original owner Landlords MUST allow tenants with disabilities to make reasonable modifications to a property so they can enjoy it. But there are also unreasonable modifications a landlord does NOT have to allow. All of the following are unreasonable modifications EXCEPT - ANSWER>>Modifications made at the tenant's expense A 20-acre property is about to be sold. Before it can be sold, however, the loan connected to the property has to be paid in full. What is the name of the provision in the mortgage that would require this full payment? - ANSWER>>Alienation clause Which of the following about REITs is FALSE? - ANSWER>>A real estate investment trust allows a single investor to directly own a property and experience the full return rights to that property An area is zoned for residential use only. If a person would like to operate a business in their home, what could they do? - ANSWER>>Seek a conditional-use permit from the zoning board, if it is defined as allowable Instruments affecting real estate must be recorded with the county clerk where the land is located. What purpose does this process of recording acts serve? - ANSWER>>The recording acts give legal priority to those interests that are recorded first What are tranches? - ANSWER>>Mortgage-backed securities that are sold to investors at different risk levels and classes In the typical real estate transaction, the appraiser will be chosen by which party? - ANSWER>>Lender

Allie's property is 600' x 430'. How many acres is the lot? - ANSWER>>Identify the square footage of the land (600' x 430'). Divide that by 43,560 feet. 5.92 acres Ben would like to construct a restaurant on a parcel of land. This particular parcel is not zoned for a commercial use. Ben should go to the city and seek a(n) - ANSWER>>Use variance A deed restriction in a neighborhood requires a 15-foot setback. The city zoning regulations specify a minimum of a 10-foot setback. Which rule must be followed? - ANSWER>>The deed restriction What does the DUST acronym stand for, and what does it relate to? - ANSWER>>Demand, Utility, Scarcity, Transferability; DUST recalls the characteristics that make real estate valuable With which type of loan will payments made at the beginning be mostly interest, while payments made at the end will be mostly principal? - ANSWER>>Amortized loan When does the Interstate Land Sales Full Disclosure Act require the seller to give the report to a lot purchaser? - ANSWER>>Before a purchase agreement is signed Jeremiah is looking to sell his home, so he researches property market values in his area for properties that are similar to his own home. These market values typically reflect - ANSWER>>The price a property sells for in an open and fair sale under normal market conditions Which of the following regarding owner's title insurance policies and lender's title insurance policies is TRUE: - ANSWER>>Owner's policies are usually issues for the sales price of the property; lender's policies are usually issued on the dollar amount of the loan

Which of the following is TRUE about a Certificate of Mold Remediation? - ANSWER>>It must be passed to property buyers for five years and it prevents insurance companies from using previous mold claims against a property Cash flow is defined as - ANSWER>>Spendable cash that an investment generates after accounting for the operating expenses, debt service, and taxes A developer plans to build an apartment building on a lot. The lot is 525,000 square feet. City regulations dictate that there can be density no greater than 20 occupants per acre. Approximately how many occupants can this lot house? - ANSWER>>525,000 / 43 ,560 = 12.052 x 20 ~ 241 Which TILA regulation requires a disclosure statement where lenders must make certain loan facts known to borrowers? - ANSWER>>Regulation Z requires lenders to make certain facts known, such as the amount of the application fee for obtaining a loan or the total sale price, including the down payment. What methods can be used when determining value through the cost approach? - ANSWER>>The square-foot method, the unit-in-place method, and the quantity-survey method. What does constructive notice presume? - ANSWER>>A diligent individual can search the public record to gain a sufficient understanding of the property, including those with present and past interests in that property. How do organization, operation, and liquidation relate to a typical real estate syndication? - ANSWER>>They are the first, second, and third phases in the typical three-phase syndication cycle According to RESPA, a seller may NOT require a borrower to do this as a condition of sale: - ANSWER>>Use a specific title company

