Section 3 Lesson 7 2

1. Question

What is installment debt?

A) Money borrowed that is repaid only at maturity in a lump sum

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B) Borrowed money repaid in regular payments over a specific term

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C) A revolving line of credit with no fixed term or payment schedule

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D) Equity taken out of a home with no repayment required

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2. Question

What is the initial interest rate on a mortgage?

A) The rate after the first adjustment on an ARM

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B) The original interest rate of the mortgage at closing

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C) The rate charged only during the last year of the loan

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D) The rate used solely to calculate late fees

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3. Question

In real estate terms, what does ingress refer to?

A) The right or act of going in or entering a property

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B) The right to exit a property only

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C) The process of recording a deed

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D) The calculation of loan-to-value ratio

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4. Question

What is an in-file credit report?

A) A handwritten summary of the borrower’s debts prepared by the loan officer

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B) A full investigative report prepared after a site visit

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C) A list of payments made on the current mortgage only

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D) An objective, usually computer-generated, report of credit and legal information from a credit repository

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5. Question

What does the term “index disclosed to the mortgagor” refer to in an ARM/GPARM?

A) The highest possible index value allowed during the loan term

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B) The average of all index values over the past year

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C) The value of the selected index that is given to the mortgagor at closing

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D) The index value on the first adjustment date only

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6. Question

In the context of ARMs/GPARMs, what is an index?

A) The borrower’s gross monthly income

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B) A number derived from a formula that serves as an indicator for determining interest rate changes

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C) The lender’s internal operating margin

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D) The original appraisal value of the property

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7. Question

Which statement best describes an independent contractor?

A) A person in business for themselves who contracts to do a complete job and is responsible only for the finished product

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B) An employee who is paid hourly and directed in day-to-day tasks

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C) A salaried manager who supervises company staff

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D) A temporary worker hired through an employment agency

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8. Question

In real estate, what is an indenture?

A) A unilateral deed executed only by the grantor

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B) A temporary lease agreement for less than one year

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C) A simple promissory note

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D) A sealed agreement or deed executed by two or more parties

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9. Question

An indemnity agreement primarily does which of the following?

A) Transfers title from one party to another

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B) Provides that one party will secure another against loss or damage from a specified event

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C) Guarantees a fixed rate of return on an investment

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D) Sets the listing price for a property

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10. Question

What do indemnification contracts in insurance typically cover?

A) Only speculative risks involving potential gains

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B) Gambling losses on investment properties

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C) Pure risks where there is a possibility of loss but no expectation of gain

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D) Administrative penalties imposed by regulators

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11. Question

Which of the following is the best description of income property?

A) Property that produces income directly, such as commercial property used in one’s trade or business

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B) Owner-occupied residential property only

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C) Vacant land held solely for speculative appreciation

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D) Any property with a mortgage on it

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12. Question

The income approach to value is based primarily on which factor?

A) The original construction cost of the property

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B) Recent listing prices of nearby homes

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C) The owner’s equity position

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D) The market rent or income the property can be expected to earn

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13. Question

What does an income and expense statement show?

A) Only the gross rental income for a property

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B) The schedule of income and expenses showing net gain or loss over a specific period

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C) Only the unpaid loan balance on a property

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D) The appraised value compared to the listing price

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14. Question

What is the primary purpose of inclusionary zoning?

A) To prohibit multifamily housing in certain areas

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B) To limit all development to luxury housing

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C) To require some new development be set aside for low and moderate income housing

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D) To remove all zoning restrictions from new development

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15. Question

Which federal agency is responsible for implementing and administering government housing and urban development programs, including FHA mortgage credit?

A) The Department of Housing and Urban Development (HUD)

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B) The Federal Deposit Insurance Corporation (FDIC)

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C) The Federal Reserve Board (FRB)

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D) The Farm Service Agency (FSA)

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16. Question

What is a homestead (exemption) as described in this glossary?

A) Any rental property owned by an investor

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B) Only vacation property located out of state

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C) The dwelling of the head of a family, often given statutory protection from creditors and sometimes property tax relief

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D) Only commercial property used in a trade or business

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17. Question

What does a homeowner’s policy (package policy) typically cover?

A) A combination of property and liability coverages for the dwelling and contents

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B) Only flood damage to the dwelling

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C) Only liability for auto accidents

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D) Only theft of personal property off premises

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18. Question

What is the primary purpose of a homeowners association (HOA)?

A) To appraise properties in the neighborhood

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B) To originate and service mortgage loans

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C) To set county-wide tax rates

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D) To maintain community facilities and services for residents’ common enjoyment

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19. Question

What is a home mortgage in this glossary context?

A) Any commercial mortgage

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B) A residential mortgage on a one- to four-family property

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C) Only FHA-insured mortgages

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D) Mortgages on properties with more than four units

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20. Question

What is a home equity line of credit (HELOC) loan?

A) A first mortgage used to purchase a home

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B) A fixed lump-sum second mortgage that cannot be drawn on again

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C) A usually subordinate loan that allows multiple advances up to a percentage of the borrower’s equity

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D) A construction loan for building a new home

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21. Question

Who is an heir in the context of real property?

A) A person entitled to inherit real property when someone dies without a will

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B) Any current tenant living on the property

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C) The listing real estate broker

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D) The local tax assessor

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22. Question

What does hazard insurance typically cover?

A) Only liability claims for injuries on the property

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B) Loss of employment income

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C) The borrower’s medical expenses

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D) Physical damage to the property from fire, wind, or similar perils

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23. Question

What is a guaranty in real estate finance?

A) A document transferring title to real property

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B) A contract to be responsible for another party’s debt or default

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C) A document setting property tax rates

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D) A lease amendment

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24. Question

What does it mean when a loan is “guaranteed” by a government agency?

A) The lender has no risk of loss under any circumstances

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B) The borrower is not responsible for repayment

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C) A third party agrees to reimburse the lender if the borrower defaults

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D) The interest rate on the loan is fixed for life

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25. Question

In the VA loan program, what is the guarantee?

A) An assurance from the VA to the lender that the loan will be repaid

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B) A guarantee from the borrower’s employer

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C) A guarantee that the property will increase in value

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D) A guarantee that taxes will never increase

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26. Question

What is a growing equity mortgage designed to do?

A) Keep payments level over the life of the loan

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B) Convert from fixed to adjustable rate automatically

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C) Defer principal payments until maturity

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D) Increase payments on a schedule so more goes toward principal reduction

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27. Question

What is ground rent?

A) Rent paid for both land and building together

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B) Money paid for the use of land under a leasehold estate

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C) Rent paid only for commercial buildings

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D) Rent paid after the mortgage is satisfied

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28. Question

In a gross lease, who typically pays the property charges such as taxes and insurance?

A) The tenant pays all property charges

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B) Property charges are split evenly between landlord and tenant

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C) The landlord pays the operating expenses, taxes, and insurance

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D) The local taxing authority pays them

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29. Question

What does the term “gross income” refer to for mortgage underwriting purposes?

A) The borrower's total stable and verifiable income before taxes and expenses

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B) Income after taxes and all monthly obligations

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C) Only overtime and bonus income

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D) Net cash flow from rental properties only

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30. Question

Who is the grantor?

A) Party conveying real property

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B) Buyer

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C) Lender

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D) Title insurer

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31. Question

Who is the grantee?

A) Lender

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B) Seller

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C) Agent

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D) Party receiving interest

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32. Question

What is the graduated payment period?

A) Hybrid ARM fixed-rate period

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B) Period with below-amortizing payments that increase every 12 months

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C) Final 5-year payoff period

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D) Time before loan is funded

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33. Question

What is a GPM?

A) Loan with fixed payments

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B) Loan with decreasing payments

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C) Loan with initially low payments increasing yearly

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D) Interest-only mortgage

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34. Question

What is a graduated payment amount?

A) Payment that fully amortizes from start

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B) Graduated-period payment causing negative amortization

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C) Final maturity payment

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D) Payment that decreases annually

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35. Question

What is one responsibility of GNMA?

A) Setting FHA rates

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B) Licensing appraisers

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C) Collecting PMI premiums

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D) Administering the mortgage-backed securities program

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36. Question

What backs GNMA MBS?

A) Full faith and credit of the U.S.

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B) Private insurers

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C) Conventional lenders

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D) VA only

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37. Question

What is a fully amortized ARM?

A) ARM with fixed payment for 10 years

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B) ARM with interest-only payments

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C) ARM that becomes fixed

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D) ARM whose payment fully amortizes balance over term

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38. Question

What is the full payment amount on an ARM?

A) A fixed introductory payment

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B) Payment required to amortize at each rate change

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C) Final balloon payment

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D) Teaser rate payment

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39. Question

What is functional depreciation?

A) Loss due to neighborhood decline

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B) Loss from external factors

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C) Loss from design defects or outdated features

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D) Loss from zoning changes

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40. Question

What does ‘front-foot’ measure?

A) One foot of property frontage

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B) Lot depth

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C) Square footage

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D) Property perimeter

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41. Question

What is a freehold estate?

A) An estate lasting exactly 99 years

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B) A leasehold with an expiration date

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C) An estate conveying temporary possession

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D) An estate for an indeterminate duration

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42. Question

Which situation best illustrates fraud in a contract?

A) A borrower misunderstanding a disclosed term

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B) A lender charging a higher interest rate than a competitor

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C) An appraiser giving an opinion of value that later proves inaccurate

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D) A willful misrepresentation of a material fact that induces someone to enter a contract to their detriment

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43. Question

What is foreclosure in the context of mortgage lending?

A) The voluntary payoff of a loan before maturity

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B) The borrower’s right to redeem property after sale

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C) A procedure by which the lender applies the property to payment of a defaulted debt under the mortgage or deed of trust

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D) A reduction in the mortgage interest rate

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44. Question

What is a flood plain?

A) Any land located above sea level

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B) A man‑made drainage system for storm water

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C) A federally owned buffer zone along rivers

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D) Land adjoining a river that would flood if the river overflowed its banks

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45. Question

When is flood insurance typically required by lenders?

A) For all loans regardless of location

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B) In areas designated as potential flood areas by federal authorities

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C) Only when the borrower requests it

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D) Only for properties located in coastal states

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46. Question

Which statement best describes a fixed rate mortgage?

A) A mortgage that provides for only one interest rate for the entire term of the loan

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B) A mortgage whose rate changes every year with the market

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C) A mortgage that starts fixed and always converts to an ARM

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D) A mortgage whose rate is renegotiated monthly

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47. Question

What is a fiscal year for a business or institution?

A) The calendar year from January 1 to December 31 only

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B) Any six-month reporting period for taxes

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C) The period between federal elections

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D) Any 12‑month period used for financial reporting and statements

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48. Question

What is a first mortgage?

A) Any mortgage on commercial property

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B) A home equity line of credit

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C) A real estate loan that creates a primary lien against real property

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D) A second lien used for down payment assistance

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49. Question

Which lien generally has first priority against a property?

A) A mechanic’s lien recorded after construction

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B) A first lien, such as a tax lien that takes priority over all other liens

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C) A junior lien recorded before the first mortgage

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D) A leasehold interest held by a tenant

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50. Question

What did FIRREA (Financial Institutions Reform, Recovery, and Enforcement Act of 1989) accomplish in part?

A) Eliminated all federal thrift regulations

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B) Created FHA mortgage insurance programs

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C) Established federal flood insurance requirements

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D) Modified federal thrift and bank regulation laws and included real estate appraisal reform

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51. Question

What is a firm commitment in mortgage lending?

A) A lender’s agreement to make a loan to a specific borrower on a specified property

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B) A preliminary rate quote that is not binding

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C) An appraisal report used to value the collateral

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D) A borrower’s promise to accept any loan terms offered

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52. Question

Under the Uniform Commercial Code, what is the purpose of a financing statement?

A) To transfer title to real property from seller to buyer

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B) To record a mortgage on a one-to-four family residence

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C) To give public notice of a lender’s security interest in personal property collateral

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D) To set the maximum interest rate allowed on a loan

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53. Question

What does Fannie Mae’s final project acceptance indicate for a condo, PUD, or co-op project?

A) That construction has been completed on time

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B) That the project meets all local zoning requirements

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C) That only FHA loans may be made in the project

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D) That the project’s physical characteristics and marketability are acceptable and loans on units may be delivered to Fannie Mae

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54. Question

Who is considered a fiduciary in a real estate or financial transaction?

A) Any third-party vendor hired by the lender

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B) Someone in a position of trust or confidence with respect to another person

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C) Any party who signs the sales contract

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D) A government regulator overseeing the transaction

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55. Question

What does a fidelity bond protect an employer against?

A) Economic loss caused by dishonest acts of its employees

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B) Losses from market interest rate changes

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C) Property damage caused by natural disasters

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D) Borrower default on mortgage loans

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56. Question

What is fair market value?

A) Price set by seller

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B) Tax assessor value

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C) Price agreed upon by willing, informed buyer and seller with no compulsion

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D) Based on replacement cost only

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57. Question

What is external depreciation?

A) Lack of maintenance

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B) Physical deterioration

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C) Loss in value due to negative external influences

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D) Outdated interior decor

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58. Question

What does an extended coverage endorsement add?

A) Mold coverage

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B) Flood insurance

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C) Windstorm, hail, explosion, riot, aircraft/vehicle damage, smoke

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D) MIP waiver

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59. Question

What is excess yield?

A) Yield lost to servicing

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B) Yield refunded

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C) Net note rate exceeding required yield plus servicing fee

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D) APR reduction

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60. Question

What is excess margin in an ARM?

A) Regulatory margin reduction

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B) Margin shortfall

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C) Net mortgage margin exceeding the required margin

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D) Note‑rate difference

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61. Question

What is an exception in legal descriptions?

A) Interest rate change

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B) Portion of land excluded

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C) Closing penalty

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D) Requirement for MI

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62. Question

What is examination of title?

A) Buyer credit review

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B) Lender insurance review

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C) Review of chain of title from abstracts or records

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D) Seller’s pre‑listing inspection

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63. Question

What is eviction?

A) Property tax reassessment

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B) Lender removing borrower

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C) Landlord’s forcible removal or interference causing constructive eviction

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D) Tenant ending lease early

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64. Question

What does ‘et ux’ mean?

A) And children

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B) And heirs

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C) And husband

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D) And wife

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65. Question

What is an estate in real estate?

A) Inheritance trust

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B) Temporary camping right

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C) Subdivision map

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D) A right or interest in the use, enjoyment, and disposition of land

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66. Question

What is an escrow payment?

A) Extra principal

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B) Loan officer fee

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C) Lender servicing fee

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D) Portion of payment held to pay taxes, insurance, and other items

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67. Question

What is the purpose of an escrow analysis?

A) Evaluate lender returns

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B) Ensure deposits cover taxes, insurance, and bills

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C) Calculate loan amortization

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D) Prepare payoff statement

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68. Question

What is an escrow account?

A) Account for loan officer commissions

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B) Temporary closing account

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C) Segregated trust account where escrow funds are held

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D) Account used for rate adjustments

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69. Question

What is the role of escrow in a real estate transaction?

A) To negotiate contract terms

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B) To appraise property

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C) To underwrite the loan

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D) To have a neutral third party handle instructions, documents, and funds

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70. Question

When does property typically escheat to the state?

A) When the owner sells the property without recording the deed.

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B) When the owner fails to pay property taxes for one year.

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C) When the property is condemned for public use.

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D) When the owner dies intestate and without heirs, causing the property to revert to the state.

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71. Question

What does errors and omissions coverage typically insure against?

A) Losses that occur because of an error or neglect by an employee who was assigned a specific responsibility.

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B) Physical damage to the property caused by natural disasters.

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C) Losses caused by intentional fraud on the part of the borrower.

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D) Any loss resulting from fluctuations in market interest rates.

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72. Question

What is equity of redemption in the foreclosure context?

A) The lender’s right to redeem the property after foreclosure.

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B) The mortgagor’s common law right to redeem property during foreclosure and, in some states, a statutory right after foreclosure.

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C) The right of junior lienholders to increase their lien amounts before foreclosure.

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D) The right of tenants to remain in the property after foreclosure.

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73. Question

In real estate, what does a homeowner’s equity represent?

A) The total amount of principal and interest paid over the life of the loan.

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B) The total of all closing costs paid at settlement.

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C) The difference between the property’s fair market value and the current indebtedness against it.

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D) The original loan amount when the mortgage was first made.

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74. Question

What is the purpose of an environmental impact report?

A) To establish zoning classifications for undeveloped land.

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B) To determine the maximum mortgage amount for a proposed project.

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C) To certify that a property is free of all environmental hazards.

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D) To report the probable effect of a development on the surrounding area, prepared to governmental guidelines.

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75. Question

What is an endorsement in the context of negotiable instruments or insurance?

A) A verbal agreement to modify the terms of a note.

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B) A writing on or notation added to an instrument that assigns, transfers, or changes its terms, or modifies insurance coverage.

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C) A government guarantee of repayment on a private loan.

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D) A court order requiring repayment of a defaulted loan.

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76. Question

In mortgage financing, what is an end loan?

A) A short-term loan used only during construction.

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B) A bridge loan used to purchase a new home before selling the current one.

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C) A loan that automatically converts to a construction loan at closing.

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D) The final or permanent mortgage loan made to a borrower, as distinguished from construction or development loans.

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77. Question

What is an encumbrance on real property?

A) Anything that affects or limits the fee simple title, such as mortgages, leases, easements, or restrictions.

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B) Any document that conveys full fee simple title.

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C) Only unpaid real estate taxes on the property.

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D) A temporary lease of personal property attached to the land.

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78. Question

Which situation best illustrates an encroachment?

A) A recorded easement allowing a neighbor to cross the property.

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B) A mortgage lien recorded against the property.

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C) An improvement that intrudes illegally onto another person’s property.

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D) A restriction in a deed limiting how the property may be used.

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79. Question

What is eminent domain?

A) The right of a lender to seize property after a borrower defaults.

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B) The authority of a homeowners association to enforce deed restrictions.

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C) A private company’s power to condemn property for commercial use.

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D) The power of government to appropriate private property for public use or for the public welfare.

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80. Question

What is electronic imaging in the context of mortgage documentation?

A) A method of electronically signing loan documents.

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B) A method of reproducing a facsimile of a document or photograph with a computer or other electronic device.

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C) A process for encrypting borrower data for security purposes.

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D) A digital platform for submitting online loan applications.

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81. Question

In real estate, what does the term egress refer to?

A) The right to install utilities across adjoining land.

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B) The right to occupy a dwelling unit for a specified term.

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C) The right of a lender to foreclose on a property after default.

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D) The right to go out from or exit a property, usually paired with ingress as access rights.

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82. Question

What does effective gross income (personal) generally include?

A) Normal annual income including overtime that is regular or guaranteed, which may come from more than one stable source.

Correct Incorrect Correct answer

B) Only base salary from a single employer, excluding all other income sources.

Correct Incorrect Correct answer

C) Irregular income such as occasional gifts or lottery winnings.

Correct Incorrect Correct answer

D) Projected future bonuses that are not yet guaranteed.

Correct Incorrect Correct answer

83. Question

What does the effective age of a property represent in appraisal?

A) The number of years since the property was first listed for sale.

Correct Incorrect Correct answer

B) The legal date when title to the property was first recorded.

Correct Incorrect Correct answer

C) The age of the property based on its physical condition, which may differ from its chronological age.

Correct Incorrect Correct answer

D) The average remaining economic life of all properties in the neighborhood.

Correct Incorrect Correct answer

84. Question

What is the primary purpose of the Equal Credit Opportunity Act (ECOA)?

A) To regulate interest rates on consumer credit.

Correct Incorrect Correct answer

B) To require all mortgage loans to be sold on the secondary market.

Correct Incorrect Correct answer

C) To make credit equally available without discrimination on specified prohibited bases.

Correct Incorrect Correct answer

D) To require lenders to offer the same loan terms to every applicant.

Correct Incorrect Correct answer

85. Question

Which of the following best describes an easement?

A) Full ownership of another person’s land.

Correct Incorrect Correct answer

B) A right or interest in the land of another allowing a specific limited use or benefit.

Correct Incorrect Correct answer

C) A temporary lease of land for agricultural purposes.

Correct Incorrect Correct answer

D) A mortgage placed on property to secure a debt.

Correct Incorrect Correct answer

86. Question

What is the primary purpose of an earnest money deposit in a real estate transaction?

A) To pay the buyer’s appraisal and inspection fees.

Correct Incorrect Correct answer

B) To guarantee the lender’s yield on the mortgage loan.

Correct Incorrect Correct answer

C) To show that the buyer’s offer is made in good faith when the parties agree to the sale.

Correct Incorrect Correct answer

D) To pay the seller’s real estate commission in advance.

Correct Incorrect Correct answer

87. Question

In second mortgages, what is meant by a due‑on‑transfer provision?

A) A clause that forgives the loan balance when the property is transferred to an heir.

Correct Incorrect Correct answer

B) Another term for a due‑on‑sale clause, typically used in connection with junior liens.

Correct Incorrect Correct answer

C) A requirement that the borrower transfer title to the lender upon default.

Correct Incorrect Correct answer

D) A provision that requires the lender to approve any change in property use.

