Texas Principles 2 Q & A - Champions School of Real Estate, Exams of Geography

Download Texas Principles 2 Q & A - Champions School of Real Estate and more Exams Geography in PDF only on Docsity! 1 Texas Principles 2 Q & A - Champions School of Real Estate.docx 1. An Appraiser's opinion of value: Appraisal 2. Suggests that value is maximized when there is reasonable degree of homogeneity, or sameness, in a neighborhood: Principle of conformity 3. USPAP stands for...: Uniform Standards of Professional Appraisal Practice 4. Standards that have been established by the Appraisal Standards Board of the Appraisal Foundation: USPAP: Uniform Standards of Professional Appraisal Practice 5. According to value: Ad Valorem 6. is when the value of a subject property is increased by the value of surrounding properties: Principle of progression 7. Fannie Mae Form 1004/Freddie Mac 70: URAR (Uniform Residential Appraisal Report) 8. The most probable price a property should bring in a competitive and open market under all conditions requisite to a fair sale: Market Value 9. does not always equal price.: Value 10. If a type of property in a market area is too abundant, it has reduced value. (Characteristics of value): Scarcity 11. The legal use that gives the greatest return in money and/or amenities.: Highest and Best Use 12. According to this principle, the value of a commodity is influenced by the cost of acquiring a substitute or comparable item.: Principle of Substitution 13. Many lenders, especially when dealing with high-LTV loans, will order this type of appraisal: Field Review 14. States that the purchase price is affected by the expectation of future appeal and benefits: Principle of anticipation 15. The reduction in value of property from causes such as deterioration or obsolescence.: Depreciation 16. The loss in a property's value due to daily wear and tear.: Physical deterioration 2 17. The loss in desirability of the style, layout, or function of an element of a property over time: Functional obsolescence 18. The loss in value of a property caused by factors outside of the property itself. Such as the oversupply and consequent drop in demand for a particular kind of property, government actions, such as zoning changes or condemnation proceedings, and proximity to undesirable land uses, such as highways or factories.: External obsolescence 19. Another Name for environmental or economic obsolescence: External obsolescence 20. Final Step in Appraisal Process: Reconciliation 21. The relationship between the amount of rent a specific property can command, and the value of the property to the owner.: GRM (Gross rent Multiplier) 22. Sales Price / Monthly Rent: GRM (Gross rent Multiplier) 23. social, economic, governmental, and environmental influences: 4 Things Value of a Property can be affected by 24. 2 Ways a "Comp" can differ: superior and inferior 25. Sales comparison approach, the cost approach, and income approach: 3 Approaches to Value for Appraisal 26. The percentage of value or sales price that a lender is willing to finance.: LTV (Loan to Value Ratio) 27. Desk Review/ Field Review: 2 Types of Appraisal Reviews 28. Shorter version of the appraisal report for underwriting, rather than requiring a full appraisal report, which includes interior inspection.: limited appraisal report 29. Suggests that the value of a property is equal to the sum of the contributory value of each of its component parts: Principle of contribution 30. Change is constant; therefore, the forces acting on a parcel of land are always affecting the value of the land. This is called .: Principle of change 31. determines that it is prudent to improve property when the value added by the improvement exceeds cost of the improvement. It is would suggest that an owner should not "over improve" a property.: Principle of Increasing/or decreasing returns 5 64. Designed to enhance consumer protection and reduce fraud by encouraging states to establish minimum standards for the licensing and registration of state licensed mortgage loan originators, and by establishing a nationwide mortgage licensing system and registry for the residential mortgage industry.: Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) 65. Dodd-Frank Wall Street Reform and Consumer Protection Act of : 2010 66. TILA (Truth in Lending), RESPA ( Real Estate Settlements Procedures Act), FCRA (Fair Credit Reporting Act), ECOA (Equal Credit Opportunity Act): Acts enforced by the Consumer Financial Protection Bureau (CFPB) 67. A federal law passed to ensure that banks would serve the needs of the community in which they were chartered to do business and prohibits redlining. enacted by Congress in 1977 revised 1995: Community Reinvestment Act 68. Passed 1974 ensures that all consumers are given an equal chance to obtain credit: ECOA (The Equal Credit Opportunity Act) 69. U.S. federal law designed to protect consumers in credit transactions by requiring clear disclosure of key terms of the lending arrangement and all costs: TILA (Truth In Lending Act) 70. The market wherein loan originators, such as mortgage bankers and brokers, can sell their loans and thus recover cash for originating