A tenant's personal belongings in apartments may be insured by - ANSWER>>Obtaining renter's insurance Which of the following about a holographic will is FALSE? - ANSWER>>It can NOT be changed Which of the following BEST describes why RESPA was passed? - ANSWER>>To ensure meaningful disclosure of closing costs in a real estate transaction Anything that is fastened or attached to real property permanently is considered to be: - ANSWER>>Real Property A quitclaim deed releases all present claims, rights and title of the: - ANSWER>>Grantor When a creditor wants to satisfy a judgement which was levied against another person, the creditor would: - ANSWER>>Obtain a writ of execution Before a mechanics lien is effective it must be: - ANSWER>>Verified and recorded Discrimination by a real estate licensee based on race is: - ANSWER>>A violation of the regulations of the Real Estate Commissioner, against public policy, and unethical Upon the signing of a real property sales contract: - ANSWER>>An equitable title passes to purchaser All California Real Estate Laws are created by: - ANSWER>>Acts of the legislature The 36 sections in a township are numbered from 1 through 36. Section 1 is located in the: - ANSWER>>Northeast corner

Which of the following would be a discriminatory act under the Commissioner's Regulations? - ANSWER>>Posting a sign on the property indicating a preference for female renters, designing an ad for general circulation appealing to persons of a specific religion to purchase within a given area, and refusing to list a property in an area occupied by persons of a race other than the licensee. The type of interest usually charged on home loans is: - ANSWER>>Simple A landowner is notified by a railroad company that it plans to cross his property with a railroad line. If the landowner refuses, the railroad company can proceed by the use of: - ANSWER>>Eminent domain Title to real property that is transferred by a will is considered: - ANSWER>>A devise A real estate broker received 40 acres of land valued at $300 per acre as a commission from the seller. Two weeks after escrow closed, the broker was offered $400 per acre for the land. If the broker accepts the offer he: - ANSWER>>Will be acting in an acceptable manner The words "procuring cause" would have an important meaning to which of the following? - ANSWER>>A disputed over commission on an open listing Which of the following is not an essential element of a contract? - ANSWER>>Performance Under the Street Improvement Act of 1911, the city is authorized to assess each owner for the work completed. These improvements are assessed on the basis of: - ANSWER>>Front footage The real estate tax fiscal year is for the period: - ANSWER>>July 1 to July 1

The landmark case of the United States Supreme Court which prohibited discrimination in housing was: - ANSWER>>Jones vs. Mayer Most real estate syndicates that have been created in California have taken the form of a: - ANSWER>>Limited partnership Under the California Veterans Home and Farm Purchase Act of 1974, the purchaser acquired possession through a: - ANSWER>>Land Contract Which of the following has the control over the approval of a subdivision under the Subdivision Map Act? - ANSWER>>Planning Commission A grant deed: - ANSWER>>Warrants that the property has not been previously conveyed by the grantor When an appraiser analyzes the rent while using the income approach, he should base his appraisal on which of the following characteristics of the income? - ANSWER>>Durability, quality, and quantity An income property was appraised for the $100,000 based on a 6% capitalization rate. If an investor used an 8% capitalization rate, the property would be: - ANSWER>>$75, Which of the following appraisal reports would be the most comprehensive and complete? - ANSWER>>Narrative Once an abstract of judgment is recorded it remains a lien on all real property for: - ANSWER>>Ten years

If a note in the amount of $22,250 specifies monthly payments over a period of 30 years at 6.6% interest per annum, what is the first month's interest payment? - ANSWER>>$122. "Duress" is a term which is most closely associated to matters concerning: - ANSWER>>Contracts Which of the following statements is true with respect to an option? An option is: - ANSWER>>Valid if consideration is delivered even if it is less than $ The term "Realtor" is a trade name and only persons who are members of which of the following organizations have the right to use the term? - ANSWER>>National Association of Realtors The California State Agency that governs the issuance of liquor licenses is the: - ANSWER>>State Franchise Tax Board The gross multiplier method of appraisal would be of little value when appraising: - ANSWER>>Public buildings Blank, special, restrictive, and qualified are all terms used to specify types of: - ANSWER>>Endorsements The phrase in a loan contract that specifies "all due and payable upon the happening of a certain event" would be classified as: - ANSWER>>An acceleration clause When a property is sold during a tight money market and the existing loan contains an alienation clause, which of the following is most likely to occur? - ANSWER>>Buyer will secure new financing

