Foreclosures & Short Sales: dilemmas and solutions

Final Exam

1.  The profit gained on the yield spread on the loan, when paid as a kickback to the mortgage broker, is known as the yield spread

  1. fee.
  2. insurance.
  3. point.
  4. premium.

2.  In Q2 2006, U.S. property values began to ______nationwide.

  1. double
  2. fall
  3. level off
  4. slightly increase

3.  Which loan is considered most risky?

  1. Alt-A
  2. Commercial
  3. Prime
  4. Sub-prime

4.  Which loan is often utilized by a self-employed person?

  1. Alt-A
  2. FHA
  3. “Low Doc” or “No Doc”
  4. Prime

5.  A slice of a collaterized debt obligation is also known as a(n)

  1. “air loan.”
  2. individual loan.
  3. security.
  4. tranche.

6.  An ARM with an interest rate that increases dramatically and quickly is also known as a(n)

  1. convertible loan.
  2. “exploding” ARM.
  3. fixed rate loan.
  4. safe loan.

7.  Which statement best describes flipping?

  1. being a predatory lender
  2. buying a home at a high price, and reselling it at a lower price
  3. buying a home at a low price, and reselling it at a higher price
  4. buying a home to hold as an investment

8.  In regard to flipping, the FHA rules state that flips

  1. are not allowed.
  2. of foreclosured properties are allowed.
  3. within 30 days are allowed, if the parties are not related by blood or marriage.
  4. within 90 days are allowed, providing the new price is not more than 200% of the old price.

9.  An exterior-only appraisal may be all that an appraiser can do

  1. post-foreclosure, due to regulations preventing the appraiser from entering.
  2. post-foreclosure, when the property is vacant.
  3. pre-foreclosure, when a hostile homeowner is still in possession.
  4. pre-foreclosure, when the property is vacant.

10.  A title company treats the agents in a real estate office to tickets to a professional football game. This is

  1. allowable, if it is disclosed to the IRS as income.
  2. allowable, if it is disclosed to future clients.
  3. a violation of the IRS.
  4. a violation of RESPA.

11.  A title company offers to come to a real estate office meeting, bring donuts, and explain the nuances of title insurance coverage, including re-issuance. This is

  1. allowable under RESPA.
  2. a continuing education class.
  3. a violation of RESPA.
  4. a violation of the FHA.

12.  “Friendly” foreclosure describes

  1. the process of foreclosure and eviction.
  2. a situation where owners who are delinquent are offered an amount of cash in exchange for their evacuation of the property by a certain date.
  3. a situation where owners who are delinquent on their loans voluntarily surrender the asset (or at least possession of it) to the lender.
  4. a situation where the property has gone through formal foreclosure, and the occupants have been physically evicted.

13.  “As-is” valuations usually assume that the lender will

  1. install new flooring throughout the house.
  2. make all needed repairs.
  3. remove the trash and debris from the property.
  4. repaint the house.

14.  A no contingency cash sale with property acceptance in an ”as-is” condition is

  1. not available through REO lenders.
  2. not an offer an investor would likely make.
  3. an offer a first-time buyer would likely make.
  4. preferred by REO lenders.

15.  An appraiser has sufficient market data to develop a percentage discount for REO properties sold ”as-is.” This discount would

  1. be a useful tool for appraising other REO properties in that market.
  2. be valid for only one property.
  3. not be applicable in his market.
  4. not be applicable in someone else’s market.

16.  A real estate agent is instructed to offer occupants of a home facing foreclosure money if they will vacate the property by a certain date. This is known as

  1. actual eviction.
  2. cash for keys.
  3. a courtesy call.
  4. friendly foreclosure.

17.  An appraiser is asked to calculate a value based on rehabilitating a property to competitive condition. This describes a(n) ______value.

  1. “as-is”
  2. “as repaired”
  3. liquidation
  4. “quick sale”

18.  An appraiser is asked to calculate a value based on selling a property within a short time frame. This describes a(n) ______value.

  1. “as is”
  2. “as repaired”
  3. market
  4. “quick sale”

19.  The administrator for a bankruptcy proceeding hires an appraiser for an assignment. The value sought would most likely be

  1. insurable value.
  2. liquidation value.
  3. market value.
  4. value in use.

20.  A lender instructs an appraiser to disregard any market data from foreclosed or REO properties when developing an appraisal. This is

  1. an allowable supplemental standard.
  2. an appropriate Scope of Work instruction.
  3. not allowable; the appraiser must consider all the market data available and determine if it is relevant to the assignment.
  4. a standard instruction.

21.  An appraiser determines that the amount of repairs needed to bring the property to a competitive condition exceeds the additional sale price that would be generated by these repairs. This is also known as

  1. curable external obsolescence.
  2. curable functional obsolescence.
  3. increasing returns.
  4. incurable physical depreciation.

22.  A real estate agent lists a property and despite many efforts, cannot obtain an offering price sufficient to satisfy the mortgage debt against the property. The next step is to see if the lender will

  1. accept a short sale.
  2. allow the new buyer to assume the loan.
  3. foreclose on the property.
  4. forgive the entire amount of the loan.

23.  The Mortgage Banker’s Association estimates that the cost of foreclosure is

  1. borne by the borrower.
  2. immense (around $250,000 on average).
  3. negligible (less than $1,000 on average).
  4. significant (around $50,000 on average).

24.  A form designed by Fannie Mae “to capture additional information to enhance the transparency of the market trends and conditions conclusions made by the appraiser” is the

  1. 1004.
  2. 1004MC.
  3. 1073.
  4. VC sheet.

25.  In regard to the pool of properties which the buyer would consider (as well as the subject property), which is NOT included in the list of things the appraiser must analyze?

  1. absorption rate
  2. interior condition
  3. LP/SP ratio
  4. number of listings available

26.  A reliable source for appraisers to estimate the cost of repairs for an “as repaired” appraisal include

  1. the lender.
  2. public records.
  3. a published cost service.
  4. published sales data.

27.  Fraudulent mortgage practices are

  1. mostly localized and infrequent.
  2. a significant problem found only in some states.
  3. typically associated with older or lower income borrowers.
  4. widespread, and often include several people, in different roles.

28.  A loan on a non-existent property is also known as a(n)

  1. air loan.
  2. ARM.
  3. pre-construction loan.
  4. silent second.

29.  Mortgage fraud is attractive to career criminals because it

  1. generates lots of money, and is seen as less risky than other criminal activities.
  2. has long-term potential and offers advancement.
  3. is very difficult to do.
  4. requires a lot of manpower.

30.  Under the Dodd-Frank Act, an AMC is defined as an “external third party” that oversees a network or panel of more than ______certified or licensed appraisers in a state, or ______or more nationally within a given year.

a.  5 / 15

b.  15 / 5

  1. 15 / 25

c.  25 / 15

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