Real Estate Vocabulary Exam

Please understand these are general real estate terms used in almost every state. This is here for practice and review purposes only. Some terms may not be on your exam.

1. Which of the following describes the term “appreciation”?

A. Kind words expressed to someone about something they did
B. An increase in the value of property
C. An item of value owned by an individual
D. None of the above

Answer: B. Appreciation is the increase in the value of a property due to changes in market conditions, inflation, or other causes.

2. When ownership of a mortgage is transferred from one company or individual to another, it is called

A. an assumption
B. an assignment
C. an assessment
D. all of the above

Answer: B. When ownership of a mortgage is transferred (assigned) from one company or individual to another, it is called an assignment.

3. A mortgage loan which requires the remaining balance be paid at a specific point in time is called a/an

A. balloon mortgage
B. early due mortgage
C. mortgage of convenience
D. promissory note

Answer: A. A mortgage loan that requires the remaining principal balance be paid at a specific point in time is a balloon mortgage.

4. The following reason accounts for why bridge loans are not used much anymore:

A. More second mortgage lenders now will lend at a high loan to value
B. Sellers would rather accept offers from Buyers who have already sold their property
C. Neither A or B
D. Both A and B

Answer: D. Bridge loans are not used much anymore because more second mortgage lenders now will lend at a high loan to value and sellers often prefer to accept offers from buyers who have already sold their property.

5. A title which is free of liens or legal questions as to ownership of the property is called a __________ title.

A. good
B. cloudy
C. clear
D. free

Answer: C. A title free of liens or legal questions as to ownership of the property is called a clear title. It is clear because there can be no challenges made to its legality.

6. What is the collateral in a home loan?

A. The property itself
B. A person’s good name
C. The amount of savings a person has
D. The current automobile the person owns

Answer: A. The property itself is the collateral, and the borrower risks losing it if he does not repay according to the terms of the mortgage or deed of trust.

7. The adjustment date on an adjustable-rate mortgage is

A. the date the interest rate changes
B. the date the stock market goes up
C. 30 days from the date the mortgage was taken out
D. all of the above

Answer: A. The adjustment date is the date the interest rate changes (adjusts).

8. What is the deposit made by a potential buyer to show he is serious about buying a house called?

A. Serious money deposit
B. Earnest money deposit
C. “Nothing ventured, nothing gained” deposit
D. Down payment

Answer: B. The deposit made by a potential buyer to show they are in earnest about purchasing a house is called an earnest money deposit.

9. A right-of-way which gives persons other than the owner access to or over a property is known as an

A. easement
B. ingress
C. egress
D. none of the above

Answer: A. An easement is a right-of-way to persons other than the owner and gives them legal access.

10. Which best describes a “subdivision”?

A. Houses in the same neighborhood similar in style and size
B. A housing development created by dividing a tract of land into individual lots
C. A development which is “substandard”
D. None of the above

Answer: B. A subdivision consists of individual lots created from a larger tract (subdivided) and are offered for sale or lease.

11. When someone contributes to the construction or rehabilitation of a property with labor or services rather than cash, that contribution is called

A. a personal contribution
B. sweat equity
C. a big help to the contractors
D. toil and labor

Answer: B. Sweat equity is the contribution to the construction of or rehabilitation of a property in the form of labor or services rather than cash.

12. A two-step mortgage is defined as

A. an adjustable rate mortgage with one interest rate for the first five or seven years and a different rate for the remainder of the term.
B. a mortgage which is both adjustable and fixed
C. a mortgage which is named after a dance step
D. all of the above

Answer: A. A two-step mortgage starts out with one rate for the first five or seven years and then changes to a different rate for the remainder of the term of the mortgage amortization.

13. A legal document evidencing a person’s right to or ownership of a property is called a:

A. quitclaim deed
B. title
C. yearly lease
D. accurate appraisal

Answer: B. A title is a legal document evidencing a person’s right to or ownership of a property.

14. If you were buying a house that included furnishings, you would receive a written document transferring title to the personal property. This document is called a/an

A. title
B. deed
C. bill of sale
D. evidence of payment

Answer: C. A bill of sale is a written document that transfers personal property from one owner to another.

15. An oral or written agreement that is binding in a court of law is called a:

A. gentlemen’s agreement
B. contract
C. business deal
D. promissory note

Answer: B. A contract can be oral or written and is binding in a court of law.

16. The part of the purchase price of a property that the buyer pays in cash and does not finance with the mortgage is called the

A. deposit
B. second mortgage
C. down payment
D. deed of trust

Answer: C. The down payment is the amount paid down in cash as the initial upfront portion of the total amount due. It is usually given in cash at the time of finalizing the transaction.

17. A female named in a will to administer an estate is called an

A. executor
B. executrix
C. individual representative
D. able inheritor

Answer: B. The female executor named in a will to administer an estate is called an executrix.

18. The greatest possible interest a person can have in real estate is called

A. fee complex
B. fee simple
C. no additional fees
D. ownership

Answer: B. The greatest possible interest a person can have in real estate is called fee simple.

19. Required for properties located in federally designated flood areas, this type of insurance compensates for physical property damage resulting from flooding. It is called

A. water damage insurance
B. hurricane insurance
C. there’s no such thing
D. flood insurance

Answer: D. Flood insurance is required in federally designated flood areas and does compensate for physical property damage resulting from flooding.

20. The following is true of a government loan:

A. It is guaranteed by the Department of Veterans Affairs (VA)
B. It is guaranteed by the Rural Housing Service (RHS)
C. It is insured by the Federal Housing Administration (FHA)
D. All of the above

Answer: D. Government loans are either insured by FHA, guaranteed by VA or RHS. Mortgages that are not government loans are called conventional loans.

21. The person conveying an interest in real property is called

A. the buyer
B. the grantee
C. the grantor
D. the mortgagor

Answer: C. The grantor is the person conveying an interest in real property to another party.

22. Insurance that covers in the event of physical damage to a property from fire, wind, vandalism, or other hazards is called

A. act of God insurance
B. hazardous insurance
C. hazard insurance
D. there is no such insurance

Answer: C. Insurance covering physical damage to a property from fire, wind, vandalism, or other hazards is called hazard insurance.

23. A liquid asset is

A. an asset which is not in solid form
B. an asset which cannot be frozen
C. a cash asset or an asset easily turned into cash
D. an asset that is hard to get to

Answer: C. A liquid asset is either cash or something easily turned into cash.

24. Another term for the lender in a mortgage agreement is the

A. banker
B. mortgagee
C. mortgagor
D. private mortgage company

Answer: B. The mortgagee is the lender.

25. If you are buying a house and asking the Seller to provide all or part of the financing, you are asking for _________ financing.

A. special
B. owner
C. personal
D. non-bank

Answer: B. When the Seller provides all or part of the financing it is called owner financing.

26. A point is

A. the part of the pen you sign a contract with
B. a score in a basketball game
C. the reason for telling the story
D. 1% of the amount of the mortgage

Answer: D. A point is 1% of the amount of the mortgage.

27. What does a power of attorney grant someone?

A. The ability to attend law school
B. Complete or limited authority on behalf of someone else
C. Complete control over which medical facility someone uses
D. The right to inherit an estate

Answer: B. A power of attorney derives power from a legal document and grants someone complete or limited authority on behalf of someone.

28. The principal is

A. the amount borrowed or remaining unpaid
B. part of the monthly payment that reduces the remaining balance of a mortgage
C. an ethic or value
D. both A and B

Answer: D. The principal is the amount borrowed or remaining unpaid, as well as the part of the monthly payment that reduces the remaining balance of a mortgage.

29. A promissory note is

A. a written promise to repay a specified amount over a specified period of time
B. an oral promise to repay a specified amount over a specified period of time
C. a note passed back and forth in class
D. a note you deliver to another telling them of your intentions

Answer: A. A promissory note is a written promise to repay a specific amount over a specified period of time.