Correct Incorrect Correct answer

88. Question

What does a due‑on‑sale provision in a conventional mortgage permit the lender to do?

A) Reduce the loan balance when the property is sold.

Correct Incorrect Correct answer

B) Automatically extend the loan term upon sale of the property.

Correct Incorrect Correct answer

C) Call the mortgage due and payable if ownership of the property is transferred without the lender’s permission.

Correct Incorrect Correct answer

D) Convert the loan to interest‑only payments when the property is sold.

Correct Incorrect Correct answer

89. Question

What does a due‑on‑encumbrance provision in a multifamily mortgage allow the lender to do?

A) Require the borrower to refinance the mortgage every five years.

Correct Incorrect Correct answer

B) Call the mortgage due or increase the interest rate if an unauthorized subordinate lien is placed on the property.

Correct Incorrect Correct answer

C) Convert the mortgage automatically to an adjustable‑rate loan.

Correct Incorrect Correct answer

D) Reduce the interest rate if the property value increases.

Correct Incorrect Correct answer

90. Question

How is the down payment in a real estate transaction defined?

A) The total of all closing costs paid by the buyer.

Correct Incorrect Correct answer

B) The difference between the sales price of the property and the mortgage amount.

Correct Incorrect Correct answer

C) The amount of earnest money given at contract signing.

Correct Incorrect Correct answer

D) The total equity in the property after one year.

Correct Incorrect Correct answer

91. Question

In traditional property law, what does dower refer to?

A) The rights that a widower has in the property of his wife at her death.

Correct Incorrect Correct answer

B) The rights that a widow has in the property of her husband at his death.

Correct Incorrect Correct answer

C) The right of a lender to foreclose on property after default.

Correct Incorrect Correct answer

D) The rights of children to inherit property equally from their parents.

Correct Incorrect Correct answer

92. Question

What is a person’s domicile for legal purposes?

A) Any place where the person owns property.

Correct Incorrect Correct answer

B) A temporary vacation residence in another state.

Correct Incorrect Correct answer

C) A fixed and permanent home to which a person intends to return.

Correct Incorrect Correct answer

D) The address listed on the person’s most recent tax return.

Correct Incorrect Correct answer

93. Question

What is the role of a document custodian in mortgage lending?

A) To originate new mortgage loans on behalf of investors.

Correct Incorrect Correct answer

B) To appraise properties securing mortgage loans.

Correct Incorrect Correct answer

C) To maintain custody of certain mortgage documents on behalf of the lender or investor.

Correct Incorrect Correct answer

D) To service delinquent mortgage loans for government agencies.

Correct Incorrect Correct answer

94. Question

What is disintermediation in the context of real estate finance?

A) The process of consolidating multiple mortgages into a single loan.

Correct Incorrect Correct answer

B) The flow of funds out of savings institutions into higher-yield short‑term investments, reducing funds available for long‑term real estate financing.

Correct Incorrect Correct answer

C) The sale of mortgage loans from one lender to another in the secondary market.

Correct Incorrect Correct answer

D) The refinancing of a long‑term mortgage into a shorter‑term mortgage.

Correct Incorrect Correct answer

95. Question

What does a discount on a mortgage note generally accomplish for the lender or investor?

A) It reduces the borrower’s obligation to repay the note’s full face value.

Correct Incorrect Correct answer

B) It adjusts the yield upward by selling or purchasing the note for less than its face value.

Correct Incorrect Correct answer

C) It converts a fixed-rate note into an adjustable-rate note.

Correct Incorrect Correct answer

D) It eliminates the need to charge any contractual interest rate on the note.

Correct Incorrect Correct answer

96. Question

In a real estate transaction, what are disbursements?

A) Payments of money made on a previously agreed-upon basis.

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B) Only the borrower’s cash brought to closing.

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C) Only commissions paid to real estate brokers.

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D) Refunds of overpaid escrow funds to the borrower.

Correct Incorrect Correct answer

97. Question

What does a direct surety bond protect against?

A) Only physical damage to the collateral property.

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B) Losses caused by the principal’s negligence, lack of ability, or dishonest act.

Correct Incorrect Correct answer

C) Only losses due to changes in market interest rates.

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D) Only the lender’s legal costs in a foreclosure action.

Correct Incorrect Correct answer

98. Question

Who is a designated appraiser in mortgage lending?

A) Any real estate agent who provides a price opinion.

Correct Incorrect Correct answer

B) A county tax assessor who sets property tax values.

Correct Incorrect Correct answer

C) Someone who determines the value of property and whose expertise is recognized and licensed by a professional association, with appraisals accepted by many lenders.

Correct Incorrect Correct answer

D) A loan officer who estimates property value during application.

Correct Incorrect Correct answer

99. Question

In real estate, what is depreciation?

A) An increase in the value of an asset due to market demand.

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B) The cost of improvements added to a property.

Correct Incorrect Correct answer

C) The total amount of principal repaid over the life of a loan.

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D) The decline in value of an asset due to physical deterioration, functional obsolescence, or economic obsolescence.

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100. Question

What does Demotech, Inc. primarily do in the context of real estate finance?

A) It establishes ratings for hazard insurance carriers by evaluating their assets and liabilities.

Correct Incorrect Correct answer

B) It appraises residential properties for mortgage lenders.

Correct Incorrect Correct answer

C) It insures mortgage loans against borrower default.

Correct Incorrect Correct answer

D) It issues federal regulations for mortgage loan originators.

Correct Incorrect Correct answer

101. Question

What is a demand note?

A) A note that is only due on a fixed maturity date.

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B) A note that is due whenever the holder demands payment.

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C) A note that cannot be prepaid under any circumstances.

Correct Incorrect Correct answer

D) A note that requires no payments until the property is sold.

Correct Incorrect Correct answer

102. Question

What does delivery in escrow involve?

A) The immediate delivery of a deed directly from seller to buyer.

Correct Incorrect Correct answer

B) The unconditional delivery of funds to the seller at contract signing.

Correct Incorrect Correct answer

C) The delivery of loan documents directly to the secondary market.

Correct Incorrect Correct answer

D) A conditional delivery of something to a third person to be held until a specified event occurs or an act is performed.

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103. Question

When is a mortgage typically considered delinquent?

A) When the borrower applies to refinance the loan.

Correct Incorrect Correct answer

B) When the borrower pays the mortgage ahead of schedule.

Correct Incorrect Correct answer

C) When a required mortgage payment is past due under the terms of the note.

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D) When the borrower changes homeowners insurance companies.

Correct Incorrect Correct answer

104. Question

What is a deficiency judgment?

A) A court order to pay the balance owed on a loan when the proceeds from the sale of the security are insufficient to pay off the loan.

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B) A court order that cancels all remaining mortgage obligations.

Correct Incorrect Correct answer

C) A judgment that automatically clears all liens on a property.

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D) An administrative penalty for paying off a mortgage early.

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105. Question

What are deferred payments in a financing arrangement?

A) Payments that must be made weekly instead of monthly.

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B) Payments that are scheduled to begin at a future time rather than immediately.

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C) Payments that are automatically waived by the lender after the first year.

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D) Payments that can never be changed once the loan closes.

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106. Question

With respect to an adjustable-rate mortgage, what is deferred interest?

A) Interest that is forgiven if the borrower makes a certain number of on-time payments.

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B) Interest that is paid only as a lump sum at closing.

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C) Interest that is not covered by the monthly payment and is added to the unpaid principal balance for later years.

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D) Interest that remains fixed for the life of the loan.

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107. Question

In mortgage lending, what does the term default generally mean?

A) The automatic renewal of a mortgage at maturity.

Correct Incorrect Correct answer

B) The voluntary prepayment of the mortgage balance.

Correct Incorrect Correct answer

C) The assignment of the mortgage to a new lender.

Correct Incorrect Correct answer

D) A breach or nonperformance of the terms of a note or the covenants of a mortgage.

Correct Incorrect Correct answer

108. Question

What is a deed restriction?

A) A limitation placed on a deed that restricts or limits the use of the real property.

Correct Incorrect Correct answer

B) A requirement that a deed must be recorded within a certain number of days after closing.

Correct Incorrect Correct answer

C) A restriction on which lender may finance a particular property.

Correct Incorrect Correct answer

D) A limitation on the maximum loan amount that may be placed on a property.

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109. Question

In a mortgage transaction, what is a deed of trust primarily used for?

A) A document that records only the sales price of a property.

Correct Incorrect Correct answer

B) A type of security instrument that conveys title in trust to a third party as collateral for a debt, with power of sale in the event of default.

Correct Incorrect Correct answer

C) A document that transfers personal property from one party to another.

Correct Incorrect Correct answer

D) A nonbinding letter describing the parties’ intent to buy or sell.

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110. Question

What is a DEED-IN-LIEU?

A) A deed used only for new construction properties.

Correct Incorrect Correct answer

B) A deed used to add a co-borrower to the title of the property.

Correct Incorrect Correct answer

C) A deed that transfers title from seller to buyer at a standard closing.

Correct Incorrect Correct answer

D) A deed given by a mortgagor to the mortgagee to satisfy a debt and avoid foreclosure; also called a voluntary conveyance.

Correct Incorrect Correct answer

111. Question

What is a DEED?

A) A promissory note containing the borrower’s promise to repay a debt.

Correct Incorrect Correct answer

B) A written document by which the ownership of land is transferred from one party to another.

Correct Incorrect Correct answer

C) A lease agreement that grants a tenant temporary possession of the property.

Correct Incorrect Correct answer

D) An appraisal report estimating the market value of the property.

Correct Incorrect Correct answer

112. Question

DEBT-TO-INCOME RATIOS are used to:

A) Appraise the current market value of the subject property.

Correct Incorrect Correct answer

B) Determine whether the title to the property is clear.

Correct Incorrect Correct answer

C) Determine whether a borrower can qualify for a mortgage by comparing monthly housing expense and total obligations to income.

Correct Incorrect Correct answer

D) Set the property tax rate for the borrower’s neighborhood.

Correct Incorrect Correct answer

113. Question

What does DEBT SERVICE refer to?

A) The periodic payment of principal and interest on mortgage loans.

Correct Incorrect Correct answer

B) The lender’s monthly servicing fee for managing the loan.

Correct Incorrect Correct answer

C) The annual property tax assessment on the mortgaged property.

Correct Incorrect Correct answer

D) The borrower’s mortgage insurance premium payments.

Correct Incorrect Correct answer

114. Question

In mortgage finance, what is DEBT?

A) The equity remaining in the property after closing costs are paid.

Correct Incorrect Correct answer

B) The appraised value of the property minus the loan amount.

Correct Incorrect Correct answer

C) Only loans that are secured by real estate as collateral.

Correct Incorrect Correct answer

D) Borrowed money, the repayment of which may be either secured or unsecured, with various possible repayment schedules.

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115. Question

What is a DEBENTURE?

A) A mortgage loan that is fully secured by real property.

Correct Incorrect Correct answer

B) A negotiable check commonly used to pay closing costs.

Correct Incorrect Correct answer

C) An unsecured debt instrument backed only by the general credit standing and earning capacity of the issuer or insurer.

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D) A deed that conveys title to real property from grantor to grantee.

Correct Incorrect Correct answer

116. Question

Which of the following best describes CUSTODY DOCUMENTS in mortgage servicing?

A) The borrower’s pay stubs, bank statements, and tax returns.

Correct Incorrect Correct answer

B) The original mortgage note, an original unrecorded assignment (or copy of the recorded assignment) to the investor, and, when applicable, the original mortgage insurance or loan guaranty certificate and any modification agreement.

Correct Incorrect Correct answer

C) Only the appraisal and inspection reports for the property.

Correct Incorrect Correct answer

D) The Loan Estimate and Closing Disclosure forms from closing.

Correct Incorrect Correct answer

117. Question

What is the purpose of a CREDIT REPORT?

A) To provide a prospective lender with a report on a prospective borrower’s credit standing to help determine creditworthiness.

Correct Incorrect Correct answer

B) To establish the property’s assessed value for tax purposes.

Correct Incorrect Correct answer

C) To verify only the borrower’s employment status.

Correct Incorrect Correct answer

D) To disclose any defects in the title to the property.

Correct Incorrect Correct answer

118. Question

What does a borrower’s CREDIT RATING primarily evaluate?

A) The current market value of the borrower’s home.

Correct Incorrect Correct answer

B) The size of the borrower’s down payment on the property.

Correct Incorrect Correct answer

C) The borrower’s ability to repay a loan based on current financial situation and past debt-repayment performance, including any defaults and delinquent payments.

Correct Incorrect Correct answer

D) The total amount of interest the borrower will pay over the life of the loan.

Correct Incorrect Correct answer

119. Question

What is CREDIT LIFE INSURANCE designed to do?

A) Protect the lender against property damage to the collateral.

Correct Incorrect Correct answer

B) Cover the borrower’s medical expenses if they become ill.

Correct Incorrect Correct answer

C) Reimburse the lender for foreclosure and legal costs.

Correct Incorrect Correct answer

D) Pay off the mortgage debt if the mortgagor dies while the policy is in force.

Correct Incorrect Correct answer

120. Question

In mortgage banking, what does the COUPON RATE describe?

A) The discount points charged to the borrower at closing.

Correct Incorrect Correct answer

B) The contract interest rate stated on the face of the note or bond.

Correct Incorrect Correct answer

C) The annual percentage rate (APR) including all finance charges.

Correct Incorrect Correct answer

D) The servicing fee retained by the lender on each payment.

Correct Incorrect Correct answer

121. Question

What are COVENANTS OF TITLE?

A) Promises by a borrower to repay the mortgage debt.

Correct Incorrect Correct answer

B) Lease provisions that govern tenant responsibilities.

Correct Incorrect Correct answer

C) Guarantees made by a grantor when real property is conveyed by a warranty deed.

Correct Incorrect Correct answer

D) Conditions in a mortgage note regarding prepayment penalties.

Correct Incorrect Correct answer

122. Question

What is a COVENANT in real estate terminology?

A) A promise in writing under seal, often used as a substitute for the verb 'contract.'

Correct Incorrect Correct answer

B) An informal oral agreement between a buyer and seller.

Correct Incorrect Correct answer

C) A government zoning restriction imposed on the property.

Correct Incorrect Correct answer

D) A recorded easement granted to a utility company.

Correct Incorrect Correct answer

123. Question

In a COST-PLUS CONTRACT for construction, how is the contract price determined?

A) As a fixed lump sum, regardless of the actual cost of construction.

Correct Incorrect Correct answer

B) Only on the basis of material costs; labor is not included.

Correct Incorrect Correct answer

C) As the appraised value of the property plus the builder’s profit.

Correct Incorrect Correct answer

D) As the actual cost of the construction plus a profit allowance to the builder, instead of a fixed price.

Correct Incorrect Correct answer

124. Question

For certain ARM plans, what does the Cost of Funds Index (COFI) represent?

A) The national average interest rate on 30-year fixed-rate mortgages.

Correct Incorrect Correct answer

B) The weighted-average cost of savings, borrowings, and advances of the 11th District members of the Federal Home Loan Bank of San Francisco.

Correct Incorrect Correct answer

C) The prime rate set by major commercial banks in the 11th District.

Correct Incorrect Correct answer

D) The average yield on 10-year U.S. Treasury notes.

Correct Incorrect Correct answer

125. Question

What is the COST APPROACH TO VALUE in appraisal?

A) Valuing property based solely on rental income.

Correct Incorrect Correct answer

B) Estimating value based on the cost to produce a substitute property with the same use.

Correct Incorrect Correct answer

C) Determining value using comparable sales only.

Correct Incorrect Correct answer

D) Using projected future cash flows to determine present value.

Correct Incorrect Correct answer

126. Question

Who is a CO‑SIGNER in a mortgage transaction?

A) A co‑borrower with equal title rights.

Correct Incorrect Correct answer

B) Someone who provides a gift for down payment.

Correct Incorrect Correct answer

C) A broker who represents both parties.

Correct Incorrect Correct answer

D) A person who is equally responsible for the debt but has no ownership interest in the property.

Correct Incorrect Correct answer

127. Question

What is CORPOREAL PROPERTY?

A) The land and all physical items affixed to it.

Correct Incorrect Correct answer

B) Intangible rights such as easements.

Correct Incorrect Correct answer

C) Personal property not attached to land.

Correct Incorrect Correct answer

D) Contract rights transferred between parties.

Correct Incorrect Correct answer

128. Question

What is a CORPORATE RELOCATION MORTGAGE?

A) Any mortgage offered by a corporation.

Correct Incorrect Correct answer

B) A commercial mortgage secured by business equipment.

Correct Incorrect Correct answer

C) A mortgage designed to assist an employee’s transfer to a new business location under a structured program.

Correct Incorrect Correct answer

D) An interest‑only loan used during relocation only.

Correct Incorrect Correct answer

129. Question

What is CORPORATE RELOCATION?

A) A tax credit for corporations expanding their business.

Correct Incorrect Correct answer

B) An employer‑arranged move of employees or operations to another area.

Correct Incorrect Correct answer

C) A merger between two corporations.

Correct Incorrect Correct answer

D) A federal program providing grants to relocating businesses.

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130. Question

What is a COOPERATIVE PROJECT?

A) A condo development with individually deeded units.

Correct Incorrect Correct answer

B) A commercial project leased to multiple tenants.

Correct Incorrect Correct answer

C) A trust that holds land for public parks.

Correct Incorrect Correct answer

D) A building where a corporation holds title and sells shares tied to proprietary leases for unit occupancy.

Correct Incorrect Correct answer

131. Question

What are COOPERATIVE MORTGAGES?

A) Mortgages related to cooperative projects, usually covering the entire multifamily property.

Correct Incorrect Correct answer

B) Only individual unit loans in condo buildings.

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C) Mortgages used exclusively for corporate relocation.

Correct Incorrect Correct answer

D) A type of construction financing.

Correct Incorrect Correct answer

132. Question

What is a COOPERATIVE CORPORATION?

A) A developer that builds multifamily rental units.

Correct Incorrect Correct answer

B) A corporation that manages condo HOAs.

Correct Incorrect Correct answer

C) The business entity that holds title to a cooperative project and grants occupancy via proprietary leases.

Correct Incorrect Correct answer

D) A mortgage lender specializing in co-op loans.

Correct Incorrect Correct answer

133. Question

What is a COOPERATIVE in real estate?

A) A form of ownership where a corporation holds title and shareholders receive occupancy rights through proprietary leases.

Correct Incorrect Correct answer

B) A condo building with individually deeded units.

Correct Incorrect Correct answer

C) A single‑family residence owned in fee simple.

Correct Incorrect Correct answer

D) A partnership arrangement for vacation rentals.

Correct Incorrect Correct answer

134. Question

What does it mean to CONVEY real property?

A) To lease property for a short term.

Correct Incorrect Correct answer

B) To transfer title of real property to another party.

Correct Incorrect Correct answer

C) To record a deed at the courthouse.

Correct Incorrect Correct answer

D) To appraise the value of a property.

Correct Incorrect Correct answer

135. Question

What is a CONVERTIBLE ARM?

A) An ARM that adjusts only once during the loan term.

Correct Incorrect Correct answer

B) A fixed‑rate mortgage that converts into an ARM.

Correct Incorrect Correct answer

C) An ARM that cannot change rates for the first 10 years.

Correct Incorrect Correct answer

D) An ARM with an option for the borrower to convert it to a fixed‑rate mortgage within a set time frame.

Correct Incorrect Correct answer

136. Question

What is a CONVENTIONAL LOAN?

A) A loan guaranteed by the Department of Veterans Affairs.

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B) A loan insured by the Federal Housing Administration.

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C) A loan not insured by FHA and not guaranteed by VA.

Correct Incorrect Correct answer

D) A loan that converts automatically to an ARM.

Correct Incorrect Correct answer

137. Question

What is a CONTRACT?

A) An agreement between parties to do or not do a lawful act.

Correct Incorrect Correct answer

B) A verbal promise that is not legally enforceable.

Correct Incorrect Correct answer

C) A document used only in commercial transactions.

Correct Incorrect Correct answer

D) A non‑binding agreement that cannot be enforced.

Correct Incorrect Correct answer

138. Question

What is a CONTINGENCY in a contract?

A) A mandatory fee required to execute a contract.

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B) A stated event that must occur before a contract becomes binding.

Correct Incorrect Correct answer

C) A penalty for canceling a contract early.

Correct Incorrect Correct answer

D) A clause that guarantees financing regardless of borrower qualifications.

Correct Incorrect Correct answer

139. Question

What is a CONSUMER REPORTING AGENCY (or bureau)?

A) A government agency that sets maximum interest rates on loans.

Correct Incorrect Correct answer

B) An organization that prepares reports on an individual’s credit and public records history for use by credit grantors.

Correct Incorrect Correct answer

C) Any lender that reports loan payments to the IRS.

Correct Incorrect Correct answer

D) A company that services mortgage loans on behalf of investors.

Correct Incorrect Correct answer

140. Question

What is a CONSTRUCTION LOAN?

A) A long-term permanent loan on a completed property.

Correct Incorrect Correct answer

B) A loan used only for purchasing vacant land.

