Deck 9: Real Property and Home Ownership

Question 1

One advantage to a fixed-rate mortgage is that the lender typically will not charge the borrower any loan origination fee. ​

Answer 1

False

Question 2

For 20 years, homeowner A and homeowner B both paid $1,500 per month on their 30-year, seven percent mortgages. Homeowner A lived in the same home and paid on the same mortgage the entire period. Homeowner B moved three times, but each time obtained a 30-year, seven percent mortgage and paid $1,500 per month. A's home and B's home both rose in value by two percent per year. After the 20 years, A and B will have the same amount of wealth from their home investments.​

Answer 2

False

Question 3

In general, home sales have changed from a "Let the buyer beware" to a "Let the seller beware" market.

Answer 3

True

Question 4

After a sales agreement is signed, the buyer may thoroughly inspect the home (personally or by using professional inspectors) and demand the seller make any "necessary" repairs. Serious disputes can follow if the surprised seller objects to making such repairs, because a contract already has been signed.​

Question 5

A homeowner's monthly mortgage payment often includes or combines sums of money for payment of property taxes and casualty insurance with the sum for principal and interest on the mortgage. ​

Question 6

The offer to buy real estate is usually made on a standard form document called a purchase agreement and deposit receipt.​

Question 7

One advantage to an adjustable interest rate mortgage (ARM) is that the lender typically will not charge the borrower any loan origination fee. ​

Question 8

The market practices governing home sales are tightly governed by the National Association of Realtors.^TM​

Question 9

The term impound account is another term used to describe a homeowners equity.​

Question 10

It is generally believed and a common saying that the most important factor in selecting a home is price, price, price.​

Question 11

The size of each payment required to amortize an adjustable interest rate mortgage (ARM) may remain constant even though the adjustable interest rate may increase from time to time. ​

Question 12

One advantage of a non-judicial foreclosure to the buyer is the debtor lacks the right of redemption.​

Question 13

All other things being equal, the longer the repayment term, the lower the monthly payments required to amortize (repay) a typical mortgage loan and the larger the total amount of cumulative interest that must be paid ​

Question 14

It is illegal for a person to sell their own home themselves unless they possess a real estate license.​

Question 15

Commonly regarded advantages of home ownership are the sense of community, stability and security.

Question 16

A real estate agent employed by the buyer to find attractive homes to purchase is called the listing agent.​

Question 17

A variable interest rate mortgage (VIRM) is the same thing as an adjustable rate mortgage (ARM).  ​

Question 18

Interest rates required by a variable interest rate mortgage (VIRM) typically are capped (i.e., limited) as to how much they can be adjusted at any one time. ​

Question 19

All other things being equal, the lower the interest rate; the lower the monthly payments required to amortize (repay) a typical mortgage loan.

Question 20

Money borrowed and secured with a home equity loan can only be used for home improvements. ​

Question 21

Although mechanics liens are used to protect automobile repair facilities that type of protection is not available to material suppliers to real property.​

Question 22

Homestead laws are uniform through the states.​

Question 23

The document that constitutes evidence of a debt and contains the essential terms of the financing, is called​

A)a loan application.
B)a deed of trust.
C)a mortgage.
D)a note, or technically, a promissory note.

Question 24

Which of the following documents will not be signed by a buyer as part of the purchase of a home?​

A)promissory note
B)mortgage or deed of trust
C)loan application
D)grant or warranty deed

Question 25

The grantor promises that he or she will transfer all they own, but do not guarantee they own  anything. They have transferred property with a ​

A)quitclaim deed.
B)as is deed.
C)grant deed.
D)warranty deed.​

Question 26

Creative financing involves​

A)FHA financing.
B)VA financing.
C)seller's financing.
D)none of the above

Question 27

The document that is usually called a listing is best described as​

A)a multiple-listing service.
B)an offer to purchase.
C)a deposit receipt.
D)an employment contract.

Question 28

The listing real estate agent is an employee of​

A)the buyer.
B)the seller.
C)both the buyer and seller.
D)the multiple-listing service.

