MD Real Estate PSI National Exam 1 Questions and Answers

Usury MOST nearly means - Answer- A: illegal interest. Each state sets its own ceiling for the maximum interest rate lenders may charge. Rates above that ceiling are considered ________ and ______. No reputable lender exceeds those rates and those that make a practice of it are commonly known as loan sharks. - Answer- usurious and illegal. Which of the following describes a mortgage that requires principal and interest payments at regular intervals and is called the liquidation of debt by periodic installment until the debt is satisfied? Amortized loan Annuity loan Acceleration loan Assemblage loan - Answer- Amortized loan the most common form of mortgage where monthly payments include both principal and interest (as opposed to balloon or interest-only seconds). Typically, monthly payment amounts remain constant, while the interest portion is higher in the earlier years, giving homeowners a larger tax deduction with higher percentages of principal paid in the later years. - Answer- amortized loans An impound or reserve account MOST benefits whom? The borrower The lender The trustee The trustor - Answer- The lender The transfer of real property ownership from seller to buyer, according to terms and conditions in a sales contract or escrow agreement; the final stage in a real estate transaction. - Answer- Settlement (also known as Closing or Loan Consummation) 1. A separate account maintained by a broker for the deposit of clients' money (i.e., good faith deposits). Also called Trust Account. 2. The account a lender maintains to hold a borrower's monthly payments for property insurance and property tax until those bills are due. Also called Reserve Account or Impound Account. - Answer- Escrow Account Also known as escrow accounts, _____________ accounts accumulate funds from closing costs and monthly payments to ensure that property taxes and homeowner's insurance are kept current. - Answer- impound The Closing Disclosure (CD) form is: the document used to make Fair Housing complaints. provided after signing a listing agreement. a statement of actual charges and adjustments. the document that must be displayed in brokerages. - Answer- a statement of actual charges and adjustments. _________is a standard form in use which is used to itemize services and fees charged to the borrower by the lender. The form is called for in the TILA RESPA Integrated Disclosure (TRID). - Answer- The Closing Disclosure (CD) A VA loan may be granted for the purchase of a one-family to four-family property if the veteran certifies the rent collected will equal the mortgage payments. the loan will be amortized for not more than 20 years. the down payment will be at least 10%. the veteran agrees to live there. - Answer- the veteran agrees to live there. A standardized measurement expressing the true annual cost of borrowing is expressed as the what? ECOA AGI APR RESPA - Answer- APR annual percentage rate A financing instrument that evidences a promise to pay a specific amount of money to a specific person within a specific time frame. A written, legally binding promise to repay a debt. - Answer- Promissory Note RESPA would prohibit which of the following acts? Steering Paying of kickbacks Blockbusting Redlining - Answer- Paying of kickbacks Federal law dealing with real estate closings that provides specific procedures and guidelines for the disclosure of settlement costs. Implemented by Regulation X, which is under the oversight of the Consumer Financial Protection Bureau. - Answer- Real Estate Settlement Procedures Act (RESPA) Channeling prospective buyers or tenants to particular neighborhoods based on their race or membership in another protected class. - Answer- steering The illegal practice of inducing owners to sell their homes (often at a deflated price) by suggesting the ethnic or racial composition of the neighborhood is changing, with the implication that property values will decline as a result. Also called Panic Selling or Panic Peddling. - Answer- Blockbusting When a lender refuses to make loans secured by property in a certain neighborhood because of the racial or ethnic composition of the neighborhood. - Answer- redlining In which of the following markets may a lender sell a loan that a mortgage banker has previously originated? Primary market Secondary market Stock market Consumer market - Answer- Secondary market Which of the following is considered a conventional loan? FHA insured VA guaranteed Commercial bank's 15 year loan Contract for deed - Answer- Commercial bank's 15 year loan. Though 30 year loans are more common, 15 year loans are considered standard, conventional loans. All of the following are true of conventional loans except what? They are made to the buyer without governmental insurance or guarantee. The policy requirements of the lenders are not uniform. The qualification requirements are uniformly fixed by state law. They require a higher down payment than non-conventional loans. - Answer- The qualification requirements are uniformly fixed by state law. Not only are guidelines not uniform, qualification standards can vary enormously from lender to lender. There are no state-mandated qualifying requirements for conventional loans. A buyer wants to take out an FHA loan. The broker should refer the buyer directly to any approved lending institution such as a bank or savings and loan association. an FHA appraiser in the area. the Federal Housing Administration Office. the Federal National Mortgage Association. - Answer- any approved lending institution such as a bank or savings and loan association. A real estate licensee instructs a potential client who is interested in buying property adjacent to an operable cement plant that Federal regulatory requirements can significantly affect property values based on which of the following laws? Section 6 of Title VIII The National OPEC Initiative Commercial Management Regulations Clean Air and Water Acts - Answer- Clean Air and Water Acts The Federal Fair Housing Act states that a prima facie case against a broker for discrimination be established after a complaint has been received because the broker has failed to do which of the following? The broker has failed to display a HUD Equal Opportunity poster. The broker has failed to hire any minority salespeople. The broker has failed to join the NAACP anti-discriminatory task force. The broker has failed to attend mandatory classes on fair housing. - Answer- The broker has failed to display a HUD Equal Opportunity poster. Which of the following would usually occur in a sale-and-leaseback transaction? The seller only gets a return on the purchase in the form of rental payments. The property is sold on the condition that the new owner lease it back to the seller at the time title passes. The