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C) A revolving line of credit for home improvements after completion.

Correct Incorrect Correct answer

D) A short-term interim loan to finance construction costs, with funds disbursed as work progresses.

Correct Incorrect Correct answer

141. Question

In a condominium project, what are CONSTITUENT DOCUMENTS?

A) The legal documents of a condominium, including the declaration, legal map, association bylaws, and articles of incorporation.

Correct Incorrect Correct answer

B) The individual sales contracts between buyers and sellers.

Correct Incorrect Correct answer

C) The appraisals and inspections for each unit.

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D) The marketing brochures used to sell units.

Correct Incorrect Correct answer

142. Question

In contract law, what is CONSIDERATION?

A) The legal description attached to the contract.

Correct Incorrect Correct answer

B) The earnest money deposit only.

Correct Incorrect Correct answer

C) The legal right, promise, or thing of value exchanged for the act or promise of another in a contract.

Correct Incorrect Correct answer

D) The attorney’s fee for drafting the agreement.

Correct Incorrect Correct answer

143. Question

Which feature best describes a CONDOMINIUM HOTEL (or “condotel”)?

A) A condo project where all units are owner-occupied with no rentals allowed.

Correct Incorrect Correct answer

B) A condo project operated as a commercial hotel, with services such as rental desks and daily cleaning, while units are individually owned.

Correct Incorrect Correct answer

C) A hotel owned and operated only by a single corporate entity.

Correct Incorrect Correct answer

D) Any condominium located in a resort area.

Correct Incorrect Correct answer

144. Question

What is a CONDOMINIUM CONVERSION?

A) Constructing a new condominium building from the ground up.

Correct Incorrect Correct answer

B) Changing an office building into industrial space.

Correct Incorrect Correct answer

C) Rezoning agricultural land for residential use.

Correct Incorrect Correct answer

D) Changing the ownership of an existing (usually rental) building to the condominium form of ownership.

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145. Question

Which choice best defines a CONDOMINIUM?

A) Ownership in a specific unit plus a proportionate interest in the project’s common areas.

Correct Incorrect Correct answer

B) A long-term lease of a unit with no ownership interest.

Correct Incorrect Correct answer

C) Ownership of the land only, not the improvements.

Correct Incorrect Correct answer

D) A time-share interest limited to certain weeks of the year.

Correct Incorrect Correct answer

146. Question

For Fannie Mae, what is CONDITIONAL PROJECT ACCEPTANCE?

A) Final unconditional approval of a project by Fannie Mae.

Correct Incorrect Correct answer

B) A construction permit issued by the local municipality.

Correct Incorrect Correct answer

C) The first stage of Fannie Mae’s acceptance of a condo, PUD, or co-op project, stating conditions required for final acceptance.

Correct Incorrect Correct answer

D) An HOA’s approval for a buyer to purchase a unit.

Correct Incorrect Correct answer

147. Question

What is a CONDITIONAL COMMITMENT, most often used with FHA loans?

A) A loan approval that is always transferable to any property.

Correct Incorrect Correct answer

B) A commitment on a specific property for a definite loan amount and terms for a future unknown purchaser of satisfactory credit.

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C) A temporary rate lock with no property identified.

Correct Incorrect Correct answer

D) A seller’s written promise to carry back financing.

Correct Incorrect Correct answer

148. Question

What is CONDEMNATION in real estate?

A) A court order requiring repairs to unsafe property.

Correct Incorrect Correct answer

B) A city’s refusal to issue a building permit.

Correct Incorrect Correct answer

C) The voluntary sale of land for public purposes.

Correct Incorrect Correct answer

D) The taking of private property for public use without the owner’s consent, upon payment of just compensation.

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149. Question

In the appraisal process, what are COMPARABLES (or “comps”)?

A) Recently sold properties similar in size, location, and amenities to the subject, used to estimate its fair market value.

Correct Incorrect Correct answer

B) Only unsold listings in the neighborhood.

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C) Any properties appraised by the same appraiser.

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D) Only distressed sales in the area.

Correct Incorrect Correct answer

150. Question

In a real estate development, what are COMMON AREAS?

A) Individually deeded private yards behind each unit.

Correct Incorrect Correct answer

B) Only the lobby and interior hallways of a building.

Correct Incorrect Correct answer

C) Land or improvements, such as parking lots and parks, for the benefit and use of all tenants and owners in a development.

Correct Incorrect Correct answer

D) Any area reserved exclusively for commercial tenants.

Correct Incorrect Correct answer

151. Question

In a condominium or PUD project, what are COMMON AREA ASSESSMENTS?

A) Individual property tax bills for each unit.

Correct Incorrect Correct answer

B) Levies against unit owners to provide capital for association expenses and upkeep of the common areas.

Correct Incorrect Correct answer

C) Optional contributions to a neighborhood improvement fund.

Correct Incorrect Correct answer

D) Charges paid only by commercial tenants in the project.

Correct Incorrect Correct answer

152. Question

What is a COMMITMENT FEE?

A) A penalty for early payoff of the loan.

Correct Incorrect Correct answer

B) The fee paid to record the mortgage in public records.

Correct Incorrect Correct answer

C) The broker’s fee for originating the loan.

Correct Incorrect Correct answer

D) A fee paid to a potential lender for the promise to lend money at a specified time in the future.

Correct Incorrect Correct answer

153. Question

In mortgage lending, what is a COMMITMENT?

A) An agreement between lender and borrower to lend money at a future date subject to stated conditions.

Correct Incorrect Correct answer

B) A notice that a loan application has been denied.

Correct Incorrect Correct answer

C) A document transferring title from seller to buyer.

Correct Incorrect Correct answer

D) A request for verification of deposit.

Correct Incorrect Correct answer

154. Question

What is a COMMISSION in a real estate transaction?

A) The fee charged by the lender to underwrite the loan.

Correct Incorrect Correct answer

B) The annual property tax due on the home.

Correct Incorrect Correct answer

C) The amount paid to a broker for services rendered, usually a percentage of the sale price.

Correct Incorrect Correct answer

D) The buyer’s earnest money deposit.

Correct Incorrect Correct answer

155. Question

In a condominium or co‑operative project, what is COMMERCIAL SPACE?

A) Storage space reserved for unit owners only.

Correct Incorrect Correct answer

B) Space used to produce income through leases for commercial or business use.

Correct Incorrect Correct answer

C) Common hallways and lobbies shared by all residents.

Correct Incorrect Correct answer

D) Recreational amenities such as pools and gyms.

Correct Incorrect Correct answer

156. Question

Which statement best defines COMMERCIAL PROPERTY?

A) Property used exclusively for agricultural purposes.

Correct Incorrect Correct answer

B) Owner-occupied single-family residences.

Correct Incorrect Correct answer

C) Only large regional shopping centers.

Correct Incorrect Correct answer

D) Income property, typically zoned for business use, including property held for rental to one or more tenants.

Correct Incorrect Correct answer

157. Question

What is a COMMERCIAL LOAN in real estate finance?

A) A mortgage loan on property that produces income.

Correct Incorrect Correct answer

B) Any loan made to an individual for personal use.

Correct Incorrect Correct answer

C) A home equity line of credit.

Correct Incorrect Correct answer

D) A construction loan on a single-family residence only.

Correct Incorrect Correct answer

158. Question

Which functions are typically performed by a COMMERCIAL BANK?

A) Selling only long-term insurance products.

Correct Incorrect Correct answer

B) Making loans, maintaining checking accounts, receiving time deposits, and discounting negotiable instruments.

Correct Incorrect Correct answer

C) Regulating other financial institutions.

Correct Incorrect Correct answer

D) Appraising real estate for mortgage underwriting.

Correct Incorrect Correct answer

159. Question

In a mortgage transaction, what is COLLATERAL?

A) The borrower’s credit history.

Correct Incorrect Correct answer

B) The lender’s funds used to make the loan.

Correct Incorrect Correct answer

C) The commission paid to the real estate broker.

Correct Incorrect Correct answer

D) Property pledged as security for a debt, such as real estate securing a mortgage.

Correct Incorrect Correct answer

160. Question

What is CO-INSURANCE in an insurance policy?

A) Sharing the risk of a policy by more than one insurer, each liable for a portion of the loss.

Correct Incorrect Correct answer

B) Requiring the borrower to pay two deductibles.

Correct Incorrect Correct answer

C) Insurance that covers both real and personal property.

Correct Incorrect Correct answer

D) A reinsurance treaty between two carriers.

Correct Incorrect Correct answer

161. Question

Which statement best describes a CO-BORROWER (CO-MORTGAGOR)?

A) A person who guarantees the loan but has no ownership interest.

Correct Incorrect Correct answer

B) A non-occupant co-signer with no repayment responsibility.

Correct Incorrect Correct answer

C) A party equally responsible for repayment who also has an interest in the property’s title.

Correct Incorrect Correct answer

D) A spouse whose income is not used to qualify.

Correct Incorrect Correct answer

162. Question

What is a CLOUD ON TITLE?

A) A temporary suspension of property taxes.

Correct Incorrect Correct answer

B) A condition revealed by title search that adversely affects title and often requires a quitclaim, release, or court action to remove.

Correct Incorrect Correct answer

C) A weather-related hazard disclosure on the property.

Correct Incorrect Correct answer

D) A standard easement for utilities.

Correct Incorrect Correct answer

163. Question

What is the purpose of a CLOSING STATEMENT?

A) To record the listing terms between seller and broker.

Correct Incorrect Correct answer

B) To set the property’s assessed tax value.

Correct Incorrect Correct answer

C) To request payoff figures from the seller’s lender.

Correct Incorrect Correct answer

D) To provide a detailed account of all funds received and paid at closing, including escrow deposits.

Correct Incorrect Correct answer

164. Question

What is the CLOSING DATE in a real estate contract?

A) The contractually agreed date for transferring title.

Correct Incorrect Correct answer

B) The date the purchase agreement is first signed.

Correct Incorrect Correct answer

C) The date the lender issues final loan approval.

Correct Incorrect Correct answer

D) The date the appraisal report is completed.

Correct Incorrect Correct answer

165. Question

Which of the following best describes CLOSING COSTS?

A) The down payment made by the buyer at settlement.

Correct Incorrect Correct answer

B) Only the lender’s origination fee on a new loan.

Correct Incorrect Correct answer

C) Expenses incidental to a real estate sale, such as loan, title, and appraisal fees.

Correct Incorrect Correct answer

D) The seller’s net proceeds after the transaction.

Correct Incorrect Correct answer

166. Question

What does CLOSING mean in a real estate transaction?

A) The date the listing agreement is signed.

Correct Incorrect Correct answer

B) The buyer’s loan application date.

Correct Incorrect Correct answer

C) The date the appraisal is completed.

Correct Incorrect Correct answer

D) The consummation of the real estate transaction when the deed is delivered, documents are signed, and funds are disbursed.

Correct Incorrect Correct answer

167. Question

Which choice best defines CLEAR TITLE?

A) Title subject only to a first mortgage.

Correct Incorrect Correct answer

B) Good, marketable title that is free of encumbrance, obstruction, burden, or limitation.

Correct Incorrect Correct answer

C) Title that cannot be conveyed to another party.

Correct Incorrect Correct answer

D) Title that includes at least one undisclosed lien.

Correct Incorrect Correct answer

168. Question

What is a CHATTEL MORTGAGE?

A) A mortgage secured by a one‑to‑four family dwelling.

Correct Incorrect Correct answer

B) A mortgage used only for vacant land.

Correct Incorrect Correct answer

C) A lien or security interest on personal property rather than real property.

Correct Incorrect Correct answer

D) A type of junior lien used in second mortgages.

Correct Incorrect Correct answer

169. Question

What is meant by the CHAIN OF TITLE for a parcel of real property?

A) The history of all documents transferring title to a parcel from the earliest to the most recent.

Correct Incorrect Correct answer

B) The list of all liens currently recorded against a property.

Correct Incorrect Correct answer

C) The order in which multiple offers are presented to a seller.

Correct Incorrect Correct answer

D) The record of all property tax payments.

Correct Incorrect Correct answer

170. Question

What is a CERTIFICATE OF TITLE?

A) The original deed conveying title to the first owner.

Correct Incorrect Correct answer

B) A title insurance policy issued to the lender.

Correct Incorrect Correct answer

C) A county tax statement for the current year.

Correct Incorrect Correct answer

D) A statement from a title company or attorney that title is legally vested in the present owner.

Correct Incorrect Correct answer

171. Question

In a VA loan, what is the CERTIFICATE OF REASONABLE VALUE (CRV)?

A) A certificate confirming that property taxes are current.

Correct Incorrect Correct answer

B) A VA‑issued document that establishes the maximum value and loan amount for a VA‑guaranteed mortgage.

Correct Incorrect Correct answer

C) A letter of intent from the veteran to occupy the property.

Correct Incorrect Correct answer

D) A lender’s appraisal review report.

Correct Incorrect Correct answer

172. Question

What is a CERTIFICATE OF OCCUPANCY?

A) The deed conveying title to a new owner.

Correct Incorrect Correct answer

B) A certificate required only for commercial properties.

Correct Incorrect Correct answer

C) Written authorization from a local municipality allowing a completed structure to be occupied.

Correct Incorrect Correct answer

D) A document showing all permits have been paid.

Correct Incorrect Correct answer

173. Question

For a VA loan, what is a CERTIFICATE OF ELIGIBILITY?

A) A certificate from the VA stating that a veteran is eligible for a VA‑insured or guaranteed loan.

Correct Incorrect Correct answer

B) A document showing that the property meets VA minimum property standards.

Correct Incorrect Correct answer

C) A lender’s commitment letter to fund the loan.

Correct Incorrect Correct answer

D) A DD‑214 form verifying military discharge status only.

Correct Incorrect Correct answer

174. Question

What does the CERTIFICATE OF DEPOSIT INDEX represent for certain ARM plans?

A) The prime rate charged by banks on credit cards.

Correct Incorrect Correct answer

B) The federal funds rate set by the Federal Reserve.

Correct Incorrect Correct answer

C) The average yield on 30‑year Treasury bonds.

Correct Incorrect Correct answer

D) The weekly average of secondary market interest rates on 6‑month negotiable certificates of deposit.

Correct Incorrect Correct answer

175. Question

What is a CERTIFICATE OF CLAIM in connection with an insured mortgage?

A) A document that transfers title from borrower to lender.

Correct Incorrect Correct answer

B) A contingent promise to reimburse an insured mortgagee for certain foreclosure costs if sale proceeds are sufficient.

Correct Incorrect Correct answer

C) A certificate showing the loan is paid in full.

Correct Incorrect Correct answer

D) A statement of the borrower’s outstanding tax obligations.

Correct Incorrect Correct answer

176. Question

Which situation best describes a CASH-OUT REFINANCE?

A) Refinancing only to obtain a lower interest rate with no change in loan amount.

Correct Incorrect Correct answer

B) Refinancing to shorten the loan term with no funds back to the borrower.

Correct Incorrect Correct answer

C) Refinancing where the new loan exceeds payoff amounts and costs, and the borrower receives extra cash at closing.

Correct Incorrect Correct answer

D) Refinancing from a fixed-rate loan into an ARM with no equity change.

Correct Incorrect Correct answer

177. Question

What is the CAPITALIZATION RATE (cap rate)?

A) The rate that reflects the relationship between a property's value and the net income it produces.

Correct Incorrect Correct answer

B) The maximum interest rate allowed by law on a mortgage.

Correct Incorrect Correct answer

C) The annual percentage rate (APR) disclosed under TILA.

Correct Incorrect Correct answer

D) The lender’s cost of funds in the secondary market.

Correct Incorrect Correct answer

178. Question

What does CAPITALIZATION mean in income property valuation?

A) Writing off the cost of improvements for tax purposes.

Correct Incorrect Correct answer

B) Increasing the loan balance by adding unpaid interest.

Correct Incorrect Correct answer

C) Recording a deed in the public records.

Correct Incorrect Correct answer

D) Converting anticipated future net income into present value using a chosen rate of return.

Correct Incorrect Correct answer

179. Question

In an adjustable-rate mortgage (ARM), what is a CAP?

A) A fee charged to lock an interest rate for a set period.

Correct Incorrect Correct answer

B) A limit on how much the interest rate or payment can increase or decrease at adjustment and over the life of an ARM.

Correct Incorrect Correct answer

C) A penalty for paying off the mortgage early.

Correct Incorrect Correct answer

D) A feature that converts an ARM to a fixed-rate loan.

Correct Incorrect Correct answer

180. Question

What is a BASIS POINT?

A) One one-hundredth of one percent, used to describe yield changes.

Correct Incorrect Correct answer

B) Ten percent of the note rate.

Correct Incorrect Correct answer

C) One full percent of loan amount.

Correct Incorrect Correct answer

D) Equal to ten basis units.

Correct Incorrect Correct answer

181. Question

Who is considered BANKRUPT?

A) Anyone who is behind on debt payments.

Correct Incorrect Correct answer

B) A person whose credit score falls below 500.

Correct Incorrect Correct answer

C) A person or entity relieved from debts through a court proceeding after surrendering assets to a court-appointed trustee.

Correct Incorrect Correct answer

D) A homeowner who has received a notice of default.

Correct Incorrect Correct answer

182. Question

What is a BALLOON NOTE?

A) A note that is fully amortized with equal payments.

Correct Incorrect Correct answer

B) A note with interest-only payments for the entire term.

Correct Incorrect Correct answer

C) A note requiring escalating payments with no final lump sum.

Correct Incorrect Correct answer

D) A note whose periodic payments do not fully amortize the loan, leaving a final lump-sum payment due at maturity.

Correct Incorrect Correct answer

183. Question

Who is an ATTORNEY IN FACT?

A) A lawyer automatically authorized to act for any client.

Correct Incorrect Correct answer

B) A person appointed to act for another under a power of attorney, limited to the authority granted.

Correct Incorrect Correct answer

C) A court-appointed representative for minors only.

Correct Incorrect Correct answer

D) A government auditor assigned to real estate transactions.

Correct Incorrect Correct answer

184. Question

What is an ASSUMPTION OF MORTGAGE?

A) When a buyer assumes liability under an existing mortgage, and the seller remains secondarily liable unless released by the lender.

Correct Incorrect Correct answer

B) When a lender forgives the remaining balance of a mortgage.

Correct Incorrect Correct answer

C) When a seller pays off the mortgage before transferring title.

Correct Incorrect Correct answer

D) When a mortgage is converted into a line of credit.

Correct Incorrect Correct answer

185. Question

What does an ASSIGNMENT OF RENTS allow a lender or creditor to do?

A) Refinance the borrower’s loan without consent.

Correct Incorrect Correct answer

B) Take legal ownership of the property immediately.

Correct Incorrect Correct answer

C) Collect rents, manage the property, and apply net income toward delinquent mortgage payments without owning the property.

Correct Incorrect Correct answer

D) Evict all tenants automatically.

Correct Incorrect Correct answer

186. Question

What is an ASSIGNMENT OF MORTGAGE?

A) A document that creates a new mortgage lien on property.

Correct Incorrect Correct answer

B) A document evidencing the transfer of ownership of a mortgage from one party to another.

Correct Incorrect Correct answer

C) A release of mortgage recorded when the loan is paid off.

Correct Incorrect Correct answer

D) A clause stating that property acquired later becomes collateral.

Correct Incorrect Correct answer

187. Question

In real estate, what is an ASSESSMENT?

A) A mandatory home inspection.

Correct Incorrect Correct answer

B) A voluntary improvement project.

Correct Incorrect Correct answer

C) The appraisal required by a mortgage lender.

Correct Incorrect Correct answer

D) A value placed on property for taxation, or a levy for a specific purpose such as a sewer assessment.

Correct Incorrect Correct answer

188. Question

What is ASSESSED VALUATION?

A) The value placed on property by a taxing authority for purposes of taxation.

Correct Incorrect Correct answer

B) The value determined by a licensed appraiser for loan approval.

Correct Incorrect Correct answer

C) The price a buyer agrees to pay for the property.

Correct Incorrect Correct answer

D) The replacement cost of improvements.

Correct Incorrect Correct answer

189. Question

What is an APPURTENANCE?

A) A loan feature allowing early payoff without penalty.

Correct Incorrect Correct answer

B) A government tax lien applied to real property.

Correct Incorrect Correct answer

C) Something attached or closely related to the land that becomes the owner’s property, such as a structure or easement.

Correct Incorrect Correct answer

D) A mortgage clause relating to future advances.

Correct Incorrect Correct answer

190. Question

What is APPRECIATION as defined in the glossary?

A) The decrease in value caused by depreciation.

Correct Incorrect Correct answer

B) A tax credit given to homeowners annually.

Correct Incorrect Correct answer

C) Any increase in value caused solely by inflation.

Correct Incorrect Correct answer

D) An increased value of property due to positive improvements or elimination of negative factors.

Correct Incorrect Correct answer

191. Question

Who is an APPRAISER?

A) A person engaged in estimating the value of property as a professional or employee.

Correct Incorrect Correct answer

B) A real estate agent listing properties for sale.

Correct Incorrect Correct answer

C) A mortgage broker arranging loans.

