Financial Management for Real Estate Question
Bank
Course Introduction
This course introduces students to the fundamental principles and practices of financial management as they pertain to the real estate industry. Covering topics such as real estate investment analysis, property valuation, risk assessment, and financing strategies, the course equips students with the analytical tools needed to make informed decisions in residential and commercial real estate markets. Emphasis is placed on understanding financial statements, project cash flow, mortgage financing, and portfolio management, preparing students to evaluate real estate projects from both investor and developer perspectives.
Recommended Textbook
Real Estate Finance 9th Edition by John P. Wiedemer
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16 Chapters
189 Verified Questions
189 Flashcards
Source URL: https://quizplus.com/study-set/3714
Page 2
Chapter 1: History and Background
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14 Verified Questions
14 Flashcards
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Sample Questions
Q1) The need to have a borrower sign both a mortgage and a promissory note is necessary as these two documents are:
A) Both collateral instruments
B) Considered interlinked documents
C) Must both be recorded to have a perfected interest
D) None of the above
Answer: B
Q2) Which of the following is most descriptive of the primary market?
A) The loan origination market
B) Trading in second mortgages
C) The buying and selling of mortgage loans
D) The market created by Fannie Mae and Freddie Mac
Answer: A
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
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Page 3
Chapter 2: Money and Interest Rates
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11 Verified Questions
11 Flashcards
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Sample Questions
Q1) When the Federal Reserve buys or sells government securities in the financial markets, it is called
A) Juggling the credit markets
B) Cycling the discount rate
C) Discounting the market rates
D) Open market operations
Answer: D
Q2) The major source of money funding residential mortgage loans today is
A) Money market funds
B) Commercial bank time deposits
C) The federal government
D) The sale of mortgage backed securities
Answer: A
Q3) Usury can best be described as
A) Interest rates set by the federal government
B) Rates charged by unscrupulous lenders
C) Interest paid or received that exceeds state laws
D) Interest limitations based on religious beliefs
Answer: B
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Page 4
Chapter 3: Mortgage Money: Regulated Lenders
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12 Verified Questions
12 Flashcards
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Sample Questions
Q1) A basic difference between mortgage companies and regulated lenders is that mortgage companies
A) Are subject to no regulations
B) Hold no deposit assets with which to fund loans
C) Are higher cost operators and unable to be competitive
D) Handle only FHA and VA loans
Answer: B
Q2) 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
Q3) Federal legislation in 1998 restored the right to membership in credit unions to
A) Anyone solicited by credit unions
B) Those with a common bond plus those working for companies with less than 3,000 employees
C) All members of AARP
D) Anyone not challenged by a commercial bank
Answer: B
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Chapter 4: Other Primary Market Lenders
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12 Verified Questions
12 Flashcards
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Sample Questions
Q1) The slow recovery in the Mortgage Backed Securities markets since the beginning of the financial crisis in 2008 and continuing into 2011 has caused most mortgages to be directly or indirectly guaranteed by:
A) FHA
B) VA
C) U.S. Government
D) Federal Reserve Bank
Q2) The growing complexity of mortgage loans and the need for better consumer protection against poorly qualified brokers has led to
A) great simplification of the mortgage loan process.
B) lowering the qualification requirements of borrowers.
C) state and National education and licensing of mortgage brokers.
D) requirements that all mortgage brokers become mortgage bankers.
Q3) Automated underwriting means
A) used only by Internet operators
B) analysis of loan application by computer software programs that allow loan approval if justified
C) analysis of loan application by elimination of all human input
D) transmission of loan info via a computer
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Page 6
Chapter 5: Mortgage Money: the Secondary Market
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12 Verified Questions
12 Flashcards
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Sample Questions
Q1) Expansion of the secondary market into conventional loans was made possible by which of the following two events.
A) Money available in the financial markets and an increase in the number of mortgages.
B) Growth of available money and the standardization of loan documents.
C) The creation of uniform mortgage instruments and the expansion of private mortgage insurance.
D) The shift to private mortgage insurance and the sharp decrease in FHA and VA insured commitments.
Q2) The primary purpose of federal agency underwriting of securities backed by mortgage loan pools is to
A) earn greater fees for the government.
B) enhance the credit-worthiness of an investment in mortgage-back securities.
C) exercise more control over the mortgage business.
D) direct more funds into low-income housing.
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Chapter 6: The Mortgage Documents
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12 Verified Questions
12 Flashcards
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Sample Questions
Q1) Which of the following folds the highest priority of claim if properly filed against property?
A) Property Taxes
B) First Mortgage Lien
C) Second Mortgage Lien
D) Homestead Claim
Q2) A prepayment penalty could be due if
A) the loan is foreclosed.
B) the monthly payment is delinquent.
C) payment is made prior to maturity.
D) the lender grants a payment moratorium.
Q3) 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
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8
Chapter 7: Mortgage Repayment Plans
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12 Verified Questions
12 Flashcards
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Sample Questions
Q1) Which of the following is the most important distinguishing feature of an adjustable rate mortgage?
A) The payment amount is fixed for the life of the loan.
B) The lender has the right to change the interest rate during the term of the loan.
C) The term of the loan may be extended.
D) The borrower has the right to reject a change in the payment amount.
Q2) 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.
