Real Estate Law
Test Bank
Course Introduction
Real Estate Law provides an in-depth exploration of the legal principles, rules, and regulations governing real property transactions. The course covers topics such as property ownership rights, land use controls, contracts of sale, leases, mortgages, title transfer, financing, and zoning. Students will gain a foundational understanding of legal documentation, dispute resolution, the closing process, and the roles of various parties in real estate transactions. Emphasis is placed on both residential and commercial real estate, with case studies and practical examples to enhance the application of legal concepts in real-world scenarios.
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) When a lender who's primary aim is to pool mortgages to resell or commit them to a Mortgage Back Security and then service the mortgages uses a funding vehicle called a:
A) REMIC
B) Mortgage Conduit
C) Ginnie Mae
D) Warehouse Line
Answer: B
Q2) The allodial system of land ownership that forms the basis of ownership in the United States is best described as the
A) Right to occupy and use land owned by a superior
B) Right of a democratic government to control how land is used
C) Ownership of land is free and absolute subject only to governmental and voluntary restrictions
D) Origin and development of community property laws.
Answer: C
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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) Of the following, which can be the best indicator of mortgage interest rates?
A) The discount rate of interest
B) Fannie Mae/Freddie Mac administered yield requirements
C) The results of weekly Treasury bill offerings
D) Reports made by the Farm Credit System
Answer: C
Q3) The agency responsible for raising the money and paying federal government obligations is the
A) Office of Management and Budget
B) U.S. Treasury
C) Federal Reserve Bank
D) Comptroller of Currency
Answer: B
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Chapter 3: Mortgage Money: Regulated Lenders
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12 Verified Questions
12 Flashcards
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Sample Questions
Q1) The investment policies of commercial banks favor all of the following types o mortgage loans EXCEPT
A) Long term mortgage loans held in portfolio
B) Short term construction loans
C) Warehouse lines of credit granted to mortgage companies
D) Medium term mortgage loans to accommodate major depositors
Answer: A
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) Most of the money available for mortgage lending comes from
A) Federal Government sponsored funding programs
B) State and municipal housing agencies
C) Private sources of investment capital
D) Federal agencies that underwrite loans
Answer: C
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Page 5
Chapter 4: Other Primary Market Lenders
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12 Verified Questions
12 Flashcards
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Sample Questions
Q1) 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.
Q2) The fee a mortgage lender charges for assembling a loan package and determining acceptance or rejection of an applicant is all a loan ________________.
A) Underwriting Fee
B) Servicing Fee
C) Assembling Fee
D) Origination Fee
Q3) Most RMBS issued by Fannie Mae and Freddie Mac being issued not being purchased by the Federal Reserve Bank is being financed by REIT's using the
A) Discount Window of the Federal Reserve Bank
B) Federal National Mortgage Conduit
C) The Federal Housing Administration
D) Public-Private Investment Program
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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) 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.
Q2) If a discount is taken off the face value of a note, the result is
A) a decrease in the return to the note holder
B) no change in the return since the interest rate is unchanged
C) a higher market value for the note
D) an increase in the return to the note holder
Q3) Which of the following best describe the difference between a CMO and a CDO?
A) The CDO is a security the CMO is not.
B) The CMO can be tranched and the CDO cannot.
C) The CDO can have other asset classes other than mortgage loans.
D) A CMO will always be higher rated by S & P and Moody's than a CDO.
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Page 7
Chapter 6: The Mortgage Documents
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12 Verified Questions
12 Flashcards
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Sample Questions
Q1) 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.
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) When you hypothecate an asset it means that you as a borrower have:
A) signed a promissory note
B) given a deed in lieu of foreclosure
C) pledged an asset as collateral without giving up it use
D) assigned their debt to another while retaining liability
Q4) The instrument that provides the security for a promissory note is the:
A) Mortgage or Deed of Trust
B) Warranty Deed
C) Property Assignment
D) Contract for Deed
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Chapter 7: Mortgage Repayment Plans
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12 Verified Questions
12 Flashcards
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Sample Questions
Q1) A note allowing monthly repayment amounts less than are necessary to fully amortize a loan during its term is called a
A) Growing Equity Mortgage
B) Graduated payment note
C) Balloon payment note
D) Buy-down note
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) 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.