Correct Incorrect Correct answer

D) A county official determining tax rates.

Correct Incorrect Correct answer

192. Question

What is the definition of APPRAISED VALUE?

A) The price a buyer agrees to pay for a property.

Correct Incorrect Correct answer

B) An estimate of property value made by a qualified expert (an appraiser).

Correct Incorrect Correct answer

C) The value assigned by the county tax assessor.

Correct Incorrect Correct answer

D) The replacement cost of improvements only.

Correct Incorrect Correct answer

193. Question

What is the definition of BASIS POINT?

A) One one-hundredth of one percent.

Correct Incorrect Correct answer

B) Ten percent of note rate.

Correct Incorrect Correct answer

C) One full percent.

Correct Incorrect Correct answer

D) Equal to ten basis units.

Correct Incorrect Correct answer

194. Question

What is the definition of BANKRUPT?

A) Anyone behind on payments.

Correct Incorrect Correct answer

B) Anyone with low credit.

Correct Incorrect Correct answer

C) Relieved of debts after surrendering assets to trustee.

Correct Incorrect Correct answer

D) Anyone receiving foreclosure notice.

Correct Incorrect Correct answer

195. Question

What is the definition of BALLOON NOTE?

A) Fully amortized note.

Correct Incorrect Correct answer

B) Interest-only note.

Correct Incorrect Correct answer

C) Escalating payment note.

Correct Incorrect Correct answer

D) Payments don't amortize; lump-sum due at maturity.

Correct Incorrect Correct answer

196. Question

What is the definition of ATTORNEY IN FACT?

A) A lawyer automatically authorized.

Correct Incorrect Correct answer

B) A person appointed under power of attorney to act for another.

Correct Incorrect Correct answer

C) A court guardian for minors.

Correct Incorrect Correct answer

D) A government auditor.

Correct Incorrect Correct answer

197. Question

What is the definition of ASSUMPTION OF MORTGAGE?

A) Buyer assumes liability; seller remains secondarily liable unless released.

Correct Incorrect Correct answer

B) Lender forgives remaining balance.

Correct Incorrect Correct answer

C) Seller pays off mortgage first.

Correct Incorrect Correct answer

D) Mortgage converted to equity line.

Correct Incorrect Correct answer

198. Question

What is the definition of ASSIGNMENT OF RENTS?

A) Refinance the borrower's loan.

Correct Incorrect Correct answer

B) Take ownership immediately.

Correct Incorrect Correct answer

C) Collect rents/manage property/apply income to delinquency.

Correct Incorrect Correct answer

D) Evict tenants automatically.

Correct Incorrect Correct answer

199. Question

What is the definition of ASSIGNMENT OF MORTGAGE?

A) A document creating a new mortgage.

Correct Incorrect Correct answer

B) A document evidencing transfer of ownership of a mortgage.

Correct Incorrect Correct answer

C) A release of mortgage when paid off.

Correct Incorrect Correct answer

D) A clause about after-acquired property.

Correct Incorrect Correct answer

200. Question

What is the definition of ASSESSMENT?

A) A mandatory inspection.

Correct Incorrect Correct answer

B) A voluntary improvement project.

Correct Incorrect Correct answer

C) An appraisal for a loan.

Correct Incorrect Correct answer

D) A value placed for taxation or a special levy.

Correct Incorrect Correct answer

201. Question

What is the definition of ASSESSED VALUATION?

A) The value placed on property by a taxing authority.

Correct Incorrect Correct answer

B) The value determined by an appraiser.

Correct Incorrect Correct answer

C) The price agreed in a contract.

Correct Incorrect Correct answer

D) The replacement cost of improvements.

Correct Incorrect Correct answer

202. Question

What is the definition of APPURTENANCE?

A) A loan feature allowing early payoff.

Correct Incorrect Correct answer

B) A government tax lien.

Correct Incorrect Correct answer

C) Something attached or related to land, such as a structure or easement.

Correct Incorrect Correct answer

D) A mortgage clause for future advances.

Correct Incorrect Correct answer

203. Question

What is the definition of APPRECIATION?

A) The decrease in value caused by depreciation.

Correct Incorrect Correct answer

B) A tax credit for homeowners.

Correct Incorrect Correct answer

C) Any increase in value caused solely by inflation.

Correct Incorrect Correct answer

D) An increased value due to improvements or removal of negative factors.

Correct Incorrect Correct answer

204. Question

What is the definition of APPRAISER?

A) A person engaged in estimating the value of property as a professional or employee.

Correct Incorrect Correct answer

B) A real estate agent listing properties.

Correct Incorrect Correct answer

C) A mortgage broker arranging loans.

Correct Incorrect Correct answer

D) A county tax official.

Correct Incorrect Correct answer

205. Question

What is the definition of APPRAISED VALUE?

A) The price a buyer agrees to pay for a property.

Correct Incorrect Correct answer

B) An estimate of property value made by a qualified expert (an appraiser).

Correct Incorrect Correct answer

C) The value assigned by the county tax assessor.

Correct Incorrect Correct answer

D) The replacement cost of improvements.

Correct Incorrect Correct answer

206. Question

What is an APPRAISAL in real estate?

A) The assessed value set by the tax assessor.

Correct Incorrect Correct answer

B) The final sales price agreed upon by buyer and seller.

Correct Incorrect Correct answer

C) An estimate of value on real property and the process of preparing such an estimate.

Correct Incorrect Correct answer

D) The replacement cost of improvements only.

Correct Incorrect Correct answer

207. Question

Which statement best describes an ANNUITY?

A) A one-time lump sum paid at loan closing.

Correct Incorrect Correct answer

B) An amount, especially of money, payable yearly until the death of the recipient.

Correct Incorrect Correct answer

C) A fee paid once to obtain a mortgage loan.

Correct Incorrect Correct answer

D) A variable payment tied only to stock market performance.

Correct Incorrect Correct answer

208. Question

Under the Truth-in-Lending Act, what does the ANNUAL PERCENTAGE RATE (APR) represent?

A) The note rate stated on the promissory note only.

Correct Incorrect Correct answer

B) The borrower’s credit score expressed as a percentage.

Correct Incorrect Correct answer

C) The lender’s cost of funds in the secondary market.

Correct Incorrect Correct answer

D) The percentage relationship of the total finance charge to the amount of the loan.

Correct Incorrect Correct answer

209. Question

What does an AMORTIZATION SCHEDULE show?

A) A table showing the principal and interest due at regular intervals and the remaining unpaid balance after each payment.

Correct Incorrect Correct answer

B) A list of all closing costs and who pays them.

Correct Incorrect Correct answer

C) The appraised value of the property each year.

Correct Incorrect Correct answer

D) A record of tax payments made on the property.

Correct Incorrect Correct answer

210. Question

What is AMORTIZATION of a loan?

A) Extending the loan term without changing the payment.

Correct Incorrect Correct answer

B) The gradual reduction of a debt by periodic payments sufficient to pay principal and interest and liquidate the debt.

Correct Incorrect Correct answer

C) Paying only interest with a lump sum principal payment at maturity.

Correct Incorrect Correct answer

D) Replacing one loan with another at a lower rate.

Correct Incorrect Correct answer

211. Question

In real estate, what is an AMENITY?

A) The legal description of a property.

Correct Incorrect Correct answer

B) The assessed value assigned by the tax assessor.

Correct Incorrect Correct answer

C) An aspect or feature of a property that enhances its value, such as parking, transportation access, or recreational facilities.

Correct Incorrect Correct answer

D) The type of zoning assigned to the property.

Correct Incorrect Correct answer

212. Question

What is the ALTA (AMERICAN LAND TITLE ASSOCIATION)?

A) A national association of title insurance companies, abstractors, and attorneys that specializes in real property law and sets standards and policy forms.

Correct Incorrect Correct answer

B) A federal agency that regulates national banks.

Correct Incorrect Correct answer

C) A state licensing board for real estate brokers.

Correct Incorrect Correct answer

D) A trade association for mortgage loan originators.

Correct Incorrect Correct answer

213. Question

What is ALL-RISK INSURANCE as described in the glossary?

A) A policy that covers only fire and extended coverage risks.

Correct Incorrect Correct answer

B) A policy that provides coverage for every conceivable risk except those specifically excluded by the policy.

Correct Incorrect Correct answer

C) A policy that covers only perils named in the policy.

Correct Incorrect Correct answer

D) A government-backed flood insurance policy.

Correct Incorrect Correct answer

214. Question

What does ALIENATION mean in real property law?

A) The government’s taking of land for public use.

Correct Incorrect Correct answer

B) The process of subdividing land into lots.

Correct Incorrect Correct answer

C) The recording of liens against real property.

Correct Incorrect Correct answer

D) The transfer of property and possession of lands or other things from one person to another.

Correct Incorrect Correct answer

215. Question

What is an AGREEMENT OF SALE?

A) A deed conveying legal title from seller to buyer.

Correct Incorrect Correct answer

B) A financing agreement between buyer and lender.

Correct Incorrect Correct answer

C) A contract in which the buyer agrees to purchase a specific property and the seller agrees to sell under stated conditions (a sales contract).

Correct Incorrect Correct answer

D) A lease granting possession without title.

Correct Incorrect Correct answer

216. Question

In real estate, who is an AGENT?

A) A person legally authorized by another to represent them or act on their behalf, such as a broker hired to sell property.

Correct Incorrect Correct answer

B) Any person who attends a closing.

Correct Incorrect Correct answer

C) Only an attorney licensed in the state.

Correct Incorrect Correct answer

D) A county tax assessor.

Correct Incorrect Correct answer

217. Question

What is the purpose of an AFTER ACQUIRED PROPERTY CLAUSE in a mortgage?

A) To limit the collateral only to property owned on the date of the loan.

Correct Incorrect Correct answer

B) To provide that property acquired by the borrower after the date of the loan automatically becomes additional security for the loan.

Correct Incorrect Correct answer

C) To allow substitution of collateral without lender consent.

Correct Incorrect Correct answer

D) To release all collateral once the loan is seasoned.

Correct Incorrect Correct answer

218. Question

Which of the following best defines an AFFIDAVIT?

A) An oral statement made under oath in court.

Correct Incorrect Correct answer

B) A written statement not requiring any oath or acknowledgment.

Correct Incorrect Correct answer

C) A promissory note secured by a mortgage.

Correct Incorrect Correct answer

D) A sworn statement in writing, made before a public official, usually a notary.

Correct Incorrect Correct answer

219. Question

What is ADVERSE POSSESSION?

A) A method of acquiring title to real property by possession for a statutory period under certain conditions.

Correct Incorrect Correct answer

B) The process of transferring title by a recorded deed.

Correct Incorrect Correct answer

C) A foreclosure action filed by a lender.

Correct Incorrect Correct answer

D) A voluntary gift of property from one owner to another.

Correct Incorrect Correct answer

220. Question

What does AD VALOREM mean in the context of property taxation?

A) A fixed flat tax charged per parcel regardless of value.

Correct Incorrect Correct answer

B) A tax based only on the original purchase price of the property.

Correct Incorrect Correct answer

C) A tax or duty based on value and levied as a percentage of that value (for example, 30 mills per dollar of property value).

Correct Incorrect Correct answer

D) A transfer tax paid only when title changes hands.

Correct Incorrect Correct answer

221. Question

Which statement best describes an ADJUSTABLE RATE MORTGAGE (ARM)?

A) A mortgage with a fixed interest rate for the entire term.

Correct Incorrect Correct answer

B) A mortgage that permits the lender to adjust its interest rate periodically based on a specified index.

Correct Incorrect Correct answer

C) A mortgage in which the interest rate can only decrease over time.

Correct Incorrect Correct answer

D) A mortgage that requires interest-only payments until maturity.

Correct Incorrect Correct answer

222. Question

What is meant by ADD-ON INTEREST in an installment loan?

A) Interest charged only on the declining balance of the loan.

Correct Incorrect Correct answer

B) Interest charged only during the final year of the loan term.

Correct Incorrect Correct answer

C) The full amount of interest calculated on the original principal for the loan term, added to principal as part of the face amount of the note.

Correct Incorrect Correct answer

D) Interest that is waived if the loan is prepaid.

Correct Incorrect Correct answer

223. Question

Which of the following is the correct definition of an ACRE?

A) 43,560 square feet; 4,840 square yards; 160 square rods.

Correct Incorrect Correct answer

B) 40,000 square feet only.

Correct Incorrect Correct answer

C) 50,000 square feet.

Correct Incorrect Correct answer

D) 10,000 square feet.

Correct Incorrect Correct answer

224. Question

In the law of contracts and descents, to ACQUIRE property means to:

A) Lease the property from another owner.

Correct Incorrect Correct answer

B) Place a lien on the property.

Correct Incorrect Correct answer

C) Appraise the property for tax purposes.

Correct Incorrect Correct answer

D) Become owner of property; to make property one’s own.

Correct Incorrect Correct answer

225. Question

Which option best describes ACCRUED INTEREST?

A) Interest paid in advance at closing.

Correct Incorrect Correct answer

B) Interest earned for the period of time that has elapsed since interest was last paid.

Correct Incorrect Correct answer

C) Interest forgiven by the lender at payoff.

Correct Incorrect Correct answer

D) Interest that will not be charged until the final year of the loan.

Correct Incorrect Correct answer

226. Question

What is an ACCIDENT AND HEALTH PREMIUM in connection with a mortgage?

A) A premium for standard homeowners insurance.

Correct Incorrect Correct answer

B) A premium for private mortgage insurance (PMI).

Correct Incorrect Correct answer

C) An insurance premium paid monthly that insures payment of the mortgage if the borrower becomes disabled.

Correct Incorrect Correct answer

D) A life insurance premium that pays off the loan at death.

Correct Incorrect Correct answer

227. Question

In real property law, what does ACCESS (EASEMENT OF) mean?

A) The right of the owner of land adjoining a road or highway to go and return from the land to the highway without obstruction.

Correct Incorrect Correct answer

B) The right to cross any neighboring property at will.

Correct Incorrect Correct answer

C) The right to park vehicles on a public street indefinitely.

Correct Incorrect Correct answer

D) The right to build a structure over a public sidewalk.

Correct Incorrect Correct answer

228. Question

What does an ACCELERATION CLAUSE in a mortgage most commonly provide?

A) The right to prepay the loan without penalty.

Correct Incorrect Correct answer

B) Automatic reduction of the interest rate after five years.

Correct Incorrect Correct answer

C) Conversion of a fixed-rate loan to an ARM.

Correct Incorrect Correct answer

D) That the entire principal becomes immediately due and payable in the event of default.

Correct Incorrect Correct answer

229. Question

Who is an ABUTTING OWNER?

A) Any owner within the same subdivision.

Correct Incorrect Correct answer

B) An owner of land which abuts or adjoins another parcel.

Correct Incorrect Correct answer

C) A tenant who occupies a neighboring property.

Correct Incorrect Correct answer

D) A lender holding a lien on adjacent property.

Correct Incorrect Correct answer

230. Question

What is an ABSTRACT OF TITLE?

A) The legal description of a parcel prepared by a surveyor.

Correct Incorrect Correct answer

B) A title insurance policy insuring against future defects.

Correct Incorrect Correct answer

C) A written history of title transactions or conditions bearing on the title to a parcel, summarizing all subsequent instruments of public record.

Correct Incorrect Correct answer

D) A summary of a borrower’s credit history.

Correct Incorrect Correct answer

231. Question

Which choice best describes ABSOLUTE TITLE?

A) Title that is exclusive to the person who has it, with no other right, interest, or claim in the same property.

Correct Incorrect Correct answer

B) Title held by two or more owners as joint tenants.

Correct Incorrect Correct answer

C) Title subject to an outstanding tax lien.

Correct Incorrect Correct answer

D) Title that is contingent on the approval of a lender.

Correct Incorrect Correct answer

232. Question

In the glossary, what does ABATEMENT refer to?

A) An increase in a property’s assessed value for tax purposes.

Correct Incorrect Correct answer

B) A permanent reduction in the loan’s interest rate.

Correct Incorrect Correct answer

C) A waiver of the loan’s prepayment penalty.

Correct Incorrect Correct answer

D) The suspension or cessation in whole or in part of a continuing charge, such as rent.

Correct Incorrect Correct answer

233. Question

Which statement best defines ABANDONMENT in real property?

A) Leaving a property vacant for more than 30 days.

Correct Incorrect Correct answer

B) Voluntary relinquishment of all right, title, claim and possession, with the intention of not reclaiming it.

Correct Incorrect Correct answer

C) Loss of property due to unpaid taxes.

Correct Incorrect Correct answer

D) Transfer of title to a lender through foreclosure.

Correct Incorrect Correct answer

234. Question

Which situation best illustrates “payment shock” as defined in the text?

A) A borrower’s payment jumps sharply when an interest-only or payment-option ARM begins amortizing, making the new amount unaffordable.

Correct Incorrect Correct answer

B) A borrower’s payment decreases after refinancing to a lower rate.

Correct Incorrect Correct answer

C) A borrower’s payment remains level for 30 years on a fixed-rate loan.

Correct Incorrect Correct answer

D) A borrower’s payment includes taxes and insurance in an escrow account.

Correct Incorrect Correct answer

235. Question

What does an “assignment of mortgage” indicate?

A) The borrower has completed paying off the mortgage in full.

Correct Incorrect Correct answer

B) The lender has modified the interest rate and term of the loan.

Correct Incorrect Correct answer

C) The mortgage has been subordinated to a new lien.

Correct Incorrect Correct answer

D) The mortgage has been transferred from the original lender or borrower to a third party.

Correct Incorrect Correct answer

236. Question

Which of the following is listed as an example of an origination service in the text?

A) Purchasing closed loans from lenders to hold in an investment portfolio.

Correct Incorrect Correct answer

B) Completing the loan application, collecting borrower documentation, and preparing the file for underwriting.

Correct Incorrect Correct answer

C) Performing yearly escrow analysis on existing loans.

Correct Incorrect Correct answer

D) Issuing property tax bills on behalf of local governments.

Correct Incorrect Correct answer

237. Question

Which description best matches “Loan Payment Collection” as discussed in the text?

A) The process of setting interest rates for newly originated loans.

Correct Incorrect Correct answer

B) The borrower’s voluntary prepayment of principal to shorten the loan term.

Correct Incorrect Correct answer

C) The process of pursuing payments of debts owed, often through collection agencies that work for a fee or percentage of the amount owed.

Correct Incorrect Correct answer

D) The lender’s internal quality control review of closed loans.

Correct Incorrect Correct answer

238. Question

What role does a mortgage investor play in the mortgage market?

A) Buying mortgage loans from lenders to free up funds for more lending.

Correct Incorrect Correct answer

B) Originating loans directly to consumers on behalf of lenders.

Correct Incorrect Correct answer

C) Performing property appraisals before loans are approved.

Correct Incorrect Correct answer

D) Collecting monthly payments on behalf of borrowers.

Correct Incorrect Correct answer

239. Question

According to the text, which statement about a mortgage lender is accurate?

A) Mortgage lenders only service loans and can never fund them.

Correct Incorrect Correct answer

B) Mortgage lenders are government agencies that insure all residential loans.

Correct Incorrect Correct answer

C) Mortgage lenders may not work with mortgage brokers under any circumstances.

Correct Incorrect Correct answer

D) Mortgage lenders issue loans and may handle application, underwriting, and funding directly, or receive applications through mortgage brokers.

Correct Incorrect Correct answer

240. Question

Which of the following best describes consumer credit as used in the text?

A) Any loan used to purchase or refinance a home.

Correct Incorrect Correct answer

B) Personal, usually unsecured debt taken on to buy everyday goods and services, such as credit cards.

Correct Incorrect Correct answer

C) Only long-term investment loans such as mortgages.

Correct Incorrect Correct answer

D) Only student loans used to pay for education.

Correct Incorrect Correct answer

241. Question

How does the SAFE Act and most state laws define a non-traditional mortgage product?

A) Only mortgages with terms longer than 30 years.

Correct Incorrect Correct answer

B) Only interest-only or balloon mortgages.

Correct Incorrect Correct answer

C) Any mortgage that requires a down payment of less than 20%.

Correct Incorrect Correct answer

D) Any mortgage product other than a 30-year fixed-rate mortgage.

Correct Incorrect Correct answer

242. Question

Which statement best describes the focus of mortgage underwriting as defined in the text?

A) Evaluating whether the borrower’s overall risk profile is acceptable by analyzing the five C’s of credit.

Correct Incorrect Correct answer

B) Determining only the property’s value without regard to the borrower.

Correct Incorrect Correct answer

C) Setting interest rates based solely on current market conditions.

Correct Incorrect Correct answer

D) Preparing closing documents after the loan is fully approved.

Correct Incorrect Correct answer

243. Question

According to the text, which items are typically included as “Prepaids” at closing?

A) Only discount points and origination fees paid to the lender.

Correct Incorrect Correct answer

B) Prepaid interest, first-year hazard or flood insurance, and escrowed portions of annual taxes and insurance.

Correct Incorrect Correct answer

C) Only government recording fees and transfer taxes.

Correct Incorrect Correct answer

D) The buyer’s down payment and seller concessions.

