Commercial Real Estate Finance
Review Questions
Course Introduction
Commercial Real Estate Finance explores the principles and practices involved in financing income-producing properties such as office buildings, shopping centers, industrial properties, and multifamily housing. The course covers topics including loan structures, risk assessment, mortgage markets, underwriting standards, valuation methods, and the roles of various stakeholders such as lenders, investors, and developers. Students will analyze real-world case studies, financial statements, and market trends to understand the complexities of debt and equity financing, securitization, and the impact of economic conditions on commercial real estate investments. By the end of the course, students will gain practical knowledge and analytical skills necessary to make informed financing decisions in the commercial real estate industry.
Recommended Textbook
Real Estate Finance 9th Edition by John P. Wiedemer
Available Study Resources on Quizplus
16 Chapters
189 Verified Questions
189 Flashcards
Source URL: https://quizplus.com/study-set/3714 Page 2
Chapter 1: History and Background
Available Study Resources on Quizplus for this Chatper
14 Verified Questions
14 Flashcards
Source URL: https://quizplus.com/quiz/73998
Sample Questions
Q1) Of the following, the more precise description of a share of stock is
A) An indication of an obligation
B) A form of unsecured debt
C) An evidence of ownership
D) A kind of security
Answer: C
Q2) Bonds are sold in the financial market by corporations for the purpose of
A) raising equity cash
B) Borrowing money
C) Providing additional brokerage fees
D) Generating greater income
Answer: B
Q3) As used in mortgage lending, the term "collateral" means
A) Something of value pledged as security for a loan
B) The purpose for which a mortgage loan is made
C) A valuable asset
D) Associated with but of secondary importance.
Answer: A
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: Money and Interest Rates
Available Study Resources on Quizplus for this Chatper
11 Verified Questions
11 Flashcards
Source URL: https://quizplus.com/quiz/73990
Sample Questions
Q1) Which of the following is most likely to result from a substantial increase in the money supply?
A) A lowering of inflation
B) A reduction of interest rates
C) An increase in interest rates
D) An increase in the value of a dollar
Answer: B
Q2) Fiscal policies of the government can best be described as
A) Budgetary control measures
B) Management of the U.S. Treasury
C) Government taxing and spending policies
D) Policies that control the banking system
Answer: C
Q3) The purpose of cash reserves as required by the FED are best described as
A) Cash placed on deposit with the FED at no interest as a cushion to meet emergency requirements of member banks
B) Cash held off the market to controlled interest rates
C) A source of income for the fed
D) A better control over a bank's lending policies
Answer: A
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 3: Mortgage Money: Regulated Lenders
Available Study Resources on Quizplus for this Chatper
12 Verified Questions
12 Flashcards
Source URL: https://quizplus.com/quiz/73989
Sample Questions
Q1) The purpose of federal agency underwriting of mortgage loan pools is to
A) Enhance the credit-worthiness of mortgage-backed securities thus reducing the costs of interest
B) Provide an additional source of income for the federal government
C) Expand government control over mortgage lending
D) Regulate qualification for borrowers
Answer: A
Q2) The secondary market for mortgage loans can best be described as the -
A) Operations of Fannie Mae/Freddie Mac
B) Market for trading second mortgages
C) Purchase and /or sale of mortgage loans after origination
D) Market for trading in Ginnie Mae contracts
Answer: C
Q3) All life insurance companies are chartered and regulated by
A) The federal Life Insurance Commission
B) Various state and federal authorities
C) State commissions only
D) Are not regulated
Answer: C
To view all questions and flashcards with answers, click on the resource link above.
Page 5
Chapter 4: Other Primary Market Lenders
Available Study Resources on Quizplus for this Chatper
12 Verified Questions
12 Flashcards
Source URL: https://quizplus.com/quiz/73988
Sample Questions
Q1) The Farm Credit System consists primarily of
A) a Cooperative, borrower-owned network of farm lending banks
B) the Rural Development Service of the Department of Agriculture and related agencies
C) only the Federal Land Bank Associations
D) the government agency that underwrites all qualifying farms loans.