Which of the following would be considered a quiet title action? - ANSWER>>Court action to remove a cloud on the title The government's control over land use, planning and zoning are an important example of: - ANSWER>>Police power Which of the following acts of a real estate licensee would not be a violation of the real estate law? - ANSWER>>Taking a net listing A corporation is prohibited from holding title to real property in California with any one as a joint tenant because: - ANSWER>>If it's perpetual existence Charles died intestate and left a $60,000 Estate but no heirs. His state would: - ANSWER>>Revert to the state When land gradually builds up as a result of the action of water, it is known as: - ANSWER>>Accretion A first trust deed can usually be distinguished from a second trust deed by the: - ANSWER>>Time and date of decoration A lender agrees to make a loan on a large commercial complex provided the borrower gives the lender a 2% interest in the ownership. This type of loan would be known as a:

• ANSWER>>Participation loan Which of the following is not a requisite for creation of an enforceable leasehold agreement? - ANSWER>>That rent payments be made in advance Which of the following is not an essential to the validity of a deed? - ANSWER>>Payment of financial consideration

The trust deed and note on a conventional loan is held by the: - ANSWER>>Lending institution When a Cal-Vet wishes to purchase a home and use his or her California veterans benefits he or she would make application to the: - ANSWER>>Department of Veterans Affairs A real estate subdivider who resides in Hawaii is required to comply with various laws if he wants to offer his property located in Hawaii for sale in California. The law that he would be most concerned with would be the: - ANSWER>>California Real Estate Law If you wish to realize a $37.50 per month income on an investment that represents a 9% return, the amount to be invested must be: - ANSWER>>$5, Deed restrictions may be terminated in all of the following ways, except: - ANSWER>>Voluntary cancellation by grantee Permissive use of a road across real property would cause a prescriptive easement in: - ANSWER>>None of the above To an appraiser, a definition of value is: - ANSWER>>The relationship between desirous persons and things desired, the ability of one commodity to command other commodities in exchange, and the present worth of all the right to future benefits arising from the ownership of property FHA has established certain MPR's that apply to loans that they insure. MPR is an abbreviation for: - ANSWER>>Minimum Property Requirements Under a construction loan, the final payment to the borrower is generally released when the: - ANSWER>>Lien period has expired

Recording a deed: - ANSWER>>Presumes delivery of the deed An executrix of an Estate is: - ANSWER>>Named in the decedent's will When a broker advertises a listed property for sale, the broker may not legally use an ad: - ANSWER>>That gives the impression that the broker is the owner of the property A client hires a broker to buy a parcel of land for a specified sum on his behalf. The broker however purchases it for himself at a lower price and then sells it to his client at a higher price without revealing his costs. This is an example of: - ANSWER>>Secret profit An appraiser intends that the estimate of value as disclosed in his or her appraisal report on a property be valid: - ANSWER>>As of the date of the appraisal only An apartment building develops a net income of $15,000. If it were sold at a price based upon a capitalization rate of 8%, the selling price would be: - ANSWER>>$187, Which of the following state agencies is empowered to prevent acts of discrimination in housing accommodations in California because of race, color, religion, national origin or ancestry? - ANSWER>>Department of Fair Employment and Housing The person who most likely would make use of the legal remedy known as "Unlawful Detainer" would be a: - ANSWER>>Lessor An estate in which a tenant who rightfully came into possession of a property, and who retains possession after the expiration of the term without he consent of the landlord is known as: - ANSWER>>An estate at sufferance

If the Federal Reserve wants to increase the amount of money available to member banks to ease a tight money market it could: - ANSWER>>Lower the minimum reserves required by its member banks All of the following would have an effect on the final estimate value when making an appraisal of an old family residence except: - ANSWER>>Original cost of the residence A restrictive covenant contained in a deed which prohibits sale to persons of a particular race will: - ANSWER>>Have no effect in the conveyance and the covenant will not be enforceable Which of the following would not be classified as a specific lien? - ANSWER>>Judgment A title plant is a: - ANSWER>>Collection of real estate records In a business partnership, if one of the partners dies, the surviving partner: - ANSWER>>Becomes exclusive manager of the partnership business and retains title to the partnership property until he winds up the partnership business Enforcement of the State Housing Law is accomplished through the: - ANSWER>>Local building inspectors The stated policy of the Real Estate Commissioner is to create a "color-blind" industry which can help society obtain voluntary, equal opportunity in fair housing. What does this mean? - ANSWER>>Maintain an attitude that is actually free from bias and color- blind to appearance, that race, creed or color is not a material fact in real estate transactions, and do unto others as you would have them do unto you State law requires that every city or county create a planning commission: - ANSWER>>Without exception