Correct Incorrect Correct answer

244. Question

Which scenario best illustrates a cash-out refinance?

A) The borrower refinances only to obtain a lower rate with no change in loan amount.

Correct Incorrect Correct answer

B) The borrower makes a large principal curtailment to pay the loan down faster.

Correct Incorrect Correct answer

C) The borrower refinances to shorten the term from 30 years to 15 years with the same balance.

Correct Incorrect Correct answer

D) The borrower refinances into a larger loan than needed to pay off existing liens and costs, receiving the difference in cash.

Correct Incorrect Correct answer

245. Question

What does the Average Prime Offer Rate (APOR) represent in mortgage lending?

A) The average property tax rate in a given county.

Correct Incorrect Correct answer

B) The average note rate on all subprime loans originated last year.

Correct Incorrect Correct answer

C) A survey-based estimate of APRs currently offered on prime mortgage loans for various terms.

Correct Incorrect Correct answer

D) The maximum rate a lender may charge on any consumer mortgage.

Correct Incorrect Correct answer

246. Question

What does the Annual Percentage Rate (APR) represent in a mortgage loan?

A) Only the note (interest) rate stated on the mortgage.

Correct Incorrect Correct answer

B) The property’s annual appreciation rate.

Correct Incorrect Correct answer

C) The borrower’s annual income growth rate.

Correct Incorrect Correct answer

D) The annual cost of borrowing that includes the interest rate plus certain lender-related finance charges paid at closing.

Correct Incorrect Correct answer

247. Question

Which statement about an assumable loan is most accurate according to the text?

A) Assumable loans can only be taken over without any credit qualification.

Correct Incorrect Correct answer

B) A buyer may take over the seller’s existing mortgage, but the seller remains liable unless released by the lender, and FHA/VA assumptions require credit qualification.

Correct Incorrect Correct answer

C) Assumable loans are never subject to due-on-sale clauses.

Correct Incorrect Correct answer

D) Only conventional conforming loans are assumable.

Correct Incorrect Correct answer

248. Question

Which of the following is an example of a third party provider in a mortgage transaction?

A) The mortgage lender that funds the loan.

Correct Incorrect Correct answer

B) The mortgage broker who originates the loan.

Correct Incorrect Correct answer

C) The borrower’s employer verifying income.

Correct Incorrect Correct answer

D) An independent appraiser hired to value the property.

Correct Incorrect Correct answer

249. Question

What happens in the secondary mortgage market?

A) Borrowers apply for new mortgage loans from retail banks.

Correct Incorrect Correct answer

B) Only government agencies purchase delinquent loans.

Correct Incorrect Correct answer

C) Mortgage loans and servicing rights are bought, sold, securitized, and ultimately owned by investors.

Correct Incorrect Correct answer

D) Real estate agents list homes for sale to first-time buyers.

Correct Incorrect Correct answer

250. Question

Which best describes the primary mortgage market?

A) The market where borrowers receive mortgage loans from primary lenders like banks and mortgage companies.

Correct Incorrect Correct answer

B) The market where mortgage-backed securities are traded between investors.

Correct Incorrect Correct answer

C) The market where government agencies insure or guarantee loans.

Correct Incorrect Correct answer

D) The market where only FHA and VA loans are originated.

Correct Incorrect Correct answer

251. Question

What does the term “conveyance” refer to in real estate?

A) The lender’s internal underwriting of a mortgage file.

Correct Incorrect Correct answer

B) The appraisal inspection of a property’s condition.

Correct Incorrect Correct answer

C) The process of paying off a mortgage ahead of schedule.

Correct Incorrect Correct answer

D) The act of transferring ownership of real property from one party to another using a legal instrument such as a deed.

Correct Incorrect Correct answer

252. Question

Which statement best describes subordination in mortgage lending?

A) Placing a HELOC ahead of the first mortgage in repayment priority.

Correct Incorrect Correct answer

B) Ranking home loans by order of priority so a second mortgage is wiped out if the first mortgage is foreclosed.

Correct Incorrect Correct answer

C) Removing all liens from a property automatically at payoff.

Correct Incorrect Correct answer

D) Allowing a borrower to skip payments without penalty.

Correct Incorrect Correct answer

253. Question

What is a first mortgage?

A) Any mortgage on commercial property

Correct Incorrect Correct answer

B) A home equity line of credit

Correct Incorrect Correct answer

C) A real estate loan that creates a primary lien against real property

Correct Incorrect Correct answer

D) A second lien used for down payment assistance

Correct Incorrect Correct answer

254. Question

Which lien generally has first priority against a property?

A) A mechanic’s lien recorded after construction

Correct Incorrect Correct answer

B) A first lien, such as a tax lien that takes priority over all other liens

Correct Incorrect Correct answer

C) A junior lien recorded before the first mortgage

Correct Incorrect Correct answer

D) A leasehold interest held by a tenant

Correct Incorrect Correct answer

255. Question

What did FIRREA (Financial Institutions Reform, Recovery, and Enforcement Act of 1989) accomplish in part?

A) Eliminated all federal thrift regulations

Correct Incorrect Correct answer

B) Created FHA mortgage insurance programs

Correct Incorrect Correct answer

C) Established federal flood insurance requirements

Correct Incorrect Correct answer

D) Modified federal thrift and bank regulation laws and included real estate appraisal reform

Correct Incorrect Correct answer

256. Question

What is a firm commitment in mortgage lending?

A) A lender’s agreement to make a loan to a specific borrower on a specified property

Correct Incorrect Correct answer

B) A preliminary rate quote that is not binding

Correct Incorrect Correct answer

C) An appraisal report used to value the collateral

Correct Incorrect Correct answer

D) A borrower’s promise to accept any loan terms offered

Correct Incorrect Correct answer

257. Question

Under the Uniform Commercial Code, what is the purpose of a financing statement?

A) To transfer title to real property from seller to buyer

Correct Incorrect Correct answer

B) To record a mortgage on a one-to-four family residence

Correct Incorrect Correct answer

C) To give public notice of a lender’s security interest in personal property collateral

Correct Incorrect Correct answer

D) To set the maximum interest rate allowed on a loan

Correct Incorrect Correct answer

258. Question

What does Fannie Mae’s final project acceptance indicate for a condo, PUD, or co-op project?

A) That construction has been completed on time

Correct Incorrect Correct answer

B) That the project meets all local zoning requirements

Correct Incorrect Correct answer

C) That only FHA loans may be made in the project

Correct Incorrect Correct answer

D) That the project’s physical characteristics and marketability are acceptable and loans on units may be delivered to Fannie Mae

Correct Incorrect Correct answer

259. Question

Who is considered a fiduciary in a real estate or financial transaction?

A) Any third-party vendor hired by the lender

Correct Incorrect Correct answer

B) Someone in a position of trust or confidence with respect to another person

Correct Incorrect Correct answer

C) Any party who signs the sales contract

Correct Incorrect Correct answer

D) A government regulator overseeing the transaction

Correct Incorrect Correct answer

260. Question

What does a fidelity bond protect an employer against?

A) Economic loss caused by dishonest acts of its employees

Correct Incorrect Correct answer

B) Losses from market interest rate changes

Correct Incorrect Correct answer

C) Property damage caused by natural disasters

Correct Incorrect Correct answer

D) Borrower default on mortgage loans

Correct Incorrect Correct answer

261. Question

What is fair market value?

A) Price set by seller

Correct Incorrect Correct answer

B) Tax assessor value

Correct Incorrect Correct answer

C) Price agreed upon by willing, informed buyer and seller with no compulsion

Correct Incorrect Correct answer

D) Based on replacement cost only

Correct Incorrect Correct answer

262. Question

What is external depreciation?

A) Lack of maintenance

Correct Incorrect Correct answer

B) Physical deterioration

Correct Incorrect Correct answer

C) Loss in value due to negative external influences

Correct Incorrect Correct answer

D) Outdated interior decor

Correct Incorrect Correct answer

263. Question

What does an extended coverage endorsement add?

A) Mold coverage

Correct Incorrect Correct answer

B) Flood insurance

Correct Incorrect Correct answer

C) Windstorm, hail, explosion, riot, aircraft/vehicle damage, smoke

Correct Incorrect Correct answer

D) MIP waiver

Correct Incorrect Correct answer

264. Question

What is excess yield?

A) Yield lost to servicing

Correct Incorrect Correct answer

B) Yield refunded

Correct Incorrect Correct answer

C) Net note rate exceeding required yield plus servicing fee

Correct Incorrect Correct answer

D) APR reduction

Correct Incorrect Correct answer

265. Question

What is excess margin in an ARM?

A) Regulatory margin reduction

Correct Incorrect Correct answer

B) Margin shortfall

Correct Incorrect Correct answer

C) Net mortgage margin exceeding the required margin

Correct Incorrect Correct answer

D) Note‑rate difference

Correct Incorrect Correct answer

266. Question

What is an exception in legal descriptions?

A) Interest rate change

Correct Incorrect Correct answer

B) Portion of land excluded

Correct Incorrect Correct answer

C) Closing penalty

Correct Incorrect Correct answer

D) Requirement for MI

Correct Incorrect Correct answer

267. Question

What is examination of title?

A) Buyer credit review

Correct Incorrect Correct answer

B) Lender insurance review

Correct Incorrect Correct answer

C) Review of chain of title from abstracts or records

Correct Incorrect Correct answer

D) Seller’s pre‑listing inspection

Correct Incorrect Correct answer

268. Question

What is eviction?

A) Property tax reassessment

Correct Incorrect Correct answer

B) Lender removing borrower

Correct Incorrect Correct answer

C) Landlord’s forcible removal or interference causing constructive eviction

Correct Incorrect Correct answer

D) Tenant ending lease early

Correct Incorrect Correct answer

269. Question

What does ‘et ux’ mean?

A) And children

Correct Incorrect Correct answer

B) And heirs

Correct Incorrect Correct answer

C) And husband

Correct Incorrect Correct answer

D) And wife

Correct Incorrect Correct answer

270. Question

What is an estate in real estate?

A) Inheritance trust

Correct Incorrect Correct answer

B) Temporary camping right

Correct Incorrect Correct answer

C) Subdivision map

Correct Incorrect Correct answer

D) A right or interest in the use, enjoyment, and disposition of land

Correct Incorrect Correct answer

271. Question

What is an escrow payment?

A) Extra principal

Correct Incorrect Correct answer

B) Loan officer fee

Correct Incorrect Correct answer

C) Lender servicing fee

Correct Incorrect Correct answer

D) Portion of payment held to pay taxes, insurance, and other items

Correct Incorrect Correct answer

272. Question

What is the purpose of an escrow analysis?

A) Evaluate lender returns

Correct Incorrect Correct answer

B) Ensure deposits cover taxes, insurance, and bills

Correct Incorrect Correct answer

C) Calculate loan amortization

Correct Incorrect Correct answer

D) Prepare payoff statement

Correct Incorrect Correct answer

273. Question

What is an escrow account?

A) Account for loan officer commissions

Correct Incorrect Correct answer

B) Temporary closing account

Correct Incorrect Correct answer

C) Segregated trust account where escrow funds are held

Correct Incorrect Correct answer

D) Account used for rate adjustments

Correct Incorrect Correct answer

274. Question

What is the role of escrow in a real estate transaction?

A) To negotiate contract terms

Correct Incorrect Correct answer

B) To appraise property

Correct Incorrect Correct answer

C) To underwrite the loan

Correct Incorrect Correct answer

D) To have a neutral third party handle instructions, documents, and funds

Correct Incorrect Correct answer

275. Question

When does property typically escheat to the state?

A) When the owner sells the property without recording the deed.

Correct Incorrect Correct answer

B) When the owner fails to pay property taxes for one year.

Correct Incorrect Correct answer

C) When the property is condemned for public use.

Correct Incorrect Correct answer

D) When the owner dies intestate and without heirs, causing the property to revert to the state.

Correct Incorrect Correct answer

276. Question

What does errors and omissions coverage typically insure against?

A) Losses that occur because of an error or neglect by an employee who was assigned a specific responsibility.

Correct Incorrect Correct answer

B) Physical damage to the property caused by natural disasters.

Correct Incorrect Correct answer

C) Losses caused by intentional fraud on the part of the borrower.

Correct Incorrect Correct answer

D) Any loss resulting from fluctuations in market interest rates.

Correct Incorrect Correct answer

277. Question

What is equity of redemption in the foreclosure context?

A) The lender’s right to redeem the property after foreclosure.

Correct Incorrect Correct answer

B) The mortgagor’s common law right to redeem property during foreclosure and, in some states, a statutory right after foreclosure.

Correct Incorrect Correct answer

C) The right of junior lienholders to increase their lien amounts before foreclosure.

Correct Incorrect Correct answer

D) The right of tenants to remain in the property after foreclosure.

Correct Incorrect Correct answer

278. Question

In real estate, what does a homeowner’s equity represent?

A) The total amount of principal and interest paid over the life of the loan.

Correct Incorrect Correct answer

B) The total of all closing costs paid at settlement.

Correct Incorrect Correct answer

C) The difference between the property’s fair market value and the current indebtedness against it.

Correct Incorrect Correct answer

D) The original loan amount when the mortgage was first made.

Correct Incorrect Correct answer

279. Question

What is the purpose of an environmental impact report?

A) To establish zoning classifications for undeveloped land.

Correct Incorrect Correct answer

B) To determine the maximum mortgage amount for a proposed project.

Correct Incorrect Correct answer

C) To certify that a property is free of all environmental hazards.

Correct Incorrect Correct answer

D) To report the probable effect of a development on the surrounding area, prepared to governmental guidelines.

Correct Incorrect Correct answer

280. Question

What is an endorsement in the context of negotiable instruments or insurance?

A) A verbal agreement to modify the terms of a note.

Correct Incorrect Correct answer

B) A writing on or notation added to an instrument that assigns, transfers, or changes its terms, or modifies insurance coverage.

Correct Incorrect Correct answer

C) A government guarantee of repayment on a private loan.

Correct Incorrect Correct answer

D) A court order requiring repayment of a defaulted loan.

Correct Incorrect Correct answer

281. Question

In mortgage financing, what is an end loan?

A) A short-term loan used only during construction.

Correct Incorrect Correct answer

B) A bridge loan used to purchase a new home before selling the current one.

Correct Incorrect Correct answer

C) A loan that automatically converts to a construction loan at closing.

Correct Incorrect Correct answer

D) The final or permanent mortgage loan made to a borrower, as distinguished from construction or development loans.

Correct Incorrect Correct answer

282. Question

What is an encumbrance on real property?

A) Anything that affects or limits the fee simple title, such as mortgages, leases, easements, or restrictions.

Correct Incorrect Correct answer

B) Any document that conveys full fee simple title.

Correct Incorrect Correct answer

C) Only unpaid real estate taxes on the property.

Correct Incorrect Correct answer

D) A temporary lease of personal property attached to the land.

Correct Incorrect Correct answer

283. Question

Which situation best illustrates an encroachment?

A) A recorded easement allowing a neighbor to cross the property.

Correct Incorrect Correct answer

B) A mortgage lien recorded against the property.

Correct Incorrect Correct answer

C) An improvement that intrudes illegally onto another person’s property.

Correct Incorrect Correct answer

D) A restriction in a deed limiting how the property may be used.

Correct Incorrect Correct answer

284. Question

What is eminent domain?

A) The right of a lender to seize property after a borrower defaults.

Correct Incorrect Correct answer

B) The authority of a homeowners association to enforce deed restrictions.

Correct Incorrect Correct answer

C) A private company’s power to condemn property for commercial use.

Correct Incorrect Correct answer

D) The power of government to appropriate private property for public use or for the public welfare.

Correct Incorrect Correct answer

285. Question

What is electronic imaging in the context of mortgage documentation?

A) A method of electronically signing loan documents.

Correct Incorrect Correct answer

B) A method of reproducing a facsimile of a document or photograph with a computer or other electronic device.

Correct Incorrect Correct answer

C) A process for encrypting borrower data for security purposes.

Correct Incorrect Correct answer

D) A digital platform for submitting online loan applications.

Correct Incorrect Correct answer

286. Question

In real estate, what does the term egress refer to?

A) The right to install utilities across adjoining land.

Correct Incorrect Correct answer

B) The right to occupy a dwelling unit for a specified term.

Correct Incorrect Correct answer

C) The right of a lender to foreclose on a property after default.

Correct Incorrect Correct answer

D) The right to go out from or exit a property, usually paired with ingress as access rights.

Correct Incorrect Correct answer

287. Question

What does effective gross income (personal) generally include?

A) Normal annual income including overtime that is regular or guaranteed, which may come from more than one stable source.

Correct Incorrect Correct answer

B) Only base salary from a single employer, excluding all other income sources.

Correct Incorrect Correct answer

C) Irregular income such as occasional gifts or lottery winnings.

Correct Incorrect Correct answer

D) Projected future bonuses that are not yet guaranteed.

Correct Incorrect Correct answer

288. Question

What does the effective age of a property represent in appraisal?

A) The number of years since the property was first listed for sale.

Correct Incorrect Correct answer

B) The legal date when title to the property was first recorded.

Correct Incorrect Correct answer

C) The age of the property based on its physical condition, which may differ from its chronological age.

Correct Incorrect Correct answer

D) The average remaining economic life of all properties in the neighborhood.

Correct Incorrect Correct answer

289. Question

What is the primary purpose of the Equal Credit Opportunity Act (ECOA)?

A) To regulate interest rates on consumer credit.

Correct Incorrect Correct answer

B) To require all mortgage loans to be sold on the secondary market.

Correct Incorrect Correct answer

C) To make credit equally available without discrimination on specified prohibited bases.

Correct Incorrect Correct answer

D) To require lenders to offer the same loan terms to every applicant.

Correct Incorrect Correct answer

290. Question

Which of the following best describes an easement?

A) Full ownership of another person’s land.

Correct Incorrect Correct answer

B) A right or interest in the land of another allowing a specific limited use or benefit.

Correct Incorrect Correct answer

C) A temporary lease of land for agricultural purposes.

Correct Incorrect Correct answer

D) A mortgage placed on property to secure a debt.

Correct Incorrect Correct answer

291. Question

What is the primary purpose of an earnest money deposit in a real estate transaction?

A) To pay the buyer’s appraisal and inspection fees.

Correct Incorrect Correct answer

B) To guarantee the lender’s yield on the mortgage loan.

Correct Incorrect Correct answer

C) To show that the buyer’s offer is made in good faith when the parties agree to the sale.

Correct Incorrect Correct answer

D) To pay the seller’s real estate commission in advance.

Correct Incorrect Correct answer

292. Question

In second mortgages, what is meant by a due‑on‑transfer provision?

A) A clause that forgives the loan balance when the property is transferred to an heir.

Correct Incorrect Correct answer

B) Another term for a due‑on‑sale clause, typically used in connection with junior liens.

Correct Incorrect Correct answer

C) A requirement that the borrower transfer title to the lender upon default.

Correct Incorrect Correct answer

D) A provision that requires the lender to approve any change in property use.

Correct Incorrect Correct answer

293. Question

What does a due‑on‑sale provision in a conventional mortgage permit the lender to do?

A) Reduce the loan balance when the property is sold.

Correct Incorrect Correct answer

B) Automatically extend the loan term upon sale of the property.

Correct Incorrect Correct answer

C) Call the mortgage due and payable if ownership of the property is transferred without the lender’s permission.

Correct Incorrect Correct answer

D) Convert the loan to interest‑only payments when the property is sold.

Correct Incorrect Correct answer

294. Question

What does a due‑on‑encumbrance provision in a multifamily mortgage allow the lender to do?

A) Require the borrower to refinance the mortgage every five years.

Correct Incorrect Correct answer

B) Call the mortgage due or increase the interest rate if an unauthorized subordinate lien is placed on the property.

Correct Incorrect Correct answer

C) Convert the mortgage automatically to an adjustable‑rate loan.

Correct Incorrect Correct answer

D) Reduce the interest rate if the property value increases.

Correct Incorrect Correct answer

295. Question

How is the down payment in a real estate transaction defined?

A) The total of all closing costs paid by the buyer.

Correct Incorrect Correct answer

B) The difference between the sales price of the property and the mortgage amount.

Correct Incorrect Correct answer

C) The amount of earnest money given at contract signing.

Correct Incorrect Correct answer

D) The total equity in the property after one year.

Correct Incorrect Correct answer

296. Question

In traditional property law, what does dower refer to?

A) The rights that a widower has in the property of his wife at her death.

Correct Incorrect Correct answer

B) The rights that a widow has in the property of her husband at his death.

Correct Incorrect Correct answer

C) The right of a lender to foreclose on property after default.

Correct Incorrect Correct answer

D) The rights of children to inherit property equally from their parents.

Correct Incorrect Correct answer

297. Question

What is a person’s domicile for legal purposes?

A) Any place where the person owns property.

Correct Incorrect Correct answer

B) A temporary vacation residence in another state.

Correct Incorrect Correct answer

C) A fixed and permanent home to which a person intends to return.

Correct Incorrect Correct answer

D) The address listed on the person’s most recent tax return.

Correct Incorrect Correct answer

298. Question

What is the role of a document custodian in mortgage lending?

