CA Real Estate Exam; CA Realty Training Course -
Questions With Correct Solutions
A trust deed can have a clause that allows for future loans on the property to
have priority. What is this called? Right Ans - A subordination clause
The supply of real estate loans tends to increase by all of the following, except:
Right Ans - increased demand for liquid assets
Matt sold his home and escrow will close on March 1. The annual tax amount
is $2,100. If the first installment has been made and the second installment
will be prorated on the escrow closing date, how much will the buyer be
charged for taxes? the tax year runs from July 1st - June 30th. Right Ans -
$700.00
Monthly taxes are $175.00. The tax year runs from July 1st through June 30.
The buyer would owe taxes for March, April, May, June (4 months) $2100 yr /
12 months = $175 month x 4months = $700.00
In order to record a contract for real property, it must: Right Ans - be
signed by both the buyer and the seller and must have acknowledgement
The measure of goods and services produced by the nation in one calendar
year is known as: Right Ans - gross national product
Of the following statements, which is false about real estate financing?
Right Ans - a promissory note is security for a mortgage
A promissory note is like a love letter promising to repay a loan, while a
mortgage is like a wedding ring that secures the loan with the property;
therefore, the false statement is that a promissory note is security for a
mortgage.
Greg received a loan application from his lender that asked him to specify his
marital status and ethnic background? Legally, what can he do? Right Ans -
He can refuse to fill in that information on the loan application
,An inducement of two months of free rent for a one-year lease was given to
Lou. If the scheduled rent was $1,500 a month, what would be Lou's effective
rent per month? Right Ans - $1,250
When the real estate market changes from a buyer's market to a seller's
market, what could be expected in the real estate industry? Right Ans -
Home prices will increase due to the lack of inventory
A borrower's debt-to-income ratio is used for which of the following? Right
Ans - To set lending amounts
A trustor defaults on their loan and does not reinstate the deed of trust. What
is the quickest way for the beneficiary to handle this situation? Right Ans -
Trustee sale
You purchase a negotiable note and you are unaware of any defects with the
note. You would be known as the following: Right Ans - Holder in due
course
What does it mean when the buyer takes property "subject to" the existing
loan? Right Ans - The buyer will not be personally responsible for the loan
A tight money policy implemented by the FED (Federal Reserve System)
would have the net effect of increasing the: Right Ans - use of secondary
trust deed financing for real estate purchases
According to the Real Estate Settlement Procedures Act (RESPA), certain
services can be charged to a borrower. The buyer or the seller can pay for all
of the following except: Right Ans - the uniform disclosure or the
settlement statements
John borrowed money from a company bank and gave the lender a trust deed
for 9 separate pieces of property that John owns free and clear without any
encumbrances. What kind of trust deed would this be? Right Ans - a
blanket deed of trust
Of the following, which is a cost of home ownership? Right Ans - Loss of
interest of the owners' equity
,When using a purchase money trust deed, the trustor: Right Ans - signs the
trust deed as security for the loan
RESPA (Real Estate Settlement Procedures Act) only applies to certain types
of property. Which of the following must comply with RESPA? Right Ans -
1-4 family residential dwellings
When both the buyer and seller sign a real property conditional sales
agreement, what effectively happens? Right Ans - the buyer receives the
equitable title
Which of the following must be provided to a buyer under the terms of the
Real Estate Settlement and Procedures Act (RESPA)? Right Ans - All of the
above
Lots of things can be prorated in real estate during the escrow process. Which
of the following would be something buyers and sellers would agree to
prorate during the sale process using escrow? Right Ans - rent
All of the following are negotiable instruments, assuming there is no
agreement to the contrary, except: Right Ans - a mortgage securing a
promissory note
A negotiable instrument is like a special type of contract that can be easily
transferred, but a mortgage securing a promissory note is not one of them. It's
like trying to use a bicycle to fly, it just doesn't work.