more loans.: secondary mortgage market 71. Formerly known as the Federal National Mortgage Association (FNMA), is the largest investor in home mortgages today. Began in 1938 federal agency. Became private 1968: Fannie Mae 72. Federal Home Loan Mortgage Corporation (FHLMC) in 1970 for the purpose of purchasing mortgages in the secondary market: Freddie Mac 73. Was established in the United States in 1968 to promote home ownership wholly owned government association that operates the mortgage-backed securities program designed to facilitate the flow of capital: GNMA (Government National Mortgage Association), or Ginnie Mae 74. For an application to be considered "complete" the lender must have all of the following...: PENSIL 75. What does PENSIL stand for?: Property Address, Estimated Value, Name of the borrower, SSN, Income, Loan Amount 76. the central banking system of the United States: Federal Reserve 6 77. Sets the Fed's monetary policy, which is carried out through the Trading Desk of the Federal Reserve Bank of New York: FOMC (Federal Open Market Committee) 78. the interest rate a Reserve Bank charges eligible financial institutions to borrow funds on a short-term basis: discount rate 79. The standard loan application in use is the Uniform Residential Loan Application: Fannie Mac 1003 80. The Mortgage Fraud Fine is not to exceed .: $10,000 81. increases the penalties for a federal conviction for mortgage fraud to a maximum of 30 years in prison and a fine of up to $1 million. -signed into law by President Barack Obama in May 2009. -increases the statute of limitations for mortgage fraud from 5 years to 10 years.: FERA (Fraud Enforcement and Recovery Act) 82. The interest rate and monthly payment change every month, 3 months, 6 months, 1 year, 3 years, 5 years or 7 years: Adjustment Period 83. what the lender uses as an instrument for measuring changes in interest rates: Index 84. The percent added to the index in order to calculate the payment interest rate: Margin 85. Is equal to the margin plus the index and is usually to the nearest one-eighth of a percent: Fully Indexed Rate 86. A lower interest rate that is offered by the lender during the first year or more of the loan.: Discounted Initial Rate (teaser rate) 87. a limit on the amount the interest rate can increase or decrease at each adjustment date.: Interest-rate Caps 88. Per Adjustment Cap/Lifetime Cap/ Initial Adjustment Cap: 3 CAPS for Interest Rate 89. covers more than one piece of property: blanket mortgage 90. Includes both real and personal property ( fixtures and furnishings): package mortgage 91. The monthly house payment that includes principal, interest, taxes and insurance (known as PITI): budget mortgage 92. partially amortized loan with final payment substantially larger than the others.: Balloon loans 7 93. financing in which a borrower receives funds secured by the value of a parcel of real estate: hard-money loan 94. Method of financing which preserves the low, existing interest rate on the original note: wraparound mortgage 95. Permits additional borrowing on the same note and mortgage.: open ended mortgage 96. Minimum withdrawal in Texas on HELOC (Home Equity Line of Credit): $4000.00 97. when two or more lenders own a share: participation loan 98. Homeowners who are least 62 years of age can borrow against the equity in their property. The loan becomes due upon the sale of the property or the death of the owner.: Reverse Annuity Mortgage 99. Borrowers are rated A-F with a prime borrower having an A rating. A minus to F-rated borrowers will pay 1 to 5 % higher than those with good credit. These are non-conforming loans.: Sub-prime loans 100. conventional/ government loans: 2 categories Residential Loans are divided into 101. If a residential property contains or more living units, the sale is considered a commercial transaction: 5 102. GMI x 28% =(House Payment as % of income): Front Ratio 103. GMI x 36% =( Sum of regular debt plus house payment): Back Ratio 104. Downpayment is the difference between the and the .: Sales Price, LTV (Loan to Value) 105. is comprehensive program provided returning World War II service men and women with many medical bene ts, educational bene ts and low-interest loans to help the veteran assimilate back into civilian life. -Was signed into law by President Franklin D. Roosevelt on June 22, 1944.: GI Bill of Rights (Servicemen's Readjustment Act) 106. A special form of insurance which is designed to allow lenders to increase LTV ratio. It basically insures the difference between the borrower's down payment and LTV. (needed when LTV is over 80%): PMI (Private Mortgage Insurance) 107. Government Rural Loan: USDA Loan 10 143. The material (soil) that is deposited through the process of accretion that is the result of avulsion, erosion and reliction.: Alluvion 144. Is the gradual loss of land over time as the land bordering a river or stream washes away: Erosion 145. missing "links" or breaks in the chain of title: Cloud in Title 146. The original conveyance of land by the sovereign is usually done with this document: Patent 147. Historically, when one was interested in acquiring title, he or she would ask