Q2) While the distinction between mortgage bankers and brokers is diminishing, a full service mortgage banker means being capable of all the of the following EXCEPT
A) originating or negotiating a loan.
B) funding a loan at closing.
C) servicing a loan until pay off.
D) holding a loan in portfolio.
Q3) The continued acceptance and growth of Real Estate Investment Trust has been enhanced by
A) the sale of REIT stock in the financial markets
B) the collapse of Foreign Investment in real estate
C) improved management
D) greater publicity
To view all questions and flashcards with answers, click on the resource link above.
6
Chapter 5: Mortgage Money: the Secondary Market
Available Study Resources on Quizplus for this Chatper
12 Verified Questions
12 Flashcards
Source URL: https://quizplus.com/quiz/73987
Sample Questions
Q1) The secondary market for mortgages can be described as the
A) Operations of Fannie Mae/Freddie Mac.
B) Market for trading second mortgages.
C) Purchase and/or sale of mortgage loans after origination.
D) Market for trading in Ginnie Mae contracts.
Q2) A unit of measure when used as a real estate finance term amounting to one hundredth of one percent is:
A) One Discount Point
B) One Basis Point
C) A Fraction
D) One Point
Q3) State and municipal housing authorities are able to offer lower cost home loans because
A) the money loaned is raised through the sale of tax-exempt bonds.
B) tax money is used to subsidize the home buyer's costs.
C) administrative costs are paid for by the government agencies involved.
D) all issues are of such large scale that costs are lower.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 6: The Mortgage Documents
Available Study Resources on Quizplus for this Chatper
12 Verified Questions
12 Flashcards
Source URL: https://quizplus.com/quiz/73986
Sample Questions
Q1) Laws that determine how land is owned and rights are conveyed are made by:
A) The Federal Land Office
B) State Law
C) Local customs
D) The Federal Housing and Urban Development
Q2) The primary purpose for recording a mortgage instrument is to
A) establish its validity
B) comply with tax laws
C) give public notice of its existence
D) safeguard the document
Q3) Loans made within the parameters and using the uniform documents as required by Fannie Mae and Freddie Mac are known as:
A) Fannie Mae or Freddie Mac loans
B) Conforming loans
C) Other Conventional loans
D) Government standard loans
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Mortgage Repayment Plans
Available Study Resources on Quizplus for this Chatper
12 Verified Questions
12 Flashcards
Source URL: https://quizplus.com/quiz/73985
Sample Questions
Q1) A buy-down mortgage is distinguished by which of the following?
A) Any mortgage with lower initial monthly payments
B) A mortgage with less-than-market interest rate
C) Payment by seller of a portion of the interest cost at closing to reduce monthly payments in the early years of repayment
D) A second mortgage that reduces, or "buys down, the first mortgage.
Q2) In mortgage lending, the term "amortization" means
A) making monthly payments
B) the pay-off of a loan at maturity
C) periodic reduction of the principle balance
D) periodic payment of interest
Q3) A buy-down mortgage is distinguished by which of the following?
A) Any mortgage with lower initial monthly payments.
B) A mortgage with less-than-market interest rate.
C) Payment by the seller of a portion of the interest cost at closing to reduce monthly payments in the early years of repayment.
D) A second mortgage that reduces, or "buys down, the first mortgage".
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Federal Government Underwriting Programs
Available Study Resources on Quizplus for this Chatper
12 Verified Questions
12 Flashcards
Source URL: https://quizplus.com/quiz/73984
Sample Questions
Q1) Which of the following cash required to close rules apply to an FHA mortgage?
A) Cash required may be added to loan amount
B) 3.5% cash required may be cover by down payment plus closing costs
C) 3.5% cash must be paid as down payment
D) Only required down payment must be in cash
Q2) Under FHA procedures, all of the following are considered prepaid items EXCEPT:
A) down payment
B) property taxes
C) hazard insurance
D) mortgage default insurance
Q3) FHA loans originated on or after December 15, 1989 are restricted to which of the following assumption policies?