A) To originate new mortgage loans on behalf of investors.

Correct Incorrect Correct answer

B) To appraise properties securing mortgage loans.

Correct Incorrect Correct answer

C) To maintain custody of certain mortgage documents on behalf of the lender or investor.

Correct Incorrect Correct answer

D) To service delinquent mortgage loans for government agencies.

Correct Incorrect Correct answer

299. Question

What is disintermediation in the context of real estate finance?

A) The process of consolidating multiple mortgages into a single loan.

Correct Incorrect Correct answer

B) The flow of funds out of savings institutions into higher-yield short‑term investments, reducing funds available for long‑term real estate financing.

Correct Incorrect Correct answer

C) The sale of mortgage loans from one lender to another in the secondary market.

Correct Incorrect Correct answer

D) The refinancing of a long‑term mortgage into a shorter‑term mortgage.

Correct Incorrect Correct answer

300. Question

What does a discount on a mortgage note generally accomplish for the lender or investor?

A) It reduces the borrower’s obligation to repay the note’s full face value.

Correct Incorrect Correct answer

B) It adjusts the yield upward by selling or purchasing the note for less than its face value.

Correct Incorrect Correct answer

C) It converts a fixed-rate note into an adjustable-rate note.

Correct Incorrect Correct answer

D) It eliminates the need to charge any contractual interest rate on the note.

Correct Incorrect Correct answer

301. Question

In a real estate transaction, what are disbursements?

A) Payments of money made on a previously agreed-upon basis.

Correct Incorrect Correct answer

B) Only the borrower’s cash brought to closing.

Correct Incorrect Correct answer

C) Only commissions paid to real estate brokers.

Correct Incorrect Correct answer

D) Refunds of overpaid escrow funds to the borrower.

Correct Incorrect Correct answer

302. Question

What does a direct surety bond protect against?

A) Only physical damage to the collateral property.

Correct Incorrect Correct answer

B) Losses caused by the principal’s negligence, lack of ability, or dishonest act.

Correct Incorrect Correct answer

C) Only losses due to changes in market interest rates.

Correct Incorrect Correct answer

D) Only the lender’s legal costs in a foreclosure action.

Correct Incorrect Correct answer

303. Question

Who is a designated appraiser in mortgage lending?

A) Any real estate agent who provides a price opinion.

Correct Incorrect Correct answer

B) A county tax assessor who sets property tax values.

Correct Incorrect Correct answer

C) Someone who determines the value of property and whose expertise is recognized and licensed by a professional association, with appraisals accepted by many lenders.

Correct Incorrect Correct answer

D) A loan officer who estimates property value during application.

Correct Incorrect Correct answer

304. Question

In real estate, what is depreciation?

A) An increase in the value of an asset due to market demand.

Correct Incorrect Correct answer

B) The cost of improvements added to a property.

Correct Incorrect Correct answer

C) The total amount of principal repaid over the life of a loan.

Correct Incorrect Correct answer

D) The decline in value of an asset due to physical deterioration, functional obsolescence, or economic obsolescence.

Correct Incorrect Correct answer

305. Question

What does Demotech, Inc. primarily do in the context of real estate finance?

A) It establishes ratings for hazard insurance carriers by evaluating their assets and liabilities.

Correct Incorrect Correct answer

B) It appraises residential properties for mortgage lenders.

Correct Incorrect Correct answer

C) It insures mortgage loans against borrower default.

Correct Incorrect Correct answer

D) It issues federal regulations for mortgage loan originators.

Correct Incorrect Correct answer

306. Question

What is a demand note?

A) A note that is only due on a fixed maturity date.

Correct Incorrect Correct answer

B) A note that is due whenever the holder demands payment.

Correct Incorrect Correct answer

C) A note that cannot be prepaid under any circumstances.

Correct Incorrect Correct answer

D) A note that requires no payments until the property is sold.

Correct Incorrect Correct answer

307. Question

What does delivery in escrow involve?

A) The immediate delivery of a deed directly from seller to buyer.

Correct Incorrect Correct answer

B) The unconditional delivery of funds to the seller at contract signing.

Correct Incorrect Correct answer

C) The delivery of loan documents directly to the secondary market.

Correct Incorrect Correct answer

D) A conditional delivery of something to a third person to be held until a specified event occurs or an act is performed.

Correct Incorrect Correct answer

308. Question

When is a mortgage typically considered delinquent?

A) When the borrower applies to refinance the loan.

Correct Incorrect Correct answer

B) When the borrower pays the mortgage ahead of schedule.

Correct Incorrect Correct answer

C) When a required mortgage payment is past due under the terms of the note.

Correct Incorrect Correct answer

D) When the borrower changes homeowners insurance companies.

Correct Incorrect Correct answer

309. Question

What is a deficiency judgment?

A) A court order to pay the balance owed on a loan when the proceeds from the sale of the security are insufficient to pay off the loan.

Correct Incorrect Correct answer

B) A court order that cancels all remaining mortgage obligations.

Correct Incorrect Correct answer

C) A judgment that automatically clears all liens on a property.

Correct Incorrect Correct answer

D) An administrative penalty for paying off a mortgage early.

Correct Incorrect Correct answer

310. Question

What are deferred payments in a financing arrangement?

A) Payments that must be made weekly instead of monthly.

Correct Incorrect Correct answer

B) Payments that are scheduled to begin at a future time rather than immediately.

Correct Incorrect Correct answer

C) Payments that are automatically waived by the lender after the first year.

Correct Incorrect Correct answer

D) Payments that can never be changed once the loan closes.

Correct Incorrect Correct answer

311. Question

With respect to an adjustable-rate mortgage, what is deferred interest?

A) Interest that is forgiven if the borrower makes a certain number of on-time payments.

Correct Incorrect Correct answer

B) Interest that is paid only as a lump sum at closing.

Correct Incorrect Correct answer

C) Interest that is not covered by the monthly payment and is added to the unpaid principal balance for later years.

Correct Incorrect Correct answer

D) Interest that remains fixed for the life of the loan.

Correct Incorrect Correct answer

312. Question

In mortgage lending, what does the term default generally mean?

A) The automatic renewal of a mortgage at maturity.

Correct Incorrect Correct answer

B) The voluntary prepayment of the mortgage balance.

Correct Incorrect Correct answer

C) The assignment of the mortgage to a new lender.

Correct Incorrect Correct answer

D) A breach or nonperformance of the terms of a note or the covenants of a mortgage.

Correct Incorrect Correct answer

313. Question

What is a deed restriction?

A) A limitation placed on a deed that restricts or limits the use of the real property.

Correct Incorrect Correct answer

B) A requirement that a deed must be recorded within a certain number of days after closing.

Correct Incorrect Correct answer

C) A restriction on which lender may finance a particular property.

Correct Incorrect Correct answer

D) A limitation on the maximum loan amount that may be placed on a property.

Correct Incorrect Correct answer

314. Question

In a mortgage transaction, what is a deed of trust primarily used for?

A) A document that records only the sales price of a property.

Correct Incorrect Correct answer

B) A type of security instrument that conveys title in trust to a third party as collateral for a debt, with power of sale in the event of default.

Correct Incorrect Correct answer

C) A document that transfers personal property from one party to another.

Correct Incorrect Correct answer

D) A nonbinding letter describing the parties’ intent to buy or sell.

Correct Incorrect Correct answer

315. Question

What is a DEED-IN-LIEU?

A) A deed used only for new construction properties.

Correct Incorrect Correct answer

B) A deed used to add a co-borrower to the title of the property.

Correct Incorrect Correct answer

C) A deed that transfers title from seller to buyer at a standard closing.

Correct Incorrect Correct answer

D) A deed given by a mortgagor to the mortgagee to satisfy a debt and avoid foreclosure; also called a voluntary conveyance.

Correct Incorrect Correct answer

316. Question

What is a DEED?

A) A promissory note containing the borrower’s promise to repay a debt.

Correct Incorrect Correct answer

B) A written document by which the ownership of land is transferred from one party to another.

Correct Incorrect Correct answer

C) A lease agreement that grants a tenant temporary possession of the property.

Correct Incorrect Correct answer

D) An appraisal report estimating the market value of the property.

Correct Incorrect Correct answer

317. Question

DEBT-TO-INCOME RATIOS are used to:

A) Appraise the current market value of the subject property.

Correct Incorrect Correct answer

B) Determine whether the title to the property is clear.

Correct Incorrect Correct answer

C) Determine whether a borrower can qualify for a mortgage by comparing monthly housing expense and total obligations to income.

Correct Incorrect Correct answer

D) Set the property tax rate for the borrower’s neighborhood.

Correct Incorrect Correct answer

318. Question

What does DEBT SERVICE refer to?

A) The periodic payment of principal and interest on mortgage loans.

Correct Incorrect Correct answer

B) The lender’s monthly servicing fee for managing the loan.

Correct Incorrect Correct answer

C) The annual property tax assessment on the mortgaged property.

Correct Incorrect Correct answer

D) The borrower’s mortgage insurance premium payments.

Correct Incorrect Correct answer

319. Question

In mortgage finance, what is DEBT?

A) The equity remaining in the property after closing costs are paid.

Correct Incorrect Correct answer

B) The appraised value of the property minus the loan amount.

Correct Incorrect Correct answer

C) Only loans that are secured by real estate as collateral.

Correct Incorrect Correct answer

D) Borrowed money, the repayment of which may be either secured or unsecured, with various possible repayment schedules.

Correct Incorrect Correct answer

320. Question

What is a DEBENTURE?

A) A mortgage loan that is fully secured by real property.

Correct Incorrect Correct answer

B) A negotiable check commonly used to pay closing costs.

Correct Incorrect Correct answer

C) An unsecured debt instrument backed only by the general credit standing and earning capacity of the issuer or insurer.

Correct Incorrect Correct answer

D) A deed that conveys title to real property from grantor to grantee.

Correct Incorrect Correct answer

321. Question

Which of the following best describes CUSTODY DOCUMENTS in mortgage servicing?

A) The borrower’s pay stubs, bank statements, and tax returns.

Correct Incorrect Correct answer

B) The original mortgage note, an original unrecorded assignment (or copy of the recorded assignment) to the investor, and, when applicable, the original mortgage insurance or loan guaranty certificate and any modification agreement.

Correct Incorrect Correct answer

C) Only the appraisal and inspection reports for the property.

Correct Incorrect Correct answer

D) The Loan Estimate and Closing Disclosure forms from closing.

Correct Incorrect Correct answer

322. Question

What is the purpose of a CREDIT REPORT?

A) To provide a prospective lender with a report on a prospective borrower’s credit standing to help determine creditworthiness.

Correct Incorrect Correct answer

B) To establish the property’s assessed value for tax purposes.

Correct Incorrect Correct answer

C) To verify only the borrower’s employment status.

Correct Incorrect Correct answer

D) To disclose any defects in the title to the property.

Correct Incorrect Correct answer

323. Question

What does a borrower’s CREDIT RATING primarily evaluate?

A) The current market value of the borrower’s home.

Correct Incorrect Correct answer

B) The size of the borrower’s down payment on the property.

Correct Incorrect Correct answer

C) The borrower’s ability to repay a loan based on current financial situation and past debt-repayment performance, including any defaults and delinquent payments.

Correct Incorrect Correct answer

D) The total amount of interest the borrower will pay over the life of the loan.

Correct Incorrect Correct answer

324. Question

What is CREDIT LIFE INSURANCE designed to do?

A) Protect the lender against property damage to the collateral.

Correct Incorrect Correct answer

B) Cover the borrower’s medical expenses if they become ill.

Correct Incorrect Correct answer

C) Reimburse the lender for foreclosure and legal costs.

Correct Incorrect Correct answer

D) Pay off the mortgage debt if the mortgagor dies while the policy is in force.

Correct Incorrect Correct answer

325. Question

In mortgage banking, what does the COUPON RATE describe?

A) The discount points charged to the borrower at closing.

Correct Incorrect Correct answer

B) The contract interest rate stated on the face of the note or bond.

Correct Incorrect Correct answer

C) The annual percentage rate (APR) including all finance charges.

Correct Incorrect Correct answer

D) The servicing fee retained by the lender on each payment.

Correct Incorrect Correct answer

326. Question

What are COVENANTS OF TITLE?

A) Promises by a borrower to repay the mortgage debt.

Correct Incorrect Correct answer

B) Lease provisions that govern tenant responsibilities.

Correct Incorrect Correct answer

C) Guarantees made by a grantor when real property is conveyed by a warranty deed.

Correct Incorrect Correct answer

D) Conditions in a mortgage note regarding prepayment penalties.

Correct Incorrect Correct answer

327. Question

What is a COVENANT in real estate terminology?

A) A promise in writing under seal, often used as a substitute for the verb 'contract.'

Correct Incorrect Correct answer

B) An informal oral agreement between a buyer and seller.

Correct Incorrect Correct answer

C) A government zoning restriction imposed on the property.

Correct Incorrect Correct answer

D) A recorded easement granted to a utility company.

Correct Incorrect Correct answer

328. Question

In a COST-PLUS CONTRACT for construction, how is the contract price determined?

A) As a fixed lump sum, regardless of the actual cost of construction.

Correct Incorrect Correct answer

B) Only on the basis of material costs; labor is not included.

Correct Incorrect Correct answer

C) As the appraised value of the property plus the builder’s profit.

Correct Incorrect Correct answer

D) As the actual cost of the construction plus a profit allowance to the builder, instead of a fixed price.

Correct Incorrect Correct answer

329. Question

For certain ARM plans, what does the Cost of Funds Index (COFI) represent?

A) The national average interest rate on 30-year fixed-rate mortgages.

Correct Incorrect Correct answer

B) The weighted-average cost of savings, borrowings, and advances of the 11th District members of the Federal Home Loan Bank of San Francisco.

Correct Incorrect Correct answer

C) The prime rate set by major commercial banks in the 11th District.

Correct Incorrect Correct answer

D) The average yield on 10-year U.S. Treasury notes.

Correct Incorrect Correct answer

330. Question

What is the COST APPROACH TO VALUE in appraisal?

A) Valuing property based solely on rental income.

Correct Incorrect Correct answer

B) Estimating value based on the cost to produce a substitute property with the same use.

Correct Incorrect Correct answer

C) Determining value using comparable sales only.

Correct Incorrect Correct answer

D) Using projected future cash flows to determine present value.

Correct Incorrect Correct answer

331. Question

Who is a CO‑SIGNER in a mortgage transaction?

A) A co‑borrower with equal title rights.

Correct Incorrect Correct answer

B) Someone who provides a gift for down payment.

Correct Incorrect Correct answer

C) A broker who represents both parties.

Correct Incorrect Correct answer

D) A person who is equally responsible for the debt but has no ownership interest in the property.

Correct Incorrect Correct answer

332. Question

What is CORPOREAL PROPERTY?

A) The land and all physical items affixed to it.

Correct Incorrect Correct answer

B) Intangible rights such as easements.

Correct Incorrect Correct answer

C) Personal property not attached to land.

Correct Incorrect Correct answer

D) Contract rights transferred between parties.

Correct Incorrect Correct answer

333. Question

What is a CORPORATE RELOCATION MORTGAGE?

A) Any mortgage offered by a corporation.

Correct Incorrect Correct answer

B) A commercial mortgage secured by business equipment.

Correct Incorrect Correct answer

C) A mortgage designed to assist an employee’s transfer to a new business location under a structured program.

Correct Incorrect Correct answer

D) An interest‑only loan used during relocation only.

Correct Incorrect Correct answer

334. Question

What is CORPORATE RELOCATION?

A) A tax credit for corporations expanding their business.

Correct Incorrect Correct answer

B) An employer‑arranged move of employees or operations to another area.

Correct Incorrect Correct answer

C) A merger between two corporations.

Correct Incorrect Correct answer

D) A federal program providing grants to relocating businesses.

Correct Incorrect Correct answer

335. Question

What is a COOPERATIVE PROJECT?

A) A condo development with individually deeded units.

Correct Incorrect Correct answer

B) A commercial project leased to multiple tenants.

Correct Incorrect Correct answer

C) A trust that holds land for public parks.

Correct Incorrect Correct answer

D) A building where a corporation holds title and sells shares tied to proprietary leases for unit occupancy.

Correct Incorrect Correct answer

336. Question

What are COOPERATIVE MORTGAGES?

A) Mortgages related to cooperative projects, usually covering the entire multifamily property.

Correct Incorrect Correct answer

B) Only individual unit loans in condo buildings.

Correct Incorrect Correct answer

C) Mortgages used exclusively for corporate relocation.

Correct Incorrect Correct answer

D) A type of construction financing.

Correct Incorrect Correct answer

337. Question

What is a COOPERATIVE CORPORATION?

A) A developer that builds multifamily rental units.

Correct Incorrect Correct answer

B) A corporation that manages condo HOAs.

Correct Incorrect Correct answer

C) The business entity that holds title to a cooperative project and grants occupancy via proprietary leases.

Correct Incorrect Correct answer

D) A mortgage lender specializing in co-op loans.

Correct Incorrect Correct answer

338. Question

What is a COOPERATIVE in real estate?

A) A form of ownership where a corporation holds title and shareholders receive occupancy rights through proprietary leases.

Correct Incorrect Correct answer

B) A condo building with individually deeded units.

Correct Incorrect Correct answer

C) A single‑family residence owned in fee simple.

Correct Incorrect Correct answer

D) A partnership arrangement for vacation rentals.

Correct Incorrect Correct answer

339. Question

What does it mean to CONVEY real property?

A) To lease property for a short term.

Correct Incorrect Correct answer

B) To transfer title of real property to another party.

Correct Incorrect Correct answer

C) To record a deed at the courthouse.

Correct Incorrect Correct answer

D) To appraise the value of a property.

Correct Incorrect Correct answer

340. Question

What is a CONVERTIBLE ARM?

A) An ARM that adjusts only once during the loan term.

Correct Incorrect Correct answer

B) A fixed‑rate mortgage that converts into an ARM.

Correct Incorrect Correct answer

C) An ARM that cannot change rates for the first 10 years.

Correct Incorrect Correct answer

D) An ARM with an option for the borrower to convert it to a fixed‑rate mortgage within a set time frame.

Correct Incorrect Correct answer

341. Question

What is a CONVENTIONAL LOAN?

A) A loan guaranteed by the Department of Veterans Affairs.

Correct Incorrect Correct answer

B) A loan insured by the Federal Housing Administration.

Correct Incorrect Correct answer

C) A loan not insured by FHA and not guaranteed by VA.

Correct Incorrect Correct answer

D) A loan that converts automatically to an ARM.

Correct Incorrect Correct answer

342. Question

What is a CONTRACT?

A) An agreement between parties to do or not do a lawful act.

Correct Incorrect Correct answer

B) A verbal promise that is not legally enforceable.

Correct Incorrect Correct answer

C) A document used only in commercial transactions.

Correct Incorrect Correct answer

D) A non‑binding agreement that cannot be enforced.

Correct Incorrect Correct answer

343. Question

What is a CONTINGENCY in a contract?

A) A mandatory fee required to execute a contract.

Correct Incorrect Correct answer

B) A stated event that must occur before a contract becomes binding.

Correct Incorrect Correct answer

C) A penalty for canceling a contract early.

Correct Incorrect Correct answer

D) A clause that guarantees financing regardless of borrower qualifications.

Correct Incorrect Correct answer

344. Question

What is a CONSUMER REPORTING AGENCY (or bureau)?

A) A government agency that sets maximum interest rates on loans.

Correct Incorrect Correct answer

B) An organization that prepares reports on an individual’s credit and public records history for use by credit grantors.

Correct Incorrect Correct answer

C) Any lender that reports loan payments to the IRS.

Correct Incorrect Correct answer

D) A company that services mortgage loans on behalf of investors.

Correct Incorrect Correct answer

345. Question

What is a CONSTRUCTION LOAN?

A) A long-term permanent loan on a completed property.

Correct Incorrect Correct answer

B) A loan used only for purchasing vacant land.

Correct Incorrect Correct answer

C) A revolving line of credit for home improvements after completion.

Correct Incorrect Correct answer

D) A short-term interim loan to finance construction costs, with funds disbursed as work progresses.

Correct Incorrect Correct answer

346. Question

In a condominium project, what are CONSTITUENT DOCUMENTS?

A) The legal documents of a condominium, including the declaration, legal map, association bylaws, and articles of incorporation.

Correct Incorrect Correct answer

B) The individual sales contracts between buyers and sellers.

Correct Incorrect Correct answer

C) The appraisals and inspections for each unit.

Correct Incorrect Correct answer

D) The marketing brochures used to sell units.

Correct Incorrect Correct answer

347. Question

In contract law, what is CONSIDERATION?

A) The legal description attached to the contract.

Correct Incorrect Correct answer

B) The earnest money deposit only.

Correct Incorrect Correct answer

C) The legal right, promise, or thing of value exchanged for the act or promise of another in a contract.

Correct Incorrect Correct answer

D) The attorney’s fee for drafting the agreement.

Correct Incorrect Correct answer

348. Question

Which feature best describes a CONDOMINIUM HOTEL (or “condotel”)?

A) A condo project where all units are owner-occupied with no rentals allowed.

