Course II
5.0 (1 review)
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MN Real Estate Course II
Terms in this set (609)
The use of a site that would yield the greatest present land value, assuming that the site is vacant or can be made vacant by demolishing improvements, plus
The best use of the whole property as it exists with improvements; the use that would yield the greatest total market value, after weighing the relative benefits of continuing with the existing improvements or replacing them.
The best use of the whole property as it exists with improvements; the use that would yield the greatest total market value, after weighing the relative benefits of continuing with the existing improvements or replacing them.
This principle holds that a property is affected by the surrounding properties. The value of the "smallest house on the block" will tend to increase if the other homes on the street have more value - progression.
On the other hand, the value of the "largest home on the block" may decrease if the other homes on the street are much lower in value - regression.
On the other hand, the value of the "largest home on the block" may decrease if the other homes on the street are much lower in value - regression.
Explain appraisal.An appraisal is an unbiased estimate of the nature, quality, value or utility of an interest in or aspect of identified real estate and related property as of a certain date.What approach is used to determine the market value of a property based on analyzing data collected about the property?Comparative Market Analysis (CMA)What type of value does BEV stand for?Business Enterprise ValueWhat are data collecting approaches utilized by a professional appraiser?Sales comparison approach
Cost approach
Income approachWhen a property is producing the greatest income and returns possible it is being used how?For its highest and best useWhich of the following is an "improvement"?
a) A renovation project that restores a property
b) A remodeling project such as an extension
c) The leveling of land to enable construction to begin
d) A housed) A houseTwo parcels of land are valued at $120,000 and $100,000 respectively. If the two parcels are merged together, the value of the new single parcel is $245,000. What is the extra value created by the merging known as?Plottage valueThe highest price a buyer is willing to pay and the lowest price the seller will accept for a property is known as what?Market valueAccording to what principle of value will a buyer not pay more for a home than what he or she would pay for another home that is equally attractive and available?SubstitutionIdris is considering buying a rental property and he wants to know how much the property will generate from rent per year. Which type of value does Idris need to determine?Rental valueWhat type of value is described as the amount of the return on an investment that an income-producing property will produce?Investment valueWhat condition is a result of continuing to add improvements to a property when those improvements will have no effect on increasing the value of the property?Diminishing ReturnWhat is the process of estimating the value of an identified interest in specific property as of a given date?ValuationThe additional value to a property that is created by assemblage is called what?PlottageWhat is defined as the current worth of the benefit and rights associated with real property ownership and use?Real estate valueWhich of the following is NOT an indirect cost?
a) Appraisal fee
b) Financing cost
c) Labor cost
d) Filing feec) Labor costBook value is generally calculated asacquisition price + capital improvements - depreciation = book value.The process of collecting data about a client's property and comparable properties, and adjusting and comparing that data to establish a realistic selling price for the client is known as what?Comparative market analysisGenerally speaking, a licensee has four responsibilities when compiling a residential market analysis. What are they?Effective communication
Diligence
Competence
DocumentationWhat is one of the most common complaints that sellers have regarding their agents?Lack of communicationWhat adjustment must an appraiser make if there is a difference between the location of the subject property and the comparable property's location?LocationWhy do appraisers make adjustments to the sales prices of comparable properties used in an appraisal?Because no two properties are ever exactly alike.In regards to the considerations a licensee must take into consideration when compiling a CMA, what is "market position"?The number of similar properties for sale in the same market, at the same timeTypically, a list of recently sold properties should include information on all of the following EXCEPT for what?
a) The number of days the property was on the market
b) The original listing price
c) The eventual selling price
d) The name of the property's buyerd) The name of the property's buyerWhile most appraisals seek to estimate market value the CMA serves a useful purpose toestablish a listing price, or range of prices for a property.When comparable sales are available, what is usually the most reliable method for estimating land value?Sales comparisonWhen estimating value, what is not subject to depreciation?LandWhat comparison approach is determined by comparing the property being appraised with recently sold comparable properties?The sales comparison approachThe test of highest and best use is applied to an improved property both as ______ and as ______.improved, vacantAccording to what principle does every property have a single use which produces the greatest income and return?Highest and best useWhat establishes the type and amount of information that will be collected and analyzed by an appraiser?The scope of workThe sales comparison method is considered _________ of the three methods of estimating value.The most reliableThe selection of comparables depends on all of the following EXCEPT which?
a) Proximity to the subject property
b) How recently the comparable was sold
c) How similar the comparable is to the subject
d) How much the comparable sold ford) How much the comparable sold forIan Prazer is assessing Ryan Seller's property using the sales comparison method. Which of the following statements is FALSE?
a) Ian's first step will be to estimate the potential gross income of Ryan's property.
b) Ian will need to assign a monetary value to each comparable category.
c) Ryan's home is being appraised using the most reliable valuation approach.
d) If comparable properties have features that are better than Ryan's home, Ian will use a negative value adjustment.a) Ian's first step will be to estimate the potential gross income of Ryan's property.Explain what a CMA is and the principle of substitution.A CMA is done by a listing agent to give the seller information about the sales prices of similar homes, so the seller can decide how much to ask for the property. According to the principle of substitution, a buyer will not pay more for a home than what he or she would pay for another home that is equally attractive and available.The licensee should keep track of the pending sales and the active listings of the homes that he or she included in the CMA. This responsibility falls under...DocumentationWhen collecting information about the seller's property for analysis, the licensee should have three focus items. What are they?The neighborhood
The home site
Existing property improvementFor purposes of a CMA, homes whose offers have been accepted by the sellers, but the sale hasn't closed and the title has not transferred is termed what?A pending saleWhen preparing sold property information for a CMA, what is the minimum number of properties the licensee should use?ThreeMost of the time when a property does not sell it is because of what?OverpricingWhat does the term market position refer to?How many similar properties may be for sale at the same time in a particular market?Describe Market Value Range.When the agent has completed a comparison of several properties against the sellers' property, he or she can come up with a range of value to present to the sellers that will assist them in arriving at a reasonable and appropriate listing price.What is the first step in the appraisal process?The first step is to define the problem.The amount and types of data the appraiser collects depend on what?What has been defined as the scope of work and on the approaches to value that the appraiser has chosenName the techniques appraisers use in valuing the land component. (6)Direct sales comparison
Allocation
Extraction
Subdivision development analysis
Land residual
Ground rent capitalizationThe sales comparison approach is based on what principle of value?SubstitutionWhat kind of real estate should not be used in an appraisal?Real estate sold through:
Bankruptcy
Foreclosures
Between family members
GovernmentAppraisers make adjustments based on what five criteria?Date of Sale
Location
Physical Characteristics
Transaction Characteristics
Sale ConditionsWhy does the appraiser make adjustments to the comparable properties and not to the subject property?Because the sale prices for those properties are known, while the sale price for the subject property is still an unknownThe most reliable appraisal approach for properties that were built recently is which approach?Cost ApproachStep one of the cost approach to appraising is what?Estimate Land ValueExplain reproduction cost.Reproduction cost is the construction cost at today's prices of producing an exact duplicate of the current building, including its improvements and its flaws.Economic age-life method is also known as what method of depreciation?Straight line methodAppraisers use the income approach to appraising for what?Appraisers use the income approach (also called the income capitalization approach) to estimate the value of properties that produce income, usually from rent paid on leases.Why do investors use the income approach to appraising?To determine how much they will pay for an apartment building, office building, shopping mall or some other like propertyWhat is step one to the income approach to appraising?Estimate the potential gross incomeList the five steps to the income approach.1. Estimate the potential gross income.
2. Estimate the effective gross income.
3. Estimate the net operating income.
4. Select a capitalization rate.
5. Apply the capitalization rate.List the five steps to the cost approach.1. Estimate the value of the land as if it were vacant
2. Estimate cost of improvements
3. Estimate accrued depreciation
4. Subtract depreciation from total cost of improvements
5. Add land value to depreciated cost to get total estimated valueWhat is the final step in the appraisal process before the appraiser writes and delivers the report?Reconcile the values obtained by the three appraisal approachesList three items the final appraisal report contains.the effective date
a signed certification, according to USPAP guidelines
all suppositions, circumstances and parameters that impacted the appraisalWhat does ASB stand for?Appraisal Standards BoardExplain what market analysis enable appraisers to do.Market analysis enables appraisers to understand the interaction of supply, demand, and prices paid in a market.