30. Which of the following best describes a real estate agent?

A. A licensed person who negotiates and transacts the sale of real estate
B. The owner of a real estate firm
C. A person who negotiates and transacts the sale of real estate but is not licensed
D. A person who sells both property and insurance

Answer: A. A real estate agent is a licensed person who negotiates and transacts the sale of real estate.

31. When does an assumption take place?

A. When someone believes something and it turns out to be true
B. When the buyer assumes the seller’s mortgage
C. When the seller assumes the buyer’s mortgage
D. All of the above

Answer: B. When the buyer assumes the seller’s mortgage is a transaction called an assumption.

32. A legal document conveying title to a property is called a/an

A. sales contract
B. option to purchase
C. deed
D. contract for deed

Answer: C. A deed is a legal document conveying title to property.

33. If you have a loan and transfer the title to another individual without informing the lender, it is likely that the lender will demand payment of the outstanding loan balance. He is able to do this because of a clause in your mortgage called the

A. due on demand clause
B. acceleration clause
C. amortization schedule
D. both A and B

Answer: B. An acceleration clause allows the lender to demand payment, most commonly if the borrower defaults on the loan or transfers title to someone without informing the lender.

34. The most common type of bankruptcy is called

A. Chapter 11 bankruptcy
B. Chapter 11 no asset bankruptcy
C. Chapter 7 no asset bankruptcy
D. Chapter 7 bankruptcy

Answer: C. The most common type for an individual is a “Chapter 7 No Asset” bankruptcy, which relieves the borrower of most types of debts.

35. Which of the following best describes a “broker”?

A. Someone who owns a real estate firm
B. Some real estate agents working for brokers
C. Someone who acts as an agent and brings two parties together for a transaction and earns a fee for this
D. All of the above

Answer: D. A broker can own a real estate firm, work for another broker who owns the firm, broker loans in the mortgage industry, but basically is defined as anyone who acts as an agent, bringing two parties together for any type of transaction and earns a fee.

36. A normal contingency in a real estate contract would be that the

A. purchaser is able to obtain a satisfactory home inspection from a qualified inspector.
B. seller is allowed to come back and spend 2 weeks in the house each year
C. purchaser is able to have occupancy as soon as the sales contract is signed
D. seller is allowed to dig up some of the landscaping and take it with him

Answer: A. A normal contingency in a sales contract would be that the purchaser is able to obtain a satisfactory home inspection from a qualified inspector. This condition has to be met before the contract is legally binding.

37. If you go to a bank or mortgage company to apply for a home, what type of mortgage would you be applying for?

A. Government
B. Conventional
C. American
D. Adjustable rate

Answer: B. Home loans which are not VA or FHA are called conventional loans.

38. A report of someone’s credit history which is prepared by a credit bureau and used by a lender in the loan qualification process is called a

A. personal affidavit
B. credit card history
C. savings account history
D. credit report

Answer: D. A report of an individual’s credit prepared by a credit bureau and used by a lender in determining a loan applicant’s creditworthiness is called a credit report.

39. If you have not made your mortgage payment within 30 days of the due date, the mortgage is considered to be in

A. arrears
B. default
C. trouble
D. bankruptcy

Answer: B. Failure to make the mortgage payment within a specified period of time, usually 30 days for first mortgages or first trust deeds, causes the loan to be in default.

40. A term used by appraisers to estimate the physical condition of a building. It may be different from the building’s actual age.

A. Estimated age
B. Longevity
C. Preferred age
D. Effective age

Answer: D. An appraiser’s estimate of the physical condition of a building is called effective age. Its actual age may be shorter or longer than the effective age.

41. The difference between the fair market value of a property and the amount still owed on the mortgage and other liens is the owner’s financial interest in the property and is called his

A. equity
B. balance due
C. indebtedness
D. none of the above

Answer: A. A homeowner’s financial interest in a property is called his equity. It is the difference between fair market value and what is still owed on the mortgage and any other liens.

42. You put in a new driveway to your property, but in the process the paving goes across your property line onto your neighbor’s property a few inches. This is called an

A. illegal driveway
B. extra benefit for your neighbor
C. encroachment
D. easement

Answer: C. An improvement that intrudes illegally on another’s property is called an encroachment. An easement would be a LEGAL intrusion.

43. A government loan that is not a VA loan would be a/an
A. FHA mortgage
B. FDA mortgage
C. This type loan does not exist
D. ARM mortgage

Answer: A. A mortgage which is insured by the Federal Housing Administration (FHA) and is the other type of government loan besides a VA loan is an FHA mortgage.

44. If you convey an interest in real property to a relative, that person is known as the

A. receiver
B. mortgagor
C. grantee
D. lucky relative

Answer: C. The person to whom an interest in real property is conveyed is the grantee.

45. You decide you want to buy a boat and you want to borrow against the equity in your home. You would get a mortgage loan up to a specified amount which is in second position to your first mortgage. This arrangement is called a

A. perfectly acceptable way to buy a boat
B. leverage against your house
C. home equity line of credit
D. line of credit for personal purposes

Answer: C. A mortgage loan, usually in second position, which allows the borrower to obtain cash drawn against the equity of his home, up to a predetermined amount, is known as a home equity line of credit.

46. You are your sister are joint tenants in a home your mother left you. Your sister has three children in her will and you have one. If she dies first, who does the property go to?

A. It is divided equally between her three children
B. It goes entirely to you
C. It is divided equally between her three children and your one
D. It goes into her estate

Answer: B. In the event of death in joint tenancy, the survivor owns the property in its entirety.

47. What is the best description of a lien?

A. Something that doesn’t stand up straight in a house
B. Something that’s illegal
C. A legal claim against property that must be paid off when it’s sold
D. None of the above

Answer: C. A lien, such as a mortgage or first trust deed, is a legal claim against a property that must be paid off when it is sold.

48. What is a lock-in?

A. A gated community which locks the gate at midnight
B. An agreement from a lender guaranteeing a specific interest rate for a specific time at a certain cost
C. What parents do with wayward children
D. A type of key available at most hardware stores

Answer: B. A lock-in is a rate guaranteed by the lender for a certain period of time at a certain cost to the buyer.

49. The right of a government to take private property for public use upon payment of its fair market value. It is the basis for condemnation proceedings.

A. Eminent domain
B. Governmental domain
C. Encroachment
D. Both A and B

Answer: A. Eminent domain is the right of the government to take private property for public use upon payment of its fair market value.

50. A mortgage with a lien position subordinate to the first mortgage on a piece of property is called a

A. second mortgage
B. first subordinate mortgage
C. mortgage which isn’t legal
D. lien position mortgage

Answer: A. A second mortgage is a mortgage with a lien position subordinate to the first mortgage.

51. An adjustable-rate mortgage, also known as an ARM is

A. one in which the interest rate is fixed over time
B. one in which the interest rate changes periodically, depending on index changes
C. one in which the interest rate changes periodically, depending on the stock market
D. a type of mortgage that the mortgagor can adjust himself

Answer: B. An adjustable rate mortgage in one in which the interest rate adjusts periodically, according to corresponding fluctuations in an index.

52. A schedule that shows how much of each payment will be applied to principal and how much toward interest over the life of the loan is called a/n

A. amortization schedule
B. annual percentage rate
C. assumption
D. both A and C

Answer: A. An amortization schedule is a table showing how much of each payment is applied to interest and how much to principal. It also shows the gradual decrease of the loan balance until it reaches zero.

53. The term applied to a mortgage in which you make the payments every two weeks, thereby making thirteen payments a year rather than twelve. This mortgage is paid off faster than a normal mortgage.

A. Twice-monthly mortgage
B. Accelerated mortgage
C. Bi-weekly mortgage
D. None of the above

Answer: C. A mortgage in which you make payments every two weeks instead of once a month is called a bi-weekly mortgage.

54. The limitation of how much an adjustable rate mortgage may adjust over a six-month period, annual period, and over the life of the loan is called a

A. buy-down
B. high point
C. top stop
D. cap

Answer: D. The limitation on how much the loan may adjust over a period of time and for the life of the loan is a cap.