A) Freely assumable but seller remains liable
B) Cannot be assumed for first five years of mortgage obligation
C) New buyer must be approved by FHA prior to title transfer
D) No assumptions are permitted
To view all questions and flashcards with answers, click on the resource link above.
Chapter 9: Borrower Quali cation
Available Study Resources on Quizplus for this Chatper
12 Verified Questions
12 Flashcards
Source URL: https://quizplus.com/quiz/73983
Sample Questions
Q1) An application for a commercial loan would include all the following items EXCEPT:
A) information on the applicant company and the individuals involved
B) complete Financial statements and property evaluation
C) a statement of compliance with RESPA requirements
D) projection of income to show source of loan repayment
Q2) The Federal Credit Reporting Acts primary provisions are to:
A) make available to the mortgagor procedures for disputing accurate information on their credit report.
B) create a rule that all credit report users provide a copy of the credit reports to the borrower.
C) provide satisfactory procedures to ensure the confidentiality and accuracy of consumer credit information.
D) allow practical procedures to deny credit to credit-worthy borrowers.
Q3) One of the better criteria used to determine an applicant's stability of income is A) the amount of income in excess of that needed for approval
B) the record of payment to other creditors
C) the length of time on the job
D) whether or not more than one applicant is liable
To view all questions and flashcards with answers, click on the resource link above.
11
Chapter 10: Property Analysis
Available Study Resources on Quizplus for this Chatper
12 Verified Questions
12 Flashcards
Source URL: https://quizplus.com/quiz/73997
Sample Questions
Q1) The normal method to reach a final estimate of value in a narrative appraisal is A) an adjusted average of the approaches to value as determined by the judgment of the appraiser.
B) whatever value is shown by the major approach.
C) a mathematically determined average of all approaches.
D) only the capitalized value as determined by the current market rate of return.
Q2) Which of the following statements regarding certification of appraisers is correct?
A) It is illegal to undertake an appraisal unless that person is properly certified
B) Appraisers may be certified by each state as long as federal guidelines are adhered to
C) Certified appraisers must be used for every loan whether or not the lender is federally related
D) All appraisers with peer designations have been grandfathered into state certified status.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 11: Commercial Loans: Construction and Land Loans
Available Study Resources on Quizplus for this Chatper
12 Verified Questions
12 Flashcards
Source URL: https://quizplus.com/quiz/73996
Sample Questions
Q1) Restating financial information on a standard form accomplishes which of the following?
A) Adds billable hours to an accountant's fee
B) Increases the amount of information that can be filed
C) Makes comparisons easier and shows up missing information
D) Makes a good impression on clients
Q2) Which of the following is not one of the more common risks of investing in commercial real estate contemplated by the mortgagee and mortgagor?
A) Financial risk
B) Liquidity risk
C) Regulatory risk
D) Management risk
Q3) A release clause in a real estate development loan agreement is one that:
A) allows the borrower to withdraw from the agreement
B) defines the conditions under which lots can be released from the mortgage for resale to builders
C) calls for releasing collateral back to the lender
D) triggers the release of a lender from any further participation in the loan
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Commercial Building and Farm Loans
Available Study Resources on Quizplus for this Chatper
12 Verified Questions
12 Flashcards
Source URL: https://quizplus.com/quiz/73995
Sample Questions
Q1) Which of the following is true of percentage leases?
A) It is the dominant method to lease warehouse space
B) The percentage charged varies with type of business
C) Shopping centers have a standard percentage rate which is the same for all tenants
D) All percentage leases allow for an annual change in the percentage charged
Q2) A stabilized income property is one in which the building has a longer operating history and is usually has a _____% or higher occupancy and is for sale by its current owner for varying reasons.
A) 75
B) 80
C) 85
D) 90
Q3) A "net lease" means which of the following?
A) The tenant pays a net rent after deducting certain listed operating expenses
B) The tenant pays rent based only on the net interior space under lease
C) The tenant pays for all of its own services
D) The tenant pays all maintenance and building operating expenses plus insurance and taxes on the building
To view all questions and flashcards with answers, click on the resource link above.