During the escrow process the escrow officer receives two pest control
reports from two different companies. What should the escrow agent do
immediately? Right Ans - Notify the real estate agent and receive written
instructions from the buyer and seller as to which report to use
Which term refers to the rate of interest charged to borrowers in connection
with a loan? Right Ans - annual percentage rate
Which of the following statements about the Federal Truth-in-Lending Act is
correct? Right Ans - It provides consumers with information about their
loan and the true cost of credit
, Which of the following best describes equity? Right Ans - all of these
Jen failed to make payments on her trust deed loan for two straight months
and a notice of default has been recorded. Which of the following is true
regarding Jen? Right Ans - Jen has the right of reinstatement
What is the purpose of the Truth in Lending Act? Right Ans - Disclosure of
credit terms
The Truth in Lending Act or Regulation Z requires lenders to disclose the
annual percentage rate (APR) of interest and all direct and indirect costs
associated with the cost of the loan so that consumers can shop for the very
best rates.
A mortgage was written two years ago with a prepayment penalty. Which of
the scenarios would allow the lender to waive the prepayment penalty?
Right Ans - When a new loan can be made at a higher rate.
The reason for a prepayment penalty is to cover the loss of interest-based
income on the early payment of the loan. A new loan at a higher rate for the
same property could make up for the loss from the unpaid interest.
If a client believes that a mortage lender violated the Real Estate Settlement
and Procedures Act, the person has how long to bring a suit? Right Ans - 1
year
The Real Estate Settlement and Procedures Act allows consumers up to one
year to file suit if they believe that a mortgage lender has violated the act by
receiving kickbacks or engaged in other improper behavior.
Which of the following does NOT describe an adjustable-rate mortgage?
Right Ans - A loan characterized by a fixed interest rate, usually one tied to a
bank or savings and loan association cost-of-funds index.
This statement is false because interest rates vary in an adjustable-rate
mortgage.
Which of the following describes a balloon loan? Right Ans - A loan that is
partially amortized
Questions With Correct Solutions
A trust deed can have a clause that allows for future loans on the property to
have priority. What is this called? Right Ans - A subordination clause
The supply of real estate loans tends to increase by all of the following, except:
Right Ans - increased demand for liquid assets
Matt sold his home and escrow will close on March 1. The annual tax amount
is $2,100. If the first installment has been made and the second installment
will be prorated on the escrow closing date, how much will the buyer be
charged for taxes? the tax year runs from July 1st - June 30th. Right Ans -
$700.00
Monthly taxes are $175.00. The tax year runs from July 1st through June 30.
The buyer would owe taxes for March, April, May, June (4 months) $2100 yr /
12 months = $175 month x 4months = $700.00
In order to record a contract for real property, it must: Right Ans - be
signed by both the buyer and the seller and must have acknowledgement
The measure of goods and services produced by the nation in one calendar
year is known as: Right Ans - gross national product
Of the following statements, which is false about real estate financing?
Right Ans - a promissory note is security for a mortgage
A promissory note is like a love letter promising to repay a loan, while a
mortgage is like a wedding ring that secures the loan with the property;
therefore, the false statement is that a promissory note is security for a
mortgage.