55. When is a real estate transaction considered to be “closed”?

A. When the buyer has signed all the sales contracts
B. When the closing documents have been recorded at the local recorder’s office
C. When all the documents are signed and money changes hands
D. Both B and C.

Answer: D. In some states “closed” means when the documents are recorded at the courthouse, and in others it is a meeting where the documents are signed and money changes hands.

56. A record of an individual’s repayment of debt, reviewed by mortgage lenders in determining credit risk is called a

A. credit affidavit
B. credit history
C. there is no such record
D. credit worthiness

Answer: B. A record of an individual’s repayment of debt is called a credit history.

57. If you sell your property to a neighbor and the lender demands repayment in full, this means you have a _________________ in your mortgage.

A. seller pays all provision
B. buyer pays all provision
C. due-on-sale provision
D. none of the above

Answer: C. A provision in a mortgage which allows the lender to demand repayment in full if the borrower sells the property that serves as security for the mortgage is called a due-on-sale provision.

58. The sum total of all the real and personal property owned by an individual at time of death is called their

A. estate
B. probate
C. will
D. all of the above.

Answer: A. The sum total of all the real and personal property owned by an individual at time of death is called an estate.

59. If you list your property with a real estate agent and sign a written agreement that they are the only ones entitled to a listing for a specific time you have given them an

A. exclusive listing
B. exclusive right to advertise
C. exclusive right to show
D. inclusive listing

Answer: A. A written contract giving a licensed real estate agent the exclusive right to sell a property for a specified time is called an exclusive listing.

60. Fair market value could be defined as

A. how much a property is worth, determined by a realtor’s market analysis
B. the most a buyer, willing, but not compelled to buy, would pay
C. the least a seller, willing, but not compelled to sell, would take
D. both B and C

Answer: D. Fair market value is the highest price that a buyer, willing but not compelled to buy, would pay, and the lowest a seller, willing but not compelled to sell, would accept.

61. If a lender agrees to make a loan to a specific borrower on a specific property, he has made a

A. decision to make the loan
B. statement that both the buyer and the property pass inspection
C. firm commitment
D. both B and C

Answer: C. A lender’s agreement to make a loan to a specific borrower on a specific property is called a firm commitment.

62. If you buy a house and build cabinets into the wall, then sell that house, the cabinets stay because they have become a

A. type of attachment
B. fixture
C. part of the house
D. none of the above

Answer: B. Personal property becomes real property when attached in a permanent manner to real estate and is called a fixture.

63. A home inspection is

A. a thorough inspection by a professional which evaluates the structural and mechanical condition of a property
B. not required by law
C. often a contingency in a contract that it turns out satisfactorily
D. both A and C

Answer: D. A home inspection is a thorough inspection by a professional that evaluates the structural and mechanical condition of the property. A satisfactory home inspection is often a contingency.

64. An insurance policy which combines personal liability insurance and hazard insurance coverage for a dwelling and its contents is called

A. homeowner’s insurance
B. buyer’s insurance
C. errors and omissions insurance
D. all of the above

Answer: A. Homeowner’s insurance combines personal liability insurance and hazard insurance coverage for a dwelling and its contents.

65. Which of the following is true of a lease-option?

A. It is an alternative financing option
B. Each month’s rent may also consist of an additional amount applied toward the purchase
C. The price is already set in the beginning
D. All of the above

Answer: D. A lease-option is an alternative financing option that allows home buyers to lease a home with an option to buy. Each month’s rent payment may consist of not only the rent, but an additional amount which can be applied toward the down payment on an already specified price.

66. In simple terms, a sum of borrowed money (principal) usually repaid with interest is called a

A. mortgage
B. loan
C. conventional loan
D. alternative mortgage

Answer: B. A sum of borrowed money generally repaid with interest is simply a loan.

67. A property description which is recognized by law and is sufficient to locate and identify the property without oral testimony is known as the property’s

A. address
B. 911 address
C. legal description
D. identifying information

Answer: C. A legal description describes the property and is recognized by law. It is sufficient to locate and identify the property without oral testimony.

68. The date on which the principal balance of a loan, bond, or other financial instrument becomes due and payable is called

A. its due date
B. maturity
C. end of the paper trail
D. delivery

Answer: B. The date on which the principal balance of a loan, bond, or other financial instrument becomes due and payable is called maturity.

69. The person borrowing money in a mortgage agreement is called the

A. mortgagor
B. mortgagee
C. borrower
D. lessee

Answer: A. The borrower in a mortgage agreement is called the mortgagor.

70. Which of the following is true about an origination fee?

A. It applies to both government and conventional loans
B. It is usually 1% on a government loan
C. It is usually 2% on a conventional loan
D. Both A and B

Answer: D. Origination fees apply to government and conventional loans. A government loan origination fee is one percent of the loan amount, but additional points may be charged which are called “discount points”. In a conventional loan, the origination fee refers to the total number of points a borrower has to pay.

71. Which of the following falls under the term “personal property”?

A. A garage attached to a house
B. A sofa
C. The front porch of a home
D. The windows in a home

Answer: B. Personal property is any property that is not part of the real property. A, C, an D are all parts of the house.

72. In some cases if a borrower pays off a loan before it is due he may encounter a penalty called a

A. penalty for early withdrawal
B. loan to value penalty
C. prepayment penalty
D. there is never a penalty for paying a loan off early

Answer: C. A fee that may be charged to a borrower who pays off a loan before it is due is known as a prepayment penalty.

73. Which of the following statements is true regarding the term “pre-approval”?

A. It applies only to the property
B. It is done before the loan application is complete
C. It s a loosely used term
D. None of the above

Answer: C. Pre-approval is a loosely used term generally taken to mean a borrower has completed a loan application and provided debt, income, and savings documentation which an underwriter has reviewed and approved.

74. PITI reserves applies to

A. a cash amount the borrower must have on hand after down payment and closing Costs.
B. an amount which is financed with the mortgage
C. both A and B
D. none of the above

Answer: A. PITI reserves must equal the cash amount that the borrower would have to pay for principal, interest, taxes, and insurance for a predefined number of months.

75. Why would a public auction take place?

A. It’s a good way to buy property
B. To inform the public about property for sale
C. To help auctioneers get employment
D. To sell property to repay a mortgage in defaults

Answer: D. A public auction is a meeting in an announced public location to sell property to repay a mortgage that is in default.

76. The term “realtor” applies to

A. any real estate agent who has passed the state exam
B. any real estate agent whose license is active
C. any real estate agent who is a member of a local real estate board affiliated with the National Association of Realtors.
D. any real estate agent who belongs to his local board

Answer: C. A realtor is defined as an agent, broker, or associate who holds active membership in a local real estate board which is affiliated with the National Association of Realtors.

77. “Remaining term” refers to

A. the remaining school term for a real estate class
B. the original amortization term minus the number of payments that have been applied
C. the months left in a pregnancy
D. all of the above

Answer: B. The remaining term applies to the original amortization term minus the number of payments that have been applied.

78. Which of the following is not true of a “revolving debt”?

A. It is a type of credit arrangement, like a credit card
B. It revolves around no interest for the first six months
C. A customer borrows against a pre-approved line of credit
D. The customer is billed for the amount borrowed plus any interest due

Answer: B. Revolving debt is a credit arrangement, such as a credit card, which allows a customer to borrow against a pre-approved line of credit when purchasing goods and services. The borrower is billed for the amount that is actually borrowed plus any interest due.

79. Which of the following does a survey not show?

A. Precise legal boundaries of a property
B. Location of improvements, easements, rights of way
C. Encroachments
D. Location of furnishings within the dwelling

Answer: D. A survey is a drawing or map showing the precise legal boundaries of a property, the location of improvements, easements, rights of way, encroachments, and other physical features.

80. What is meant by “seller carry-back”?

A. The seller physically carries his furnishings out of the house on the day of closing
B. The seller agrees to be on the mortgage with the buyer
C. the seller provides financing, often in combination with an assumable mortgage
D. The seller carries the principal, but not the interest on a loan

Answer: C. A seller carry-back is an agreement in which the owner of a property provides financing, often in combination with an assumable mortgage.

