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

Download Texas Principles 2 Q & A - Champions School of Real Estate and more Exams Real Estate Management in PDF only on Docsity! QUESTIONS AND ANSWERS Exam Texas Principles 2 Q & A - Champions School of Real Estate TESTED AND CONFIRMED A+ ANSWERS 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 50. The lender is known as the...: mortgagee 51. Also known as a , a real estate lien notes the borrower's unconditional promise to repay, and includes the amount borrowed, payment amount, due date and rate of interest.: promissory note 52. The document that pledges the property as security for repayment of the note is called . It is recorded in the county in which the property is located.: mortgage 53. title theory state/lien theory state: Two theories of ownership 54. Type of asset-backed security that is secured by a mortgage or collection of mortgages. The mortgages are sold to a group of individuals (a government agency or investment bank) that securitizes, or packages, the loans together into a security that investors can buy.: Mortgage Backed Securities 55. The money that mortgage companies use to make loans comes from the sale of .: bonds 56. Loans that are short term, collateralized by the mortgage notes they fund, and are normally repaid through the sale of these notes to the secondary market.: Warehouse line of credit 57. A person, corporation or firm, not otherwise in banking, that provides its own funds for mortgage financing as opposed to savings and loan associations or commercial banks that use other people's money (depositors) to originate mortgage loans: Mortgage Banker 58. The process of creating a new mortgage loan: Loan origination 59. Building a file that will be used to make an underwriting decision: Loan Processing 60. The consummation of a real estate transaction in which all appropriate documents are signed and the proceeds of the mortgage loan are disbursed by the lender.: Loan Closing 61. The process of transferring funds to a title or escrow company for disbursement: Loan Funding 62. Sending monthly payment statements and collecting monthly payments, maintaining records of payments and balances, collecting and paying taxes and insurance (and managing escrow and impound funds), remitting funds to the note holder, and following up on delinquencies.: Loan Servicing 63. The term Residential Mortgage Loan Originator is mandated by the Act: SAFE 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 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 126. Action of combining the real properties: Assemblage 127. increased usability and value real property: Plottage 128. The combination of two or more properties into one: assemblage or plottage 129. list of all owners from the first to the current owner: chain of title 130. complete history of the title to the property, and includes all deeds, wills and other documents affecting title.: abstract of title 131. examining of the public records and constructed a chain of title and an abstract of title.: attorney's opinion of title 132. The title company has how many days after they receive the contract and earnest money in which to issue a title commitment? 20 133. divided into sections called "schedules," and must be delivered by the title company within 20 days of its receipt of the contract.: title commitment 134. pending lawsuits affecting the property: lis pendens 135. October 3, 2015, It replaced the Good Faith Estimate, which has been in use since January of 2010. The Loan Estimate form combines elements of the Good Faith Estimate and the initial Truth In Lending disclosure into one.: Loan Estimate 136. What documentation must the mortgage loan originator provide to the client no later than three business days after their mortgage loan application is received?: The Special Information Booklet and the Loan Estimate form 137. RESPA manages closings on family properties with federally-related financing.: one-to-four, residential 138. Is not covered by a Title policy.: Survivorship rights of a policyholder's spouse 139. lists all cash that came into and all expenses incurred by a property during the reporting period: Cash Flow Report 140. Any property, whether real or personal, that is capable of being inherited: Hereditament 141. One who receives property through a will: Beneficiary 142. Money that is inherited: Legacy 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?: 43,560 161. 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 204. Property, with the consent of the lender, is sold by an owner/borrower at a price that is not sufficient to pay for the existing mortgage: Short-sale 205. don't have to have license if they call at a real estate auction. If they're involved in any part of a real estate transaction beyond calling at auction, he or she must be a licensed individual.: Auctioneers 206. How do you calculate GRM (Gross rent Multiplier)?: Sales Price / Monthly Rent 207. 4 Things that Value of a Property can be affected by...: social, economic, governmental, and environmental influences 208. What are 3 Approaches to Value for Appraisal?: Sales comparison approach, the cost approach, and income approach 209. What are 2 Types of Appraisal Reviews?: Desk Review and Field Review 210. Net/Gross Adjustments may not exceed what %?: 15% Net/ 25% Gross Adjustments 211. Chronological Age is the...: actual age of the property in years 212. Effective Age is the...: appraiser's estimate of the age of the house based upon its ongoing maintenance and upgrades. (A house may be well-maintained and been updated over the years; therefore, the appraiser might determine that a 20-year-old house might have an age of 10) 213. Income Capitalization is the...: appraisal of commercial income properties 214. What does IRV stand for?: income, return on investment, value 215. What is the IRV formula?: (V =I ÷R), (R= I ÷ V), (I =V X R) I: income R: return on investment V: value 216. What is Redlining?: refusing to provide financing in a particular location 217. The is known as the mortgager.: borrower 218. The is known as the mortgagee.: lender 219. What is a mortgage?: a document that pledges the property as security for repayment of the note 220. What are Two theories of ownership?: title theory state, lien theory state 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 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