PSI MARYLAND PRACTICE EXAM
QUESTIONS AND ANSWERS
If an older building cannot be air-conditioned, it is an example of ___________ ?
A. Economic obsolescence.
B. Functional obsolescence.
C. Physical deterioration.
D. External deterioration - CORRECT ANSWERS ✅✅ -B. Functional obsolescence.
An appraiser MUST be licensed or certified to handle Federally related work on
residential property valued at more than ___________?
A. $100,000.
B. $250,000.
C. $500,000.
D. $1,000,000. - CORRECT ANSWERS ✅✅ -B. $250,000.
The main difference between tenancy in common and joint tenancy is that with tenancy
in common, when a co-owner dies, _____________
A. His undivided interest passes to his heirs.
B. The last surviving owner holds title in severalty.
C. His undivided interest passes to the surviving co-owners.
D. The principle of the right to survivorship determines the rights of the surviving co-
owners. - CORRECT ANSWERS ✅✅ -A. His undivided interest passes to his heirs.
A buyer wants to purchase a home for $160,000 with a 15% down payment. The lender
charges 2 points. How much money does the buyer need up front to make the
purchase?
A. $2,720
B. $24,000
C. $24,408
D. $26,720 - CORRECT ANSWERS ✅✅ -D. $26,720
When a home is purchased using an ARM, the monthly loan payment on the mortgage
will ____________ ?
,A. Rise slightly in each adjustment period until the cap is reached.
B. Be adjusted automatically to ensure that negative amortization does not occur.
C. Be based on a very low interest rate to begin with, but will rise to the market rate at
the first adjustment.
D. Vary over the life of the loan depending on fluctuations in the interest rate to which
the loan is referenced. - CORRECT ANSWERS ✅✅ -D. Vary over the life of the loan
depending on fluctuations in the interest rate to which the loan is referenced.
An exception to title insurance coverage is ___________?
A. Forged documents.
B. Defects found in public newspapers.
C. Incorrect records of marital status.
D. Defects that clearly appear in the title search. - CORRECT ANSWERS ✅✅ -D.
Defects that clearly appear in the title search.
Under the common law of agency, licensees owe the broker with whom they are
associated all of the following duties EXCEPT _________?
A. Loyalty.
B. Competence.
C. Indemnification.
D. Full disclosure. - CORRECT ANSWERS ✅✅ -C. Indemnification.
The buyer is assuming a mortgage presently on the property in the amount of $110,000.
What is the adjustment made at closing?
A. Credit buyer $110,000; debit seller $110,000.
B. Credit seller $110,000; debit buyer $110,000.
C. Credit buyer $110,000; no adjustment to seller.
D. Credit seller $110,000; no adjustment to buyer. - CORRECT ANSWERS ✅✅ -A.
Credit buyer $110,000; debit seller $110,000.
A mentally disabled person who has been declared incompetent by a judge wishes to
enter into a contract. Under what conditions can such a person do so?
A. The person must obtain prior written approval by a licensed psychiatrist or
psychologist.
B. The person must be capable of understanding the transaction.
C. The person appointed by the court to act for the disabled person must contract on his
or her behalf.
D. The person may enter a contract under any conditions, because the law prohibits
discrimination against persons with disabilities. - CORRECT ANSWERS ✅✅ -C. The
person appointed by the court to act for the disabled person must contract on his or her
behalf.
, Even if a loan applicant's current income seems adequate to qualify for a certain loan,
the Equal Credit Opportunity Act allows a lender to refuse the loan as a high risk if the
applicant's main source of income is ___________?
A. Alimony.
B. Commission sales.
C. Pension fund.
D. Child support payments. - CORRECT ANSWERS ✅✅ -B. Commission sales.
A broker and the buyers he represents are anxiously awaiting the closing on their new
home. The closing is scheduled in 4 days. The buyers inform the broker that they just
received revised Loan Estimate and Closing Disclosure forms from the lender,
indicating the Annual Percentage Rate on their loan has increased by 0.3%. Based on
the TILA-RESPA Integrated Disclosure rule, what action should the broker take in this
situation?
A. Assist the buyers in calculating the new loan payments and ask them if they want to
proceed with the closing as scheduled.
B. Advise the buyers to file a legal action against the lender for violation of predatory
lending practices under the Real Estate Settlement Procedures Act.
C. Call the lender and inform them that they are in violation of the seven-day waiting
period and cannot change the terms of the loan this close to the closing.
D. Confirm with the seller's broker, the lender and the - CORRECT ANSWERS ✅✅ -
D. Confirm with the seller's broker, the lender and the closing entity that the closing
must be delayed to allow for a new seven-day waiting period because of the interest
rate revision.
A broker represents a group of investors who purchase single family residences when
they can be found at very low prices. Their offers are typically made with $500 deposits
and cash closings within 7 days of acceptance of the offers. When the last property
closed, the investors suggested the broker keep the deposit money to be used for their
next purchase, as yet not identified. What must the broker do with these deposit funds?
A. Return them to the purchasers.
B. Deposit them in his escrow account.
C. Deposit them in his rental trust account.
D. Hold them in his personal account until needed. - CORRECT ANSWERS ✅✅ -A.
Return them to the purchasers.
A minority couple come to a salesperson looking for a house. The salesperson has
some properties for which the couple qualify but avoids showing or mentioning these
listings. Instead, the salesperson shows only properties in low-priced and integrated
neighborhoods. This practice is known as ___________?
