REE 3043 Quiz 4 Study Guide Exam
Fully Solved.
B. Land Development Loans - Answer Different financing requirements usually are involved in
the various phases of a property's life. Which of the following types of loans is used to finance
improvements to the land, such as sewers, streets and utilities?
A. Bridge loans
B. Land development loans
C. Land acquisition loans
D. Construction loans
C. Bullet Loan - Answer An interest-only balloon mortgage loan is commonly referred to as
a(n):
A. Land acquisition loan
B. Mini-perm loan
C. Bullet loan
D. Mezzanine loan
D. Loan Commitment - Answer Which of the following terms refers to a written agreement
that binds the lender to make a loan to the borrower provided the borrower satisfies the terms
and conditions of the agreement?
A. Loan document
B. Loan application
C. Loan underwriting
D. Loan commitment
A. Similar to Home Loans, the legal borrower in a Commercial loan is often a single asset
corporation - Answer When comparing Commercial Loans versus Home Loans, which of the
following statements is least correct?
A. Similar to Home Loans, the legal borrower in a Commercial loan is often a single asset
corporation.
B. Commercial mortgages and notes are not as standardized as Home Loans.
, C. In contrast to borrowers of Home Loans, the Commercial mortgage borrowers are often
shielded from personal liability.
D. Commercial mortgage documents are longer and more complex.
C. Yield-maintenance - Answer If mortgage rates decline significantly, borrowers may decide
to prepay the principal on their loan even if they face prepayment penalties. One way that
lenders protect themselves from prepayments in such circumstances is to require the borrower
to pay the lender the present value (PV) of losses due to prepayment. This process is referred to
as:
A. Curtailment
B. Defeasance
C. Yield-maintenance
D. Lockout
C. Default risk - Answer While floating rate mortgage loans may offer lower interest rates to
borrowers than comparable fixed-payment mortgages, floating-rate loans may increase a
lender's exposure to which of the following risks since borrowers may not be able to continue to
service the debt if payments on the loan increase significantly?
A. Liquidity risk
B. Pipeline risk
C. Default risk
D. Interest rate risk
C. Similar to LPs (Limited Partnerships), LLCs (Limited Liability Companies) permit only the
general partner to participate in management - Answer Which of the following statements is
least correct?
A. In a LP (Limited Partnership), the general partner(s) is(are) subject to unlimited liability.
B. In a LP (Limited Partnership), the general partner(s) manage(s) the operations of the limited
partnership.
C. Similar to LPs (Limited Partnerships), LLCs (Limited Liability Companies) permit only the
general partner to participate in management.
D. In contrast to LPs (Limited Partnerships), LLCs (Limited Liability Companies) permit all owners
to have limited liability.
D. Interest rate risk - Answer A commercial mortgage lender can reduce their
_______________________ by issuing floating (adjustable) rate mortgages.
Fully Solved.
B. Land Development Loans - Answer Different financing requirements usually are involved in
the various phases of a property's life. Which of the following types of loans is used to finance
improvements to the land, such as sewers, streets and utilities?
A. Bridge loans
B. Land development loans
C. Land acquisition loans
D. Construction loans
C. Bullet Loan - Answer An interest-only balloon mortgage loan is commonly referred to as
a(n):
A. Land acquisition loan
B. Mini-perm loan
C. Bullet loan
D. Mezzanine loan
D. Loan Commitment - Answer Which of the following terms refers to a written agreement
that binds the lender to make a loan to the borrower provided the borrower satisfies the terms
and conditions of the agreement?
A. Loan document
B. Loan application
C. Loan underwriting
D. Loan commitment
A. Similar to Home Loans, the legal borrower in a Commercial loan is often a single asset
corporation - Answer When comparing Commercial Loans versus Home Loans, which of the
following statements is least correct?
A. Similar to Home Loans, the legal borrower in a Commercial loan is often a single asset
corporation.
B. Commercial mortgages and notes are not as standardized as Home Loans.
, C. In contrast to borrowers of Home Loans, the Commercial mortgage borrowers are often
shielded from personal liability.
D. Commercial mortgage documents are longer and more complex.
C. Yield-maintenance - Answer If mortgage rates decline significantly, borrowers may decide
to prepay the principal on their loan even if they face prepayment penalties. One way that
lenders protect themselves from prepayments in such circumstances is to require the borrower
to pay the lender the present value (PV) of losses due to prepayment. This process is referred to
as:
A. Curtailment
B. Defeasance
C. Yield-maintenance
D. Lockout
C. Default risk - Answer While floating rate mortgage loans may offer lower interest rates to
borrowers than comparable fixed-payment mortgages, floating-rate loans may increase a
lender's exposure to which of the following risks since borrowers may not be able to continue to
service the debt if payments on the loan increase significantly?
A. Liquidity risk
B. Pipeline risk
C. Default risk
D. Interest rate risk
C. Similar to LPs (Limited Partnerships), LLCs (Limited Liability Companies) permit only the
general partner to participate in management - Answer Which of the following statements is
least correct?
A. In a LP (Limited Partnership), the general partner(s) is(are) subject to unlimited liability.
B. In a LP (Limited Partnership), the general partner(s) manage(s) the operations of the limited
partnership.
C. Similar to LPs (Limited Partnerships), LLCs (Limited Liability Companies) permit only the
general partner to participate in management.
D. In contrast to LPs (Limited Partnerships), LLCs (Limited Liability Companies) permit all owners
to have limited liability.
D. Interest rate risk - Answer A commercial mortgage lender can reduce their
_______________________ by issuing floating (adjustable) rate mortgages.