In addition, market analysis suggests future changes in the market and provides decision support concerning the optimal timing for a wide range of real-estate-related decisions—sell, purchase, develop, convert, demolish, etc.What is the income approach best used for?Estimating value of investment properties like apartment buildings, office buildings, and shopping mallsWhich appraisal approach is most reliable for a residential home?Sales comparison approachWhat is the cost approach appraisal method best used for?Recent construction
Special purpose (schools, churches)
Government owned properties (gov. buildings)Market analysis can be used for:Price setting
Construction planning
Underwriting and lending
Community land use planning
Regulation and ordinance development
Taxation and budgetingThe straight-line method is also known as what?Economic age-life methodA property is being appraised by the cost approach. The appraiser estimates that the land is worth $20,000 and the replacement cost of the improvements is $150,000. Total depreciation from all causes is $31,000. What is the indicated value of the property?$139,000The income capitalization approach, or income approach, is more specifically used for appraisingincome or rental properties.What approach that an appraiser uses assumes that an investor will not pay anymore for a property with a certain income than he or she would pay for a similar property with a similar income?The principle of substitutionWhat method would an appraiser use when computing the replacement or reproduction of a building, by applying a percentage increase factor to the original cost of construction to account for the increases in costs over time?Index methodWhich cost approach step is usually done using the sales comparison approach?Estimate land valueA property is being appraised by the cost approach. The appraiser estimates that the land is worth $10,000 and the replacement cost of the improvements is $75,000. Total depreciation from all causes is $7,000. What is the indicated value of the property?$78,000As the capitalization rate ______, the value ______.Decreases, increasesWhat does an appraiser calculate by subtracting vacancy and credit losses from potential gross income?Effective gross incomeWhat is the first step in the cost valuation approach?Approximate land value as if it were vacantIn residential lending, market information about employment trends helps in evaluating a loan applicant'squalificationsWho requires that real estate appraisals, used in conjunction with federally-related transactions, be performed in accordance with USPAP?FIRREAWhat is the formula for calculating the cap rate?Income ÷ value = capitalization rateThe straight-line method is to estimate accrued depreciation because it is ______ than the breakdown method, but it is ______.easier, less preciseWhen computing the reproduction or replacement cost of a building, which methods would an appraiser use?Unit comparison method
Unit-in-place method
Quantity survey method
Index methodWhat type of rate does an appraiser arrive at by comparing the relationship of net operating income to the sales price of similar properties that have recently sold?Capitalization rateLenders make the decision on whether to issue a loan, the amount of a loan, and the terms of a loan based on what?Market analysisWhat real estate term refers to a loss in value of a property due to any cause?DepreciationWhat principle of value describes the benefits a buyer expects to receive over the period of time he or she has the property and it influences his or her decision to purchase it?AnticipationThe licensee should keep track of the pending sales and the active listings of the homes that he or she included in the CMA. This responsibility falls under:DocumentationWhat type of loans do lenders give to finance the construction of improvements to properties such as homes, apartments and office buildings?Construction mortgagesThe two categories of loans available to consumers in the property market are what?Conventional and government-backedWho can perform a preapproval?Only a lenderWhich of the following is a private corporation that is NOT in conservatorship with the Federal Housing Finance Agency (FHFA)?
Fannie Mae
Ginnie Mae
Freddie Mac
Farmer MacFarmer MacNoninstitutional lenders include who?Mortgage bankers
Credit unions
SyndicatesDescribe a graduated payment mortgage (GPM):The payment starts out low and then gradually rises.Ginnie Mae is a government backed organization in the secondary mortgage market thatguarantees the monthly payments of mortgages.Seller James has taken back $20,000 as a second mortgage so Buyer Karl can qualify to buy the property. The $20,000 is what type of mortgage?Purchase Money MortgageA home equity loan is an alternative to what?RefinancingWhat is the main purpose of Fannie Mae?To make sure mortgage money is available for people across the countryIf the Freddie Mac conforming loan is $417,000, the maximum DVA guarantee would be how much?$104,250 (25%)What is a significant difference between institutional mortgage lenders and noninstitutional mortgage lenders?Institutional lenders are heavily regulated by law, while noninstitutional lenders have few, if any, regulations.What did lenders establish to protect borrowers from unlimited increases in their interest rate?Rate capsWhat type of loan typically has a low initial rate followed by higher rates?Adjustable Rate LoansAll of the following are important players in the secondary mortgage market EXCEPTSallie MaeThe evaluation process used to determine the borrower's ability to repay a loan and estimating the value of the property being used as collateral is calledUnderwritingPrequalification is considered ______, whereas preapproval is considered ______.an informal process, a formal processWho holds the largest portion of the American public's savings?Savings and loans associationsThe Rural Housing Service is an agency ofUSDAWhat type of loan gives owners the ability to borrow against the equity they have built up in their home?A home equity loanWhat is not a critical procedure when a lender is processing a loan?Preparing title work for the propertyThe secondary mortgage market consists of holding warehouse agencies thatpurchase many mortgage loans and assemble them in packages to sell to investors.How have life insurance companies recently become more involved with single-family mortgages?They have acquired blocks of single-family mortgages from the secondary market to enhance their investment portfolios.The specific time at which the interest rate of an adjustable rate loan may change is called what?The adjustment periodWhich is NOT one of the lender's qualifications for a borrower to qualify for a loan?ageIn a wraparound mortgage, the second lender issues a new, larger loan to the borrower ata higher interest rate.A blanket mortgageCovers more than one piece of propertyThe lender who gives the money to the buyer to purchase a home is called aMortgageeWhat is a financing instrument that creates a lien against a property?A mortgageIn what type of mortgage is the lender secured by taking possession of all the original title documents of the property?Equitable mortgageWhat clause outlines what will happen if a borrower fails to pay a mortgage, to maintain a property or to perform any other agreement, stipulation or condition in a mortgage?The acceleration clauseA lien that has attached to a property before a mortgage lien is ______ the mortgage lien.Senior toWhat are the two types of title insurance policies?Owner and lenderWhat are the types of foreclosure proceedings?Judicial foreclosure
Nonjudicial foreclosure
Strict foreclosureWhat identifies a property being mortgaged?A legal descriptionWhy do lenders include a prepayment penalty clause in a mortgage document?(They want the money from interest) To prevent the borrower from repaying the loan early.What do lenders include in a mortgage to allow them to assess a penalty to the buyer for paying early?A prepayment penalty clauseWhen is a mortgage sent to the courthouse for recording?After all parties sign the mortgage closing documentsHow much of a down payment is required for a VA loan?0In what type of mortgage situation does the buyer hold the deed to the property during the mortgage term?Lien TheoryIn law, it is assumed that once an instrument affecting title is recorded, everyone is aware of the fact even if they haven't researched the fact. This is called what?The doctrine of constructive noticeWhere is a mortgage recorded?The courthouseWhat insures against financial loss from defects in title to real property and from the invalidity or unenforceability of mortgage loans?Title insuranceIn what type of mortgage situation does the lender keep title to the property during the loan term?Title theoryWho does the property taxes clause in a mortgage contract state is responsible for paying taxes on the subject property?The borrowerDescribe and define the two classifications of encumbrances.An encumbrance that affects the physical condition of the property, such as restrictions, encroachments and easements.
An encumbrance that affects the title, such as judgments, mortgages, mechanics' liens and other liens.List three provisions that are common to most notes.Amount borrowed - This is the face amount of the note that is advanced when the note is executed.
Interest rate - The rate can be either fixed or adjustable. If it's adjustable, the note should specify how the rate will change.
Amount of payments - The amount of the payments will be determined by the face amount of the loan, the length of the loan and the interest rate.What is a mortgage?A mortgage is a financing instrument that pledges the real property described in the mortgage document as collateral for the debt described in the note.How does a note differ from a mortgage?A note is a complete contract.
After it is legally signed by the borrower, it is a legally-enforceable and fully-negotiable financial instrument.
A mortgage however, always needs a note to be legally valid.Explain the granting clause mortgage provision.This statement pledges the mortgagor's rights. The use of the words "grant, bargain, sell and convey" transfers a form of ownership to the mortgagee, which creates a lien on the property. The lien will be released when the loan is satisfied or allow action to be taken in the case of a default.Define acceleration clause.This clause outlines what will happen if the borrower fails to pay the mortgage, to maintain the property or to perform any other agreement, stipulation or condition contained in the mortgage.
Any failure on the part of the borrower can result in the lender accelerating the mortgage and taking whatever steps are needed to recover the investment (can call the full amount due).The act of acquiring title to a property that already has an existing mortgage and agreeing to be personally liable for the terms and conditions of the mortgage, including the payments is the definition of what?Mortgage AssumptionExplain the mortgage assumption value (MAV).The cash equivalent, at the time, of future savings that could be achieved by assuming an existing low-interest-rate mortgage rather than taking out a new higher interest loan and accounting for the time value of money.What is a deed of trust?A deed of trust is a legal document which transfers title to a property to a third-party trustee as security for an obligation owed by the trustor (the borrower) to the beneficiary (the lender).List 3 reasons that lenders prefer to use the deed of trust when making loans.1. A deed of trust can be used to secure more than one note.
2. A trustee may be given the power to sell property after default without going through the time-consuming judicial foreclosure process.
3. No statutory right or redemption period on a power of sale (sale from default on deed of trust).List two differences between a mortgage and a deed of trust.A mortgage is a lien on the property being given as collateral, with the legal title remaining in the name of the borrower. In a deed of trust, the borrower conveys the property to the trustee, who holds the title to the collateral on behalf of the lender until the loan terms have been satisfied.
A mortgage must be recorded while a deed of trust does not.
A mortgage may be discharged by a simple acknowledgment that the loan terms have been satisfied. A deed of trust is discharged using a reconveyance of title form.
A mortgage has 2 parties, deed of trust has 3.
Default on a deed of trust, the trustee can sell without going to court.What is the main characteristic of a two-step mortgage?An adjustable rate mortgage that has the same interest rate for part of the mortgage and a different rate for the rest of the mortgage is called a 2-step mortgage.What is a lock-in clause?A very drastic form of a prepayment clause which actually prohibits the borrower from paying the mortgage loan in full before a specific date.What is the main advantage and what is the main disadvantage to a borrower to purchase a property "subject to" the mortgage?Advantage: He cannot be held personally liable for the amount of the debt he assumed. The original owners are still personally and legally responsible.
Disadvantage: They risk losing all the equity they have in the property.Define subordination clause.This clause is an agreement to reduce the priority of an existing loan to a new loan that will be recorded in the future.A loan taken after the first mortgage on the same property it termed a what?Second mortgage loanWhat is described as the act of acquiring title to a property that already has an existing mortgage and agreeing to be personally liable for the terms and conditions of the mortgage, including the payments?A mortgage assumptionWhich covenant included in a deed of trust states that the trustee must transfer the property to the borrower when the loan is paid in full?ReconveyanceGreg Hall is a developer who secured a loan for 15 homes he is building. As each home is completed, Greg must be able to give clear title to each purchaser. To keep from having to pay off the whole mortgage before he can sell each parcel, which clause will he need to have in his mortgage document?Release clauseWhat type of clause allows a subsequent mortgage to take priority?Subordination ClausePaula takes out a loan for $145,000 and is expected to pay 2 points at the closing. How much will she pay?$2,900According to the terms of the deed of trust, a borrower must pay all of the following except which?
