ROCKWELL FUNDAMENTAL FINAL EXAM ACTUAL
QUESTIONS AND ANSWERS RATED A+
✔✔A lender agrees that a seller who owes $400,000 on a mortgage that is in default
may list the property at $350,000, which is the current market value of the property. This
type of transaction is known as a:
a. deed in lieu
b. foreclosure
c. loan workout
d. short sale - ✔✔D. short sale
✔✔A couple in their 70s with no liens on their home would like some extra income, but
don't want to make monthly loan payments. What kind of loan might a lender offer
them?
a. a reverse equity loan, since they are over 62 and have sufficient equity in their home
b. a reverse equity loan, since they are over the age of 35
c. a reverse equity loan, but the couple will need to make monthly payments
d. none; a lender will probably refuse to lend to anyone over the age of 62 - ✔✔A. a
reverse equity loan, since they are over 62 and have sufficient equity in their home
✔✔An investor looks at a property listed for $150,000, with a monthly net operating
income of $1,000. He decides instead to offer $120,000. What kind of income appear
analysis would he have used to arrive at that conclusion?
a. capitalization rate
b. competitive market analysis
c. gross rent multiplier
d. initial basis - ✔✔A. capitalization rate
✔✔One of the provision of the Housing for Older Persons Act:
a. create a cause of action for lawsuits concerning misrepresentation of the nature of a
55+ property
b. exempts grandparents who will have grandchildren rising
c. requires that facilities and services for elderly persons must be available in housing
that is specifically for persons 55 or older
d. requires that in qualified projects, at least 80% of the units must be occupied by
persons 55 years or older - ✔✔D. requires that in qualified projects, at least 80% of the
units must be occupied by persons 55 years or older
✔✔Bob's property has a fair market value of $190,000. It is in a county where properties
are assessed at 50% of value, and the tax rate is $55 per $1,000 of assessed value.
What's Bob's annual property tax?
a. $2,612.50
b. $5,225.00
c. $7,837.50
d. $10,450.00 - ✔✔B. $5,225
,($190,000 x 0.50 = $95,000)
($95,000 / $1000 = 95)
(95 x 55 = $5,225)
✔✔Martha gave Hannah the right to purchase her vacant lot for $65,000. Hannah paid
Martha $1,200 for this right. Hannah is the:
a. mortgagor
b. mortgagee
c. optionor
d. optionee - ✔✔D. optionee
✔✔A seller complains that the seller's agent is showing other properties to buyers that
compete with the seller's property. Which of the following is true?
a. Seller's agent is breaching the duty of loyalty to seller
b. seller's agent is not breaching the duty of loyalty
c. seller's agent has created a conflict of interest
d. seller's agent may do so, but only with the seller's express permission - ✔✔B. seller's
agent is not breaching the duty of loyalty
✔✔A buyer would be protected from risk of loss due to a failed heating system through:
a. an agency disclosure statement
b. a home protection plan
c. mortgage insurance
d. title insurance - ✔✔B. a home protection plan
✔✔The Thompsons, a retired couple, need more income. Their lender offers a type of
loan in which the lender will send the couple a monthly check for as long as the couple
lives on the property, in exchange for a lien against the equity on their property. The
lender is referring to a/an:
a. shared-appreciation mortgage
b. deep in lieu
c. open-end mortgage
d. reverse mortgage - ✔✔D. reverse mortgage
✔✔Maya and Andrew are real estate agents who work for competing brokerages. They
don't like a new discount broker and decide together not to show any of the new
broker's listings. This is a violation of the Sherman Act because it is:
a. a group boycott
b. a tie-in arrangement
c. market allocation
d. price fixing - ✔✔A. a group boycott
✔✔In an option:
a. no consideration is required
, b. the seller is the optionee and the buyer is the optionor
c. the seller must apply the option money to the purchase price if the optionee exercises
her option
d. the option agreement must clearly state all the terms and conditions of the sale -
✔✔D. the option agreement must clearly state all the terms and conditions of the sale
✔✔A licensee takes a listing from his sister. He should:
a. arrange for a 'straw client' to take his sister's place for legal purposes
b. disclose the relationship if acting as a dual agent
c. keep the relationship a secret
d. not be able to legally take this listing - ✔✔B. disclose the relationship if acting as a
dual agent
✔✔An agent sends faxes to clients highlighting prospective properties that they might
like. The faxes should always include the:
a. address of each property
b. agent's license number
c. brokerage phone number
d. instructions on how to opt out of receiving more faxes - ✔✔D. instructions on how to
opt out of receiving more faxes
✔✔A letter of intent:
a. contains all terms and conditions of a contractual agreement
b. is generally binding
c. is used regularly in small residential transactions
d. sets out basics prior to negotiation - ✔✔D. sets out basics prior to negotiation
✔✔Which of the following instances is an example of an agency relationship terminated
by operation of law?