81. A title company is one which

A. is usually not needed in a real estate transaction
B. is not called upon until one year after the sale is closed
C. specializes in examining and insuring titles to real estate
D. specializes in preparing deeds and deeds of trust

Answer: C. A title company specializes in examining and insuring titles to real estate.

82. A state or local tax which is payable when title passes from one owner to another is called a

A. title tax
B. transfer tax
C. revenue stamps
D. real estate tariff

Answer: B. State or local tax payable when title passes from one owner to another is called a transfer tax.

83. What is Truth-in-Lending?

A. A state law requiring lenders to fully disclose in writing all terms and conditions of a mortgage
B. A federal law requiring lenders to fully disclose in writing all terms and conditions of a mortgage
C. A local law requiring lenders to fully disclose in writing all terms and conditions of a mortgage
D. None of the above

Answer: B. Truth-in-Lending is a federal law requiring lenders to fully disclose in writing the terms and conditions of a mortgage, including the annual percentage rate and other charges.

84. A VA mortgage

A. is a conventional mortgage for the state of Virginia
B. is guaranteed by the Department of Veterans Affairs
C. originates in Texas but ends up in Virginia
D. in available to anyone applying for a mortgage

Answer: B. A VA mortgage is guaranteed by the Department of Veterans Affairs.

85. Which of the following is not true of “amortization”?

A. Over time the interest portion increases as the loan balance decreases
B. Over time the interest portion decreases as the loan balance decreases
C. Over time the amount applied to principal increases so the loan is paid off in the specified time
D. None of the above

Answer: A. The loan payment consists of a portion which will be applied to pay the accruing interest on a loan, with the remainder being applied to the principal. Over time the interest portion decreases as the loan balance decreases and the amount applied to principal increases so that the loan is paid off (amortized) in the specified time.

86. The valuation placed on property by a public tax assessor for taxation purposes is called

A. real value
B. fair market value
C. assessed value
D. predicted value

Answer: C. The valuation placed on property by a public tax assessor for purposes of taxation is called assessed value.

87. If a veteran is eligible for a VA loan, he or she would receive a document from the VA called

A. Certificate of Authenticity
B. Certificate of Approval
C. Certificate of Met Requirements
D. Certificate of Eligibility

Answer: D. A certificate of eligibility is a document issued by the Veteran’s Administration that certifies a veteran’s eligibility for a VA loan.

88. Which of the following usually earns the largest commissions in a real estate transaction?

A. Attorneys
B. Realtors
C. Loan officers
D. Home warranty companies

Answer: B. Realtors generally earn the largest commissions, followed by lenders.

89. An unwritten body of law based on general custom in England and used to an extent in some states is called

A. common law
B. uncommon law
C. casual law
D. it isn’t law if it’s not written down

Answer: A. An unwritten body of law based on general custom in England and used to an extent in some states is called common law.

90. If a real estate agent is trying to determine the market value of a property, one thing they would use is recent sales of similar properties or

A. neighbors’ estimates of the value of the property
B. records from several years back in the same neighborhood
C. comparable sales
D. sales they estimate to happen in the future

Answer: C. Recent sales of similar properties in nearby areas and used to help determine the market value of a property are called comparable sales, or “comps.”

91. A person to whom money is owed is known as a

A. debtor
B. creditor
C. mortgagee
D. lender

Answer: B. A creditor is a person to whom money is owed.

92. Discount points refer to

A. a system of figuring out how much the property will be discounted
B. points paid in addition to the one percent loan origination fee
C. usually only FHA and VA loans
D. both B and C

Answer: D. This term is usually used in reference to only government loans (FHA and VA). Discount points are any points paid in addition to the one percent loan origination fee.

93. Which of the following can the Equal Credit Opportunity Act (ECOA) not discriminate against?

A. Race, color or religion
B. National origin
C. Age, sex, or marital status
D. All of the above

Answer: D. ECOA is a federal law requiring lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs.

94. An exclusive listing is one which gives a licensed real estate agent the exclusive right to sell a property

A. until it sells
B. until the owner takes it off the market
C. for a specified period of time
D. none of the above

Answer: C. An exclusive listing gives a licensed real estate agent the exclusive right to sell a property for a specified period of time.

95. Which of the following is true about Fannie Mae’s Community Home Buyer’s Program?

A. It is an income-based community lending model
B. It has flexible underwriting guidelines to increase low to moderate income family’s buying power
C. Borrows who participate must attend pre-purchase home-buyer education sessions
D. All of the above

Answer: D. Fannie Mae’s Community Home Buyer’s Program is an income-based community lending model, under which mortgage insurers and Fannie Mae offer flexible underwriting guidelines to increase a low or moderate income family’s buying power and to decrease the total amount of cash needed to purchase a home. Participating borrows are required to attend pre-purchase home-buyer education sessions.

96. The mortgage that is in first place among any loans recorded against a property and usually refers to the date in which loans are recorded, but not always, is called a

A. primary mortgage
B. first in line mortgage
C. first mortgage
D. both A and B

Answer: C. The mortgage that is in first place is a first mortgage.

97. The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property is called a

A. takeover by the mortgage company
B. public auction
C. foreclosure
D. proceeds sale

Answer: C. The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property is called a foreclosure.

98. Loans against 401K plans are

A. not allowed for down payments on property
B. an acceptable source of down payment for most types of loans
C. too great a risk for most people to take
D. only allowed if you’re accumulated $50,000 in the plan

Answer: B. Some administrators of 401(k)/403B plans allow for loans against the monies you have accumulated in these plans. Loans against 401k plans are an acceptable source of down payment for most types of loans.

99. A late charge is

A. the penalty a borrower pays when a payment is late a stated number of days
B. usually put into play when the payment is fifteen days late on a first mortgage
C. usually not applicable to most people
D. both A and B

Answer: D. A late charge usually kicks in after fifteen days on a first mortgage and is a penalty a borrower must pay.

100. A person’s financial obligations are known as his

A. payments
B. assets
C. liabilities
D. credit risks

Answer: C. A person’s financial obligations are called liabilities and include long-term and short-term debt and any other amounts owed to others.

101. Which of the following is not true of annual percentage rate (APR)?

A. It is the note rate on your loan
B. It is not the note rate on your loan
C. It is a value created according to a government formula intended to reflect the true cost of borrowing and expressed as a percentage
D. It is always higher than the actual note rate on your loan

Answer: A. Annual percentage rate is not the note rate on your loan. It is a value created according to a government formula intended to reflect the true annual cost of borrowing, expressed as a percentage. The APR is always higher than the actual note rate on your loan.

102. An individual qualified by education, training, and experience to estimate the value of real property and personal property and who usually works independently is called an

A. estimator of value
B. appraiser
C. on-site inspector
D. underwriter

Answer: B. An appraiser is an individual qualified by education, training, and experience to estimate the value of real and personal property. Some work for lenders, but most are independent.

103. Which of the following best describes a “balloon payment”?

A. Payment delivered with a “bang”
B. First of many payments on a mortgage
C. The final lump sum payment due at the termination of a balloon mortgage
D. Payments which go higher and higher each year

Answer: C. A balloon payment is the final lump sum payment due at the termination of a balloon mortgage.

104. When a borrower refinances his mortgage at a higher amount than the current loan balance with the intention of pulling out money for personal use, it is referred to as a

A. refinance extra
B. cash-out refinance
C. home equity refinance
D. adjustable lump sum refinance

Answer: B. A cash-out refinance is when a borrow refinances his mortgage at a higher amount than the current loan balance because he wants to pull our money for personal use.

105. A certificate of deposit is

A. the same as a down payment
B. a liquid asset
C. a deposit held in a bank paying a certain amount of interest to the depositor over a certain time
D. a deposit held in a bank which pays double the amount of normal interest over time

Answer: C. A certificate of deposit is a time deposit held in a bank which pays a certain amount of interest to the depositor.