Fire insurance
Taxes
Principal and interest payments
Life insuranceLife insuranceMortgage holder Norm paid off his loan 6 months early and was charged an additional $250 fee. This fee is known as what?Prepayment PenaltyFannie Mae's standard for late mortgage payment is a fee of5% after 15 days.A Due-On-Sale Clause also goes by the termAlienation clause
A non-assumption clause
A call clause
A right to sell clause.Which of the following best defines a release clause?A mortgage provision that releases a pledged asset after a certain portion of the total payments has been madeWhat is a document that describes the amount of money borrowed, the terms under which it will be repaid and any conditions that relate to either the borrowing of the money or the consequences in event of default?A promissory noteWhat are the two general types of encumbrances?Encumbrances that affect the physical condition of the property and encumbrances that affect the title.What type of promissory note is an interest-only note, where the borrower pays interest periodically and pays the entire principal when the note comes due?A straight noteLoan origination fees are typically how much?1% of the loan amountWho are the mortgagor and the mortgagee in a mortgage contract?Borrower and lenderWhat clause, in a standard mortgage, states that if the borrower repays the debt when due, the words of grant are void, the mortgage is canceled and the title is given back to the borrower?A defeasance clauseTom has defaulted on his mortgage. What mortgage provision will allow the lender to recover the property?Acceleration clauseThe provision of a mortgage that pledges the mortgagor's rights is called what?Granting clauseWhich of the following conveys title rights in the property over to an assigned trustee?
Deed
Leverage
Deed of trust
Index rateDeed of trustWhich of the following terms describes a financing instrument that pledges the real property described in the mortgage document as collateral for the debt described in the note?A mortgageJim Green has agreed to sell his home to Pam and Paul Able. Pam and Paul will pay Jim the $15,000 in cash they received at their wedding reception. They will also pay Jim $8,000 a year at 7% interest for 10 years. Jim and the Ables have entered into what kind of agreement?Land contractWho generally needs to give consent, prior to the assumption process, in order to assume an existing mortgage?The lenderWhich of the following would not be a disadvantage of a land contract from the BUYER's perspective?
a) There could be trouble getting the seller to deed the property at the end of the term.
b) Liens could arise during the term and cloud the title.
c) Problems could arise if the payments were not actually applied to the loan.
d) The possibility of differing interpretations of the contract could lead to a lawsuit.The possibility of differing interpretations of the contract could lead to a lawsuit.Jessica takes out a loan for $120,000 and is expected to pay 3 points at the closing. How much will she pay?$3,600Describe the difference between equity of redemption and statutory redemption.The right to redeem property between the time of the default and the foreclosure sale is equity of redemption.The right to redeem the property after the foreclosure sale has taken place is statutory redemption.What is a deficiency judgment?Any outstanding debt remaining after foreclosure and sale of a property.With a judicial foreclosure, when is the Deed of Conveyance issued and who issues it?The sheriff will issue a Deed of Conveyance if the debtor does not redeem the property within the redemption period.Does Minnesota law allow for a redemption period after a foreclosure?Yes, Minnesota provides borrowers with a statutory right of redemption. The redemption period ranges from only five weeks in cases where the borrower has abandoned the property, to one year in cases where the borrower owes less than two-thirds of the original principal amount of the loan.What does the FHA expect a lender to do at the foreclosure sale for an FHA-insured property if the bids are less than the loan balance?FHA expects the lender to bid on the debt, take the title, and present it to the FHA along with a claim for insurance.What kind of redemption rights does a defaulted borrower have under a power-of-sale foreclosure?The borrower has the right to redeem the property between the notice of sale and the actual sale (equity of redemption). But there is no statutory redemption period with a power-of-sale foreclosure.What is the disadvantage of a strict foreclosure?There is no clearly established value for the property because there is no public auction. The lender's losses cannot be established and there are no deficiency judgments with strict foreclosures.Foreclosing a mortgage under the power of sale is essentially the same as the process used to foreclose on a deed of trust. The one difference is that in most states is what?The lender cannot bid on the saleName three common types of default.Failure to meet an installment payment of the interest and principal.
Failure to pay taxes when they are due.
Neglecting to pay hazard insurance premiums.In a non-judicial foreclosure sale, the new purchaser will receive a trustee's deed to the property. But what potential problem exists?There is no guarantee that the title is clear. There may be some outstanding liens still in effect, such as a federal tax lien, real property taxes or assessments, or a valid mechanic's lien.Prior to initiating a foreclosure the lender must do what?Send a demand letter requesting the payment of past due amounts which gives the borrower twenty (20) days to pay any past due amounts otherwise foreclosure proceedings will begin.The primary method of foreclosure in Minnesota is what?The non-judicial foreclosureWhat does the Housing Act of 1964 require?Requires that lenders provide relief in circumstances where the default is beyond the borrower's control.Define recasting.A redesign of a loan by changing the terms, either temporarily or permanently. Lenders can change terms such as interest rate, amortization period or payment amount.What is a moratorium?A temporary or permanent, partial or full waiver of mortgage payments that the lender grants to the defaulting borrower.Give three reasons a borrower could have trouble making mortgage payments.A borrower could:
Lose his or her job.
Lose pay due to an extended illness or injury.
Suffer a personal tragedy.
Overextend his or her credit by running up credit cards.Which form of bankruptcy is the least favorable to a lender?Chapter 11 bankruptcy is the least favorable because the lender may find that the security is tied up for years during the reorganization process.A Chapter 13 bankruptcy is known as a what?Wage earner proceedingDefine Chapter 7 bankruptcy.The purpose of Chapter 7 or "straight bankruptcy" is to give debtors a fresh start by clearing all of their debt and liquidating their nonexempt assets. Chapter 7 is available to any person regardless of the extent of his or her assets or liabilities.The borrower accepts the jurisdiction of the court, gives up any right to declare any defenses and claims, relinquishes the right to appeal or argue with any judgment that is given, and otherwise agrees to cooperate with the lender in the litigation. This is the definition of what type of foreclosure?Friendly ForeclosureChapter 7 bankruptcy is available toAnyoneIf a borrower cannot make all of the monthly mortgage payments, a lender may choose to waive these payments. These waivers are also known asmoratoriums.How does the title usually transfer in a voluntary conveyance?Quitclaim deedWhat type of bankruptcy looks to safeguard the debtor's assets while putting together a plan of reorganization?Chapter 11The right to redeem a property following a foreclosure is known as what?Statutory redemption (Equity of redemption is BEFORE auction)After a nonjudicial foreclosure sale, to whom do the proceeds go first?To the trustee to pay expensesWhich type of bankruptcy is known as a "wage earner proceeding"?Chapter 13Most private mortgage insurance companies consider a default to benonpayment of the loan for four months.If a veteran borrower is delinquent on his or her mortgage loan payment of more than three months, the lender must formally notifythe local VA office.If a lender agrees to suspend a borrower's interest payments and instead add the interest to the principal it is known as what?Deferred interestWhen a court orders the sale of a property at public auction following a foreclosure it is known as what?Decree of foreclosure and order of saleWhich Act requires lenders to provide relief when circumstances are beyond the borrower's control?Housing Act of 1964In a deed in lieu of foreclosure situation, the title is usually transferred with ______ from the borrower to the lender.a warranty or quitclaim deedVoluntary conveyance is also known as what?Giving deed in lieu of foreclosureWhat is the purpose of straight bankruptcy?To clear all of a debtor's outstanding debt and liquidate his or her assetsHomeowner Sally was unable to pay her mortgage loan for the past 4 months. Sallyhas defaulted in carrying out her contractual agreement.What are the sale terms for a conventional mortgage foreclosure auction?The sale itself must be held between 9 am and 5 pm on a business day in the county where the property is located.The most common type of default isthe failure to meet an installment payment of the interest and principal on the note.What is the term for the right of a defaulted borrower to buy back the property BEFORE the foreclosure sale?Equity of redemption (before, after auction is statutory redemption)When the terms of a loan are rewritten, this process is calledrecasting.Generally speaking, non-judicial foreclosure does not involve what?Court actionWhat is a nonrecourse loan?A loan where the borrower is not held personally liable (but secured by property)The statutory redemption period in Minnesota ranges from ______ to ______.5 weeks, 1 yearWhat is the difference between a void contract and a voidable contract?A void contract is an agreement that does not meet the tests for validity, and therefore is no contract at all.
A voidable contract is one which initially appears to be valid, but is subject to cancellation by a party to the contract who is believed to have acted under some kind of disability.What is the difference between an express contract and an implied contract?1. An express contract is one in which all the terms and covenants of the agreement have been clearly stated and agreed to by all parties, whether verbally or in writing.
An implied contract is an unstated or unintentional agreement that may be considered to exist when the actions of any of the parties suggest the existence of an agreement.What is a bilateral contract?1. One in which both parties promise to perform their respective parts of an agreement in exchange for performance by the other partyWhat is an executory contract? Give an example of one.One in which performance is yet to be completed. A sales contract prior to closing is executory.What are the five criteria of a valid contract?Competent parties
Mutual agreement
Lawful objective
Consideration
In writingWhat is the Statute of Frauds and what does it concern?The Statute of Frauds requires that certain contracts must be in writing to be enforceable. It concerns the enforceability of a contract, not its validity.For what reasons may a contract be terminated?Performance
Infeasibility
Mutual agreement
Operation of LawWhen must a suit for damages be initiated?The suit must be initiated within the time period allowed by the Statute of Limitations.Define breach of contract.A breach of contract is a failure to perform according to the terms of the agreement. Also called default, a breach of contract gives the damaged party the right to take legal action.When one party announces, in advance of the due date for performance, that he or she intends not to perform on his or her side of the bargain, this is called what?Anticipatory Breach.Explain renunciation breach of contract.Renunciation occurs where a party refuses to perform his obligations under the contract. It may be either express or implied.