If there is a conflict between the signed escrow instructions and the signed deposit receipt, which of the following would be binding? - ANSWER>>The escrow instructions A person that is employed by another to act on his or her behalf may be considered: - ANSWER>>An employee, an agent, and an independent contractor To hold real property as tenants in common, individuals must: - ANSWER>>Hold undivided interests The least contract is considered: - ANSWER>>Personal property An estate of inheritance or a perpetual estate would be: - ANSWER>>A fee simple estate The end result of most profit and loss statements is to ascertain: - ANSWER>>Net income When a listing is signed by a seller and broker, a fiduciary relationship is created between the broker and the: - ANSWER>>Seller Which of the following would not be classified as an institutional lender? - ANSWER>>Mortgage company Which of the following represents a gross misrepresentation by the agent? - ANSWER>>The representation is an obvious falsehood, the representation is made with the knowledge of it being a falsehood, and the representation caused the aggrieved party to enter into the contract

Most real estate contracts are in writing on reprinted forms. Some of the terms of these contracts must be written in and other parts are reprinted. In the interpretation of such contracts: - ANSWER>>The written parts take precedence over the printed parts A cautious buyer paid $200 for a four-month option to purchase a property for $30,000. Under these circumstances, each of the following are true except: - ANSWER>>Optionee has created a legal interest in the property According to the provisions of both federal and state civil rights legislation, discrimination due to race, color, creed or national origin in housing is: - ANSWER>>Unenforceable, unlawful, and illegal Which of the following is generally demanded in every sale of real property in California? - ANSWER>>A policy of title insurance An appraiser in analyzing the data for his final estimate of value on a property would give least consideration to: - ANSWER>>The assessed value of the property Which of the following is not considered in determining whether an item of property is a fixture? - ANSWER>>Cost of item The commission to be paid to a broker in a probate sale is set by the: - ANSWER>>Court A formal declaration before a notary public or other qualified by a person who has executed an instrument, that such execution in his or her act and deed is called: - ANSWER>>An acknowledgment The value of a commercial property is set at $400,000 by using a net income of $36, and a 9% capitalization rate. If you used a 12% capitalization rate, the value of the property would be: - ANSWER>>$300,

One of the chief advantages of the market data approach in the appraisal of real property is that: - ANSWER>>It is the easiest method for a salesperson to learn and use In comparing the cost of reproduction of two buildings of the same square footage, a two-story house usually: - ANSWER>>Costs less than a one-story house What is the annual interest rate on a $16,000 loan when the interest payments are $ per quarter on the full amount? At least; - ANSWER>>4%, but less than 5% Land which is subject to an easement is said to be: - ANSWER>>Encumbered Private restrictions on use can include: - ANSWER>>Deed restrictions, easement and rights of way, leases and mortgage notes Under the law of Agency, a fiduciary relationship is created between the broker and the seller upon execution of the listing agreement. As far as the broker's responsibility to third parties, the broker: - ANSWER>>Must be fair and honest A lease of real property for a fixed period of time at a set rate of rent creates: - ANSWER>>An estate for years All of the following are personal property except: - ANSWER>>Easements A valid deed vests title in the grantee when the deed is: - ANSWER>>Delivered A valid recorded homestead will not protect the homeowner against the foreclosure of: - ANSWER>>A mortgage, a trust deed, or a mechanic's lien

1. The ______________ is the most active in the regulation of real estate licensees. - ANSWER>>d) state government

2. Which of the following is necessary for a deed of conveyance to be valid? - ANSWER>>b) The deed must be in writing
3. The primary distinction between the legal concepts of real estate and real property is that - ANSWER>>a) real property includes ownership of a bundle of rights.
4. An applicant for a salesperson license must - ANSWER>>c) have a finger printing and background check prior to receiving a license.
5. TRELA makes provisions for - ANSWER>>c) a prerequisite of a minimum of 15 classroom hours counted toward license renewal every two years.
6. A(n) ______________ is a freehold estate that is limited to the duration of the life of the owner. - ANSWER>>b) life estate
7. What distinguishes a lien from other types of encumbrance? - ANSWER>>a) It involves a monetary claim against the value of a property.
8. What type of conventional life estate ends with the death of the life estate owner? - ANSWER>>b) Ordinary life estate
9. When speaking of real estate market dynamics, the amount of available properties that becomes occupied over a period of time is called - ANSWER>>b) absorption.
10. What is the primary danger of allowing an encroachment? - ANSWER>>c) Over time, the encroachment may become an easement by prescription that damages the property's market value.

