179. Which of the following items is usually considered to be a cost of home ownership:

1. 179. Which of the following items is usually considered to be a cost of home ownership: • Interest lost on owner's equity; • Land depreciation; • Amenity value; • Improvement appreciation.

2. 179. Which of the following items is usually considered to be a cost of home ownership: • Interest lost on owner's equity; • Land depreciation; • Amenity value; • Improvement appreciation. Lost interest on equity is a cost of ownership

3. 176. An investor paid $300,000 for an apartment building, making a $75,000 cash down payment. One year later, the property increased 10% in value. This resulted in a $30,000 or 40% gain on the $75,000 equity. This is an example of: • Highest and best use; • Leverage; • Escalation; • Plottage.

4. 176. An investor paid $300,000 for an apartment building, making a $75,000 cash down payment. One year later, the property increased 10% in value. This resulted in a $30,000 or 40% gain on the $75,000 equity. This is an example of: • Highest and best use; • Leverage; • Escalation; • Plottage. Leverage – $300,000

5. 678. A real estate investor, who wishes to operate by using the principle of leverage, would: • Use his personal funds insofar as possible; • Use borrowed funds and personal funds on an equal basis; • Use borrowed money to the maximum extent possible; • Invest in real properties with values that are declining.

6. 678. A real estate investor, who wishes to operate by using the principle of leverage, would: • Use his personal funds insofar as possible; • Use borrowed funds and personal funds on an equal basis; • Use borrowed money to the maximum extent possible; • Invest in real properties with values that are declining. Leverage – Borrow the maximum

7. 96. The appreciation in value that is experienced by a mortgaged home accrues to the benefit of: • The trustee; • The beneficiary; • The trustor; • None of the above.

8. 96. The appreciation in value that is experienced by a mortgaged home accrues to the benefit of: • The trustee; • The beneficiary; • The trustor; • None of the above. Appreciation – Trustor

9. 637. Carlson borrowed $35,000 to finance the purchase of his home. The trend of gradual economic inflation will affect the outstanding balance of the loan to the: • Benefit of the trustor; • Benefit of the trustee; • Benefit of the beneficiary; • Disadvantage of the beneficiary and the trustor.

10. 637. Carlson borrowed $35,000 to finance the purchase of his home. The trend of gradual economic inflation will affect the outstanding balance of the loan to the: • Benefit of the trustor; • Benefit of the trustee; • Benefit of the beneficiary; • Disadvantage of the beneficiary and the trustor. Appreciation (inflation) – Trustor

11. 555. When the general level of prices decreases: • It has no affect on the value of money; • The value of commodities increases; • The value of money increases; • The value of money decreases.

12. 555. When the general level of prices decreases: • It has no affect on the value of money; • The value of commodities increases; • The value of money increases; • The value of money decreases. Prices decrease – Value of money increases

13. 609. When the real estate market changes from a buyer’s market to a seller’s market, which of the following results could naturally be expected: • Prices would probably drop because of the increased supply and reduced demand; • Construction activity in new subdivisions would decline; • Prices would be unaffected, since every parcel is unique; • Prices would rise because of the increased demand and lagging supply.

14. 609. When the real estate market changes from a buyer’s market to a seller’s market, which of the following results could naturally be expected: • Prices would probably drop because of the increased supply and reduced demand; • Construction activity in new subdivisions would decline; • Prices would be unaffected, since every parcel is unique; • Prices would rise because of the increased demand and lagging supply. Seller’s market – Prices rise

15. 656. Changes in which of the following would have an impact on real estate in the future: • The real estate industry; • Land use controls; • The popularity of consumerism issues; • All of the above.

16. 656. Changes in which of the following would have an impact on real estate in the future: • The real estate industry; • Land use controls; • The popularity of consumerism issues; • All of the above. Impact real estate – Consumerism, land use controls

17. 872. Generally, as the employment rate and the GNP (Gross National Product) both rise: • The level of personal income rises; • New residential developments will increase in number; • Sales of existing homes will remain level or increase; • All of the above will probably occur.

