Lesson 7
Chapter 15-16
1.
Which of these primary mortgage market participants do not actually make real estate
loans?
a.
insurance companies
b.
endowment funds
c.
mortgage brokers
d.
none of these make loans for real estate
e.
all of these make loans for real estate
2.
In the secondary mortgage market several loans are pooled to form a new security
known as mortgage backed securities. Pools formed by this agency guarantee
payment of principal and interest
a.
FHA
b.
GNMA
c.
FHLMC
d.
VA
e.
All of these
3.
A loan with a constant payment that slowly pays off the principal borrowed is known as
a.
a balloon loan.
b.
an annuity.
c.
a strait loan.
d.
an amortized loan.
e.
an adjustable loan.
4.
If you expected your income to increase and wanted to pay off the mortgage you would
obtain a(n)
a.
balloon payment mortgage.
b.
growing equity mortgage.
c.
reverse annuity mortgage.
d.
adjustable rate mortgage.
5.
To help meet the needs of low and moderate income housing, congress passed
a.
Federal Home Loan Mortgage Corporation ( FHLMC )
b.
Real Estate Settlement Procedures Act ( RESPA )
c.
Regulation Z
d.
Equal Credit Opportunity Act ( ECOA )
e.
Communities Reinvestment Act ( CRA )
6.
Bob owns a disco bar and the apartment building next door. Gail, a tenant,
complains about the late night noise. Finally she abandons her apartment.
a.
Gail suffered actual eviction.
b.
Gail suffered constructive eviction.
c.
Bob violated the covenant of quiet enjoyment.
d.
e.
b and c
None of these.
7.
The elements of a valid lease include all of the following EXCEPT
a.
capacity to contract
b.
consideration
c.
legal objectives
d.
offer and acceptance
e.
signature of lessee and lessor
8.
An estate at will terminates
a.
if the lessee or lessor die
b.
if the property is sold
c.
at the expiration of the contract
d.
all of these
e.
none of these
9.
An estate for years terminates
a.
if the lessee or lessor die
b.
if the property is sold
c.
at the expiration of the contract
d.
all of these
e.
none of these
10.
An estate from period to period terminates
a. if the lessee or lessor die
b. if the property is sold
c. at the expiration of the contract
d. all of these
e. none of these
11.
Adjustable rate mortgages have several components. One of these sets the
maximum amount for monthly payments and is known as
a.
rate cap
b.
payment cap
c.
negative amortization
d.
margin
12.
A lease that stipulates that the rent will include a portion of the lessee’s revenue
a.
a gross lease
b.
a net lease
c.
a percentage lease
d.
a variable lease
e.
none of these
13.
Rent on a hotel room is an example of
a.
a gross lease
b.
a net lease
c.
a percentage lease
14.
A loan that consists of a series of interest only payments followed by the repayment of
the principal at the end of the loan is known as
a.
a balloon loan
b.
an annuity
c.
a strait loan
d.
an amortized loan
e.
an adjustable loan
15.
A sublease
I.
usually requires consent of the lessor
II.
relieves the lessee of the obligation to pay rent
III.
may be for a term greater than the current tenant’s lease
a.
b.
c.
d.
16.
I only
II and III
I, III
I, II, III
VA and FHA loans
I. are loans made by the FHA and VA
II. are loans guaranteed by the FHA and VA
III. have no prepayment penalties on all dwellings
a.
b.
c.
d.
I only
II only
I and III
II and III
17.
A lease that stipulates that the rent will be adjusted according to charges in an index such
as the CPI is known generally as
a.
a gross lease
b.
a net lease
c.
a percentage lease
d.
a variable lease
e.
none of these
18.
A lender’s interest in a mortgage loan is protected by obtaining additional security from
a.
private mortgage insurance.
b.
title insurance.
c.
the borrower’s note.
d.
impound accounts.
19.
A lender will take certain factors into consideration when deciding whether to grant a
borrower a mortgage loan. Which of the following is a violation of the Equal Credit
Opportunity Act (ECOA)?
a.
The marital status of the borrower
b.
The creditworthiness of the borrower
c.
The amount of the borrower’s income
d.
The ability of the borrower to make the payments
20.
The type of mortgage loan that uses both real and personal property as security is a
a.
blanket loan.
b.
package loan.
c.
purchase money mortgage.
d.
wraparound loan.
21.
If the amount of a loan is $13,500 and the interest rate is 6 percent, what is the amount of
the semiannual interest payment?
a.
$596.55
b.
$405.00
c.
$810.00
d.
$202.50
22.
A common feature of an adjustable rate mortgage (ARM) is
a.
the interest rate is fixed for a maximum of five years.
b.
there is negative amortization if rates decrease.
c.
a rate cap on the amount the rate may increase.
d.
automatic conversion to a fixed-rate loan.
23.