106. Common area assessments are

A. sometimes called Homeowners Association Fees
B. paid by individual owners of condominiums or planned unit developments
C. used to maintain the property and common areas
D. all of the above

Answer: D. Common area assessments are also sometimes called Homeowners Association Fees and are paid by the individual owners of condos or planned unit developments and are used to maintain the property and common areas.

107. A short-term interim loan for financing the cost of construction is called a

A. flexible loan
B. convertible loan
C. construction loan
D. not a loan, but a promissory note

Answer: C. A short-term interim loan for financing the cost of construction is called a construction loan. The lender makes payments to the builder at periodic intervals as the work progresses.

108. In simple terms, debt is

A. credit extended to someone
B. an amount owed to another
C. an amount owed to another with interest
D. repayable

Answer: B. Debt is an amount owed to another

109. Which of the following is not true of the term “depreciation”?

A. It is a decline in the value of property
B. It is an accounting term showing the declining monetary value of an asset
C. It is a true expense where money is actually paid
D. Lenders add back depreciation expense for self-employed borrowers and count it as income

Answer: C. Depreciation is not a true expense where money is actually paid. It is a decline in the value of property and an accounting term showing the declining monetary value of an asset. Lenders add back depreciation expense for self-employed borrowers and count it as income.

110. Which of the following would not be paid by escrow disbursements?

A. Real estate taxes
B. Hazard insurance
C. Mortgage insurance
D. Personal property taxes

Answer: D. Personal property taxes are not a typical escrow disbursement, but real estate taxes, hazard insurance and mortgage insurance are.

111. The lawful expulsion of an occupant from real property is called

A. conviction
B. divorce from bed and board
C. eviction
D. there is no way to lawfully remove an occupant from real property

Answer: C. The lawful expulsion of an occupant from real property is called eviction.

112. If you have a loan in which the interest rate does not change during the term of the loan you have a _____________ mortgage.

A. fixed-rate
B. conventional fixed-rate
C. owner financing
D. all of the above

Answer: A. A loan in which the interest rate does not change during the term is called a fixed-rate mortgage.

113. The following is true of a Home Equity Conversion Mortgage (HECM).

A. It is also known as reverse annuity mortgage
B. You don’t make payments to the lender, the lender makes payments to you
C. It enables older homeowners to convert their equity into cash
D. All of the above

Answer: D. Usually called a reverse annuity mortgage, this mortgage is unique in that instead of making payments to a lender, the lender makes payments to you, allowing older homeowners to convert their equity to cash. The loan does not have to be repaid until the borrower no longer occupies the property.

114. A written agreement between property owner and tenant stipulating the conditions under which the tenant may possess the property for a specified period of time and the payment due is called a/an

A. contract
B. option
C. lease
D. lease-option

Answer: C. A written agreement between property owner and tenant laying out the terms of the agreement including payment and period of time is called a lease.

115. A lender is

A. the firm making the loan
B. the individual representing the firm making the loan
C. the individual offering owner financing
D. both A and B

Answer: D. A lender is the firm making the loan or an individual representing the firm making the loan.

116. A margin is

A. a measurement of error
B. an artificial line not to write in on a loan document
C. both A and B
D. the difference between the interest rate and the index on an adjustable rate mortgage

Answer: D. A margin is the difference between the interest rate and the index on an adjustable rate mortgage which remains stable over the life of the loan.

117. Which of the following is the best definition of a mortgage broker?

A. A mortgage company which originates loans, then places with other lending institutions
B. A mortgage company which originates loans, then keeps them in house
C. An individual which originates loans, then sells on the secondary market
D. Much like a real estate broker, receives a commission on loans

Answer: A. A mortgage broker is a mortgage company which originates loans, then places with a variety of other lending institutions with whom they usually have pre-established relationships.

118. The term “note rate” refers to:

A. the speed at which a musician plays scales
B. the interest rate stated on a mortgage note
C. the interest rate stated on a personal loan
D. the rate at which a note is amortized

Answer: B. Note rate means the interest rate stated on a mortgage note.

119. If you have not made your mortgage payment, you are likely to receive which of the following?

A. Notice of non-payment
B. A written eviction notice
C. Notice of default
D. A letter from an attorney

Answer: C. You are likely to receive a formal written notice, called a notice of default, that a default has occurred and legal action may be taken.

120. A payment that is not sufficient to cover the scheduled monthly payment on a mortgage loan is called a

A. late payment
B. partial payment
C. “too little, too late” payment
D. a drop in the bucket

Answer: B. A payment insufficient to cover the scheduled monthly payment on a mortgage loan is a partial payment, normally not accepted by the lender, but in times of hardship a borrower can make a request of the loan servicing collection department.

121. PITI stands for

A. principal, interest, taxes and insurance

B. principle, interest, taxes and insurance
C. prepayment, interest, tariff and insurance
D. none of the above

Answer: A. PITI is principal, interest, taxes and insurance.

122. Which of the following describes “prepayment”?

A. An amount paid to reduce the interest on a loan before the due date
B. An amount paid to reduce the principal on a loan before the due date
C. Can result from a sale, owner’s decision to pay off the loan, or foreclosure
D. Both B and C

Answer: D. A prepayment reduces the principal on a loan before the due date and can result from a sale, the owner’s decision to pay off the loan early, or foreclosure.

123. What is private mortgage insurance?

A. Mortgage insurance that is arranged for by the buyer privately

B. Mortgage insurance provided by a private mortgage insurance company
C. Insurance required for loans with a loan-to-value percentage in excess of 80%
D. Both B and C

Answer: D. A prepayment reduces the principal on a loan before the due date and can result from a sale, the owner’s decision to pay off the loan early, or foreclosure.

124. If you were trying to buy a home you and the seller would need to sign a written contract called a/an

A. purchase agreement
B. down payment agreement
C. option to purchase
D. all of the above

Answer: A. A written contract signed by buyer and seller stating the terms and conditions under which a property will be sold is called a purchase agreement.

125. What is a recorder?

A. A public official who keeps records of real property transactions
B. The county clerk
C. The registrar of deeds
D. All of the above.

Answer: D. A recorder is a public official who keeps records of real property transactions in their area and is also known by the names “county clerk” and “registrar of deeds”.

126. The principal balance on a mortgage is

A. the outstanding balance of principal and interest
B. the outstanding balance of principal only
C. the amount the mortgage has been paid down
D. none of the above

Answer: B. The principal balance is the outstanding balance of principal only on a mortgage and does not include interest or any other charges.

127. Which of the following is not true about qualifying ratios?

A. There are two types of ratios—“top” or “front” and “back” or “bottom”
B. The “top” ratio is a calculation of the borrower’s monthly housing costs (principal, taxes, insurance, mortgage insurance, homeowners’ association fees) as a percentage of monthly income
C. the “back” ratio includes all monthly costs as well as “back” taxes
D. Both calculations are used in determining whether a borrower can qualify for a mortgage

Answer: C. The “back” or “bottom” ratio includes housing costs as well as all other monthly debt.

128. The definition of “real” property is

A. property that has nothing artificial on it, only natural materials
B. land and appurtenances, including anything of a permanent nature such as structures, trees and minerals
C. things located within houses such as furniture, accessories, appliances, and clothing
D. all of the above

Answer: B. Real property is defined as land and appurtenances, including anything of a permanent nature such as structures, trees, minerals, and the interest, benefits, and inherent rights thereof.

129. In joint tenancy, if one person dies and the other inherits the property, this is called

A. tenants in common
B. whatever is stated in the will
C. following the wishes of the deceased
D. right of survivorship

Answer: D. In joint tenancy the right of survivors to acquire the interest of a deceased joint tenant is called right of survivorship.

130. A secured loan is

A. backed by collateral
B. when the borrower promises something of value to the lender
C. when the bank is not in danger of failing
D. when the bank has been bailed out

Answer: A. A secured loan is backed by security, also called collateral.

131. A mortgage or other type of lien that has a priority lower than that of the first mortgage is called

A. a second mortgage
B. subordinate financing
C. first subordinate financing
D. all of the above

Answer: B. Subordinate financing is any mortgage or other lien that has a priority lower than the first mortgage.