a. a broker renounces the agency
b. a client revokes the agency
c. broker and client mutually agree to end the agency
d. the subject property, a single-family residence, burns down - ✔✔D. the subject
property, a single-family residence, burns down
✔✔A broker will be working for a firm as an independent contractor. The firm must
provide the broker with:
a. advertising materials
b. an independent contractor agreement
c. business cards
d. insurance coverage - ✔✔B. an independent contractor agreement
✔✔A survey has been completed, and stakes have been placed marking off the
property. The survey can be used to:
a. construct fences and driveways
QUESTIONS AND ANSWERS RATED A+
✔✔A lender agrees that a seller who owes $400,000 on a mortgage that is in default
may list the property at $350,000, which is the current market value of the property. This
type of transaction is known as a:
a. deed in lieu
b. foreclosure
c. loan workout
d. short sale - ✔✔D. short sale
✔✔A couple in their 70s with no liens on their home would like some extra income, but
don't want to make monthly loan payments. What kind of loan might a lender offer
them?
a. a reverse equity loan, since they are over 62 and have sufficient equity in their home
b. a reverse equity loan, since they are over the age of 35
c. a reverse equity loan, but the couple will need to make monthly payments
d. none; a lender will probably refuse to lend to anyone over the age of 62 - ✔✔A. a
reverse equity loan, since they are over 62 and have sufficient equity in their home
✔✔An investor looks at a property listed for $150,000, with a monthly net operating
income of $1,000. He decides instead to offer $120,000. What kind of income appear
analysis would he have used to arrive at that conclusion?
a. capitalization rate
b. competitive market analysis
c. gross rent multiplier
d. initial basis - ✔✔A. capitalization rate
✔✔One of the provision of the Housing for Older Persons Act:
a. create a cause of action for lawsuits concerning misrepresentation of the nature of a
55+ property
b. exempts grandparents who will have grandchildren rising
c. requires that facilities and services for elderly persons must be available in housing
that is specifically for persons 55 or older
d. requires that in qualified projects, at least 80% of the units must be occupied by
persons 55 years or older - ✔✔D. requires that in qualified projects, at least 80% of the
units must be occupied by persons 55 years or older
✔✔Bob's property has a fair market value of $190,000. It is in a county where properties
are assessed at 50% of value, and the tax rate is $55 per $1,000 of assessed value.
What's Bob's annual property tax?
a. $2,612.50
b. $5,225.00
c. $7,837.50
d. $10,450.00 - ✔✔B. $5,225
,($190,000 x 0.50 = $95,000)
($95,000 / $1000 = 95)
(95 x 55 = $5,225)
✔✔Martha gave Hannah the right to purchase her vacant lot for $65,000. Hannah paid
Martha $1,200 for this right. Hannah is the:
a. mortgagor
b. mortgagee
c. optionor
d. optionee - ✔✔D. optionee
✔✔A seller complains that the seller's agent is showing other properties to buyers that
compete with the seller's property. Which of the following is true?
a. Seller's agent is breaching the duty of loyalty to seller
b. seller's agent is not breaching the duty of loyalty
c. seller's agent has created a conflict of interest
d. seller's agent may do so, but only with the seller's express permission - ✔✔B. seller's
agent is not breaching the duty of loyalty
✔✔A buyer would be protected from risk of loss due to a failed heating system through:
a. an agency disclosure statement
b. a home protection plan
c. mortgage insurance
d. title insurance - ✔✔B. a home protection plan
✔✔The Thompsons, a retired couple, need more income. Their lender offers a type of
loan in which the lender will send the couple a monthly check for as long as the couple
lives on the property, in exchange for a lien against the equity on their property. The
lender is referring to a/an:
a. shared-appreciation mortgage
b. deep in lieu
c. open-end mortgage
d. reverse mortgage - ✔✔D. reverse mortgage
✔✔Maya and Andrew are real estate agents who work for competing brokerages. They
don't like a new discount broker and decide together not to show any of the new
broker's listings. This is a violation of the Sherman Act because it is:
a. a group boycott
b. a tie-in arrangement
c. market allocation
d. price fixing - ✔✔A. a group boycott
✔✔In an option:
a. no consideration is required
, b. the seller is the optionee and the buyer is the optionor
c. the seller must apply the option money to the purchase price if the optionee exercises
her option
d. the option agreement must clearly state all the terms and conditions of the sale -
✔✔D. the option agreement must clearly state all the terms and conditions of the sale
✔✔A licensee takes a listing from his sister. He should:
a. arrange for a 'straw client' to take his sister's place for legal purposes
b. disclose the relationship if acting as a dual agent
c. keep the relationship a secret
d. not be able to legally take this listing - ✔✔B. disclose the relationship if acting as a
dual agent
✔✔An agent sends faxes to clients highlighting prospective properties that they might
like. The faxes should always include the:
a. address of each property
b. agent's license number
c. brokerage phone number
d. instructions on how to opt out of receiving more faxes - ✔✔D. instructions on how to
opt out of receiving more faxes
✔✔A letter of intent:
a. contains all terms and conditions of a contractual agreement
b. is generally binding
c. is used regularly in small residential transactions
d. sets out basics prior to negotiation - ✔✔D. sets out basics prior to negotiation
✔✔Which of the following instances is an example of an agency relationship terminated
by operation of law?
a. a broker renounces the agency
b. a client revokes the agency
c. broker and client mutually agree to end the agency
d. the subject property, a single-family residence, burns down - ✔✔D. the subject
property, a single-family residence, burns down
✔✔A broker will be working for a firm as an independent contractor. The firm must
provide the broker with:
a. advertising materials
b. an independent contractor agreement
c. business cards
d. insurance coverage - ✔✔B. an independent contractor agreement
✔✔A survey has been completed, and stakes have been placed marking off the
property. The survey can be used to:
a. construct fences and driveways