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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) The Federal Housing Administration implements its programs with which of the following procedures?
A) Providing government bonds as collateral for loans
B) Issuing an insured commitment covering the loan
C) Funding a portion of each loan at closing
D) Guaranteeing a portion of each 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) To qualify property to be pledged as collateral for a VA guaranteed loan, it must meet VA standards as determined by
A) written affidavit of the veteran seller
B) inspection and approval of the lender's agent
C) any approved VA builder
D) a VA approved appraiser
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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 assistance given by a credit report to borrower qualification is primarily to:
A) verify the applicant's place of residence
B) show the applicant's payment record to other creditors
C) confirm employment and banking relations
D) disclose any liens against applicant's property
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
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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) Which of the following types of legal description is most commonly found in urban areas?
A) Geodetic or government survey
B) Metes and Bounds
C) General Survey
D) Lot and Block
Q2) The underlying theories that support evaluation of a property are called:
A) Approaches to value
B) Qualification for designations
C) Principles of appraisal
D) Whatever local practices prevail
Q3) A condominium type of unit is more popular than a cooperative apartment unit because
A) It generally provides more living space
B) They are located in more desirable living areas
C) Ownership rights in a condo permit resale without approval of others
D) A greater number are available
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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) A construction loan can include all of the following conditions EXCEPT:
A) disbursement only after certain construction has been completed
B) a release of that portion of the collateral on which disbursement of funds has been made
C) a method of assuring the lender that money disbursed to a borrower/builder is used to pay a project's bills
D) a requirement for periodic inspection to assure the lender that all plans and specifications are being met
Q2) The major difficulty in obtaining a raw land purchase loan is:
A) the land is hard for the lender to inspect
B) the value is difficult to determine
C) it is not certain that its value will increase
D) it produces no income while expenses like taxes and insurance continue
Q3) 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
Page 13
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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) Multifamily housing must comply with a 1988 amendment to Fair Housing Act that adds which of the following to the prohibition against discrimination?
A) Pets and other personality
B) Elderly persons
C) Citizenship and employment
D) Familial status and handicapped
Q3) One of the better ways to assure success with a high rise office building investment is to:
A) pick a suit able location
B) prelease as much space as possible, preferably to a major tenant
C) obtain the best possible financing
D) require that the building contractor be bonded
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Page 14
Chapter 13: Other Financing Practices
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11 Verified Questions
11 Flashcards
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Sample Questions
Q1) 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
Q2) If a builder holds an unsubordinated leasehold interest in land, it means that a building constructed on the land
A) would pass to the landowner if the land rent is not paid
B) would pass to the mortgagee if the land rent is not paid
C) the builder would only forfeit ownership if the mortgage loan is not paid
D) would remain in possession of the builder as long as the land rent if paid
Q3) The loan to value ratio is a measure used by lenders for all the following purposes EXCEPT:
A) to determine acceptability of the property as loan collateral
B) as a basis for pricing the loan
C) to determine the need for private mortgage insurance
D) to protect against exceeding legal loan limits
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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) Freddie Mac offers an "expedited" collateral assessment which means
A) no appraisal is necessary
B) must only assure that property exists
C) a short appraisal at lender's option which may be completed within two hours
D) it can only be used if property is in a recognized subdivision
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) 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
Q2) Lead poisoning can result from inhalation an/or ingestion of lead from all the following sources EXCEPT:
A) Emissions from internal combustion engines
B) Water passing through plastic pipes
C) Powdering or blistering paint in place prior to 1978
D) Household dust and soil around a house
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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Chapter 16: Settlement Procedures
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12 Flashcards
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Sample Questions
Q1) 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
Q2) The underlying purpose of RESPA requirements is to:
A) require disclosures that give a buyer/borrower sufficient information to make informed decisions
B) increase federal control over real estate deals
C) introduce complex questions that necessitate employing legal counsel
D) limit costs of closing a real estate transaction
Q3) The Truth-in-Lending Act allows certain transactions to be rescinded by consumers; Transactions exempt from this right of rescission include which of the following residential mortgage transactions?
A) Cash out refinance
B) Reverse Annuity Mortgage
C) Purchase Money Mortgage
D) Home Equity Line of Credit
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