132. If you were buying a house and wanted to protect yourself against any loss arising from disputes over ownership of your property, you would purchase

A. hazard insurance
B. errors and omissions insurance
C. title insurance
D. deed insurance

Answer: C. Insurance that protects the lender (lender’s policy) or the buyer (owner’s policy) against loss arising from disputes over ownership of a property is title insurance.

133 Which of the following is true of the Veteran’s Administration (VA)?

A. It encourages lenders to make mortgages to veterans
B. It is an agency of the federal government which guarantees residential mortgages made to eligible veterans
C. The guarantee protects the lender against loss
D. All of the above

Answer: D. An agency of the federal government, the VA guarantees residential mortgages made to eligible veterans of the military services. This guarantee protects the lender against loss and thus encourages lenders to make mortgages to veterans.

134. The form used to apply for a mortgage loan, which contains information about a borrower’s income, savings, assets, debts, and more is called a/an

A. application for funds
B. income documentary
C. both A and B
D. application

Answer: A. The form used to apply for a mortgage loan containing information about a borrower’s income, savings, assets, debts, and more is called an application.

135. An assessment does which of the following?

A. Places a value on property for the purpose of real estate sales
B. Is the same as a competitive market analysis
C. Places a value on property for the purpose of taxation
D. Is usually carried out by the mayor of a town

Answer: C. An assessment places a value on property for the purpose of taxation.

136. Which of the following is not true about the “bond market”?

A. It refers to the daily buy and selling of thirty-year treasury bonds
B. Lenders do not usually follow this market closely
C. The same factors that affect the bond market affect mortgage rates at the same time
D. Fluctuations in this market cause mortgage rates to change daily

Answer: B. Lenders actually do follow this market closely because the same factors that affect the Treasury Bond market also affect mortgage rates at the same time.

137. What does the term “buydown” mean?

A. Usually refers to a fixed rate mortgage where the interest rate is “bought down” for a temporary period, usually one to three years.
B. A lump sum is paid and held in an account used to supplement the borrower’s monthly payment
C. These funds can sometimes come from the seller to induce someone to buy their property
D. All of the above

Answer: D. A buy-down refers to a fixed rate mortgage where the interest rate is “bought down” for a temporary period. The funds for this can come from the seller, the lender, or some other source. The lump sum is paid and held in an account used to supplement the borrower’s monthly payment for a time and after that time the borrower’s payment is calculated at the note rate.

138. Certificate of Reasonable Value (CRV) applies to

A. an FHA loan
B. a conventional loan
C. a VA loan
D. a car loan

Answer: C. Once the appraisal has been done on a property being bought with a VA loan, the VA issues a CRV.

139. If you are buying a piece of property and have someone else who is obligated on the loan and is on the title to the property, that person is called a

A. spouse
B. family member or friend who shares the property and payments with you
C. co-borrower
D. none of the above

Answer: C. An additional individual who is both obligated on the loan and is on the title to the property is called a co-borrower.

140. How would you define “collection”?

A. A plate, usually at church, where money is donated
B. It goes into effect when a borrower falls behind
C. It applies to several or many things in the same category on a loan application
D. It only applies to trash

Answer: B. When a borrower falls behind, the lender contacts them in an effort to bring the loan current. The loan then goes to “collection” and the lender must mail and record certain documents in case they have to foreclose on the property.

141. Which of the following is true of “condominium”?

A. It applies to ownership, not to construction or development
B. It is a type of ownership where all of the owners own each other’s interior units
C. It is an ownership where owners own the property, common areas, and buildings together
D. both A and C

Answer: D. A condominium is real property where all the owners own the property, common areas and building together, with the exception of the interior of the unit to which they have title. Mistakenly referred to as a type of construction or development, it actually refers to type of ownership.

142. An organization which gathers, records, updates, and stores financial and public records information about the payment records of individuals being considered for credit is called a

A. credit repository
B. credit reporting agency
C. mortgage company
D. bank

Answer: A. A credit repository is an organization which gathers, records, updates, and stores financial and public records information about the payment records of individuals being considered for credit.

143. In some states a recorded mortgage is replaced by a

A. contract for deed
B. promissory note
C. deed of trust
D. deed

Answer: C. Some states do not record mortgages but do record a deed of trust which is essentially the same thing.

144. If you have failed to pay mortgage payments when they are due, it is called

A. delinquency
B. foreclosure
C. collections
D. no big deal

Answer: A. Failure to make mortgage payments when they are due is called delinquency. Most are due on the first day of the month, and even though they may not charge a “late fee” for a number of days, the payment is considered to be late and the loan delinquent.

145. Which of the following would not be considered an “encumbrance”, limiting the fee simple title, on a piece of property?

A. Leases
B. Mortgages
C. Easements or restrictions
D. Furniture not paid for

Answer: D. Encumbrances include mortgages, easements, leases, or restrictions.

146. An earnest money deposit is put into this until delivered to the seller when the transaction is closed.

A. the realtor’s bank account
B. the attorney’s bank account
C. the buyer’s bank account
D. an escrow account

Answer: D. An earnest money deposit is put into escrow until delivered to the seller when the transaction is closed.

147. Which of the following is true of the Federal National Mortgage Association (Fannie Mae)?

A. It is the nation’s largest supplier of mortgages
B. It is congressionally chartered, shareholder owned
C. It is the same as Freddie Mac
D. both A and B

Answer: D. Fannie Mae is a congressionally chartered, shareholder-owned company that is the nation’s largest supplier of home mortgage funds.

148. An employer-sponsored investment plan allowing individuals to set aside tax-deferred income for retirement or emergency purposes is called a ______________ plan.

A. 436(k)/401B
B. 339(k)/372B
C. 401(k)/403B
D. both A and B

Answer: C. 401(k)/403B plans are employer-sponsored investment plans allowing individuals to set aside tax-deferred income for retirement or emergency purposes. Private corporations provide 401(k) plans; 403B plans are provided by not for profit organizations.

149. Which of the following is true of the Government National Mortgage Association, also known as Ginnie Mae?

A. It is government owned
B. It was created by Congress on September 1, 2002
C. Provides funds to lenders for making home loans
D. Both A and C

Answer: D. Ginnie Mae is government owned, created by Congress on September 1, 1968. Ginnie Mae performs the same roles as Fannie Mae and Freddie Mac in providing funds to lenders for home loans, but it provides funds for government loans (FHA and VA).

150. At what amount is a loan considered to be a “jumbo” loan, which exceeds Fannie Mae’s and Freddie Mac’s loan limits? It is also known as a non-conforming loan.

A. $417,000
B. $227,150
C. $300,000
D. Jumbo refers to the percentage borrowed, not the amount

Answer: A. A jumbo loan is anything over $417,000.

151. Usually part of a homeowner’s insurance policy, this type insurance offers protection against claims alleging that a property owner’s negligence or inappropriate action resulted in bodily injury or property damage to another party.

A. Malpractice insurance
B. Liability insurance
C. Hazard insurance
D. Collision insurance

Answer: B. Liability insurance protects against claims against a property owner for negligence or bodily injury or property damage to another party.

152. A lender refers to the process of getting new loans as

A. selling his product
B. loan origination
C. his bread and butter
D. more than just a job

Answer: B. A lender refers to the process of getting new loans as loan origination.

153. The percentage relationship between the amount of the loan and the appraised value or sales price (whichever is lower) is called

A. value to loan
B. first-time homebuyer’s loan
C. loan to value
D. both B and C

Answer: C. The percentage relationship between the amount of the loan and the appraised value or sales price is called loan to value.

154. If you are applying for a loan, the lender gives and guarantees you a specific interest rate for a specific time. This period of time is called the

A. period of no return
B. rate-freeze period
C. lock-in period
D. period at which you cannot seek other financing

Answer: C. The time during which the lender has guaranteed a certain rate is called the lock-in period.