14
Chapter 13: Other Financing Practices
Available Study Resources on Quizplus for this Chatper
11 Verified Questions
11 Flashcards
Source URL: https://quizplus.com/quiz/73994
Sample Questions
Q1) All of the following are true of maximum and minimum limits for conventional loans
EXCEPT:
A) Fannie Mae/Freddie Mace set new limits each year for their conventional/conforming loans
B) if a prospective loan exceeds an institution's in-house limit, other lenders may join in a participation loan
C) setting minimum limits for loan amounts is a possible violation of the Fair Housing Act
D) all states set limits on the maximum amount for residential loans within the state
Q2) The private mortgage insurance required by regulated depository financial institutions states that for residential mortgage loans with LTV's higher than _______%must have private insurance coverage.
A) 75
B) 80
C) 85
D) 90
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: Technology Advances in Mortgage Lending
Available Study Resources on Quizplus for this Chatper
11 Verified Questions
11 Flashcards
Source URL: https://quizplus.com/quiz/73993
Sample Questions
Q1) Fannie Mae offers two automated underwriting programs, one called " Desktop Originator" that is for use:
A) by an agent taking information on a laptop computer for transmittal to a seller/servicer who verifies and transmits the information to Fannie Mae
B) to transmit information directly to Fannie Mae's Desktop Underwriter system
C) prohibited to a real estate broker
D) by any individual
Q2) Even though greatly diminished in market share subprime loans offer all of the following EXCEPT
A) a higher profit margin if carefully made
B) a market that has been shunned before high tech analysis allowed better selection for carefully documented loans
C) greater depth of loan analysis has eliminated all risks
D) an expansion of the loan market beyond higher quality "A" rated borrowers
Q3) Mortgage loan origination software must increasingly be compatible with:
A) Microsoft Excel
B) TurboTax
C) Third party originator web portals
D) Mortgagebot
To view all questions and flashcards with answers, click on the resource link above.
Page 16
Chapter 15: Environmental Issues
Available Study Resources on Quizplus for this Chatper
10 Verified Questions
10 Flashcards
Source URL: https://quizplus.com/quiz/73992
Sample Questions
Q1) Regulation implementing the Endangered Species Act Define a "taking" as:
A) abusing land that harbors an endangered species
B) only if its habitat is destroyed
C) killing an endangered species and/or damaging or destroying its habitat
D) failure to report the presence of an endangered species
Q2) The following is true of electromagnetic forces.
A) Numerous testing has proven no direct relation between electromagnetic forces and cancer
B) Real Estate agents should not answer questions on this subject
C) Electromagnetic forces are a real cause of cancer
D) Many diseases are facilitated by electromagnetic forces
Q3) Determining for sure whether or not a particular land area falls under the definition of wetlands must be made by:
A) the landowner following guidelines issued by the EPA and the Corps of Engineers
B) observation of the types of vegetation growing in the area
C) an engineering analysis of water content in the soil
D) inspection and determination by the U.S. Corps of Engineers
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 16: Settlement Procedures
Available Study Resources on Quizplus for this Chatper
12 Verified Questions
12 Flashcards
Source URL: https://quizplus.com/quiz/73991
Sample Questions
Q1) A mortgagee's title policy protects which of the following against an adverse claim of title?
A) Borrower
B) Trustee
C) Real Estate agent
D) Lender
Q2) Real estate settlement procedures for residential loans, including the required settlement statement, are regulated by the
A) Office of Thrift Supervision
B) Fannie Mae-Freddie Mac
C) Department of Housing and Urban Development
D) Federal Reserve Bank
Q3) The primary purpose of the Truth-in-Lending Act is to
A) require full disclosure of the amount of the promissory note
B) provide meaningful information to borrowers on the cost of consumer credit
C) discourage excessive loan costs for consumers
D) establish limits on the total charges a lender can assess for a loan
To view all questions and flashcards with answers, click on the resource link above. Page 18