18. 872. Generally, as the employment rate and the GNP (Gross National Product) both rise: • The level of personal income rises; • New residential developments will increase in number; • Sales of existing homes will remain level or increase; • All of the above will probably occur. GNP and employment rise – Income rises, home sales increase

19. 181. When considering portfolio risk management the lender needs to be concerned with which of the following: • Reserves; • Diversification; • Liquidity; • All of the above.

20. 181. When considering portfolio risk management the lender needs to be concerned with which of the following: • Reserves; • Diversification; • Liquidity; • All of the above. Portfolio risk management – Concerned with all

21. 182. Financial institutions which specialize in making home loans obtain most of their funds from: • Individual savings; • Business savings; • Government loans; • The Federal National Mortgage Association.

22. 182. Financial institutions which specialize in making home loans obtain most of their funds from: • Individual savings; • Business savings; • Government loans; • The Federal National Mortgage Association. Lenders – Individual savings

23. 709. Deregulation of the financial institutions most nearly means: • There is now no government control of financial institutions; • There is no limit on the interest rate financial institutions can pay on deposits; • Financial institutions can no longer respond to market conditions; • Examination and enforcement attitudes are more relaxed.

24. 709. Deregulation of the financial institutions most nearly means: • There is now no government control of financial institutions; • There is no limit on the interest rate financial institutions can pay on deposits; • Financial institutions can no longer respond to market conditions; • Examination and enforcement attitudes are more relaxed. (Financial Deregulation) – Pay any rate of Interest

25. 185. Mr. Smith went to Broker Jardine for a 15-year loan for $19,000 on his property, which was worth $30,000 and was free and clear. Which of the following is the least likely lender: • Insurance company; • Money bank; • Private lender; • Credit union.

26. 185. Mr. Smith went to Broker Jardine for a 15-year loan for $19,000 on his property, which was worth $30,000 and was free and clear. Which of the following is the least likely lender: • Insurance company; • Money bank; • Private lender; • Credit union. Insurance companies – Large loans

27. 183. A builder needs a long-term loan of $3,000,000 to develop a new shopping center. Which of the following would usually be the best source of such funds: • Mutual funds; • Credit unions; • Life insurance companies; • National banks.

28. 183. A builder needs a long-term loan of $3,000,000 to develop a new shopping center. Which of the following would usually be the best source of such funds: • Mutual funds; • Credit unions; • Life insurance companies; • National banks. Insurance companies – Large loans

29. 611. Life insurance companies not willing to deal directly with mortgagors/trustors, usually pay a loan servicing and preparation fee and make real estate mortgage loans to purchase indirectly through: • FHA or VA; • Savings and loan associations; • Mortgage companies; • Any of the above.

30. 611. Life insurance companies not willing to deal directly with mortgagors/trustors, usually pay a loan servicing and preparation fee and make real estate mortgage loans to purchase indirectly through: • FHA or VA; • Savings and loan associations; • Mortgage companies; • Any of the above. Insurance companies – Work through mortgage companies

31. 186. Which of the following types of lenders would have the greatest percentage of, and the most funds invested in, real estate mortgages: • Savings and loan associations; • Commercial banks; • Life insurance companies; • Mutual savings banks.

32. 186. Which of the following types of lenders would have the greatest percentage of, and the most funds invested in, real estate mortgages: • Savings and loan associations; • Commercial banks; • Life insurance companies; • Mutual savings banks. Savings & Loan Associations – Most funds in real estate

33. 188. A primary source of funds for residential financing is: • The Federal Housing Administration; • The Federal Home Insurance Corporation; • The Federal Home Loan Bank System; • Federal savings and loan associations.

34. 188. A primary source of funds for residential financing is: • The Federal Housing Administration; • The Federal Home Insurance Corporation; • The Federal Home Loan Bank System; • Federal savings and loan associations. Savings & Loan Associations – Primary source

35. 556. Which of the following statements is most nearly true concerning the activities of mortgage companies: • They are organized under federal laws and thus are not subject to state regulations; • They never service the loans they create; • They prefer negotiating loans which are salable in the secondary market; • They are not active in the field of government-insured loans.