155. A credit report which reports the raw data pulled from two or more of the major credit repositories is called a

A. multi-credit report
B. merged credit report
C. this is not legal
D. none of the above

Answer: B. A merged credit report reports the raw data pulled from two or more of the major credit repositories.

156. Sometimes, called a first trust deed, this is a legal document pledging a property to the lender as security for payment of a debt.

A. promissory note
B. deed of trust
C. owner financing document
D. mortgage

Answer: D. A mortgage is a legal document pledging a property to the lender as security for payment of a debt.

157. Which of the following is not true of mortgage insurance?

A. It covers the lender against some of the losses incurred resulting from default on a home loan
B. It is sometimes is mistakenly referred to a PMI (private mortgage insurance)
C. It is required on all loans having a loan to value of more than 90%
D. No “MI” loans are usually made at higher rates

Answer: C. Mortgage insurance is required on all loans having a loan to value of more than 80%.

158 A no-point loan has an interest rate

A. lower than if you pay one point
B. the same as if you pay one point
C. higher than if you pay one point
D. a no-point loan does not exist

Answer: C. The interest rate on a “no points” loan is approximately a quarter percent higher than on a loan where you pay one point.

159. The total amount of principal owed on a mortgage before any payments are made is called the

A. total amount due
B. original principal balance
C. a lot less than you’ll actually pay
D. your down payment times ten

Answer: B. The total amount of principal owed on a mortgage before any payments are made is called the original principal balance.

160. A planned unit development (PUD) is different from a condominium because

A. a condominium usually has more amenities
B. there are fewer units in a condominium development
C. in a condominium the individual owns the airspace of the unit
D. all of the above

Answer: C. A planned unit development is a type of ownership where individuals actually own the building or unit they live, but common areas are owned jointly with the other members of the development or association. In a condominium, an individual owns the airspace of his unit, but the buildings and common areas are owned jointly with the others in the development.

161. The term that means a limit on the amount that the interest rate can increase or decrease over the life of an adjustable rate mortgage is

A. term cap
B. life cap
C. ARM cap
D. none of the above

Answer: B. A life cap limits the amount the interest rate can increase or decrease over the life of the mortgage.

162. If a commercial bank or other financial institution extends you credit up to a certain amount for a certain time, you are receiving a

A. line of credit
B. personal loan
C. unsecured loan
D. both B and C

Answer: A. A line of credit is given by a commercial bank or other financial institution for a certain time and certain amount.

163. The term “modification” means

A. a change in your mortgage without having to refinance
B. a change in house plans before building begins
C. the right of the bank to modify the interest rate without telling you
D. both B and C

Answer: A. Occasionally a lender will agree to modify the terms of your mortgage without requiring you to refinance.

164. Which of the following is true of the term “mortgage banker”?

A. They are generally assumed to originate and fund their own loans
B. It is a loosely applied term to those who are mortgage brokers or correspondents
C. They usually sell loans on the secondary market to Fannie Mae, Freddie Mac, or Ginnie Mae.
D. All of the above.

Answer: D. A mortgage banker is generally assumed to originate and fund their own loans, which are then sold on the secondary market. Firms loosely apply this term to themselves, whether they are true mortgage bankers or simply mortgage brokers or correspondents.

165. Which of the following describes “prime rate”?

A. It is the interest rate banks charge to their preferred customers
B. The same factors that influence the prime rate also affect interest rates of mortgage loans
C. Changes in the prime rate are usually not widely publicized in the news media
D. Both A and B

Answer: D. Prime rate is the interest rate banks charge to their preferred customers. Changes in the prime rate are widely publicized in the news media and the same factors that influence prime rate also affect interest rates of mortgage loans.

166. A no cash-out refinance is

A. intended to put cash in the hands of the borrower
B. calculated to cover the balance due on the current loan and any costs associated with obtaining the new mortgage
C. often referred to as a “rate and term refinance”
D. both B and C

Answer: D. A no cash-out refinance is not intended to put cash in the hands of the buyer, but the new balance is calculated to cover the balance due on the current loan and any costs associated with obtaining the new mortgage. It is often referred to as a “rate and term refinance”.

167. A legal document requiring a borrower to repay a mortgage loan at a stated interest rate during a specified period of time is called a

A. note
B. deed of trust
C. mortgage
D. both B and C

Answer: A. A note is a legal document requiring a borrower to repay a mortgage loan at a stated interest rate during a specified period of time.

168. The date when a new monthly payment amount takes effect on an adjustable-rate mortgage or graduated-payment mortgage is called the

A. new payment date
B. payment change date
C. new payment due date
D. change payment date

Answer: B. The date when a new monthly payment amount takes effect on an adjustable-rate mortgage or graduated-payment mortgage is called the payment change date.

169. A quitclaim deed does which of the following?

A. Transfers with warranty whatever interest or title a grantor may have at the time the conveyance is made
B. Transfers without warranty whatever interest or title a grantor may have at the time the conveyance is made
C. Does not transfer interest at all
D. Quitclaim deeds are no longer used

Answer: B. A quitclaim deed transfers without warranty whatever interest or title a grantor may have at the time the conveyance is made

170. In a refinance transaction, what happens?

A. One loan is paid off with the proceeds from a new loan using the same property as security
B. An additional loan is added to the present loan
C. The loan’s interest rate changes
D. The term of the loan is increased

Answer: A. A refinance transaction is the process of paying off one loan with the proceeds from a new loan using the same property as security.

171. The amount of principal that has not yet been repaid is called the

A. amount owed
B. balance of the loan
C. remaining balance
D. all of the above

Answer: C. The amount of principal that has not yet been repaid is called the remaining balance.

172. If you made an arrangement to repay delinquent installments or advances, you would be setting up a

A. good faith payment plan
B. repayment plan
C. another loan to pay off
D. oral contract

Answer: B. A repayment plan is an arrangement made to repay delinquent installments or advances.

173. Your neighbor has given you a right of first refusal on a piece of land he plans to sell. What does this mean?

A. He has given you the first opportunity to purchase it before he offers it for sale to others
B. He expects you to refuse to buy it
C. He expects you to pay more for it than anyone else
D. None of the above

Answer: A. A right of first refusal is a provision in an agreement that requires the owner of a property to give another party the first opportunity to purchase or lease the property before he offers it for sale or lease to others.

174. You are selling the house you live in, but the house you’re moving to is not completed. You need to stay on in the house a while after closing. You work out a deal with the new purchaser called a

A. no-rent lease agreement
B. delayed possession for the new purchaser
C. sale-leaseback
D. lease for one year past closing

Answer: C. A sale-leaseback is a technique in which a seller deeds property to a buyer for a consideration, and the buyer simultaneously leases the property back to the seller.

175. In a tenancy in common

A. ownership passes to the survivors in the event of death
B. ownership does not pass to the survivors in the event of death
C. there are no provisions made for the death of the owners
D. when one person dies, the others have to move

Answer: B. In a tenancy in common ownership does not pass to the survivors in the event of death.

176. The duties of a “servicer” include

A. collecting principal and interest payments from borrowers
B. managing borrowers’ escrow accounts
C. usually a servicer services mortgages purchased by an investor in the secondary mortgage market
D. all of the above

Answer: D. A servicer is an organization that collects principal and interest payments from borrowers and manages borrowers’ escrow accounts. The servicer often services mortgages that have been purchased by an investor in the secondary mortgage market.

177. In “third-party origination”

A. an independent political party originates a loan
B. a lender uses another party to completely or partially originate, process, underwrite, close, fund, or package the mortgages it plans to deliver to the secondary mortgage market.
C. three parties are involved in the loan process
D. all of the above

Answer: B. A lender uses another party to completely or partially originate, process, underwrite, close, fund, or package the mortgages it plans to deliver to the secondary mortgage market.

178. A title search of a property would show the following to be true:

A. the seller is the legal owner of the property
B. there are no liens or other claims against the property
C. the previous owners came over on the Mayflower
D. both A and B

Answer: D. A title search would show that the seller is the legal owner and there are no outstanding liens or other claims against the property.