A renunciation occurs when one party, by words or conduct, evinces an intention not to perform, or expressly declares that they will be unable to perform their obligations under the contract in some essential respect.Define liquidated damages.A predetermined amount of money stipulated in the contract to be the total amount of compensation the non-defaulting party should receive upon breach by the other party.What is offer and acceptance otherwise known as?Meeting of the minds or mutual agreementA sales contract prior to closing is what type of contract?ExecutoryWhich of these is not one of the three situations of breach which gives the innocent party the option of terminating the contract?Performance breachBuyer Bill has agreed to pay for a computer system after all hardware has been installed and operational. What type of contract does Bill hold?ExecutoryWhen does an offer to purchase a property officially become accepted?Once the party making the offer has been notified of the party accepting the offers actual acceptanceWhat occurs when a party refuses to perform his or her obligations under a contract?RenunciationThe three factors that determine whether a person has the capacity to contract are:legal age, mentally competent and legitimate authorityAccording to contract law, every valid contract is also what?Enforceable or unenforceableJuan and Eric have a long-term lease agreement that was made orally, with no written contract. What is Juan and Eric's contract?Valid but not enforceableSeller Marge defaulted on a sales contract with buyer Melanie. Melanie really wants to buy Marge's house, so files a court action to have Marge forced to fulfill her obligations and sell. What type of suit is Melanie filing?Suit for specific performanceWhat are the three situations of breach?Renunciation
Breach of condition
Fundamental breachWhat term describes a predetermined amount of money stipulated in the contract to be the total amount of compensation the non-defaulting party should receive upon breach by the other party?Liquidated damagesA contract that conveys an interest in real estate must· Be in writing
· Contain a legal description of the property
· Be signed by one or more of the parties
(In addition to competent parties, mutual agreement, lawful objective, and consideration)Which of the following contracts must be in writing to be enforceable?
A parol contract
A six-month lease
A two-year lease
An executory contractA two-year lease
(anything conveying interest in real estate)What describes expenses incurred as a result of bringing a lawsuit and which the court may order the losing party to pay?CostsA contract is not valid or enforceable if just one party provides ______, the exchange of ______ must be two-way.considerationWhat does the Statute of Frauds concern?EnforceabilityIn a breach of contract the non-defaulting party isreleased from any further obligations of the agreement.Describe the offer and acceptance process of mutual agreement.The buyer makes an offer to start the process. The seller can accept the offer as is or submit a counteroffer. The Buyer can then accept the seller's counteroffer or make another counteroffer. This process goes back and forth until a mutual agreement is reached.What happens when a seller makes a counteroffer to a buyer's original offer?The original offer terminates and the counteroffer in effect becomes a new offer.What is a contingency and what is the most common contingency?A contingency is a condition that must be met before the contract is enforceable. The most common contingency concerns financing.When a party defaults on a sales contract, what are the legal remedies to the remaining party?If the buyer defaults, the seller can keep the buyer's earnest deposit and may also sue for damages, cancellation, or specific performance.
If the seller defaults, the buyer can sue for specific performance, damages, or cancellation.What does the escrow clause in a sales contract do?It provides for the custody and disbursement of the earnest money deposit and releases the escrow agent from certain liabilities in the performance of escrow duties.What does a right of rescission clause set forth?It allows buyers, under certain conditions, to rescind the sale contract and re-claim their escrow deposit if the sellers fail to complete and deliver the property condition disclosure statement to buyers in a timely fashion. The buyer must follow certain procedures and meet certain deadlines in order to legitimately cancel the contract.What does a due-on-sale clause say?The parties state their understanding that loans that survive the closing may be called due by the lender. Both parties agree to hold the other party harmless for the consequences of an acceleration of the loan.If the seller of a property is a foreign person, what must the buyer do with respect to the IRS?The buyer must withhold 10% of the purchase price at closing if the seller is a foreign person or entity and forward the withheld amount to the Internal Revenue Service.When is the listing agent required to receive the earnest deposit and when must it be deposited?The listing agent must receive the earnest money within 2 business days after the final acceptance date of the purchase agreement.The listing broker must deposit the earnest money in the listing broker's escrow account within 3 business days of the final acceptance date OR within 3 days of receipt of earnest deposit, whichever is later.If a buyer will receive financing, what details will be conveyed in the Price and Financing section?The section will show the percentage of the sale price being financed, type of financing, and indicate which financing addendum is included in the purchase agreement.Explain a sale of property contingency.A sale of property contingency occurs when a buyer must sell his or her current property in order to purchase the property listed in the purchase agreement.What is the main issue addressed in the Real Estate Taxes section of the purchase agreement?How real estate taxes will be divided between Buyer and Seller in the year of closing.Regarding deferred taxes/special assessments, in what situation could either party cancel the Purchase Agreement?If Seller receives a notice for an improvement or special assessment after the date of the purchase agreement and before closing, Seller and Buyer must have a written agreement on the division of payment or who is taking responsibility for the payment. If no agreement is made in writing, either party may cancel the purchase agreement by providing notice to the other party and signing a Cancellation of Purchase Agreement.What happens if Seller does not show marketable title by closing date?Seller will automatically be granted an additional 30 days to make title marketable OR the buyer can waive the title defects with written notice. In addition to the 30-day extension, Buyer and Seller may mutually agree to extend the closing date.
If both parties do not agree to a closing date extension, either party may cancel the property agreement with written notice and by signing a Cancellation of Purchase Agreement.Explain the Risk of Loss section.This section states Seller is responsible for any damage to the property between the date of final agreement and closing. If the property is destroyed or suffers substantial damage before the closing date, Buyer can cancel the purchase agreement with written notice.What are the only 4 scenarios when a listing broker is allowed to release earnest money from the broker's trust account?In relation to a successful closing
With written agreement by both parties
Upon receipt of an affidavit of cancellation under Minnesota statute
Upon receipt of court orderExplain the Notice of Agency section.This section provides the names of the licensees involved in this transaction, the company each licensee is affiliated with, and the licensees' relationships with Buyer and/or Seller. This does NOT satisfy MN statute regarding Agency Disclosure Requirements.According to the Entire Agreement section, what is included in the purchase agreement?The purchase agreement only includes addenda or amendments signed by all parties. Any other written or oral communication is not part of the agreement.When does final acceptance of the purchase agreement officially occur?Final acceptance occurs when both parties have fully executed the contract. This means Buyer and Seller have agreed to all terms, signed all required locations, and initialed any agreed upon changes. Both parties must receive a copy of the final, fully executed contract for it to be binding.What is the Review of Arbitration Disclosure Statement section about?This is the last section of the contract and must be signed by Buyer(s) and Seller(s) acknowledging they have received and have had the opportunity to review the Disclosure Statement: Arbitration Disclosure and Residential Real Property Arbitration Agreement.What two main points does the Commencement of Construction section make?Builder will begin construction upon execution of the purchase agreement and after all contingencies are cleared.Builder is exclusively responsible for the direction and supervision of the workforces and Buyer agrees to not interfere without written consent from Builder.According to the Modifications section, how are increases and decreases in purchase price due to modifications to the property paid?Changes in price are either paid when the Change Order is executed OR at closing. This section needs to be correctly checked to indicate how Buyer and Builder will handle changes in price due to modifications.If the seller knows of facts pertaining to radon at the property and does not disclose the information to the buyer, what remedies does the buyer have?The buyer may bring a civil suit against the seller. Any action must occur within two years after the date the buyer closed the purchase or transfer of the property.What does the Special Warranties section say?It states that plumbing, electrical, and heating and cooling systems are free of defects caused by faulty installation for a two-year period and will be in working order at closing. It also says Builder does not provide warranties on appliances.How many business days, after the final acceptance of a purchase agreement, must the listing agent receive the earnest money?2Non-business days include all of the following EXCEPT which?
Sunday
Friday
Federal holiday
SaturdayFridayWhat term describes items that belong with a house and cannot easily be removed?AppurtenancesWhat provision in a sales contract is the seller's written summary of the property's condition at the time of contracting for sale?Residential Property Condition DisclosureIf a property is destroyed before the closing date the buyer can cancel the purchase agreement and the earnest money will beRefunded to the buyer.What does a buyer need from a builder if he or she contracts any additional work that does not involve the builder?Written consent from the builderUnder the property location section of a Minnesota Purchase Agreement, what should be provided along with the street address?The legal descriptionWhat can a person file against a property if payment for materials, labor or improvements aren't made?A lienHaving made an offer to purchase, when can the buyer withdraw the offer?Before it is accepted by the sellerThe mutual consent needed for a contract to be valid is reached through the process ofoffer and acceptance.If the seller is a foreign national, the buyer is required to withhold how much of the purchase price and forward it to the IRS?10%In a Minnesota Purchase Agreement, under Notice of Agency, it must state the name of the licensee working with the buyer, his or her relationship with the buyer and his or herCompany name.A marketable title is subject to:1. Building and zoning laws, ordinances, state and federal regulations;
2. Restrictions on use or improvements to property without proper forfeiture provisions;
3. Reservation of mineral rights by the State of Minnesota; and
4. Utility and drainage easements that do not interfere with existing improvements.Under the Risk of Loss section in the Minnesota Purchase Agreement, it states that the seller is responsible for any damage to the property from the date of the purchase agreement todate of closing.What is included in the purchase price in a Minnesota Purchase Agreement for New Construction?The real property plus the home constructionWho is responsible for damages of loss to the property between the date of the purchase agreement to the date of closing?SellerUnder Legal Disclosures in a Minnesota Purchase Agreement, if either party desires legal or tax advice who should be consulted?A professionalWhat type of contingency allows the buyer to have the property professionally inspected and repairs negotiated?An inspection contingencyIf radon levels are elevated in a home, what does the Minnesota Department of Health recommend?A radon mitigatorWhat type of contingency occurs when a buyer must sell his or her current property in order to purchase a property?A sale of property contingencyList the three most common financing addenda used in residential real estate.The Conventional or Privately Insured Conventional Mortgage Financing,
FHA Insured Mortgage Financing,
DVA Guaranteed Mortgage Financing addenda.What are the two financing contingency options that all three primary financing addenda have?The agreement is canceled if the buyer cannot secure financing and closing does not occur on the scheduled date.