an attorney or abstractor to do a title search that would result in this: Abstract of Title 148. The evidence an individual has of his or her right to possess land.: Title 149. An individual who inherits property by intestate succession acquires title by descent: Descendant 150. A gradual increase in land area when water gradually withdraws: Reliction 151. A can convey Fee Simple, a life estate, an easement or a defeasible or determinable fee: deed 152. Rights and obligations of both landlord and tenant in the leasing of residential and commercial properties: Landlord and tenant Act 153. Additional capital or property included in a transaction to even out the exchange: Boot 154. potential income of a property that is derived from rents collected in a year: Gross Scheduled Income 155. May be organized as limited or general partnerships: Real Estate Investment Syndicates 156. commercial property is depreciated over how many years?: 39 157. residential property is depreciated over how many years?: 27.5 158. Freddie Mac and Fannie Mae: The two largest issuers of REMICs 159. Allows for the indirect investment in mortgages through the sale of securities. Purchases "pools" of mortgages: REMIC (Real Estate Mortgage Investment Conduit) 160. 1 ACRE of land = how many sq ft?: 43,560 11 161. Area square dimensions formula: L x W 162. 1 yard= how many feet?: 3 ft 163. 3ft x 3ft= ?: 9 sq ft 164. 9 sq. ft. is equal to one what?: 1 sq yd 165. cubic dimensions formula: L x W x H 166. 3ft x 3ft x 3ft = ?: 27 cu. ft 167. 1 cu. yd = how many cubic feet?: 27 cu. ft. 168. Area of Triangle formula: 1/2 L X W= 169. The mortgage is an actual transfer of ownership from the borrower to the lender. Title remains with the lender until the loan is repaid. The lender transfers title back to the borrower when the loan is repaid.: title theory state 170. The borrower retains ownership of the property, subject to the lien that secures repayment of the loan.: lien theory state 171. is the standard financial index used in U.S. capital markets and can be found in the Wall Street Journal: LIBOR 172. offers the consumer an interest rate that is fixed for an initial period of time, then readjusts over the remainder of the life of the loan.: Hybrid ARMs 173. payment plan allows a borrower to pay only the interest for a specified number of years, typically for 3 to 10 years, making it possible for a borrower to have smaller monthly payments for a period of time: interest-only (I-O) ARM 174. Contributions to buyer's closing cost that are limited to 6% of the sales price: Seller contributions 175. Insured by the U.S. Department of Agriculture. The program offers 100% financing (no down payment) for qualified borrowers. -Has only one loan repayment plan, offering 30-year fixed rate mortgages only: USDA Rural Development Guaranteed Housing Loan program 176. The right of the government to regulate and control the way that an individual uses his or her land. (Zoning example): Police Power 12 177. The government's right to tax real estate.: Taxation 178. The right of the government to take an individual's land if he or she dies without a will or heirs: Escheat 179. The action of government seizure of land for the good of the public.: Condemnation 180. title to land in the United States can be traced back to its original owner: sovereignty of the soil 181. What is the acronym for government's rights to land?: PETE (Police Power,Eminent Domain,Taxation, Escheat) 182. Changing the zoning of a property to a lower value: Downzoning 183. The amount of space required between the lot line and the building line: Setback 184. Permission to violate rules: Variance 185. Passed by Congress in 1968. The Act was passed to protect consumers from fraud in the sale or lease of land. Developers are required to provide each purchaser with a disclosure document (Property Report). The Property Report contains information about the subdivision and is required to be delivered to a purchaser before the signing of a purchase agreement. The purchase agreement gives the purchaser a seven-day period in which the purchase can be canceled.: Interstate Land Sales Full Disclosure Act 186. Passed by Congress in 1980. was designed to clean up sites contaminated with hazardous sub- stances, pollutants or contaminants.: CERCLA (Comprehensive Environmental Response, Compensation, and Liability Act) 187. Possible polluter who may be held liable under CERCLA for the contamination of a property or resource: PRP (potentially responsible party) 188. January 1, 2005, launching its Mold Mission Program. is administered by the Texas Department of State Health Services (DSHS), and sets rules and regulations for the inspection, assessment and remediation of mold. It requires that all persons who conduct assessment and remediation of mold be properly trained and licensed by the state.: TMARR (Texas Mold Assessment and Remediation Rules) 189. Removal of Mold: Remediation 190. founded in 1993 membership based non-profit organization that promotes sustainability in how buildings are designed, built, and operated. Consists of 79 local affiliates, 16,000 member 15 221. Consumer Financial Protection Bureau (CFPB) enforces what Acts?: TILA, RESPA, FCRA, ECOA 222. What does TILA stand for?: Truth in Lending 223. What does RESPA stand for?: Real Estate Settlements Procedures Act 224. What does FCRA stand for?: Fair Credit Reporting Act 225. What does ECOA stand for?: Equal Credit Opportunity Act 226. The largest investor in home mortgages today. Began in 1938 federal agency. Became private 1968.: fannie mac 227. Another name for GNMA (Government National Mortgage Association): ginnie mae 228. Fannie Mac 1003: The standard loan application in use is the Uniform Residential Loan Application 229. Adjustment Period is the interest rate and monthly payment change every month, months, months, year, years, years or years: 3, 6, 1, 3, 5, 7 230. What are the 3 CAPS for Interest Rate?: Per Adjustment Cap, Lifetime Cap, Initial Adjustment Cap 231. A blanket mortgage covers...: more than one piece of property 232. A package mortgage includes both and property.: real, personal 233. Budget Mortgage is the monthly house payment that includes...: PITI (principal, interest, taxes and insurance) 234. 2 categories Residential Loans are divided into are...: conventional and government loans 235. What is the Front Ratio Formula?: GMI x 28% =(House Payment as % of income) 236. What is the Back Ration Formula?: GMI x 36% =( Sum of regular debt plus house payment) 237. T or F. Survivorship rights of a policyholder's spouse is covered by a Title policy.: f 238. What all can a deed convey?: Fee Simple, life estate, easement or a defeasible, determinable fee 16 239. Real Estate Investment Syndicates can be organized as or partnerships.: limited, general 240. The two largest issuers of REMICs are...: freddie mac and fannie mae 241. L x W =: area square dimensions 242. 3 ft. is equal to one what?: yard 243. 1 sq. yrd. = how many square feet?: 9 244. L x W x H=: cubic dimensions 245. 27 cu. ft. is equal to one what?: cubic yard 246. 1/2 L X W=: area of triangle 247. Seller contributions to buyer's closing cost are limited to % of the sales price.: 6 248. What does PETE stand for?: Police Power,Eminent Domain,Taxation, Escheat 249. What are the Green Buyer types?: Economizers, Investors, and Health Conscious Buyers 298. a use of property that is not in agreement with present zoning laws: nonconforming use 299. A method of valuing a property based on the monetary returns it can be expected to produce is the...: income approach 300. land exempt from real property tax include...: government office buildings, parks, schools 301. karl signed a one-year lease on an apartment with a rental agency. He sublet the apartment to Kurt, who defaulted on the sublease. Any action entered by the landlord would be against who? Karl or Kurt?: karl 302. RESPA prohibits, among other things, and/or fees for services not actually performed during the closing process: kickbacks 303. before a newly constructed building may be utilized by tenants, the owner must secure a certificate of: occupancy 304. A three-year commercial lease would be in court, unless it was in writing.: unenforceable 305. allows a broker to indemnify herself against legal actions by those with whom she deals by purchasing: errors and omissions insurance 17 306. Economic obsolescence results from factors...: outside the property 307. the right of rescission in credit transactions for home refinancing is business: 3 308. adjustments for differences between the subject property and the comparable property are made to the...: comparable party 309. the amount of commission to be paid the broker for selling a property is stated in...: the listing contract 310. Texas tax rates are expressed as: dollars of tax per hundred dollars of caluation 311. Chen bought a home for $100,000. Paying $20,000 cash and taking an $80,000 mortgage loan. Now several years later, the loan balance is $75,000 and the home is worth $120,000. What is Chen's equity?: 45,000 312. T or F. under the terms of an exclusive right to sell listing the owner may sell the property and not owe a commission to the listing broker: f 313. the placing of funds belonging to others in a broker's personal bank account constitutes as...: commingling 314. ben lists a property for $250,000. the seller will pay a 7% commission for the sale of the property. what is the amount of the commission ben will receive: 17,500 315. Jane is selling her home and has listed it with a broker. she is required to give a seller's disclosure of property condition form to the buyer. the most likely person to fill out this form is the...: seller 316. a competitive market analysis CMA is most often prepared by a: real estate agent 317. under the terms of an exclusive agency listing, a commission is not due the listing broker if a buyer is found by: the owner, through her own efforts 318. the process of combining two parcels of land into one larger parcel that is worth more than the total value of the individual parcels is: assemblage 319. a ground lease is a lease of...: land only 320. the market value on johns home is $180,000. He owes $105,000 on the property. what is his equity in the home?: $75,000 321. an FHA loan is a loan that is by the Federal Housing Administration: insured