Greg received a loan application from his lender that asked him to specify his
marital status and ethnic background? Legally, what can he do? Right Ans -
He can refuse to fill in that information on the loan application
,An inducement of two months of free rent for a one-year lease was given to
Lou. If the scheduled rent was $1,500 a month, what would be Lou's effective
rent per month? Right Ans - $1,250
When the real estate market changes from a buyer's market to a seller's
market, what could be expected in the real estate industry? Right Ans -
Home prices will increase due to the lack of inventory
A borrower's debt-to-income ratio is used for which of the following? Right
Ans - To set lending amounts
A trustor defaults on their loan and does not reinstate the deed of trust. What
is the quickest way for the beneficiary to handle this situation? Right Ans -
Trustee sale
You purchase a negotiable note and you are unaware of any defects with the
note. You would be known as the following: Right Ans - Holder in due
course
What does it mean when the buyer takes property "subject to" the existing
loan? Right Ans - The buyer will not be personally responsible for the loan
A tight money policy implemented by the FED (Federal Reserve System)
would have the net effect of increasing the: Right Ans - use of secondary
trust deed financing for real estate purchases
According to the Real Estate Settlement Procedures Act (RESPA), certain
services can be charged to a borrower. The buyer or the seller can pay for all
of the following except: Right Ans - the uniform disclosure or the
settlement statements
John borrowed money from a company bank and gave the lender a trust deed
for 9 separate pieces of property that John owns free and clear without any
encumbrances. What kind of trust deed would this be? Right Ans - a
blanket deed of trust
Of the following, which is a cost of home ownership? Right Ans - Loss of
interest of the owners' equity
,When using a purchase money trust deed, the trustor: Right Ans - signs the
trust deed as security for the loan
RESPA (Real Estate Settlement Procedures Act) only applies to certain types
of property. Which of the following must comply with RESPA? Right Ans -
1-4 family residential dwellings
When both the buyer and seller sign a real property conditional sales
agreement, what effectively happens? Right Ans - the buyer receives the
equitable title
Which of the following must be provided to a buyer under the terms of the
Real Estate Settlement and Procedures Act (RESPA)? Right Ans - All of the
above
Lots of things can be prorated in real estate during the escrow process. Which
of the following would be something buyers and sellers would agree to
prorate during the sale process using escrow? Right Ans - rent
All of the following are negotiable instruments, assuming there is no
agreement to the contrary, except: Right Ans - a mortgage securing a
promissory note
A negotiable instrument is like a special type of contract that can be easily
transferred, but a mortgage securing a promissory note is not one of them. It's
like trying to use a bicycle to fly, it just doesn't work.
During the escrow process the escrow officer receives two pest control
reports from two different companies. What should the escrow agent do
immediately? Right Ans - Notify the real estate agent and receive written
instructions from the buyer and seller as to which report to use
Which term refers to the rate of interest charged to borrowers in connection
with a loan? Right Ans - annual percentage rate
Which of the following statements about the Federal Truth-in-Lending Act is
correct? Right Ans - It provides consumers with information about their
loan and the true cost of credit
, Which of the following best describes equity? Right Ans - all of these
Jen failed to make payments on her trust deed loan for two straight months
and a notice of default has been recorded. Which of the following is true
regarding Jen? Right Ans - Jen has the right of reinstatement
What is the purpose of the Truth in Lending Act? Right Ans - Disclosure of
credit terms
The Truth in Lending Act or Regulation Z requires lenders to disclose the
annual percentage rate (APR) of interest and all direct and indirect costs
associated with the cost of the loan so that consumers can shop for the very
best rates.
A mortgage was written two years ago with a prepayment penalty. Which of
the scenarios would allow the lender to waive the prepayment penalty?
Right Ans - When a new loan can be made at a higher rate.
The reason for a prepayment penalty is to cover the loss of interest-based
income on the early payment of the loan. A new loan at a higher rate for the
same property could make up for the loss from the unpaid interest.
If a client believes that a mortage lender violated the Real Estate Settlement
and Procedures Act, the person has how long to bring a suit? Right Ans - 1
year
The Real Estate Settlement and Procedures Act allows consumers up to one
year to file suit if they believe that a mortgage lender has violated the act by
receiving kickbacks or engaged in other improper behavior.
Which of the following does NOT describe an adjustable-rate mortgage?
Right Ans - A loan characterized by a fixed interest rate, usually one tied to a
bank or savings and loan association cost-of-funds index.
This statement is false because interest rates vary in an adjustable-rate
mortgage.
Which of the following describes a balloon loan? Right Ans - A loan that is
partially amortized