Correct Incorrect Correct answer

B) A condo project operated as a commercial hotel, with services such as rental desks and daily cleaning, while units are individually owned.

Correct Incorrect Correct answer

C) A hotel owned and operated only by a single corporate entity.

Correct Incorrect Correct answer

D) Any condominium located in a resort area.

Correct Incorrect Correct answer

349. Question

What is a CONDOMINIUM CONVERSION?

A) Constructing a new condominium building from the ground up.

Correct Incorrect Correct answer

B) Changing an office building into industrial space.

Correct Incorrect Correct answer

C) Rezoning agricultural land for residential use.

Correct Incorrect Correct answer

D) Changing the ownership of an existing (usually rental) building to the condominium form of ownership.

Correct Incorrect Correct answer

350. Question

Which choice best defines a CONDOMINIUM?

A) Ownership in a specific unit plus a proportionate interest in the project’s common areas.

Correct Incorrect Correct answer

B) A long-term lease of a unit with no ownership interest.

Correct Incorrect Correct answer

C) Ownership of the land only, not the improvements.

Correct Incorrect Correct answer

D) A time-share interest limited to certain weeks of the year.

Correct Incorrect Correct answer

351. Question

For Fannie Mae, what is CONDITIONAL PROJECT ACCEPTANCE?

A) Final unconditional approval of a project by Fannie Mae.

Correct Incorrect Correct answer

B) A construction permit issued by the local municipality.

Correct Incorrect Correct answer

C) The first stage of Fannie Mae’s acceptance of a condo, PUD, or co-op project, stating conditions required for final acceptance.

Correct Incorrect Correct answer

D) An HOA’s approval for a buyer to purchase a unit.

Correct Incorrect Correct answer

352. Question

What is a CONDITIONAL COMMITMENT, most often used with FHA loans?

A) A loan approval that is always transferable to any property.

Correct Incorrect Correct answer

B) A commitment on a specific property for a definite loan amount and terms for a future unknown purchaser of satisfactory credit.

Correct Incorrect Correct answer

C) A temporary rate lock with no property identified.

Correct Incorrect Correct answer

D) A seller’s written promise to carry back financing.

Correct Incorrect Correct answer

353. Question

What is CONDEMNATION in real estate?

A) A court order requiring repairs to unsafe property.

Correct Incorrect Correct answer

B) A city’s refusal to issue a building permit.

Correct Incorrect Correct answer

C) The voluntary sale of land for public purposes.

Correct Incorrect Correct answer

D) The taking of private property for public use without the owner’s consent, upon payment of just compensation.

Correct Incorrect Correct answer

354. Question

In the appraisal process, what are COMPARABLES (or “comps”)?

A) Recently sold properties similar in size, location, and amenities to the subject, used to estimate its fair market value.

Correct Incorrect Correct answer

B) Only unsold listings in the neighborhood.

Correct Incorrect Correct answer

C) Any properties appraised by the same appraiser.

Correct Incorrect Correct answer

D) Only distressed sales in the area.

Correct Incorrect Correct answer

355. Question

In a real estate development, what are COMMON AREAS?

A) Individually deeded private yards behind each unit.

Correct Incorrect Correct answer

B) Only the lobby and interior hallways of a building.

Correct Incorrect Correct answer

C) Land or improvements, such as parking lots and parks, for the benefit and use of all tenants and owners in a development.

Correct Incorrect Correct answer

D) Any area reserved exclusively for commercial tenants.

Correct Incorrect Correct answer

356. Question

In a condominium or PUD project, what are COMMON AREA ASSESSMENTS?

A) Individual property tax bills for each unit.

Correct Incorrect Correct answer

B) Levies against unit owners to provide capital for association expenses and upkeep of the common areas.

Correct Incorrect Correct answer

C) Optional contributions to a neighborhood improvement fund.

Correct Incorrect Correct answer

D) Charges paid only by commercial tenants in the project.

Correct Incorrect Correct answer

357. Question

What is a COMMITMENT FEE?

A) A penalty for early payoff of the loan.

Correct Incorrect Correct answer

B) The fee paid to record the mortgage in public records.

Correct Incorrect Correct answer

C) The broker’s fee for originating the loan.

Correct Incorrect Correct answer

D) A fee paid to a potential lender for the promise to lend money at a specified time in the future.

Correct Incorrect Correct answer

358. Question

In mortgage lending, what is a COMMITMENT?

A) An agreement between lender and borrower to lend money at a future date subject to stated conditions.

Correct Incorrect Correct answer

B) A notice that a loan application has been denied.

Correct Incorrect Correct answer

C) A document transferring title from seller to buyer.

Correct Incorrect Correct answer

D) A request for verification of deposit.

Correct Incorrect Correct answer

359. Question

What is a COMMISSION in a real estate transaction?

A) The fee charged by the lender to underwrite the loan.

Correct Incorrect Correct answer

B) The annual property tax due on the home.

Correct Incorrect Correct answer

C) The amount paid to a broker for services rendered, usually a percentage of the sale price.

Correct Incorrect Correct answer

D) The buyer’s earnest money deposit.

Correct Incorrect Correct answer

360. Question

In a condominium or co‑operative project, what is COMMERCIAL SPACE?

A) Storage space reserved for unit owners only.

Correct Incorrect Correct answer

B) Space used to produce income through leases for commercial or business use.

Correct Incorrect Correct answer

C) Common hallways and lobbies shared by all residents.

Correct Incorrect Correct answer

D) Recreational amenities such as pools and gyms.

Correct Incorrect Correct answer

361. Question

Which statement best defines COMMERCIAL PROPERTY?

A) Property used exclusively for agricultural purposes.

Correct Incorrect Correct answer

B) Owner-occupied single-family residences.

Correct Incorrect Correct answer

C) Only large regional shopping centers.

Correct Incorrect Correct answer

D) Income property, typically zoned for business use, including property held for rental to one or more tenants.

Correct Incorrect Correct answer

362. Question

What is a COMMERCIAL LOAN in real estate finance?

A) A mortgage loan on property that produces income.

Correct Incorrect Correct answer

B) Any loan made to an individual for personal use.

Correct Incorrect Correct answer

C) A home equity line of credit.

Correct Incorrect Correct answer

D) A construction loan on a single-family residence only.

Correct Incorrect Correct answer

363. Question

Which functions are typically performed by a COMMERCIAL BANK?

A) Selling only long-term insurance products.

Correct Incorrect Correct answer

B) Making loans, maintaining checking accounts, receiving time deposits, and discounting negotiable instruments.

Correct Incorrect Correct answer

C) Regulating other financial institutions.

Correct Incorrect Correct answer

D) Appraising real estate for mortgage underwriting.

Correct Incorrect Correct answer

364. Question

In a mortgage transaction, what is COLLATERAL?

A) The borrower’s credit history.

Correct Incorrect Correct answer

B) The lender’s funds used to make the loan.

Correct Incorrect Correct answer

C) The commission paid to the real estate broker.

Correct Incorrect Correct answer

D) Property pledged as security for a debt, such as real estate securing a mortgage.

Correct Incorrect Correct answer

365. Question

What is CO-INSURANCE in an insurance policy?

A) Sharing the risk of a policy by more than one insurer, each liable for a portion of the loss.

Correct Incorrect Correct answer

B) Requiring the borrower to pay two deductibles.

Correct Incorrect Correct answer

C) Insurance that covers both real and personal property.

Correct Incorrect Correct answer

D) A reinsurance treaty between two carriers.

Correct Incorrect Correct answer

366. Question

Which statement best describes a CO-BORROWER (CO-MORTGAGOR)?

A) A person who guarantees the loan but has no ownership interest.

Correct Incorrect Correct answer

B) A non-occupant co-signer with no repayment responsibility.

Correct Incorrect Correct answer

C) A party equally responsible for repayment who also has an interest in the property’s title.

Correct Incorrect Correct answer

D) A spouse whose income is not used to qualify.

Correct Incorrect Correct answer

367. Question

What is a CLOUD ON TITLE?

A) A temporary suspension of property taxes.

Correct Incorrect Correct answer

B) A condition revealed by title search that adversely affects title and often requires a quitclaim, release, or court action to remove.

Correct Incorrect Correct answer

C) A weather-related hazard disclosure on the property.

Correct Incorrect Correct answer

D) A standard easement for utilities.

Correct Incorrect Correct answer

368. Question

What is the purpose of a CLOSING STATEMENT?

A) To record the listing terms between seller and broker.

Correct Incorrect Correct answer

B) To set the property’s assessed tax value.

Correct Incorrect Correct answer

C) To request payoff figures from the seller’s lender.

Correct Incorrect Correct answer

D) To provide a detailed account of all funds received and paid at closing, including escrow deposits.

Correct Incorrect Correct answer

369. Question

What is the CLOSING DATE in a real estate contract?

A) The contractually agreed date for transferring title.

Correct Incorrect Correct answer

B) The date the purchase agreement is first signed.

Correct Incorrect Correct answer

C) The date the lender issues final loan approval.

Correct Incorrect Correct answer

D) The date the appraisal report is completed.

Correct Incorrect Correct answer

370. Question

Which of the following best describes CLOSING COSTS?

A) The down payment made by the buyer at settlement.

Correct Incorrect Correct answer

B) Only the lender’s origination fee on a new loan.

Correct Incorrect Correct answer

C) Expenses incidental to a real estate sale, such as loan, title, and appraisal fees.

Correct Incorrect Correct answer

D) The seller’s net proceeds after the transaction.

Correct Incorrect Correct answer

371. Question

What does CLOSING mean in a real estate transaction?

A) The date the listing agreement is signed.

Correct Incorrect Correct answer

B) The buyer’s loan application date.

Correct Incorrect Correct answer

C) The date the appraisal is completed.

Correct Incorrect Correct answer

D) The consummation of the real estate transaction when the deed is delivered, documents are signed, and funds are disbursed.

Correct Incorrect Correct answer

372. Question

Which choice best defines CLEAR TITLE?

A) Title subject only to a first mortgage.

Correct Incorrect Correct answer

B) Good, marketable title that is free of encumbrance, obstruction, burden, or limitation.

Correct Incorrect Correct answer

C) Title that cannot be conveyed to another party.

Correct Incorrect Correct answer

D) Title that includes at least one undisclosed lien.

Correct Incorrect Correct answer

373. Question

What is a CHATTEL MORTGAGE?

A) A mortgage secured by a one‑to‑four family dwelling.

Correct Incorrect Correct answer

B) A mortgage used only for vacant land.

Correct Incorrect Correct answer

C) A lien or security interest on personal property rather than real property.

Correct Incorrect Correct answer

D) A type of junior lien used in second mortgages.

Correct Incorrect Correct answer

374. Question

What is meant by the CHAIN OF TITLE for a parcel of real property?

A) The history of all documents transferring title to a parcel from the earliest to the most recent.

Correct Incorrect Correct answer

B) The list of all liens currently recorded against a property.

Correct Incorrect Correct answer

C) The order in which multiple offers are presented to a seller.

Correct Incorrect Correct answer

D) The record of all property tax payments.

Correct Incorrect Correct answer

375. Question

What is a CERTIFICATE OF TITLE?

A) The original deed conveying title to the first owner.

Correct Incorrect Correct answer

B) A title insurance policy issued to the lender.

Correct Incorrect Correct answer

C) A county tax statement for the current year.

Correct Incorrect Correct answer

D) A statement from a title company or attorney that title is legally vested in the present owner.

Correct Incorrect Correct answer

376. Question

In a VA loan, what is the CERTIFICATE OF REASONABLE VALUE (CRV)?

A) A certificate confirming that property taxes are current.

Correct Incorrect Correct answer

B) A VA‑issued document that establishes the maximum value and loan amount for a VA‑guaranteed mortgage.

Correct Incorrect Correct answer

C) A letter of intent from the veteran to occupy the property.

Correct Incorrect Correct answer

D) A lender’s appraisal review report.

Correct Incorrect Correct answer

377. Question

What is a CERTIFICATE OF OCCUPANCY?

A) The deed conveying title to a new owner.

Correct Incorrect Correct answer

B) A certificate required only for commercial properties.

Correct Incorrect Correct answer

C) Written authorization from a local municipality allowing a completed structure to be occupied.

Correct Incorrect Correct answer

D) A document showing all permits have been paid.

Correct Incorrect Correct answer

378. Question

For a VA loan, what is a CERTIFICATE OF ELIGIBILITY?

A) A certificate from the VA stating that a veteran is eligible for a VA‑insured or guaranteed loan.

Correct Incorrect Correct answer

B) A document showing that the property meets VA minimum property standards.

Correct Incorrect Correct answer

C) A lender’s commitment letter to fund the loan.

Correct Incorrect Correct answer

D) A DD‑214 form verifying military discharge status only.

Correct Incorrect Correct answer

379. Question

What does the CERTIFICATE OF DEPOSIT INDEX represent for certain ARM plans?

A) The prime rate charged by banks on credit cards.

Correct Incorrect Correct answer

B) The federal funds rate set by the Federal Reserve.

Correct Incorrect Correct answer

C) The average yield on 30‑year Treasury bonds.

Correct Incorrect Correct answer

D) The weekly average of secondary market interest rates on 6‑month negotiable certificates of deposit.

Correct Incorrect Correct answer

380. Question

What is a CERTIFICATE OF CLAIM in connection with an insured mortgage?

A) A document that transfers title from borrower to lender.

Correct Incorrect Correct answer

B) A contingent promise to reimburse an insured mortgagee for certain foreclosure costs if sale proceeds are sufficient.

Correct Incorrect Correct answer

C) A certificate showing the loan is paid in full.

Correct Incorrect Correct answer

D) A statement of the borrower’s outstanding tax obligations.

Correct Incorrect Correct answer

381. Question

Which situation best describes a CASH-OUT REFINANCE?

A) Refinancing only to obtain a lower interest rate with no change in loan amount.

Correct Incorrect Correct answer

B) Refinancing to shorten the loan term with no funds back to the borrower.

Correct Incorrect Correct answer

C) Refinancing where the new loan exceeds payoff amounts and costs, and the borrower receives extra cash at closing.

Correct Incorrect Correct answer

D) Refinancing from a fixed-rate loan into an ARM with no equity change.

Correct Incorrect Correct answer

382. Question

What is the CAPITALIZATION RATE (cap rate)?

A) The rate that reflects the relationship between a property's value and the net income it produces.

Correct Incorrect Correct answer

B) The maximum interest rate allowed by law on a mortgage.

Correct Incorrect Correct answer

C) The annual percentage rate (APR) disclosed under TILA.

Correct Incorrect Correct answer

D) The lender’s cost of funds in the secondary market.

Correct Incorrect Correct answer

383. Question

What does CAPITALIZATION mean in income property valuation?

A) Writing off the cost of improvements for tax purposes.

Correct Incorrect Correct answer

B) Increasing the loan balance by adding unpaid interest.

Correct Incorrect Correct answer

C) Recording a deed in the public records.

Correct Incorrect Correct answer

D) Converting anticipated future net income into present value using a chosen rate of return.

Correct Incorrect Correct answer

384. Question

In an adjustable-rate mortgage (ARM), what is a CAP?

A) A fee charged to lock an interest rate for a set period.

Correct Incorrect Correct answer

B) A limit on how much the interest rate or payment can increase or decrease at adjustment and over the life of an ARM.

Correct Incorrect Correct answer

C) A penalty for paying off the mortgage early.

Correct Incorrect Correct answer

D) A feature that converts an ARM to a fixed-rate loan.

Correct Incorrect Correct answer

385. Question

What is a BASIS POINT?

A) One one-hundredth of one percent, used to describe yield changes.

Correct Incorrect Correct answer

B) Ten percent of the note rate.

Correct Incorrect Correct answer

C) One full percent of loan amount.

Correct Incorrect Correct answer

D) Equal to ten basis units.

Correct Incorrect Correct answer

386. Question

Who is considered BANKRUPT?

A) Anyone who is behind on debt payments.

Correct Incorrect Correct answer

B) A person whose credit score falls below 500.

Correct Incorrect Correct answer

C) A person or entity relieved from debts through a court proceeding after surrendering assets to a court-appointed trustee.

Correct Incorrect Correct answer

D) A homeowner who has received a notice of default.

Correct Incorrect Correct answer

387. Question

What is a BALLOON NOTE?

A) A note that is fully amortized with equal payments.

Correct Incorrect Correct answer

B) A note with interest-only payments for the entire term.

Correct Incorrect Correct answer

C) A note requiring escalating payments with no final lump sum.

Correct Incorrect Correct answer

D) A note whose periodic payments do not fully amortize the loan, leaving a final lump-sum payment due at maturity.

Correct Incorrect Correct answer

388. Question

Who is an ATTORNEY IN FACT?

A) A lawyer automatically authorized to act for any client.

Correct Incorrect Correct answer

B) A person appointed to act for another under a power of attorney, limited to the authority granted.

Correct Incorrect Correct answer

C) A court-appointed representative for minors only.

Correct Incorrect Correct answer

D) A government auditor assigned to real estate transactions.

Correct Incorrect Correct answer

389. Question

What is an ASSUMPTION OF MORTGAGE?

A) When a buyer assumes liability under an existing mortgage, and the seller remains secondarily liable unless released by the lender.

Correct Incorrect Correct answer

B) When a lender forgives the remaining balance of a mortgage.

Correct Incorrect Correct answer

C) When a seller pays off the mortgage before transferring title.

Correct Incorrect Correct answer

D) When a mortgage is converted into a line of credit.

Correct Incorrect Correct answer

390. Question

What does an ASSIGNMENT OF RENTS allow a lender or creditor to do?

A) Refinance the borrower’s loan without consent.

Correct Incorrect Correct answer

B) Take legal ownership of the property immediately.

Correct Incorrect Correct answer

C) Collect rents, manage the property, and apply net income toward delinquent mortgage payments without owning the property.

Correct Incorrect Correct answer

D) Evict all tenants automatically.

Correct Incorrect Correct answer

391. Question

What is an ASSIGNMENT OF MORTGAGE?

A) A document that creates a new mortgage lien on property.

Correct Incorrect Correct answer

B) A document evidencing the transfer of ownership of a mortgage from one party to another.

Correct Incorrect Correct answer

C) A release of mortgage recorded when the loan is paid off.

Correct Incorrect Correct answer

D) A clause stating that property acquired later becomes collateral.

Correct Incorrect Correct answer

392. Question

In real estate, what is an ASSESSMENT?

A) A mandatory home inspection.

Correct Incorrect Correct answer

B) A voluntary improvement project.

Correct Incorrect Correct answer

C) The appraisal required by a mortgage lender.

Correct Incorrect Correct answer

D) A value placed on property for taxation, or a levy for a specific purpose such as a sewer assessment.

Correct Incorrect Correct answer

393. Question

What is ASSESSED VALUATION?

A) The value placed on property by a taxing authority for purposes of taxation.

Correct Incorrect Correct answer

B) The value determined by a licensed appraiser for loan approval.

Correct Incorrect Correct answer

C) The price a buyer agrees to pay for the property.

Correct Incorrect Correct answer

D) The replacement cost of improvements.

Correct Incorrect Correct answer

394. Question

What is an APPURTENANCE?

A) A loan feature allowing early payoff without penalty.

Correct Incorrect Correct answer

B) A government tax lien applied to real property.

Correct Incorrect Correct answer

C) Something attached or closely related to the land that becomes the owner’s property, such as a structure or easement.

Correct Incorrect Correct answer

D) A mortgage clause relating to future advances.

Correct Incorrect Correct answer

395. Question

What is APPRECIATION as defined in the glossary?

A) The decrease in value caused by depreciation.

Correct Incorrect Correct answer

B) A tax credit given to homeowners annually.

Correct Incorrect Correct answer

C) Any increase in value caused solely by inflation.

Correct Incorrect Correct answer

D) An increased value of property due to positive improvements or elimination of negative factors.

Correct Incorrect Correct answer

396. Question

Who is an APPRAISER?

A) A person engaged in estimating the value of property as a professional or employee.

Correct Incorrect Correct answer

B) A real estate agent listing properties for sale.

Correct Incorrect Correct answer

C) A mortgage broker arranging loans.

Correct Incorrect Correct answer

D) A county official determining tax rates.

Correct Incorrect Correct answer

397. Question

What is the definition of APPRAISED VALUE?

A) The price a buyer agrees to pay for a property.

Correct Incorrect Correct answer

B) An estimate of property value made by a qualified expert (an appraiser).

Correct Incorrect Correct answer

C) The value assigned by the county tax assessor.

Correct Incorrect Correct answer

D) The replacement cost of improvements only.

Correct Incorrect Correct answer

398. Question

What is the definition of BASIS POINT?

A) One one-hundredth of one percent.

Correct Incorrect Correct answer

B) Ten percent of note rate.

Correct Incorrect Correct answer

C) One full percent.

Correct Incorrect Correct answer

D) Equal to ten basis units.

Correct Incorrect Correct answer

399. Question

What is the definition of BANKRUPT?

A) Anyone behind on payments.

Correct Incorrect Correct answer

B) Anyone with low credit.

Correct Incorrect Correct answer

C) Relieved of debts after surrendering assets to trustee.

