Question 1

While the Securities and Exchange Commission does not directly regulate real estate sales, it can become involved under which of the following circumstances?
A) Whenever any sale of land is across state lines
B) If it suspects mishandling of an escrow account
C) If paper is sold for development without a specific commitment for conveyance of property
D) A sale where payment is made by installment notes

Accepted Answer

The SEC can become involved in real estate transactions if there is a sale of securities, such as development paper, without a specific commitment for the conveyance of property. This is because it involves the sale of securities, which falls under the SEC's regulatory purview.

Question 2

Which of the following is NOT an acceptable procedure for proving title to land?
A) An attorney's opinion based on research of an abstract
B) An accurate survey made by a state-licensed surveyor
C) Purchase of title insurance
D) A Torrens registration system

Accepted Answer

An accurate survey made by a state-licensed surveyor, while important for determining the boundaries of a property, does not by itself prove title to land. Proving title typically involves establishing legal ownership and the right to use the property, which is done through methods such as attorney's opinions on abstracts, title insurance, or a Torrens registration system.

Question 3

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

Accepted Answer

A

Question 4

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

Accepted Answer

The most common form of business organization used to create a land syndicate is the limited partnership. This is because it offers liability protection to the limited partners while allowing them to invest in the syndicate without being involved in its day-to-day operations. The general partner, who manages the syndicate, has unlimited personal liability, but this risk can be minimized through insurance and proper management. The other options (syndicate itself, S Corporation, and land trust) are not typically used for creating a land syndicate.

Question 5

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

Accepted Answer

States do not set limits on the maximum amount for residential loans; these limits are typically set by federal entities like Fannie Mae and Freddie Mac or by the lenders themselves based on various factors including market conditions and the borrower's creditworthiness.

Question 6

Which of the following is a FALSE statement in regard to refinancing a home loan?
A) Lenders are free to set their own requirements for refinancing a loan
B) Income tax laws may affect the savings in refinancing
C) A 2 percent reduction in interest rate is a profitable refinancing in every case
D) A major problem is the appraised value of the property may be less than the balance due on the existing mortgage loan

Accepted Answer

A 2 percent reduction in interest rate may not always yield a profitable refinancing as it depends on various factors such as the remaining term of the existing loan, closing costs, and the borrower's overall financial situation. Therefore, this statement is false.

Question 7

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) was enacted to make it more __________________________________
A) difficult for unsecured creditors to obtain payments in Chapter 7
B) structured for lenders to obtain releases from Chapter 11 filings
C) difficult for well off borrowers to file for Chapter 7 by having to go through a means test
D) extends the 60 month payment settlement period for Chapter 13 to 72 months

Accepted Answer

The BAPCPA made it more difficult for well off borrowers to file for Chapter 7 bankruptcy by requiring them to go through a means test to determine their ability to repay their debts. This was done to prevent abuse of the bankruptcy system by individuals who had the ability to repay their debts but chose to file for bankruptcy instead.

Question 8

In a non-judicial foreclosure, the power of sale clause in a mortgage grants the right to take the action to the:
A) Court
B) Mortgagor
C) Trustee
D) New buyer

Accepted Answer

The answer of In a non-judicial foreclosure, the power of...

Question 9

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

Accepted Answer

The answer of The private mortgage insurance required by regulated...

Question 10

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

Accepted Answer

The answer of If a builder holds an unsubordinated leasehold...

Question 11

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

Accepted Answer

An owner's title insurance policy protects the policyholder against any adverse claims or defects in the title even beyond the term of property ownership. It is not transferable to a new owner, and it does not terminate when the mortgage loan is paid off or when the property is transferred to a new owner.

Quiz 13: Other Financing Practices

While the Securities and Exchange Commission does not directly regulate real estate sales, it can become involved under which of the following circumstances?

Which of the following is NOT an acceptable procedure for proving title to land?

The loan to value ratio is a measure used by lenders for all the following purposes EXCEPT:

To create a land syndicate, the most common form of business organization used is the:

All of the following are true of maximum and minimum limits for conventional loans EXCEPT:

Which of the following is a FALSE statement in regard to refinancing a home loan?

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) was enacted to make it more __________________________________

In a non-judicial foreclosure, the power of sale clause in a mortgage grants the right to take the action to the:

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.

If a builder holds an unsubordinated leasehold interest in land, it means that a building constructed on the land

Which of the following is correct in regard to an owner's title insurance policy?