11. What statement is TRUE of payment that is made from the real estate recovery fund on account of a licensee's acts? - ANSWER>>d) The license is suspended immediately, but will be reissued upon reimbursement of the fund, with interest.
12. A salesperson listed a home and then transferred his license to another broker. Which of the following is true? - ANSWER>>d) The listing will stay with the original broker.
13. A licensee is required to keep the Commission updated with - ANSWER>>a) her current email address.
14. When an owner leases her property, she temporarily relinquishes the right to - ANSWER>>c) occupy the property.
15. Which education requirement can a person leave out when applying for a salesperson license? - ANSWER>>a) Evidence of a degree in some form of postsecondary education.
16. Which of the following is an expense which would be listed on the HUD-1 Uniform Settlement Statement? - ANSWER>>b) Title insurance fees
17. Listing, marketing, facilitating transactions and managing information summarizes the critical skills in which of the following? - ANSWER>>d) Real estate brokerage
18. Which of the following happens when a leased property is sold? - ANSWER>>a) The buyer acquires title subject to the lease.
19. Which of the following is a valid distinction between a corporation and a proprietorship? - ANSWER>>a) A corporation has perpetual existence; a proprietorship terminates upon the owner's death.

20. What type of property is abstract, having no physical existence in itself, other than as evidence of one's ownership interest? - ANSWER>>a) Intangible
21. In an economic system, supply is defined as - ANSWER>>b) the quantity of a product or service available for sale, lease, or trade at any given time.
22. Which is NOT included in the ownership bundle of rights? - ANSWER>>d) Taxation
23. Which of the following items are paid in arrears? - ANSWER>>c) Taxes and interest
24. Which of the following laws or rulings extended discrimination to include gender, handicapped status, and family status? - ANSWER>>c) The Fair Housing Amendments Act of 1988.
25. What type of seller financing allows the seller to receive a junior mortgage from the buyer to use to make the payments on the original first mortgage? - ANSWER>>b) Wraparound mortgage
26. All of the following are ways of specializing in the real estate brokerage business except? - ANSWER>>b) By area
27. Who are the essential parties involved in an estate in trust? - ANSWER>>d) Trustor, trustee, and beneficiary.
28. The purpose of a covenant clause in a deed of conveyance is to - ANSWER>>a) state the grantor's assurance or warrant to the grantee that a certain condition or fact concerning the property is true.
29. The most commonly used deed is the - ANSWER>>a) general warranty deed.

30. Who owns the property in a time-share estate? - ANSWER>>b) The property is owned by tenants in common or by a freehold owner who leases on a time-share basis.
31. A broker has her license suspended for violating state license law. In such a case, the licenses of her three salespeople are - ANSWER>>b) inactive.
32. A property owner is precluded by deed restriction from developing a thirty foot boat dock. The limitation prompts the owner to sell to another party. The new owner - ANSWER>>b) takes title subject to the same restriction.
33. In the state of Texas, what circumstances would restrict the government from using eminent domain? - ANSWER>>b) If the result of the property being taken will confer a private benefit on a particular private party.
34. A county or municipal authority usually grants a certificate of occupancy for new construction only after - ANSWER>>c) the construction complies with building codes.
35. If a parcel does not have a lot and block number and is too irregular to be described as a fraction of a section, the legal description - ANSWER>>b) will include a metes and bounds description.
36. How many acres are there in the S 1/2 of the NW 1/4 of Section 3? - ANSWER>>c) 80 acres
37. If the monthly rent of a property is $3,000, and the gross rent multiplier (GRM) is 80, what is the value of the property? - ANSWER>>b) $240,
38. The principal shortcoming of the gross rent multiplier approach to estimating value is that - ANSWER>>a) numerous expenses are not taken into account.