Question 29

A document used to transfer ownership interest in real property is called a deed and it has different legal significance than a contract.​

Question 30

Which of the following is not an economic benefit of home ownership?​

A)buildup of ownership equity
B)appreciation in value
C)deduction of property taxes on income-tax returns
D)tax deduction of principal on income-tax returns

Question 31

A judgment against a debtor for the unpaid balance still due after judicial foreclosure of a real estate mortgage is called a right of redemption.​

Question 32

A debtor fails for several months to pay creditor money due on a loan secured by a mortgage. Which of the following may happen?​

A)nonjudicial foreclosure
B)right of reinstatement
C)judicial foreclosure
D)all of the above

Question 33

Many renters would purchase homes, except they​

A)cannot qualify for a mortgage.
B)cannot find appropriate homes for sale.
C)cannot come up with sufficient down payment.
D)want to retain the advantages of renting.

Question 34

A typical title insurance policy will protect a new homeowner from losses caused by​

A)conflict over access to neighbor's property by easement.
B)claims of others supported by unrecorded documents.
C)boundary dispute with neighbors.
D)none of the above

Question 35

The document that constitutes a power to foreclose upon collateral and apply its value to satisfaction of the underlying debt, is called​

A)a note.
B)a deed of trust.
C)a mortgage.
D)both b and c

Question 36

The document that is usually called a deposit receipt is best described as​

A)a multiple-listing service.
B)an offer to purchase.
C)an employment contract.
D)a listing.

Question 37

A homeowner desires to sell his or her home and signs an exclusive-agency listing agreement, requiring payment of a six percent commission to the real estate agent. If shortly thereafter, before the agent has time to do anything to sell the property, the owner surprisingly finds a couple who  purchases it for $400,000, the homeowner​

A)must pay a commission of $24,000 to the listing agent.
B)is not obligated to pay a commission.
C)is not obligated to pay a commission, unless the agent has placed the listing in the local multiple-listing service.
D)must pay a commission of $12,000, but is entitled to retain the other half because he or she found the buyer.

Question 38

A foreclosure is a process by which secured real property is confiscated at the direction of the unpaid creditor and sold to the highest bidder​

Question 39

Which of the following typically represents the largest cash expenditures incident to home ownership?​

A)utility services (water, electricity, gas)
B)maintenance costs
C)PITI (principal, interest, insurance, and taxes)
D)property taxes

Question 40

A homeowner desires to sell his or her home and signs an exclusive-listing agreement, requiring  payment of a six percent commission to the real estate agent. If shortly thereafter, but before the  agent has time to do anything to sell the property, the owner surprisingly finds a couple who  purchases it for $400,000, the homeowner ​

A)must pay $24,000 to the listing agent.
B)is legally required only to reimburse the agent for out-of-pocket expenses.
C)has lucked out and need not pay any commission to the agent, because the agent hadn't done anything yet.
D)must pay the $24,000 commission only if the agent had acted with due diligence by placing the listing in the local multiple-listing service.

Question 41

A due on sale clause ​

A)triggers payment of any unpaid balance on home loan.
B)requires a seller to pay for title insurance.
C)requires a seller to sign an appropriate deed.
D)is a form of quiet title action.

Question 42

Sometimes a homeowner who becomes wholly unable to make mortgage payments can protect his or her credit rating by giving the lender a(n) __________________​.

Question 43

A two party instrument stating on its face "Pay to the order of Tom Smith" is: ​

A)A promissory note with Tom Smith as the payee.
B)A quitclaim deed with Tom Smith a grantor
C)A mortgage with the bank as the beneficiary
D)A deed of trust with Smith as the beneficiary

Question 44

Nicki is a debtor who defaulted on a real loan and is facing a foreclosure proceeding. Among the protections the debtor might have is a;​

A)nonjudicial foreclosure
B)easement
C)judicial foreclosure
D)homestead

Question 45

In 1985, George Weasley owned a parcel of land that extended down to the Quixote River. He conveyed the strip of the property fronting the river to Draco Malfoy. The deed included the following statement: "Reserve being kept for said Draco Malfoy. I grant the right of way by land or water." The strip of property is now owned by Sirius Black, and the portion retained by George Weasley now belongs to Cornelius Fudge. Fudge is denying Black access to the river.​