Buyer must provide a written statement from the lender indicating the buyer has been approved for the loan.How does a seller indicate plans to pay some or all of buyer's costs?The addendum Seller's Contribution to Buyer's Costs is filled out and signed by both the seller and the buyer.At the bottom of page 2 of the FHA Insured Financing Addendum, what form does HUD require mortgage lenders to provide?HUD requires all mortgage lenders who issue a FHA Insured loan to provide the form For Your Protection: Get a Home Inspection.When is the Addendum to Purchase Agreement: Counteroffer used?The counteroffer addendum is used to change specific provisions in a purchase agreement offer.That information is a seller disclosing and providing to a buyer on the Lead-Based Paint Disclosure Addendum?A seller discloses knowledge of any lead-based paint or paint hazards at the property. Seller also specifies if reports and records pertaining to lead-based paint and hazards are available and provides any to the buyer.What does the blank spot on line 25 of the Inspection Contingency address?The blank indicates the number of business days following the date of final acceptance that a buyer must perform inspections.How is a Sale of Buyer's Property Contingency removed by a buyer?A buyer removes the contingency by providing the seller a valid copy of a fully executed purchase agreement for the buyer's property.Explain a short sale contingency.A short sale contingency is used when the proceeds of a purchase agreement sale will not be enough to pay off all mortgages and liens against a property. The seller is seeking approval from creditors to go ahead with the sale.What is a seller still responsible for when selling a property "as is?"The seller is still responsible for the Risk of Loss provision detailed on the purchase agreement.What does a majority of the Condominium / Townhouse / Cooperative - Common Interest Community (CIC) Addendum address?The CIC addendum mostly details Minnesota statutes related to common interest communities and outlines the required documentation a buyer purchasing a CIC property must receive.When either the sewage treatment section and/or the well inspection section of the Subsurface Sewage Treatment System and Well Inspection Contingency form are checked, what additional information must be included in the section?The number of business days that inspections/tests must be performed and who will be responsible for obtaining the inspections/tests.What two ways is the amount of earnest money always shown on a purchase agreement?Written and numeric formIf a purchase agreement is subject to cancellation of a previously written purchase agreement, what information needs to be provided on lines 53 and 54 of the current purchase agreement?The date the previous agreement was written and the latest day the cancellation must be obtained.When is dual agency representation allowed in a transaction?When both the seller and the buyer authorize dual agency by signing the disclosure section on the purchase agreement.Buyer Jeff is purchasing a home for $175,000 and will finance 80% put down 20% in cash. What amount, in dollars, is he financing and what amount is he paying in cash?He is financing $140,000 and paying $35,000 in cash.Where would you find the paragraph discussing possession on the purchase agreement?Page 3, Lines 108 thru 110.When must a purchase agreement always include a Lead Based Paint Disclosure?If the property in the purchase agreement was built before 1978.What financing information is included on page 1 of a purchase agreement?Percentage of price to be financed, percentage of price to be paid in cash, type of mortgage, and type of loan.Every addendum used and attached to the standard purchase agreement must be ______ to create a binding contract.SignedWhat trumps any information agreed to in a purchase agreement and/or previous addenda if parties are unclear on an issue?The most recently signed addendaWhat must every purchase agreement include involving a property built before 1978?The Disclosure of Information on Lead-Based Paint and Lead-Based Paint HazardsWho will be required to pay costs for ensuring a well and/or sewage system is in compliance with government regulations?No one, either party can cancel, or negotiate who pays costs.If a buyer counters a seller's counteroffer, what addendum would the buyer use?The Addendum to Purchase Agreement: CounterofferIf the buyer, John and Mary Smith, finance 96% of the sale price, what percent are they paying in cash?4%How long does a person have to apply for a DVA mortgage following the acceptance date?5 business daysWhen is the standard Addendum to Purchase Agreement used?When a change must be made to a fully-executed purchase agreement and there is no specific form related to the change.There are 9 primary addenda associated with purchase agreements, and ___ secondary addenda that are less used.5What is not one of the most common financing addenda?
FHA
ARM
Conventional
DVAARMOne of the most common addenda used in real estate is which addenda?Counteroffer formThere are _____ primary addenda associated with purchase agreements, and 5 secondary addenda that are less used.9What clause in an FHA mortgage states that if the appraised value of the home is less than the sales price, the buyer is not obligated to follow through with the purchase?The FHA Escape ClauseThe most common financing addenda isconventional.Using the Seller's Contribution to Buyer's Costs Addendum form the seller can contribute to the buyer's costs in what ways?Specific dollar amount
Percentage of mortgage amount
Percentage of sale priceWhat is an important thing to remember about the enforceability of listing agreements?They must be in writing to be enforceable.Describe an open listing.An open listing is a non-exclusive listing that allows a seller or buyer to engage a number of different brokers to sell or help purchase property.
The broker who brings the buyer or finds the suitable property gets the commission.
If the owner sells the property or the buyer finds his or her own property, no commission is owed to any broker.What is the major difference between an exclusive right to sell listing and an exclusive agency listing?With exclusive right to sell, the broker has the exclusive right to market the property and receive a commission regardless of who procures the buyer.
With exclusive agency, the owner retains the right to find a buyer and sell the property and owe the exclusive broker no commission.What are the three main differences between an exclusive right to sell and an exclusive buyer's agency agreement?· The principal is a buyer instead of a seller
· The agent's objectives
· How the agent is paidWhat is the most desirable way to terminate a listing?By fulfillment of the contractWhat is meant by a ready, willing, and able customer?One who is amenable to the terms of the transaction (ready and willing) and financially capable of paying the price and legally capable of completing the transaction (able)What is the main item of performance for a client?Payment of compensation, if the agreement calls for it.List four causes for listing termination, not including performance.Infeasibility: it is not possible to perform under the terms of the agreement
Mutual agreement: both parties agree to cancel the listing
Breach: the terms of the listing are violated
Lapse of time: the listing expiresWhat is the seller initialing to on line 23 of the agreement?Acknowledgment of receiving and having the opportunity to review the Internet Display Options Form.List three obligations the seller has to the broker during the term of the listing agreement.Cooperate with broker to sell the property.
Promptly notify the broker of any property inquiries.
Secure and/or conceal any valuable personal property during showings or open houses.What is considered "seller content"?Any videos or photos of the property the seller provides to the broker.What are the two ways the broker compensation amount can be calculated?A percentage of the sale price
A flat feeWhat must occur for a broker to work as a dual agent in a transaction?The buyer and seller have to both agree to a dual agency relationship in writing.When is the broker not indemnified by the seller from damage, loss, and/or liability?When the damage, loss, or injury is the result of gross negligence or willful misconduct of the broker.What does the Consent for Communication section authorize?The broker to contact the seller via by mail, phone, fax, email or other means of communication during the term of the agreement.What information would you find on line 59 of the exclusive right to sell contract?The percentage of the sale price the seller will pay the broker for compensation.Explain a broker's obligations in a buyer representation agreement.The broker will make an effort to locate a property for the buyer, will help with negotiations, and act in the buyer's best interest during the transaction.Line 39 of the Buyer Representation Contract:
Exclusive must be checked to indicate what?If compensation paid to the buyer's broker by the seller or seller's broker decreases the compensation buyer owes according to the agreement.Describe the Other Potential Buyers section.This section discusses the possibility of the broker having other potential buyers who may be in competition for similar homes as the buyer.What is the main difference between the two buyer representation agreements?The exclusivity of the broker-buyer relationship.What are the two principal determinants of procuring cause? (Open listing compensation)Being first to find the customer and being the one who induces the customer to complete the transactionAn open listing is a(n) ______ contract.non-exclusiveWhich section in an exclusive buyer agency contract provides details on how to obtain information on the predatory offender registry and persons registered under Minnesota statute?Notice regarding predatory offender informationWho is the principal party in a buyer agency agreement?The buyerWhich section in an exclusive buyer representation contract requires the agent to write the name of the buyer and the name of the broker?DefinitionsWhich section in an exclusive right to sell contract says the seller cannot refuse to sell or discriminate on the terms or conditions of a sale to any person due to his or her race, color, creed, religion, national origin, sex, marital status, public assistance, physical or mental handicap, sexual orientation, or family status?Fair housing noticeWhich section in the exclusive buyer representation contract states the buyer understands the broker may represent other buyers and consents to other buyer representation?Other Potential BuyersWhat will happen to a broker's retainer fee if the broker fails to sell a client's property?The broker will keep the feeWhat action might a seller take if a broker defaults on a listing agreement?The client may sue the broker for money damages.A seller or buyer could refuse to pay a commission if a listing agreement is notin writing.What is revocation?A party to a listing agreement cancelling the listingWhat is the status of a listing agreement if the property is destroyed by fire?The listing agreement is terminated.If the client revokes the listing after the broker has already earned a commission,the client must pay the commission, no matter what type of listing it was.An open listing is often considered to bea unilateral contract.What would constitute "effecting a completed transaction" for a listing agreement?Finding a ready, willing and able buyer who makes an acceptable offer.What must all exclusive listing contracts contain?Definite termination dateBoth principals to the listing agreementhave the power to revoke the contract at any time (but may not have the right).Which section in an exclusive buyer representation contract states that the buyer's actions may affect payment of compensation by the seller?CautionWhich section in an exclusive right to sell contract authorizes the broker and broker representatives to contact seller by mail, phone, fax, email, or other means of communication during the term of the agreement?Consent for communicationWhat act refers to verifying the accuracy of the statements in the listing regarding the property, the owner, and the owner's representations?Due DiligenceWhat is a contract for deed?It's a bilateral agreement between a seller (vendor) and buyer (vendee) where the seller defers receipt of some or the entire purchase price of a property over a specified period of time.When does the buyer receive full title?The buyer receives title when he or she pays the final payment specified in the agreement. Of course, all other contractual obligations need to be met for title to pass.From the seller's perspective, what are 3 benefits to participating in a contract for deed?Tax Benefits