Under a percentage lease, a commercial lessee may agree to pay
a.
maintenance.
b.
real estate taxes.
c.
insurance.
d.
a percent of sales.
24.
A lease that will terminate within one year of its inception
a.
is invalid.
b.
violates the provisions of the statute of frauds.
c.
must be in writing.
d.
may be oral.
25.
A lessee who pays some or all of the lessor’s property expenses has a
a.
gross lease.
b.
net lease.
c.
percentage lease.
d.
sublease.
26.
Rent would be best defined as
a.
contractual consideration to a third party.
b.
consideration for the use of real property.
c.
all monies paid by the lessor to the lessee.
d.
the total balance owed under the terms of the lease.
27.
Mr. and Mrs. Delong lease a two-bedroom apartment from Karos Management Company.
Due to ordinary wear and tear, the dishwasher breaks down. Who must pay for its repair?
a.
The lessor
b.
The lessee
c.
The insurance company
d.
The real estate agent
28.
A developer received a loan that covers five parcels of real estate and provides for the
release of the mortgage lien on each parcel when certain payments are made on the loan.
This type of loan arrangement is called a
a.
purchase-money loan.
b.
blanket loan.
c.
package loan.
d.
wraparound loan.
29.
For a lender, income on the loan is realized from loan origination fees, discount points,
and which of the following?
a.
Recurring interest income
b.
Investment groups
c.
The discount rate
d.
Amortization
30.
In an adjustable rate mortgage, the interest rate is tied to an objective economic indicator
called a(n)
a.
mortgage factor.
b.
discount rate.
c.
index.
d.
reserve requirement.
31.
Which law requires that all advertising that references mortgage financing terms contain
certain disclosures?
a.
Equal Credit Opportunity Act
b.
Fair Housing Act
c.
Community Reinvestment Act
d.
Truth-In-Lending Act (Regulation Z)
32.
When the Federal Reserve Board raises its discount rate, all of the following are likely to
happen EXCEPT
a.
buyer’s points will increase.
b.
interest rates will fall.
c.
d.
mortgage money will become scarce.
the percentage of ARMs will increase.
33.
Which of the following characteristics of a fixed-rate home loan that is amortized
according to the original payment schedule is true?
a.
The amount of interest to be paid is predetermined.
b.
The loan cannot be sold in the secondary market.
c.
The monthly payment will fluctuate each month.
d.
The interest change may be based on an index.
34.
Fran purchased her home 30 years ago for cash. Today Fran receives monthly checks
from a mortgage lender that supplements her retirement income. Fran most likely has
obtained a(n)
a.
shared-appreciation mortgage.
b.
adjustable-rate mortgage.
c.
reverse-annuity mortgage.
d.
overriding deed of trust.
35.
Which of the following would automatically terminate a residential lease?
a.
Total destruction of the property
b.
Sale of the property
c.
Failure of the tenant to pay rent
d.
Death of the tenant
36.
If a tenant moved out of a rented store building because access to the building was
blocked as a result of the landlord’s negligence, the
a.
tenant would have no legal recourse against the landlord.
b.
landlord would be liable for the rent until the expiration of the lease.
c.
landlord would have to provide substitute space.
d.
tenant would be entitled to recover damages from the landlord.
37.
Under negotiated terms of a certain residential lease, the landlord is required to maintain
the water heater. If the tenant is unable to get hot water because of a faulty water heater
that the landlord has failed to repair after repeated notification, the tenant could do all
EXCEPT
a.
sue the landlord for damages.
b.
sue the landlord for breach of the covenant of seisin.
c.
abandon the premises claiming constructive eviction.
d.
terminate the lease agreement.
38.
Which of the following is true about a holdover tenant?
a.
The landlord must accept additional rent if the tenant remains on the premises.
b.
The tenant must give the landlord a 30-day notice to vacate.
c.
The tenant may continue to occupy the premises without the permission of the
landlord.
d.
The landlord may evict the tenant.
39.
Mary has assigned her apartment lease to Ben, and the landlord has agreed to the
assignment. Who is liable for the payment of the rent?
a.
Ben is liable to Mary, Mary is liable to the landlord.
b.
Both Ben and Mary are liable to the landlord.
c.
Only Mary is liable.
d.
Only Ben is Liable.
40.
A tenancy in which the tenant continues in possession after the lease has expired, without
the landlord’s permission, is a
a.
tenancy for years.
b.
periodic tenancy.
c.
tenancy at will.
d.
tenancy at sufferance.
Essay questions are for your convenience to prepare for the midterm and final. You do not have
to turn them in for a grade.
1.
Compare and contrast a Purchase money mortgage and a Wraparound mortgage.
2.
Explain the provisions of Regulation Z.
3.
Compare and contrast a balloon loan and a strait loan.
4.
Describe the requirements for a valid lease.
5.
Compare and contrast an estate for years and an estate from period to period.
6.
Describe and discuss gross lease, net lease, and percentage leases.