A)the parties own the property in joint tenancy
B)Black has right to the interest which is an easement
C)the is a tenancy in the entirety
D)Black cannot access the property as it is Fudge's homestead

Question 46

Peter, the seller, and Sendhil. The buyer, enter into a real estate purchase agreement. The property is put into _ while Sendhil applies for a loan. After Sendhil qualified, he changed his mind. Undoubtedly Peter's recovery would be ____________ based on the _____________ in the
Purchase agreement.​

A)escrow, specific performance, coinsurance clause.
B)deposit, compensatory damages, escrow.
C)escrow, liquidated damages, deposit
D)assessment, points, disclosure.

Question 47

The forced sale of real property following a court proceeding is called a:

A)judicial foreclosure.
B)deficiency judgment.
C)right of redemption.
D)real estate owned.

Question 48

Chang, Ruth and Reggie were joint tenants. Reggie dies.​

A)One-third goes to Chang, one-third goes to Reggie and one-third goes to Reggie's heirs.
B)The property goes to whoever Reggie gave it to in her will.
C)The property goes to Reggie's heirs.
D)Reggie's property goes to Chang and Ruth.

Question 49

A real estate employment contract is generally a:​

A)Listing agreement
B)exclusive listing
C)deposit receipt
D)multiple-listing service

Question 50

A homeowner must pay a substantial penalty if the mortgage lender does not receive the required monthly payment by the stated ___________________ date.​

Question 51

All of the repayment terms of a home loan are found in two documents, the ____________ and the ________________ .​

Question 52

Some lenders do not sell all of their home mortgage loans. Rather, they keep them as an investment to earn the stated interest rate. These lenders rely upon the credit-worthiness of their borrowers  instead of upon federal guarantees or repayment of private mortgage insurance. Such banks and savings and loans are called _________________ lenders.​

Question 53

Monthly payments on home mortgages often include, PITI, Principal, Interest, Property Taxes, and ________________ .​

Question 54

All the money necessary to complete the purchase of a home, above and beyond the net amount of the new mortgage loan, and whether used for payment of "garbage fees," reimbursement to seller of prepaid property taxes, or for part of the purchase price, is called the ________________ .​

Question 55

Cassey wished to convey a 40-acre tract of land to his two children, George and Martha, so each would own the property equally and be free to transfer their interest to anyone they wished during life or at death. What form of joint ownership should Cassey choose?​

A)joint tenancy
B)community property
C)tenancy in common
D)tenancy by the entirety

Question 56

After a home mortgage loan is made by a bank or savings and loan, it may be sold (assigned) to investors who participate in what is called the __________________ . These buyers essentially are purchasing a stream of future income represented by the monthly payments made on the home mortgages they purchased.​

Question 57

The standard real estate commission paid a listing broker/agent is 6%. That amount is;​

A)negotiable
B)standard by federal law.
C)standard by state law.
D)standard by HUD administrative rule.

Question 58

Conrad contracts to sell his house and lot to Winifred for $100,000. The terms of the purchase agreement require Winifred to pay 10 percent of the purchase price as a deposit toward the purchase price. The terms further stipulate that should the buyer breach the contract, the deposit will be retained by Conrad. Such a good faith deposit is called:​

A)Liquidated damages
B)A mortgage
C)PMI
D)Equity

Question 59

Which of the following documents will be signed by a seller as part of the purchase of a home?​

A)promissory note
B)mortgage or deed of trust
C)loan application
D)grant or warranty deed

Question 60

Houses owned by institutional lenders through foreclosure are referred to as​

A)commission free properties.
B)reinstatement positioned.
C)damaged properties.
D)real estate owned (REO).