Large Pool of Buyers
Quick SaleHow is default handled?Default and recourse with contract for deed agreements vary from state to state. Typically, if the seller defaults, the buyer can sue for cancellation of the contract or specific performance. If the buyer defaults, the seller often cancels the contract, keeps the consideration already paid, and evicts the buyer.List three essential elements of a contract for deed.Price and Payment Terms
Type of Deed
Title InformationWhat is the difference between a warranty deed and a special warranty deed?A warranty deed guarantees the property title is free and clear of any defects that may have occurred before and during the ownership period of the seller. A special warranty deed only guarantees defects during the ownership period of the seller.Explain the taxes and insurance provision.This provision outlines who is responsible for paying taxes and/or insurance during the term of the contract.What is required to make a contract for deed legally binding?The notarized signatures of the seller and buyer.When providing the name of the seller on page 1, what additional information must be included?The marital status of each sellerWhat specific information would the blank spot in the purchase price section address?Down payment amount
monthly payments
due dates
interest rate
final payment detailsExplain how partial prepayment of the contract will be applied to the contract balance.Partial prepayment is applied to any payments due and then toward principal installments in the reverse order of their maturity.How is payment of real estate taxes and special assessments paid in the year the contract is written?It varies from contract to contract depending on what the parties agree to, and the agreement information must be written into the contract.What types of property insurance is the purchaser responsible for maintaining during the term of the contract?Insurance against loss by fire and other standard "all-risk" hazards. If flood insurance is available, it must be purchased too.What three topics does the damage to property section discuss?application of insurance proceeds
purchaser's election to rebuild
owner's association considerationsWhen must the purchaser record the contract in the appropriate county office?Within four months of the contract dateWhat does the protection of interests section allow the parties to do?Each party has the right to protect their interest in the property by taking action or paying any amount due in regards to the property that the other party accrued. Any amounts paid would be repaid to the other party with interest.Explain the late payment fee provision in the Minnesota Uniform Conveyancing Blanks Addendum.Any payment fifteen days late will incur a late charge of 4% of the delinquent amount.If the seller and buyer want to include any of the additional terms detailed in the MAR: Addendum to Purchase Agreement: Contract for Deed Financing, what must both parties do?Initial next to the additional term they want included in the contractWhat does the seller refinance provision allow in the MAR Addendum to Purchase Agreement: Contract for Deed Financing?It allows the seller to refinance as long as the amount doesn't exceed the contract balance and the seller pays all associated expenses.What is the seller responsible for completing on the MAR's Important Information About Contract for Deed Addendum?The seller must circle "DO" or "DO NOT" on lines 7-9 to indicate if buyer is responsible for paying insurance, property taxes, and repairs/maintenance.There are ______ addenda and ______ buyer informational sheet used in contract for deed transactions in Minnesota.two, oneWhat provision in a contract for deed addendum states that if any payment is not received by the seller within fifteen days of the due date, the purchaser will incur a late charge?Late payment feeWhat section in a contract for deed form addresses what the seller and buyer are allowed to do in order to protect their interests in the property?Protection of interestsAn installment sales contract is a bilateral agreement between a ______ (seller) and a ______ (buyer).vendor, vendeeWhat provision in a contract for deed addendum states the buyer will provide the seller a signed financial statement within 5 days of final acceptance of the contract?Credit approvalWhat section in a contract for deed form states that unless otherwise specified in the contract, the purchaser can fully or partially prepay the contract without incurring a penalty?PrepaymentWhat type of deed transfers ownership of a property from the seller to the buyer, but it does not guarantee to the buyer that the seller owns the property free and clear?A bargain and sale deedWhat section of an addendum to purchase agreement details the price and payment terms outlined in a Minnesota Uniform Conveyancing Blank Contract for Deed?Contract termsWhich element in a contract for deed states that the buyer has the right to occupy, use and enjoy the property within the law and provisions in the agreement?Use of propertyWhat provision in a contract for deed addendum says if the purchaser fails to perform any terms of the contract, the seller may declare the entire unpaid interest due after providing 30 days written notice to the purchaser?Alternative acceleration remedyAccording to the contract for deed form, how many days does an insurance provider have to provide written notice to a seller before cancellation, non-renewal, termination or change in coverage?10What section in a contract for deed states if either the seller or purchaser assign interest in the property, they will promptly notify the other party?Notice of interestWhat section in a contract for deed form indicates that the purchaser is not permitted to remove or destroy buildings, improvements, or fixtures and will not allow waste on the property?Waste, repair and liensIf a seller defaults by failing to deliver the deed the buyer may sue for all except
specific performance.
cancellation of the agreement.
mineral rights.
damages.mineral rights.The buyer must provide the seller a signed financial statement within how long of final acceptance of the contract?5 daysIn what type of deed does the seller guarantee only against problems or claims created during the seller's ownership of a property?A special warranty deed_____________ section in a contract for deed addresses the following three issues: insured risks and amounts, other terms, and notice of damage?Property insuranceAccording to Minnesota law, when must a contract for deed be recorded following its execution?Within 4 monthsWhat provision in a contract for deed addendum says the purchaser may not sell, assign, or otherwise transfer the purchaser's interest of the property without written consent from the seller?Transfer restrictionsWhat section in a contract for deed addendum does the seller fill out if the buyer is assuming the mortgage?Existing mortgagesThe purchaser is responsible for maintaining insurance that is sufficient to provide how much coverage to all buildings, improvements, and fixtures against loss?100% of replacement costsList 2 steps a broker should take to ensure compliance with fair housing laws.Prominently display in all offices the Equal Opportunity Poster that HUD distributes.
Provide ongoing training and education to all affiliated licensees by holding seminars and workshops, watching videos and bringing in guest speakers.What is significant about the Fair Housing Amendments Act of 1988?It added handicap and familial status to the list of protected classes.Describe the exemption that exists for familial status discrimination.Housing for older persons is exempt if one of the following conditions is exists.
The HUD Secretary has determined that it is specifically designed for and occupied by elderly persons under a Federal, State or local government program.
It is occupied solely by persons who are 62 or older.
It houses at least one person who is 55 or older in at least 80 percent of the occupied units, and adheres to a policy that demonstrates the intent to house persons who are 55 or older.If a person feels like he or she has been discriminated against, how long does that person have to file a complaint?With HUD - within one year of the alleged actIn state or federal court - within two years of the alleged actWhat was the significance of the Plessy v. Ferguson Supreme Court decision of 1896?This Supreme Court decision allowed the use of "separate but equal" racially-segregated accommodations and facilities. In other words, as long as separate housing for blacks and whites were judged to be equal, they were legal.Why is it important for licensees to understand the Americans with Disabilities Act?Brokers need to evaluate whether they need to make physical changes to their office space to comply with the law.Licensees should inform their commercial and investor clients of the need to have their leases professionally evaluated and their offices inspected for compliance.List three activities that are considered discriminatory in real estate.Refusing to sell, rent or negotiate with any person who is a member of a protected class
Telling persons that a property is not for sale or rent when it is
Denying membership in any multiple listing service (MLS) or any broker's organizationSalesperson Sally tells her senior citizen buyers that the home they want to view is located in a neighborhood with several small children and loud teenagers. She tells them they would not be comfortable in this home and she shows them a list of homes in other neighborhoods she thinks would be more appropriate. What would you say about Sally's behavior?Sally is guilty of steering which is prohibited by Fair Housing laws.What is the definition of discriminatory advertising?Discriminatory advertising is defined as advertising that indicates a preference, limitation or discrimination based on race, color, religion, handicap, sex, familial status or national origin.In general terms, what kind of advertising would be considered acceptable and what would be considered discriminatory?Any advertising that describes the property would be considered acceptable, while advertising that describes buyers could be considered discriminatoryGive four examples of words or phrases that would be considered discriminatory, and three that would not, with regard to handicap when writing an ad. (See screen 29 for other correct answers.)Discriminatory - no wheelchairs, able-bodied persons only, no deaf, or no handicapped parking
Non-discriminatory - fourth-floor walk-up, walk-in closets, wheelchair rampWhen doing newspaper advertising, how could you avoid an impression of racial steering?Use a wide variety of newspapers, not just the local or neighborhood paper.What does ECOA prohibit?Discrimination against applicants on the basis of race, color, religion, national origin, sex, marital status, age or dependency on public assistanceWhy was the Community Reinvestment Act passed?To prevent redlining and to encourage banks and thrifts to help meet the credit needs of all segments of their communities, including low- and moderate-income neighborhoodsWhat does the Home Mortgage Disclosure Act require?That lenders report statistical information each year to insure that lenders are not restricting loans to certain individuals or neighborhoods to exclude them from obtaining a mortgageAccording to the Fair Credit Reporting Act, from whom must a lender seek authorization to get a consumer's credit report?The consumer himself or herselfIn the Buchanan v. Warley case of 1917, what did the court reason?Laws cannot deny rights protected by the constitution.Which federal department enforces fair housing standards?The Department of Housing and Urban Development (HUD).The Community Reinvestment Act mortgage lender's rating scale system goes fromoutstanding to substantial noncompliance.ECOA expects a lender to base lending decisions onan individual's income, net worth, job stability and credit rating.Public and common areas must be accessible to persons with disabilities in buildings that have an elevator and four or more units and were ready for first occupancy after when?March, 1991Which of the following would not be considered a discriminatory phrase in advertising?
No bicycles allowed
Able-bodied persons only
Mature individuals
No handicapped parkingNo bicycles allowedWhich of the following is not a protected class under the Federal Fair Housing Act?