39. If net income on a property is $20,000 and the cap rate is 5%, the value of the property using the income capitalization method is - ANSWER>>b) $400,000.00
40. What calculation is used to figure a property's ROI (return on investment)? - ANSWER>>c) Net operating income divided by price
41. The steps in the income capitalization approach are - ANSWER>>c) estimate net income, and apply a capitalization rate to it.
42. An appraiser would use which approach to determine the value of an apartment building? - ANSWER>>c) Income capitalization approach
43. The roof of a property cost $10,000. The economic life of the roof is 20 years. Assuming the straight- line method of depreciation, what is the depreciated value of the roof after 3 years? - ANSWER>>d) $1,500
44. A tax certificate - ANSWER>>b) entitles its holder to apply for a tax deed after a certain period.
45. A unique characteristic of a special assessment tax is that - ANSWER>>a) it only applies to properties which will benefit from the public improvement.
46. A local government authority may establish a __________ tax district which is designated for a specific benefit or service and expires once the cost of the project has been paid for. - ANSWER>>a) special
47. A millage rate is derived by - ANSWER>>a) dividing the tax requirement by the tax base.
48. The approval process for development of multiple properties in an area includes submission of - ANSWER>>b) a plat of subdivision.

49. A datum is a reference point used for legal descriptions of - ANSWER>>b) the standard rectangular survey description.
50. The legal description of a tract of land in a subdivision that has been recorded is usually with - ANSWER>>a) the lot and block number and unit number, if any.
51. In the state of Texas, a homestead is defined as - ANSWER>>b) a parcel of real property containing the owner's family home.
52. The principle which holds that there is, theoretically, a single use for a property that produces the greatest income and return is known as - ANSWER>>b) highest and best use.
53. Which of the following is true of a loan with negative amortization? - ANSWER>>b) Payments are not sufficient to retire the loan.
54. A builder is required to secure a loan with mortgages on three properties. This is an example of - ANSWER>>b) a blanket mortgage loan.
55. If a loan has _______________, the loan balance increases over the term of the loan. - ANSWER>>a) negative amortization
56. A graduated payment loan is a mortgage loan where - ANSWER>>c) the loan payments gradually increase.
57. License regulators, empowered by state law to oversee brokerage practices, may - ANSWER>>a) take punitive actions against fraud or misrepresentation.
58. The principal role of the Veteran's Administration in the mortgage lending market is to - ANSWER>>a) guarantee loans made by approved lenders.

59. Which of the following phrases could a licensee use to advertise without violating Fair Housing laws? - ANSWER>>b) "No Section 8"
60. The taxes for the year 2011 were $600.00, and were to be paid in arrears. The closing took place on June 15, 2011. Using a calendar year with the seller paying for closing day, how much was the tax proration, and how did it appear on a full settlement statement? - ANSWER>>c) Debit the buyer $272.88 and credit the seller the same amount.
61. A house sold for $165,000, and the total commission received by the broker was $12,375.00. What was the rate of commission? - ANSWER>>b) 7.50%
62. Under the Fair Housing Act, discrimination based on which of the following is prohibited? - ANSWER>>d) None of the above.
63. Cash flow is a measure of how much pre-tax or after-tax cash an investment property generates. To derive cash flow it is therefore necessary to exclude - ANSWER>>a) cost recovery expense.
64. Capital gain tax is figured by multiplying one's tax bracket times - ANSWER>>b) the difference between net sale proceeds and adjusted basis.
65. A distinguishing feature of a deed condition is that - ANSWER>>a) it gives the grantor the right to re-possess the property if the grantee violates the condition.
66. Testing for fair housing compliance - ANSWER>>c) Both A and B.
67. In mortgage lending, which action is acceptable: - ANSWER>>c) Refusing to make a mortgage loan because of the applicant's credit score.

68. Real estate taxes can be imposed by taxing entities at which level of government? - ANSWER>>d) All of the above.
69. What taxes are based on the assessed value of property? - ANSWER>>b) Ad valorem.
70. A buydown is a financing arrangement where - ANSWER>>a) the lender lowers the interest rate on a loan in exchange for a prepayment of principal.