Question 61

_______________ is money or other property made available as security by a debtor to a creditor, through physical possession or legal right, to guarantee repayment of a loan.​

Question 62

State laws provide that all documents that affect the ownership of, or possession of, real estate may be _________________ in public official records.​

Question 63

When a home buyer agrees to continue to make monthly payments to the seller's existing mortgage lender, a(n) __________________ occurs.​

Question 64

How do anti-deficiency statutes protect homeowners?​

Question 65

A(n) _ _ _ _ _ _ _ _ _ _ _ gives a person the right to make limited use of another person's real property, such as driving a car over it.​

Question 66

The difference between the market value of a home and the sum of all mortgages and liens against it is called the owner's _________________ . What is ignored in this calculation is the impact of ________________ on the owner's true economic interest in the property.​

Question 67

Describe the difference between an exclusive listing and an exclusive-agency listing.​

Question 68

A real estate employment contract in which the owner of real property agrees to pay a licensed agent a certain commission regardless of who finds the buyer to whom the property is sold is called​

Question 69

If a lender (creditor) wishes to claim a(n) _____________ they should chose a judicial foreclosure over a non-judicial foreclosure.​

Question 70

Harvey Hadley conveyed a parcel of property in the city of Fairlywell Downs to Carl Bland and Dirk Pitts. The granting clause of the deed stated that Carl and Dirk take the property jointly.
Neither Carl nor Dirk signed the deed.
a. What is the nature of the joint ownership interest of Carl and Dirk? Explain?
b. Of what impact is it that neither Carl nor Dirk signed the deed? Explain?
c. If the property were still in escrow, of what effect would a recorded tax lien be?​

Question 71

A(n) _ _ _ _ _ _ _ _ _ _ _ gives a person revocable permission to make limited use of another person's real property, such as driving a car over it.​

Question 72

Assume that a quiet, young, loving couple that is three years out of college with one small child lives in a subdivision home, but is disturbed nightly by the activities of the neighbors. These activities include a loud stereo playing very undesirable music; many cars coming and going at all hours of the night, many of which squeal their tires; loud voices in the middle of the night, both in front and in back of the neighbor's home; and vulgar epithets shouted day and night. Further, the  neighbors neglect to remove litter of all kinds (automobile parts, papers, boxes, jars, etc.) from their  front and side yards. What economic consequences are involved, and what legal remedies does the  young couple have? ​

Question 73

Lee and Patricia Cheema own a house in California. The house was owned by Lee Cheema as his separate property before his marriage to Patricia. Improvements were made to the house after the marriage and paid for with community property funds. California is a community property state and therefore most property acquired during a marriage is community property. Assume that Don Burgunder wishes to buy the property from Lee Cheema. Don will want to be sure that all interests in the property are conveyed to him. Ownership records will show that Lee Cheema is the sole owner. Don, however, would be right to be concerned that Patricia may have some interest in the house because of the community property improvements to it. What type of deed should Don expect from the Cheema's to protect his interests?​

Question 74

A debtor who fully reimburses the person who made the winning bid at the judicial-foreclosure sale within one year can reclaim the property through a called the _________________ .​

Question 75

The annualized percentage rate (APR) of a home purchase mortgage may be larger than the interest rate stated in the note if __________________ are paid by the borrower to the lender.​

Question 76

Briefly describe private mortgage insurance (PMI).​

Question 77

As the text notes on p. 386, disclosure laws may require sellers to disclose the occurrence of some deaths in the home with prospective buyers. But what about ghosts? Find the case Stambovsky v. Ackley , 169 A.D.2d 254 (N.Y. App. Div. 1991). Why did the court conclude that the seller owed a duty to disclose to the buyer that the home had a reputation for being haunted? Do you agree? Why or why not? Consult this primer on stigmatized property as you develop your response:
http://www.americanbar.org/content/dam/aba/publishing/probate_property_magazine/rppt_mo_premium_rp_publications_magazine_2005_mj_perlin.authcheckdam.pdf

Question 78

Tran conveyed to Liu all his ownership interest in his real property but when he did so he made no promise that he had conveyed anything. Liu received a​

Question 79

An obstacle to clear title in real estate is called a ____________ .​

Question 80

A ______________ deed is the deed that provides the new owner the greatest protection.​