Religion
Weight
Sex
Familial statusWeightA broker induces an owner to sell by telling him that Hispanics are moving into the neighborhood. This broker is guilty of what prohibited activity?BlockbustingLicensee Norm has created an ad that says "Apartment for rent, quiet neighborhood, and female tenants only." If Norm runs the ad he may be charged with discrimination based on what?SexIs the term "Non-smoking" a discriminatory term when used in advertising a property?No, because it describes expected conduct, not a protected class.What are reasons to understand Fair Housing Laws?It is right.
It is the law.
It reduces risk.At a community meeting, Broker Amanda tells a group of families in an established neighborhood that several Indian families are planning to buy homes in their neighborhood. She tells them that this action could decrease their property values. Which statement is true?Amanda is guilty of blockbusting.What legislation mandates that persons with disabilities have equal access to jobs, public accommodations, government services, public transportation and telecommunications?Americans with Disabilities ActWhich act prohibits lenders from discriminating against applicants?ECOA (Equal Credit Opportunity Act)Many errors and omissions liability policies ______ Fair Housing issues.do not coverIf a person believes he or she has been discriminated against, how long does he or she have to file a HUD complaint?1 yearThe Fair Credit Reporting Act, or Title VI of the Consumer Credit Protection Act of 1968, requires that lenders do what?Reveal the sources of credit information to the consumer.
Keep all credit information confidential.
Obtain authorization from a consumer in order to get the customer's credit information.The Equal Credit Opportunity Act (ECOA) prohibits lenders from discriminating against applicants on the basis of1. Race
2. Color
3. Religion
4. National Origin
5. Sex
6. Marital status
7. Age
8. Dependency on Public AssistanceCarl's habit of directing minority clients to the south end of town because he feels they would be more comfortable in that neighborhood is known as what?SteeringWhich Act added handicap and familial status to the list of protected classes?1988 Fair Housing Amendments ActWhat is the penalty for a first violation of Fair Housing Law?$16,000Treating people differently than others are treated under the same or similar circumstances is the definition of what?(Housing) DiscriminationName three examples of housing discrimination.Application Denials
Harassment
Different TreatmentReal property (home, apartments, lots, etc.) rented or sold; boarding houses; public housing; mobile home parks; condominiums; homeless shelters and sober housing are all examples of what?Covered housing under Minnesota Fair Housing LawsName three items Minnesota government recommends on how to avoid discrimination complaints.Keep complete and accurate records.
Apply rules consistently to all tenants.
Accommodate tenants with disabilities.Which federal agencies are jointly responsible for enforcing the federal Fair Housing Act?The Department of Justice ("DOJ") and the Department of Housing and Urban Development ("HUD")The Fair Housing Act prohibits discrimination in housing on the basis of what?Race, color, religion, sex, national origin, familial status, and disabilityWhat is the main difference between the Fair Housing Act and the Americans With Disabilities Act?The Fair Housing Act has seven protected classes, whereas the ADA protects only persons with disabilities.Based on the recommendation from Minnesota Fair Housing agencies, what is the best thing you can do concerning discrimination?The best thing you can do is be aware.What is testing?A simulated housing transaction designed to obtain evidence of differential treatment based on an individual's protected class status.How can testing be beneficial?Testing, coupled with good documentation and record keeping, can clearly demonstrate a real estate agency's innocence when faced with a fair housing complaint.What would be a key component of protecting yourself against a discrimination complaint?If you treat everyone the same, you will not have any problems complying with the fair housing laws.If you believe you are being tested, name three things to be aware of.Do not attempt to frustrate the tester.
Treat the tester as any other buyer you encounter, even if you know you are being tested.
Respond only to the questions asked and never volunteer information concerning any fair housing violation.Which of the following housing is NOT covered by Minnesota's Fair Housing laws?Housing operated by a private club that limits occupancyWhat term refers to a group of people whom the law protects against illegal discrimination?Protected ClassAgent Betty is positive that a customer is actually a tester. What should Betty do?Treat the person exactly the same as she would any other customer.It is not a violation of Fair Housing Law torefuse to rent due to criminal history.A client asks you the following specific question: "Would you live in this home or this neighborhood?" How should you answer?By focusing on factual statements based on various features within the homeDirecting people to one area of a complex, one particular floor or one neighborhood based on their protected class is known assteering.Wherever possible, a licensee should confine him or herself to only discussing what?A subject property's physical aspects and attributesWhat is the only housing exempt from familial status discrimination provisions?Housing for older personsHousing discrimination does not have to be ______ to be illegal.intentionalIn addition to the seven protected classes covered by the federal law, the Minnesota Human Rights Act considers what groups to be protected classes?Marital status
Creed
Sexual orientationWhat 5 items are in the listing agreement?1. The prospective buyer will only be described in terms that do not include race, religion, color, national origin, sex, handicap, familial status or other protected-class status.
2. The prospective buyers will be identified not by name but by occupation, present residence, or other characteristics of the buyer which could not identify them as members of a protected class.
3. The facts of the offer should be carefully documented so that the broker cannot be charged with failure to present the offer in a fair and nondiscriminatory manner.
4. The listing will be terminated if the seller refuses to consider an offer because the prospective buyer is a member of a protected class.
5. The supervisor and broker will be informed of any suspected attempts by the seller to illegally discriminate.To prevent being caught committing Fair Housing violations by testers or anyone else, licenseesshould treat each buyer with the same respect, dignity, and fairness that everyone deserves.Housing covered by Minnesota's Fair Housing laws include all of the following EXCEPT which?
Housing operated by a religious organization that limits occupancy
Public housing
Sober housing
CondominiumsHousing operated by a religious organization that limits occupancyWhat might inadvertently be in violation of familial status laws?Safety rulesThe seller cannot legally decline to show a property to minorities or members of other protected classes. If this happens,both the seller and the real estate professional could be sued for violating fair housing laws.If a buyer asks for the "Jewish" area, what do you do?Explain to the buyer that you, ethically and legally, cannot recommend housing based on religion.It is a legal fair housing practice when someone is treated differently because ofrental history.What should a real estate professional make clear to a client before entering into a listing agreement?That his or her brokerage takes Fair Housing laws very seriously.Define lease agreement.A legal document outlining the terms under which one party agrees to rent property from another party. A lease guarantees the lessee (the renter) use of an asset and guarantees the lessor (the property owner) regular payments from the lessee for a specified number of months or years.What are two reasons investor clients are different from regular customer/clients?They do most of the research on their own.
They make offers on many different properties.What are a property manager's four main areas of responsibility?Financial and Marketing
Tenant and Occupancy
Facility
Administration and Risk ManagementWhat is the typical turnover period for a resort property?Many owners turn over resort properties in five years.Name three types of land real estate licensees must have knowledge in to specialize in land brokerage?Farms, ranches, recreational, timberland, and other specialty land properties
Undeveloped tracts of land
Transitional and development landWhat two types of farms exist in the United States?Family farms and corporate farmsREO or Real Estate Owned properties are generally a good deal for what two types of real estate buyers?First Time Home Buyer
InvestorsWhat is the main reason a seller would be seek a short sale?The seller is attempting to negotiate a deal with the lender and avoid foreclosure.What are the three types of real estate auctions?Absolute Auction
Minimum Bid Auction
Reserve AuctionWhat is foreclosure?When the lien holder takes ownership in a property due to a variety of possible reasons, but most commonly for the lack of payment on a loanWhat do specialists in residential real estate need to know?Specialists in residential real estate need to have a thorough knowledge of real estate law, local economics, fair housing laws, types of financing, mortgages, and government programs.What are some examples of commercial property?Malls, office parks, restaurants, gas stations, convenience stores, and office towersIn a real estate auction if the property is sold to the highest bidder regardless of the price, this is a(n)absolute auction.A market that turns over every 5 years on average requires an agent to provide more information to buyers and sellers than is usually necessary. This specialization would be inresort properties.Administration and Risk Management is one of the four major areas of responsibility fora property manager.The process where the lien holder takes ownership in a property due to a variety of possible reasons, but most commonly the lack of payment on a loan is known as aforeclosure.What are the two basic types of farms?Family farms and corporate farmsIn what type of auction will the auctioneer accept bids at or above published minimum price?A Minimum Bid AuctionAny property in which the owner receives payment by another for use or occupation of the property definesrental real estate.If the property is sold to the highest bidder in a real estate auction regardless of the price, this is a/an:absolute auction.Generally speaking, how quickly is vacation property turned over?Every 5 yearsA common trend that has affected many occupations and has become widespread in the real estate industry is known asspecialization.John and Mary's house is valued at $200,000. Their mortgage is $250,000. They're upside down $50,000. John is being transferred and they need to sell their home. They will look for an agent specializing inshort salesWhat type of farms deal with large scale food production?Corporate farmsWhich of the following is NOT one of the three types of auction?
Minimum bid auction
Silent auction
Absolute auction
Reserve auctionSilent auctionHomes on short sale arepre-foreclosure.Of all the real estate specializations, which is probably the complex and multifaceted?Commercial real estateSmaller farms that are independently-owned and operated are typically what kind of farm?Family farmsIn general, what happens at the end of the pre-foreclosure period?The property is sold at public auctionWho is the lessor in a lease agreement?Property ownerThe ______ is the amount of the return on an investment that an income-producing property will generate.investment valueWhat the market recognizes as "the change in value an improvement makes to a property" is called what?ContributionWhat type of value is described as the value of a property as carried on the accounts of the owner?Book valueWhich type of value are real estate licensees most concerned with?Exchange valueWhich of the following is NOT an aspect of highest and best use?