Correct Incorrect Correct answer

D) Anyone receiving foreclosure notice.

Correct Incorrect Correct answer

400. Question

What is the definition of BALLOON NOTE?

A) Fully amortized note.

Correct Incorrect Correct answer

B) Interest-only note.

Correct Incorrect Correct answer

C) Escalating payment note.

Correct Incorrect Correct answer

D) Payments don't amortize; lump-sum due at maturity.

Correct Incorrect Correct answer

401. Question

What is the definition of ATTORNEY IN FACT?

A) A lawyer automatically authorized.

Correct Incorrect Correct answer

B) A person appointed under power of attorney to act for another.

Correct Incorrect Correct answer

C) A court guardian for minors.

Correct Incorrect Correct answer

D) A government auditor.

Correct Incorrect Correct answer

402. Question

What is the definition of ASSUMPTION OF MORTGAGE?

A) Buyer assumes liability; seller remains secondarily liable unless released.

Correct Incorrect Correct answer

B) Lender forgives remaining balance.

Correct Incorrect Correct answer

C) Seller pays off mortgage first.

Correct Incorrect Correct answer

D) Mortgage converted to equity line.

Correct Incorrect Correct answer

403. Question

What is the definition of ASSIGNMENT OF RENTS?

A) Refinance the borrower's loan.

Correct Incorrect Correct answer

B) Take ownership immediately.

Correct Incorrect Correct answer

C) Collect rents/manage property/apply income to delinquency.

Correct Incorrect Correct answer

D) Evict tenants automatically.

Correct Incorrect Correct answer

404. Question

What is the definition of ASSIGNMENT OF MORTGAGE?

A) A document creating a new mortgage.

Correct Incorrect Correct answer

B) A document evidencing transfer of ownership of a mortgage.

Correct Incorrect Correct answer

C) A release of mortgage when paid off.

Correct Incorrect Correct answer

D) A clause about after-acquired property.

Correct Incorrect Correct answer

405. Question

What is the definition of ASSESSMENT?

A) A mandatory inspection.

Correct Incorrect Correct answer

B) A voluntary improvement project.

Correct Incorrect Correct answer

C) An appraisal for a loan.

Correct Incorrect Correct answer

D) A value placed for taxation or a special levy.

Correct Incorrect Correct answer

406. Question

What is the definition of ASSESSED VALUATION?

A) The value placed on property by a taxing authority.

Correct Incorrect Correct answer

B) The value determined by an appraiser.

Correct Incorrect Correct answer

C) The price agreed in a contract.

Correct Incorrect Correct answer

D) The replacement cost of improvements.

Correct Incorrect Correct answer

407. Question

What is the definition of APPURTENANCE?

A) A loan feature allowing early payoff.

Correct Incorrect Correct answer

B) A government tax lien.

Correct Incorrect Correct answer

C) Something attached or related to land, such as a structure or easement.

Correct Incorrect Correct answer

D) A mortgage clause for future advances.

Correct Incorrect Correct answer

408. Question

What is the definition of APPRECIATION?

A) The decrease in value caused by depreciation.

Correct Incorrect Correct answer

B) A tax credit for homeowners.

Correct Incorrect Correct answer

C) Any increase in value caused solely by inflation.

Correct Incorrect Correct answer

D) An increased value due to improvements or removal of negative factors.

Correct Incorrect Correct answer

409. Question

What is the definition of APPRAISER?

A) A person engaged in estimating the value of property as a professional or employee.

Correct Incorrect Correct answer

B) A real estate agent listing properties.

Correct Incorrect Correct answer

C) A mortgage broker arranging loans.

Correct Incorrect Correct answer

D) A county tax official.

Correct Incorrect Correct answer

410. Question

What is the definition of APPRAISED VALUE?

A) The price a buyer agrees to pay for a property.

Correct Incorrect Correct answer

B) An estimate of property value made by a qualified expert (an appraiser).

Correct Incorrect Correct answer

C) The value assigned by the county tax assessor.

Correct Incorrect Correct answer

D) The replacement cost of improvements.

Correct Incorrect Correct answer

411. Question

What is an APPRAISAL in real estate?

A) The assessed value set by the tax assessor.

Correct Incorrect Correct answer

B) The final sales price agreed upon by buyer and seller.

Correct Incorrect Correct answer

C) An estimate of value on real property and the process of preparing such an estimate.

Correct Incorrect Correct answer

D) The replacement cost of improvements only.

Correct Incorrect Correct answer

412. Question

Which statement best describes an ANNUITY?

A) A one-time lump sum paid at loan closing.

Correct Incorrect Correct answer

B) An amount, especially of money, payable yearly until the death of the recipient.

Correct Incorrect Correct answer

C) A fee paid once to obtain a mortgage loan.

Correct Incorrect Correct answer

D) A variable payment tied only to stock market performance.

Correct Incorrect Correct answer

413. Question

Under the Truth-in-Lending Act, what does the ANNUAL PERCENTAGE RATE (APR) represent?

A) The note rate stated on the promissory note only.

Correct Incorrect Correct answer

B) The borrower’s credit score expressed as a percentage.

Correct Incorrect Correct answer

C) The lender’s cost of funds in the secondary market.

Correct Incorrect Correct answer

D) The percentage relationship of the total finance charge to the amount of the loan.

Correct Incorrect Correct answer

414. Question

What does an AMORTIZATION SCHEDULE show?

A) A table showing the principal and interest due at regular intervals and the remaining unpaid balance after each payment.

Correct Incorrect Correct answer

B) A list of all closing costs and who pays them.

Correct Incorrect Correct answer

C) The appraised value of the property each year.

Correct Incorrect Correct answer

D) A record of tax payments made on the property.

Correct Incorrect Correct answer

415. Question

What is AMORTIZATION of a loan?

A) Extending the loan term without changing the payment.

Correct Incorrect Correct answer

B) The gradual reduction of a debt by periodic payments sufficient to pay principal and interest and liquidate the debt.

Correct Incorrect Correct answer

C) Paying only interest with a lump sum principal payment at maturity.

Correct Incorrect Correct answer

D) Replacing one loan with another at a lower rate.

Correct Incorrect Correct answer

416. Question

In real estate, what is an AMENITY?

A) The legal description of a property.

Correct Incorrect Correct answer

B) The assessed value assigned by the tax assessor.

Correct Incorrect Correct answer

C) An aspect or feature of a property that enhances its value, such as parking, transportation access, or recreational facilities.

Correct Incorrect Correct answer

D) The type of zoning assigned to the property.

Correct Incorrect Correct answer

417. Question

What is the ALTA (AMERICAN LAND TITLE ASSOCIATION)?

A) A national association of title insurance companies, abstractors, and attorneys that specializes in real property law and sets standards and policy forms.

Correct Incorrect Correct answer

B) A federal agency that regulates national banks.

Correct Incorrect Correct answer

C) A state licensing board for real estate brokers.

Correct Incorrect Correct answer

D) A trade association for mortgage loan originators.

Correct Incorrect Correct answer

418. Question

What is ALL-RISK INSURANCE as described in the glossary?

A) A policy that covers only fire and extended coverage risks.

Correct Incorrect Correct answer

B) A policy that provides coverage for every conceivable risk except those specifically excluded by the policy.

Correct Incorrect Correct answer

C) A policy that covers only perils named in the policy.

Correct Incorrect Correct answer

D) A government-backed flood insurance policy.

Correct Incorrect Correct answer

419. Question

What does ALIENATION mean in real property law?

A) The government’s taking of land for public use.

Correct Incorrect Correct answer

B) The process of subdividing land into lots.

Correct Incorrect Correct answer

C) The recording of liens against real property.

Correct Incorrect Correct answer

D) The transfer of property and possession of lands or other things from one person to another.

Correct Incorrect Correct answer

420. Question

What is an AGREEMENT OF SALE?

A) A deed conveying legal title from seller to buyer.

Correct Incorrect Correct answer

B) A financing agreement between buyer and lender.

Correct Incorrect Correct answer

C) A contract in which the buyer agrees to purchase a specific property and the seller agrees to sell under stated conditions (a sales contract).

Correct Incorrect Correct answer

D) A lease granting possession without title.

Correct Incorrect Correct answer

421. Question

In real estate, who is an AGENT?

A) A person legally authorized by another to represent them or act on their behalf, such as a broker hired to sell property.

Correct Incorrect Correct answer

B) Any person who attends a closing.

Correct Incorrect Correct answer

C) Only an attorney licensed in the state.

Correct Incorrect Correct answer

D) A county tax assessor.

Correct Incorrect Correct answer

422. Question

What is the purpose of an AFTER ACQUIRED PROPERTY CLAUSE in a mortgage?

A) To limit the collateral only to property owned on the date of the loan.

Correct Incorrect Correct answer

B) To provide that property acquired by the borrower after the date of the loan automatically becomes additional security for the loan.

Correct Incorrect Correct answer

C) To allow substitution of collateral without lender consent.

Correct Incorrect Correct answer

D) To release all collateral once the loan is seasoned.

Correct Incorrect Correct answer

423. Question

Which of the following best defines an AFFIDAVIT?

A) An oral statement made under oath in court.

Correct Incorrect Correct answer

B) A written statement not requiring any oath or acknowledgment.

Correct Incorrect Correct answer

C) A promissory note secured by a mortgage.

Correct Incorrect Correct answer

D) A sworn statement in writing, made before a public official, usually a notary.

Correct Incorrect Correct answer

424. Question

What is ADVERSE POSSESSION?

A) A method of acquiring title to real property by possession for a statutory period under certain conditions.

Correct Incorrect Correct answer

B) The process of transferring title by a recorded deed.

Correct Incorrect Correct answer

C) A foreclosure action filed by a lender.

Correct Incorrect Correct answer

D) A voluntary gift of property from one owner to another.

Correct Incorrect Correct answer

425. Question

What does AD VALOREM mean in the context of property taxation?

A) A fixed flat tax charged per parcel regardless of value.

Correct Incorrect Correct answer

B) A tax based only on the original purchase price of the property.

Correct Incorrect Correct answer

C) A tax or duty based on value and levied as a percentage of that value (for example, 30 mills per dollar of property value).

Correct Incorrect Correct answer

D) A transfer tax paid only when title changes hands.

Correct Incorrect Correct answer

426. Question

Which statement best describes an ADJUSTABLE RATE MORTGAGE (ARM)?

A) A mortgage with a fixed interest rate for the entire term.

Correct Incorrect Correct answer

B) A mortgage that permits the lender to adjust its interest rate periodically based on a specified index.

Correct Incorrect Correct answer

C) A mortgage in which the interest rate can only decrease over time.

Correct Incorrect Correct answer

D) A mortgage that requires interest-only payments until maturity.

Correct Incorrect Correct answer

427. Question

What is meant by ADD-ON INTEREST in an installment loan?

A) Interest charged only on the declining balance of the loan.

Correct Incorrect Correct answer

B) Interest charged only during the final year of the loan term.

Correct Incorrect Correct answer

C) The full amount of interest calculated on the original principal for the loan term, added to principal as part of the face amount of the note.

Correct Incorrect Correct answer

D) Interest that is waived if the loan is prepaid.

Correct Incorrect Correct answer

428. Question

Which of the following is the correct definition of an ACRE?

A) 43,560 square feet; 4,840 square yards; 160 square rods.

Correct Incorrect Correct answer

B) 40,000 square feet only.

Correct Incorrect Correct answer

C) 50,000 square feet.

Correct Incorrect Correct answer

D) 10,000 square feet.

Correct Incorrect Correct answer

429. Question

In the law of contracts and descents, to ACQUIRE property means to:

A) Lease the property from another owner.

Correct Incorrect Correct answer

B) Place a lien on the property.

Correct Incorrect Correct answer

C) Appraise the property for tax purposes.

Correct Incorrect Correct answer

D) Become owner of property; to make property one’s own.

Correct Incorrect Correct answer

430. Question

Which option best describes ACCRUED INTEREST?

A) Interest paid in advance at closing.

Correct Incorrect Correct answer

B) Interest earned for the period of time that has elapsed since interest was last paid.

Correct Incorrect Correct answer

C) Interest forgiven by the lender at payoff.

Correct Incorrect Correct answer

D) Interest that will not be charged until the final year of the loan.

Correct Incorrect Correct answer

431. Question

What is an ACCIDENT AND HEALTH PREMIUM in connection with a mortgage?

A) A premium for standard homeowners insurance.

Correct Incorrect Correct answer

B) A premium for private mortgage insurance (PMI).

Correct Incorrect Correct answer

C) An insurance premium paid monthly that insures payment of the mortgage if the borrower becomes disabled.

Correct Incorrect Correct answer

D) A life insurance premium that pays off the loan at death.

Correct Incorrect Correct answer

432. Question

In real property law, what does ACCESS (EASEMENT OF) mean?

A) The right of the owner of land adjoining a road or highway to go and return from the land to the highway without obstruction.

Correct Incorrect Correct answer

B) The right to cross any neighboring property at will.

Correct Incorrect Correct answer

C) The right to park vehicles on a public street indefinitely.

Correct Incorrect Correct answer

D) The right to build a structure over a public sidewalk.

Correct Incorrect Correct answer

433. Question

What does an ACCELERATION CLAUSE in a mortgage most commonly provide?

A) The right to prepay the loan without penalty.

Correct Incorrect Correct answer

B) Automatic reduction of the interest rate after five years.

Correct Incorrect Correct answer

C) Conversion of a fixed-rate loan to an ARM.

Correct Incorrect Correct answer

D) That the entire principal becomes immediately due and payable in the event of default.

Correct Incorrect Correct answer

434. Question

Who is an ABUTTING OWNER?

A) Any owner within the same subdivision.

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B) An owner of land which abuts or adjoins another parcel.

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C) A tenant who occupies a neighboring property.

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D) A lender holding a lien on adjacent property.

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435. Question

What is an ABSTRACT OF TITLE?

A) The legal description of a parcel prepared by a surveyor.

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B) A title insurance policy insuring against future defects.

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C) A written history of title transactions or conditions bearing on the title to a parcel, summarizing all subsequent instruments of public record.

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D) A summary of a borrower’s credit history.

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436. Question

Which choice best describes ABSOLUTE TITLE?

A) Title that is exclusive to the person who has it, with no other right, interest, or claim in the same property.

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B) Title held by two or more owners as joint tenants.

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C) Title subject to an outstanding tax lien.

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D) Title that is contingent on the approval of a lender.

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437. Question

In the glossary, what does ABATEMENT refer to?

A) An increase in a property’s assessed value for tax purposes.

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B) A permanent reduction in the loan’s interest rate.

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C) A waiver of the loan’s prepayment penalty.

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D) The suspension or cessation in whole or in part of a continuing charge, such as rent.

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438. Question

Which statement best defines ABANDONMENT in real property?

A) Leaving a property vacant for more than 30 days.

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B) Voluntary relinquishment of all right, title, claim and possession, with the intention of not reclaiming it.

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C) Loss of property due to unpaid taxes.

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D) Transfer of title to a lender through foreclosure.

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439. Question

Which situation best illustrates “payment shock” as defined in the text?

A) A borrower’s payment jumps sharply when an interest-only or payment-option ARM begins amortizing, making the new amount unaffordable.

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B) A borrower’s payment decreases after refinancing to a lower rate.

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C) A borrower’s payment remains level for 30 years on a fixed-rate loan.

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D) A borrower’s payment includes taxes and insurance in an escrow account.

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440. Question

What does an “assignment of mortgage” indicate?

A) The borrower has completed paying off the mortgage in full.

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B) The lender has modified the interest rate and term of the loan.

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C) The mortgage has been subordinated to a new lien.

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D) The mortgage has been transferred from the original lender or borrower to a third party.

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441. Question

Which of the following is listed as an example of an origination service in the text?

A) Purchasing closed loans from lenders to hold in an investment portfolio.

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B) Completing the loan application, collecting borrower documentation, and preparing the file for underwriting.

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C) Performing yearly escrow analysis on existing loans.

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D) Issuing property tax bills on behalf of local governments.

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442. Question

Which description best matches “Loan Payment Collection” as discussed in the text?

A) The process of setting interest rates for newly originated loans.

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B) The borrower’s voluntary prepayment of principal to shorten the loan term.

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C) The process of pursuing payments of debts owed, often through collection agencies that work for a fee or percentage of the amount owed.

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D) The lender’s internal quality control review of closed loans.

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443. Question

What role does a mortgage investor play in the mortgage market?

A) Buying mortgage loans from lenders to free up funds for more lending.

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B) Originating loans directly to consumers on behalf of lenders.

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C) Performing property appraisals before loans are approved.

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D) Collecting monthly payments on behalf of borrowers.

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444. Question

According to the text, which statement about a mortgage lender is accurate?

A) Mortgage lenders only service loans and can never fund them.

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B) Mortgage lenders are government agencies that insure all residential loans.

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C) Mortgage lenders may not work with mortgage brokers under any circumstances.

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D) Mortgage lenders issue loans and may handle application, underwriting, and funding directly, or receive applications through mortgage brokers.

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445. Question

Which of the following best describes consumer credit as used in the text?

A) Any loan used to purchase or refinance a home.

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B) Personal, usually unsecured debt taken on to buy everyday goods and services, such as credit cards.

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C) Only long-term investment loans such as mortgages.

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D) Only student loans used to pay for education.

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446. Question

How does the SAFE Act and most state laws define a non-traditional mortgage product?

A) Only mortgages with terms longer than 30 years.

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B) Only interest-only or balloon mortgages.

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C) Any mortgage that requires a down payment of less than 20%.

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D) Any mortgage product other than a 30-year fixed-rate mortgage.

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447. Question

Which statement best describes the focus of mortgage underwriting as defined in the text?

A) Evaluating whether the borrower’s overall risk profile is acceptable by analyzing the five C’s of credit.

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B) Determining only the property’s value without regard to the borrower.

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C) Setting interest rates based solely on current market conditions.

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D) Preparing closing documents after the loan is fully approved.

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448. Question

According to the text, which items are typically included as “Prepaids” at closing?

A) Only discount points and origination fees paid to the lender.

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B) Prepaid interest, first-year hazard or flood insurance, and escrowed portions of annual taxes and insurance.

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C) Only government recording fees and transfer taxes.

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D) The buyer’s down payment and seller concessions.

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449. Question

Which scenario best illustrates a cash-out refinance?

A) The borrower refinances only to obtain a lower rate with no change in loan amount.

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B) The borrower makes a large principal curtailment to pay the loan down faster.

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C) The borrower refinances to shorten the term from 30 years to 15 years with the same balance.

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D) The borrower refinances into a larger loan than needed to pay off existing liens and costs, receiving the difference in cash.

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450. Question

What does the Average Prime Offer Rate (APOR) represent in mortgage lending?

A) The average property tax rate in a given county.

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B) The average note rate on all subprime loans originated last year.

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C) A survey-based estimate of APRs currently offered on prime mortgage loans for various terms.

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D) The maximum rate a lender may charge on any consumer mortgage.

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451. Question

What does the Annual Percentage Rate (APR) represent in a mortgage loan?

A) Only the note (interest) rate stated on the mortgage.

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B) The property’s annual appreciation rate.

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C) The borrower’s annual income growth rate.

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D) The annual cost of borrowing that includes the interest rate plus certain lender-related finance charges paid at closing.

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452. Question

Which statement about an assumable loan is most accurate according to the text?

A) Assumable loans can only be taken over without any credit qualification.

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B) A buyer may take over the seller’s existing mortgage, but the seller remains liable unless released by the lender, and FHA/VA assumptions require credit qualification.

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C) Assumable loans are never subject to due-on-sale clauses.

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D) Only conventional conforming loans are assumable.

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453. Question

Which of the following is an example of a third party provider in a mortgage transaction?

A) The mortgage lender that funds the loan.

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B) The mortgage broker who originates the loan.

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C) The borrower’s employer verifying income.

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D) An independent appraiser hired to value the property.

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454. Question

What happens in the secondary mortgage market?

A) Borrowers apply for new mortgage loans from retail banks.

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B) Only government agencies purchase delinquent loans.

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C) Mortgage loans and servicing rights are bought, sold, securitized, and ultimately owned by investors.

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D) Real estate agents list homes for sale to first-time buyers.

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455. Question

Which best describes the primary mortgage market?

A) The market where borrowers receive mortgage loans from primary lenders like banks and mortgage companies.

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B) The market where mortgage-backed securities are traded between investors.

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C) The market where government agencies insure or guarantee loans.

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D) The market where only FHA and VA loans are originated.

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456. Question

What does the term “conveyance” refer to in real estate?

A) The lender’s internal underwriting of a mortgage file.

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B) The appraisal inspection of a property’s condition.

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C) The process of paying off a mortgage ahead of schedule.

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D) The act of transferring ownership of real property from one party to another using a legal instrument such as a deed.

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457. Question

Which statement best describes subordination in mortgage lending?

A) Placing a HELOC ahead of the first mortgage in repayment priority.

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B) Ranking home loans by order of priority so a second mortgage is wiped out if the first mortgage is foreclosed.

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C) Removing all liens from a property automatically at payoff.

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D) Allowing a borrower to skip payments without penalty.

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