36. 556. Which of the following statements is most nearly true concerning the activities of mortgage companies: • They are organized under federal laws and thus are not subject to state regulations; • They never service the loans they create; • They prefer negotiating loans which are salable in the secondary market; • They are not active in the field of government-insured loans. Mortgage companies – Sell in secondary market

37. 41. Most junior loans that are negotiated today are secured from: • Private lenders; • Commercial banks; • Savings and loan associations; • Insurance companies.

38. 41. Most junior loans that are negotiated today are secured from: • Private lenders; • Commercial banks; • Savings and loan associations; • Insurance companies. Private lenders – Junior loans

39. 194. The phrase “the secondary mortgage market” refers to: • Investments that are not real estate related such as corporate or government bonds; • All real estate loans which are secured by junior trust deeds or mortgages; • Different kinds of loans which are made by insurance companies or pension funds; • A resale marketplace for existing trust deed loans.

40. 194. The phrase “the secondary mortgage market” refers to: • Investments that are not real estate related such as corporate or government bonds; • All real estate loans which are secured by junior trust deeds or mortgages; • Different kinds of loans which are made by insurance companies or pension funds; • A resale marketplace for existing trust deed loans. Secondary mortgage market – Resale marketplace

41. 641. Which of the following agencies increases the availability of mortgage credit by maintaining a secondary market for residential conventional mortgages? • Federal Housing Administration; • Veterans Administration; • Federal Deposit Insurance Corporation; • Federal Home Loan Mortgage Corporation.

42. 641. Which of the following agencies increases the availability of mortgage credit by maintaining a secondary market for residential conventional mortgages? • Federal Housing Administration; • Veterans Administration; • Federal Deposit Insurance Corporation; • Federal Home Loan Mortgage Corporation. Federal Home Loan Mortgage Corporation – Maintains secondary market

43. 558. When the Federal Reserve Board increases the reserve requirements, it will: • Result in more construction starts; • Encourage conservative investors; • Decrease loan activity; • Reduce deflationary pressures.

44. 558. When the Federal Reserve Board increases the reserve requirements, it will: • Result in more construction starts; • Encourage conservative investors; • Decrease loan activity; • Reduce deflationary pressures. Increase reserves – Decreases loan activity

45. 679. Should a tight money policy be implemented by the Federal Reserve System (The Fed), the net effect would be the increasing of: • Volume of sales of single-family homes; • Use of second trust deed financing in real estate transactions; • Use of new first trust deed financing in real estate transactions; • Supply of lendable funds for housing construction.

46. 679. Should a tight money policy be implemented by the Federal Reserve System (The Fed), the net effect would be the increasing of: • Volume of sales of single-family homes; • Use of second trust deed financing in real estate transactions; • Use of new first trust deed financing in real estate transactions; • Supply of lendable funds for housing construction. Tight money – More second trust deeds

47. 869. When Crane sold his house to Thompson, it was necessary for Crane to take back a note secured by a second trust deed in order to complete the transaction. Which of the following would probably be the reason for this: • The note on the second trust deed has a low discount rate; • The initial financing was VA guaranteed; • The current money market is "tight"; • The deal was being conventionally financed.

48. 869. When Crane sold his house to Thompson, it was necessary for Crane to take back a note secured by a second trust deed in order to complete the transaction. Which of the following would probably be the reason for this: • The note on the second trust deed has a low discount rate; • The initial financing was VA guaranteed; • The current money market is "tight"; • The deal was being conventionally financed. Tight money – Sellers carry back a second

49. 639. Which of the following would not be considered a demand source for mortgage money? • Construction; • Federal National Mortgage Association; • Refinancing; • Sales financing.

50. 639. Which of the following would not be considered a demand source for mortgage money? • Construction; • Federal National Mortgage Association; • Refinancing; • Sales financing. Federal National Mortgage Association – Not a demand source