Q3) A major advantage for the borrower in a home equity revolving type loan is that
A) the home does not serve as collateral
B) the interest expense has been used as a qualifying tax deduction applicable to a home loan
C) the interest rate charged is limited by law to the same as a first mortgage
D) all lenders freely offer this type of credit
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Chapter 8: Federal Government Underwriting Programs
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12 Verified Questions
12 Flashcards
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Sample Questions
Q1) When a VA loan has been properly assumed, a veteran has a right to a release of liability upon meeting all of the following requirements EXCEPT
A) loan must be currently paid
B) property must be sold to another veteran
C) purchaser must be qualified to buy
D) purchaser must agree to assume the loan
Q2) An assumption of a VA loan made for loans originated after March 1, 1988 without approval of the lender or the VA can result in
A) criminal action taken against the seller
B) no action because the loan can be freely assumed
C) an immediate acceleration of the note payable
D) no Action if the payments are made timely for the next five years
Q3) Which of the following Federal legislation gives Veterans who were forced to relocate from having to take a loss on the sale of their home due to a drop in fair value?
A) Economic Stimulus Act of 2008
B) American Recovery and Reinvestment Act of 2009
C) VA Home Equity Conversion
D) Housing and Economic Recovery Act in 2008
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Chapter 9: Borrower Quali cation
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12 Verified Questions
12 Flashcards
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Sample Questions
Q1) The VA residual qualification method determines an applicant's residual income, then measures that against the applicant's
A) mortgage payment amount
B) other shelter expenses
C) other monthly obligations
D) VA calculated cost of living expense
Q2) The private mortgage insurance carrier and the amount of insurance coverage required are determined by the:
A) Mortgagor
B) Seller
C) Mortgagee
D) Real Estate Agent
Q3) The percentage ratios used as guidelines in the qualification of an applicant's income by HUD/FHA are based on the applicant's
A) effective income not reduced by taxes
B) net effective income after deduction of both income and social security taxes
C) net effective income reduced only by withholding tax
D) net effective income reduced only by social security taxes
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11
Chapter 10: Property Analysis
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12 Verified Questions
12 Flashcards
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Sample Questions
Q1) The capitalization value of a $30,000 income stream to an investor seeking a 12.5 percent return is:
A) $120,000
B) $200,000
C) $240,000
D) $480,000
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.
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12
Chapter 11: Commercial Loans: Construction and Land Loans
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12 Verified Questions
12 Flashcards
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Sample Questions
Q1) An application for a commercial loan would include all of 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) 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
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
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Page 13
Chapter 12: Commercial Building and Farm Loans
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12 Verified Questions
12 Flashcards
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Sample Questions
Q1) 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
Q2) While they require very specialized information, farm loans are based on the same three legs as all mortgage loans, which are:
A) a creditworthy borrower, adequate collateral, good crops
B) both crops and livestock, a creditworthy borrower, adequate income
C) income sufficient to repay the loan, assured good weather, a creditworthy borrower
D) creditworthy borrower, adequate collateral, income sufficient to repay the loan
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14
Chapter 13: Other Financing Practices
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11 Verified Questions
11 Flashcards
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Sample Questions
Q1) 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
Q2) Which of the following is correct in regard to an owner's title insurance policy?
A) It is transferable to a new property owner
B) The policy terminates when the mortgage loan is paid off
C) The policy terminates when the property is transferred to a new owner
D) It protects the policy holder against adverse claims even beyond the term of property ownership
Q3) To create a land syndicate, the most common form of business organization used is the:
A) syndicate itself
B) limited partnership
C) S Corporation
D) land trust
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Page 15
Chapter 14: Technology Advances in Mortgage Lending
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11 Verified Questions
11 Flashcards
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Sample Questions
Q1) The advantage of a web site offering mortgage loans is:
A) an individual can obtain a mortgage loan without paying for or dealing with an agent or loan officer
B) the availability of loans is very limited
C) the cost is generally higher than with regular channels
D) it is a time consuming procedure as careful analysis is needed.
Q2) Which of the following is true about credit scoring?
A) It is a new method of credit analysis
B) It is a number compiled from credit records that show a person's creditworthiness
C) It has no variation and can be the sole criteria for creditworthiness
D) It is used only for analysis of car loans
Q3) 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
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Chapter 15: Environmental Issues
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10 Verified Questions
10 Flashcards
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Sample Questions
Q1) Which of the following statements is FALSE in regard to asbestos in a building?
A) Ingestion of microscopic fibers can cause asbestosis, a noncancerous disease
B) The real danger lies in loose, or "soft," asbestos not that occurring in hard form
C) In all cases where asbestos is found, the EPA recommends immediate removal
D) The EPA will accept an in-place management program rather than require removal of all asbestos
Q2) 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
Q3) 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
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Page 17
Chapter 16: Settlement Procedures
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12 Verified Questions
12 Flashcards
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Sample Questions
Q1) The variance 3/7/3 Rule requires a seven business day waiting period once the initial disclosure is provided before closing a home loan if the Good Faith Estimate turns out to be off by more than the variance percentages established by which of the following new legislative actions?
A) Mortgage Disclosure Improvement Act of 2008
B) American Recovery and Reinvestment Act of 2009
C) The Frank-Dodd Act of 2011
D) The Community Reinvestment Act
Q2) After initial closing deposits have been made, RESPA limits the continuing escrow or reserve account cushion held by lenders on residential loans to which of the following?
A) Not more than is reasonable and customary
B) Not more than one sixth of the annual recurring charges
C) Not more than one twelfth of the annual recurring charges
D) No restrictions apply after the initial deposits have been made
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
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Page 18