new owner leases the property out to a third party. The rent that the seller pays is not income-tax deductible. - Answer- The property is sold on the condition that the new owner lease it back to the seller at the time title passes. ________ is usually used for the purpose of creating cash flow from a commercial property. As the name implies, the owner transfers title to the buyer in exchange for cash, then leases the property back at a monthly rate while continuing to run his business from that location or otherwise use the property. - Answer- A sale-leaseback The primary survey line running north and south in the rectangular survey system is the township line. base line. range line. principal meridian. - Answer- principal meridian. A three-story apartment complex built in 1965 does not meet with the handicapped access provisions for the 1988 Fair Housing Act. The owner must make the ground floor handicapped accessible. make the 1st and 2nd floors accessible. make the entire building accessible. the owner doesn't have to comply since it's less than 4 stories. - Answer- make the ground floor handicapped accessible. Because the building was constructed before the 1991 standards went into effect, only the first floor needs to be modified. A salesperson is involved in a transaction where an individual wishes a six-month lease with an option to buy. What is true about this situation? The individual must go to an attorney since it is too complicated a transaction for a salesperson. This transaction is too complicated for a salesperson. Only a person with a broker's license should handle this transaction. A salesperson could use two standard forms, fill in the blanks and request that his or her broker review the forms before signing. The salesperson should write the purchase offer. A lease for 6 months does not need to be in writing. - Answer- A salesperson could use two standard forms, fill in the blanks and request that his or her broker review the forms before signing. A seller listed his home for six months on February 26. On April 29, a buyer made an offer on the property. The listing broker presented the offer to the seller on April 30. The seller accepted the offer on May 1, with the closing to occur on June 15. Assuming the closing took place on June 15, when did the listing expire? May 26th June 15th August 26th December 15th - Answer- June 15th. When the closing takes place, the terms of the contract have been fulfilled and it expires automatically. A competent and disinterested person who is authorized by another person to act in his or her place and sign a contract of sale is called an attorney in fact. a substitute grantor. a licensee. an agent. - Answer- an attorney in fact. A zoning change has been announced that will result in the loss of value of the property to a property owner. What should a property manager do? Advise the owner immediately. Terminate the property management agreement. Follow the owner's instructions that were previously given. Start lobbying against the zoning change. - Answer- Advise the owner immediately. Again, the property manager is the owner's "eyes and ears" for protecting the owner's best interests. Anything that can impact the property's value in either a positive or negative way should be communicated immediately. Which of the following would not terminate an agency relationship? Abandonment by the agent Revocation by the principal Submission by the agent of two offers at the same time Fulfillment of the agency purpose - Answer- Submission by the agent of two offers at the same time Which entity is prohibited from collecting taxes on real property? Counties Townships Cities The Federal Government - Answer- The Federal Government A homeowner owned a house on a lot. The front ten feet of the lot were taken by eminent domain for a sidewalk. Would the homeowner be entitled to compensation? Yes. The land was taken for public use by eminent domain. Yes. He must be paid for the use of the sidewalk. No. He still had use of the house and lot. No. Compensation is not given on land taken for public use. - Answer- Yes. The land was taken for public use by eminent domain. Governments and municipalities can only seize property (other than in criminal cases) for the public good and through eminent domain, which is a process, not an arbitrary action. Part of that process involves determining fair compensation to the owner. A recorded subdivision plat is used in the metric survey system. rectangular survey system. lot and block system. metes and bounds system. - Answer- lot and block system. The zoning commission of Jefferson County requires that all new construction in a specific area adhere to a specific type of architecture. What type of zoning is this? Bulk Retro Directive Aesthetic - Answer- Aesthetic For the past 30 years Lois has operated a neighborhood grocery store. Last week the city council passed a zoning ordinance that prohibits packaged food sales in the area where Lois's grocery store is located. The store is now an example of a/an illegal enterprise. nonconforming use. violation of eminent domain. variance of the zoning laws. - Answer- nonconforming use. This is an example of "grandfathering" that's common when new zoning rules are put into place. Basically it means that businesses and buildings that were in compliance before the new code was established may continue to operate or exist under their present owners Which of the following activities is a violation of the Federal Fair Housing Act? A nonprofit church that denies access to its retirement home to any person because of race A nonprofit private club that gives preference in renting units to its members at lower rates The owner of a single-family residence selling his/her own home who gives preference to a buyer based on his/her sex Discrimination in the sale of a warehouse based on the prospective purchaser's gender - Answer- A nonprofit church that denies access to its retirement home to any person because of race. The private club is exempt because its preferential treatment is based on its membership; the home owner is exempt, so long as he is selling his home without a broker; the warehouse is exempt because it's not a housing unit. An increase in the availability of money would lead to which effect? Interest rates would go up. Interest rates would go down. Interest rates would NOT be affected due to RESPA guidelines. Interest rates would NOT be affected due to Truth in Lending. - Answer- Interest rates would go down. Which phrase is not acceptable to use when advertising? "Quiet streets" "Christian home" "Non-smoking" "Desirable neighborhood" - Answer- "Christian home" An aggrieved party with a Fair Housing violation claim has how long to file a complaint with the Department of Housing and Urban Development? 1 month 6 months 1 year