A. Steering.
B. Blockbusting.
QUESTIONS AND ANSWERS
If an older building cannot be air-conditioned, it is an example of ___________ ?
A. Economic obsolescence.
B. Functional obsolescence.
C. Physical deterioration.
D. External deterioration - CORRECT ANSWERS ✅✅ -B. Functional obsolescence.
An appraiser MUST be licensed or certified to handle Federally related work on
residential property valued at more than ___________?
A. $100,000.
B. $250,000.
C. $500,000.
D. $1,000,000. - CORRECT ANSWERS ✅✅ -B. $250,000.
The main difference between tenancy in common and joint tenancy is that with tenancy
in common, when a co-owner dies, _____________
A. His undivided interest passes to his heirs.
B. The last surviving owner holds title in severalty.
C. His undivided interest passes to the surviving co-owners.
D. The principle of the right to survivorship determines the rights of the surviving co-
owners. - CORRECT ANSWERS ✅✅ -A. His undivided interest passes to his heirs.
A buyer wants to purchase a home for $160,000 with a 15% down payment. The lender
charges 2 points. How much money does the buyer need up front to make the
purchase?
A. $2,720
B. $24,000
C. $24,408
D. $26,720 - CORRECT ANSWERS ✅✅ -D. $26,720
When a home is purchased using an ARM, the monthly loan payment on the mortgage
will ____________ ?
,A. Rise slightly in each adjustment period until the cap is reached.
B. Be adjusted automatically to ensure that negative amortization does not occur.
C. Be based on a very low interest rate to begin with, but will rise to the market rate at
the first adjustment.
D. Vary over the life of the loan depending on fluctuations in the interest rate to which
the loan is referenced. - CORRECT ANSWERS ✅✅ -D. Vary over the life of the loan
depending on fluctuations in the interest rate to which the loan is referenced.
An exception to title insurance coverage is ___________?
A. Forged documents.
B. Defects found in public newspapers.
C. Incorrect records of marital status.
D. Defects that clearly appear in the title search. - CORRECT ANSWERS ✅✅ -D.
Defects that clearly appear in the title search.
Under the common law of agency, licensees owe the broker with whom they are
associated all of the following duties EXCEPT _________?
A. Loyalty.
B. Competence.
C. Indemnification.
D. Full disclosure. - CORRECT ANSWERS ✅✅ -C. Indemnification.
The buyer is assuming a mortgage presently on the property in the amount of $110,000.
What is the adjustment made at closing?
A. Credit buyer $110,000; debit seller $110,000.
B. Credit seller $110,000; debit buyer $110,000.
C. Credit buyer $110,000; no adjustment to seller.
D. Credit seller $110,000; no adjustment to buyer. - CORRECT ANSWERS ✅✅ -A.
Credit buyer $110,000; debit seller $110,000.
A mentally disabled person who has been declared incompetent by a judge wishes to
enter into a contract. Under what conditions can such a person do so?
A. The person must obtain prior written approval by a licensed psychiatrist or
psychologist.
B. The person must be capable of understanding the transaction.
C. The person appointed by the court to act for the disabled person must contract on his
or her behalf.
D. The person may enter a contract under any conditions, because the law prohibits
discrimination against persons with disabilities. - CORRECT ANSWERS ✅✅ -C. The
person appointed by the court to act for the disabled person must contract on his or her
behalf.
, Even if a loan applicant's current income seems adequate to qualify for a certain loan,
the Equal Credit Opportunity Act allows a lender to refuse the loan as a high risk if the
applicant's main source of income is ___________?
A. Alimony.
B. Commission sales.
C. Pension fund.
D. Child support payments. - CORRECT ANSWERS ✅✅ -B. Commission sales.
A broker and the buyers he represents are anxiously awaiting the closing on their new
home. The closing is scheduled in 4 days. The buyers inform the broker that they just
received revised Loan Estimate and Closing Disclosure forms from the lender,
indicating the Annual Percentage Rate on their loan has increased by 0.3%. Based on
the TILA-RESPA Integrated Disclosure rule, what action should the broker take in this
situation?
A. Assist the buyers in calculating the new loan payments and ask them if they want to
proceed with the closing as scheduled.
B. Advise the buyers to file a legal action against the lender for violation of predatory
lending practices under the Real Estate Settlement Procedures Act.
C. Call the lender and inform them that they are in violation of the seven-day waiting
period and cannot change the terms of the loan this close to the closing.
D. Confirm with the seller's broker, the lender and the - CORRECT ANSWERS ✅✅ -
D. Confirm with the seller's broker, the lender and the closing entity that the closing
must be delayed to allow for a new seven-day waiting period because of the interest
rate revision.
A broker represents a group of investors who purchase single family residences when
they can be found at very low prices. Their offers are typically made with $500 deposits
and cash closings within 7 days of acceptance of the offers. When the last property
closed, the investors suggested the broker keep the deposit money to be used for their
next purchase, as yet not identified. What must the broker do with these deposit funds?
A. Return them to the purchasers.
B. Deposit them in his escrow account.
C. Deposit them in his rental trust account.
D. Hold them in his personal account until needed. - CORRECT ANSWERS ✅✅ -A.
Return them to the purchasers.
A minority couple come to a salesperson looking for a house. The salesperson has
some properties for which the couple qualify but avoids showing or mentioning these
listings. Instead, the salesperson shows only properties in low-priced and integrated
neighborhoods. This practice is known as ___________?
A. Steering.
B. Blockbusting.