Maximally productive
Carefully planned
Legally permissible
Financially feasibleCarefully plannedA commercial property was used by the owner to manufacture DVD disks. As the market for DVDs declined, the owner made less profit, so the owner changed production to in-demand cloud storage devices and the profits increased. The change in the owner's use of the property caused a change in what?The property's in-use valueWho prepares CMAs?A licensed realtorFour auto dealerships located along the same street attract more customers because they are close together. What principle of value is at work here?CompetitionWhat principle says that the value of a property depends on available properties, property prices, the number of prospective buyers and the price buyers are willing to pay?Supply and DemandWhat is an amount a particular purchaser agrees to pay and a particular seller agrees to accept under the circumstances surrounding the transactions?Market priceWhat term describes the cost of labor and materials?Direct costsWhat is an unbiased estimate of the nature, quality, value or utility of an interest in or aspect of identified real estate and related personality as of a certain date?An appraisalWhat does the term "improvement" refer to in relation to an improvement value?A house or structure built upon landTypically, what two types of value are combined to produce the "total value" of a residential property?The land value and the improvement valueGenerally cost and market value don't correspond except in the case ofnew construction.What is not an approach an appraiser uses to value a property?
Sales comparison
Cost
Improvements
Income capitalizationImprovementsA licensee should keep in mind that the information on pending sales is not as reliable as on sold homes becausethe price the licensee sees is only the listing price, not the sales price, and the sale is not final.What is the final step of the appraisal process?Estimate the combined worth of the land and the improvements.Which of the following is not a consideration when doing a residential market analysis?
The buyer appeal
The drawbacks of the property
The market value range
The value of the property's landThe value of the property's landProperty sales do not close immediately, and generally remain at a pending stage for how long?30 to 60 daysOn what criteria will an appraiser make an adjustment if there are differences in amenities such as number of rooms, square footage, age, construction type or landscaping?Physical characteristicsWhile compiling information for a CMA, a licensee would NOT consider which of the following?
The site of the home
The national average price of homes.
Any existing improvements
The surrounding neighborhoodThe national average price of homes.A broker or salesperson who is attempting to establish a listing price, or range of prices for a property, uses a scaled-down version of the appraiser's sales comparison approach called acomparative market analysis, or CMA.When a licensee prepares a market analysis, he or she should include similar properties that have sold withinthe past three to six months.After comps have been adjusted, what does an appraiser do with the values from each to arrive at a final range and estimate for the subject property by the sales comparison approach?Reconciles the valuesThe sales comparison approach is the most popular in which sector of real estate transactions?Residential propertyA competitive market analysis is an attempt to do what?Identify an estimate of a property's value based on comparablesWhat land value component describes sales of comparable vacant parcels that are analyzed and adjusted to indicate a value for the subject land?Direct sales comparisonWho is responsible for determining the scope of work?The appraiserWhat represents the variance between the subject and the comparable for a given item when weighting comparables?The dollar amount of an adjustmentWhich of the following is NOT indicative of the best approach methods to an appraisal?
Nature of the client's property
Available data
The amount of the appraiser's fee
The client's needsThe amount of the appraiser's feeWhat land value technique states that a typical ratio of land value to total value is derived from comparable properties and applied to the subject?AllocationWhich of the following consideration is the most subjective and when doing a residential market analysis?
Buyer appeal
Drawbacks
Market position
Recommended termsBuyer appealIan Prazer is assessing Ryan Seller's property using the sales comparison method. Which of the following statements is FALSE?
Ian's first step will be to estimate the potential gross income of Ryan's property.
Ian will need to assign a monetary value to each comparable category.
Ryan's home is being appraised using the most reliable valuation approach.
If comparable properties have features that are better than Ryan's home, Ian will use a negative value adjustment.Ian's first step will be to estimate the potential gross income of Ryan's property.What term describes depreciation that is economically feasible to repair?CurableNoelle Value is appraising Bridgette Ohner's apartment complex using the income approach. To determine her property's annual net operating income, Noelle mustsubtract the operating expenses from the effective gross income.What does the principle of anticipation assume?An investor will purchase a property based on the future income the property will produce.If a property's NOI is $30,000 and the cap rate is 7%, what is the property's value?$428,571What does FIRREA require real estate appraisals used in conjunction with federally-related transactions be performed in accordance with?USPAPWhen computing the reproduction or replacement cost of a building, which method would an appraiser not use?
Unit comparison method
Unit-in-place method
Quality survey method
Index methodQuality survey methodWho sets forth rules for developing an appraisal and reporting its results?The Appraisal Standards BoardWhose job is it to determine real estate values by gathering, analyzing and applying information pertinent to a property?A professional appraiserWhat is described as the rent scheduled to be collected on a property plus income from other sources such as vending machines, parking fees and laundry facilities?Potential gross incomeWhat term used in community land use planning means the degree of development and productive activity on a property?IntensityWhat are the causes of external obsolescence?Negative environmental, social or economic factorsPotential gross income is calculated under the assumption of what?That there are no vacanciesWhich appraisal approach carries more weight with investment and rental properties?The income approachA property sold for $185,000 and is producing an annual net operating income of $16,650. What is the capitalization rate?9%Appraisers are trained to be what in the lending process?An impartial third party in the lending processWhat is one of the final steps in the appraisal process?Reconciling the different values from the appraisal methodsWhat is the first step of the income approach method?Estimate potential gross incomeIn residential lending, market information about employment trends helps in evaluating a loan applicant's
specifications.qualifications.What future predictions, if any, does market analysis provide to appraisers?Future changes in the marketWhen estimating the cost of improvements, the unit comparison method is also known as what?Square-foot methodWhich appraisal approach is more reliable for newly constructed properties, or for special purpose or government-owned properties?Cost ApproachWhat is the interest rate on an ARM tied to?IndexWhat are the biggest risks lenders face?That the borrower will not repay the loan and that the collateral property is less than the outstanding loan balance.Preapproval differs from prequalification in thatIt involves the completion of an actual loan application.An interest-only loan might be a good choicefor a buyer who plans to own the property for a short time and believes the property will appreciate during that time.The Office of Thrift Supervision's lending standards suggest an upper limit on conventional loan-to-value ratios for a 1-to-4 family residence of what?85%A wraparound mortgage, or wrap, is a form of secondary financing that allows a borrower to do what?To get a second loan from a second lender without paying off a first loan from a first lender.Freddie Mac's mission isto provide stability, affordability, and opportunity to the housing market.A(n) ______ is an expandable loan which gives a borrower a limit up to which he or she may borrow.open-end loanIn which of the following types of loans is the payment allocated only to interest?StraightWhat describes a lump sum payment that is made to the lender at closing that usually comes from the builder as an incentive to the buyer or a family member trying to help out?A buydownAn institutional lender isany financial institution whose loans and lending practices are regulated by law.What's the main reason primary mortgage lenders sell their notes in the secondary mortgage market?To generate more money to make more loansIn a fixed rate mortgage the interest rate remains fixed for ______.Term of the loan.What is a loan secured by real estate called?A mortgage loanWhich of the following is NOT another term for a due-on-sale clause?
alienation clause
right-to-sell clause
feline clause
non-assumption clausefeline clauseWhich of the following is NOT a form of foreclosure?
Non-judicial foreclosure
Strict foreclosure
Negotiable foreclosure
Judicial foreclosureNegotiable foreclosureIn the event of default by the purchaser, the lender has the right to bring legal action through the courts to satisfy the debt. This is called by what name?Judicial ForeclosureWhich type of mortgage begins with a fixed interest rate that is then periodically readjusted over time?ARMBesides defaulting on a mortgage, lien holders can also bring about a foreclosure for all of the following EXCEPT for?
Overdue taxes
Unrepaid overdraft
Delinquent HOA dues
Unpaid collector's billsUnrepaid overdraftWhat are the two basic types of amortized loan?Fixed rate mortgage and adjustable-rate mortgageWho gets a property's title following a foreclosure?The holder of the mortgage, or a third party who may purchase the real estate at a foreclosure sale.Gary still owes $78,000 on his mortgage when he sells his house to Allen for $100,000. What would prevent Allen from paying Gary $22,000 and assuming the outstanding $22,000 mortgage?An alienation clauseWho manages the FHA mortgage insurance program?The Department of Housing and Urban DevelopmentIn law, it is assumed that once an instrument affecting title is recorded, everyone is aware of the fact even if they haven't researched the fact. This is called what?The doctrine of constructive noticeWhat is attached to a title when a mortgage is signed by the mortgagor and delivered to the mortgagee and the mortgagor receives the funds whose repayment the mortgage secures?A lienWhen a mortgage is used to purchase a property, who has ownership of the property?The borrowerWhat does title insurance typically insure?Real property interests of fee simple ownership, or a mortgageWho is the mortgagee in a mortgage loan?The lenderThrough what process does a lender take both legal and equitable title to a property in fee simple?ForeclosureIn what type of mortgage situation does the:
a) Borrower keep title to the property
b) Lender keep title to the property
during the loan term?a) Lien theory (borrower keeps)
b) Title theory (lender keeps)What document makes a mortgage an enforceable contract?The noteWhat type of an acceleration clause requires the borrower to pay off the entire mortgage debt when the property is sold?Due-on-sale-clauseTitle Insurance protects the lender and the borrower against ______.future claims to the property.In what type of mortgage does the lender become the owner of the mortgaged property until the loan is repaid or other mortgage obligations are repaid in full?Mortgage by demiseMortgage by demise vs Equitable mortgageMortgage by demise- the lender become the owner of the mortgaged property until the loan is repaid in full.
Equitable mortgage- the lender is secured by taking possession of all the original title documents of the property.What type of clause prevents the lender from seeking a deficiency judgment above the actual mortgaged property?Exculpatory ClauseWhat type of clause would limit the repayment of a mortgage ahead of schedule?Lock-In Clause (type of prepayment clause that prohibits paying in full before a specific date)Who does a deed of trust convey title to?The trustee (3rd party that holds the title)What kind of lien is a real estate loan?Specific, voluntaryUnder the recording laws of most states ______ may or must be recorded, whereas a ______ does not need to be recorded and in some states is not eligible for recording.a mortgage assignment, a deed of trust assignmentWhat represents prepaid interest and the lender charges to borrowers to get additional income on a mortgage loan?PointsWhat term describes a lien on a property being given as collateral with the legal title remaining in the name of the borrower?A mortgageWhat is the most common type of physical encumbrance?Utility easement
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