179. A trustee

A. is known to be trustworthy
B. is someone who has a great deal of trust in others
C. is a fiduciary who holds or controls property for the benefit of another
D. is usually a job for relatives

Answer: C. A trustee is a fiduciary who holds or controls property for the benefit of another.

180. When a person is “vested” he can

A. use a portion of a fund such as an individual retirement fund
B. use a portion of a fund without paying taxes on it
C. have access to a bulletproof vest when in dangerous situations
D. both A and C

Answer: A. A person who is “vested” can use a portion of a fund such as an individual retirement fund, but must pay taxes on funds that are withdrawn. If someone is 100% vested, they can withdraw all the funds set aside for them in a retirement fund.

181. Which of the following is not true of the term “appraised value”?

A. It usually comes out lower than the purchase price when using comparable sales
B. It is an opinion of a property’s fair market value
C. It is based on comparable sales
D. None of the above

Answer: A. The appraised value usually comes out at the purchase price because the most recent sale is the one on the property in question.

182. If a buyer qualifies and is able to take over the seller’s mortgage when buying his home, this type of mortgage is called

A. “pass on down” mortgage
B. assumable mortgage
C. owner financing
D. both B and C

Answer: B. A mortgage that can be assumed by the buyer when a home is sold is called an assumable mortgage. Usually the borrower must qualify in order to assume.

183. A call option is most similar to

A. a lifetime cap
B. a buy-down
C. an acceleration clause
D. all of the above

Answer: C. A call option is most similar to an acceleration clause.

184. A “chain of title” would show

A. the transfers of title to a piece of property over the years
B. members of the “chain gang” who had previously owned the property
C. neither A nor B
D. both A and B

Answer: A. A chain of title is an analysis of the transfers of title to a piece of property over the years.

185. Which of the following is true of a cloud on title?

A. It usually cannot be removed except by deed, release, or court action
B. It is the result of conditions revealed by a title search that adversely affect the title to real estate
C. both A and B
D. neither A nor B

Answer: C. A cloud on title is any condition revealed by a title search that adversely affects the title to real estate. Usually clouds cannot be removed except by deed, release, or court action.

186. Which of the following applies to “closing costs”?

A. They are divided into two categories—“non-recurring closing costs” and “pre-paid items”
B. Lenders try to estimate the amounts of non-recurring and pre-paids on a Good Faith Estimate shortly after receiving the loan application
C. Pre-paids are items which recur over time, such as property taxes and homeowners insurance
D. All of the above

Answer: D. Closing costs are either “non-recurring” or “pre-paids.” “Pre-paids” occur over time, like property taxes and homeowners insurance. Lenders try to estimate both categories and give a Good Faith Estimate within three days of receiving a home loan application.

187. What is “community property”?

A. Property that is owned by an entire condominium development
B. Property that is owned by an entire subdivision of single-family homes
C. Property acquired by a married couple during the marriage and considered to be jointly owned
D. Both A and B

Answer: C. Community property, an outgrowth of the Spanish and Mexican heritage of the area, determines that property acquired by a married couple during their marriage is considered to be jointly owned.

188. If an apartment complex is converted to a condominium, this is called

A. a condominium conversion
B. an apartment conversion
C. either an apartment or condominium conversion
D. fewer options for people to rent

Answer: A. Changing the ownership of an existing building (usually a rental project) to the condominium form of ownership is called a condominium conversion.

189. This is an adjustable rate mortgage that allows the borrower to change the ARM to a fixed rate mortgage within a specific time.

A. due-to-change ARM
B. convertible ARM
C. fixed rate ARM
D. two-fold mortgage

Answer: B. A convertible ARM is an adjustable rate mortgage that allows the borrower to change the ARM to a fixed rate mortgage within a specific time.

190. If someone gives you “credit,” you are

A. agreeing to receive something of value in exchange for a promise to repay the lender at a later date
B. getting something you deserve for something you did
C. very lucky, because this doesn’t happen often
D. both B and C

Answer: A. Credit is an agreement in which a borrower receives something of value in exchange for a promise to repay the lender at a later date.

191. In an effort to avoid foreclosure (which may or may not happen), you might give the lender

A. the payments he is due, all at one time
B. your car and any other valuable personal property you have
C. a “deed in lieu” (of foreclosure)
D. a “deed in lieu” (of foreclosure), which then will not affect your credit badly

Answer: C. A “deed in lieu of foreclosure” conveys title to the lender when the borrower is in default and wants to avoid foreclosure. The lender may or may no stop foreclosure proceedings. Regardless, the avoidance and non-repayment of debt will most likely show on a credit history. The “deed in lieu” may prevent having the documents preparatory to a foreclosure becoming a matter of public record by being recorded.

192. When a lender performs this calculation annually to make sure the correct amount of money for anticipated expenditures is being collected, the lender is performing

A. checks and balances
B. an escrow analysis
C. a detailed loan analysis
D. lenders don’t do this

Answer: B. Once a year your lender will perform an “escrow analysis” to make sure they are collecting the correct amount of money for the anticipated expenditures.

193. The report on the title of a property from the public records or an abstract of the title is called

A. a title report
B. an examination of title
C. an examination of deed, survey and title
D. title insurance

Answer: B. The report on the title of a property from the public records or an abstract of the title is called an examination of title.

194. A consumer protection law that regulates the disclosure of consumer credit reports by consumer/credit reporting agencies and establishes procedures for correcting mistakes on one’s credit record is called the

A. Credit Reporting Act
B. Fair Credit Reporting Act
C. Consumer Protection Act
D. Truth-in-Lending Act

Answer: B. The Fair Credit Reporting Act is a consumer protection law that regulates the disclosure of consumer credit reports by consumer/credit reporting agencies and establishes procedures for correcting mistakes on one’s credit record.

195. If you inherit from someone, the best type of estate to inherit is called

A. a fee simple estate
B. general, all-encompassing estate
C. life estate
D. none of the above

Answer: A. A fee simple estate is an unconditional unlimited estate of inheritance that represents the greatest estate and most extensive interest in land that can be enjoyed and is of perpetual duration.

196. A homeowner’s association does which the following?

A. It manages the common areas of a condominium project or planned unit development
B. It owns title to the common elements in a condominium development
C. It doesn’t own title to the common elements in a planned unit development
D. All of the above

Answer: A. A homeowner’s association manages the common areas of a condominium project or planned unit development, owns title to the common elements in a planned unit development but doesn’t in a condo development.

197. In simple terms a judgment is

A. a personal opinion about real estate
B. an individual’s way of making decisions about legal matters
C. a decision made by a court of law
D. an opinion of an attorney

Answer: C. A judgment is a decision made by a court of law. In repayment of a debt, the court may place a lien against the debtor’s real property as collateral for the judgment’s creditor.

198. This is a way of holding title to a property wherein the mortgagor does not actually own the property but rather has a recorded long-term lease on it.

A. contract for deed
B. rent-to-own contract
C. long-term lease
D. leasehold estate

Answer: D. A leasehold estate is a way of holding title to a property when the mortgagor does not actually own the property but rather has a recorded long-term lease on it.

199. Which of the following are duties of a loan officer?

A. The solicitation of loans
B. Representation of the lending institution
C. Representation of the borrower to the lending institution
D. All of the above

Answer: D. A loan officer, sometimes called a lender, loan representative, loan “rep,” or account executive solicits loans, represents the lending institution, and represents the borrower to the lending institution.

200. The amount paid by a mortgagor for mortgage insurance, either government or private is called

A. mortgage insurance premium
B. private mortgage insurance premium
C. FHA insurance premium
D. VA insurance premium

Answer: A. The mortgage insurance premium is paid by a mortgagor for mortgage insurance, either to a government agency such as the Federal Housing Administration (FHA) or to a private mortgage insurance (MI) company.

201. Which of the following statements is not true of mortgage life and disability insurance?

A. It begins immediately after someone becomes disabled
B. It pays off the entire debt if someone dies during the life of the mortgage
C. It is a type of term life insurance often bought by borrowers
D. In this type insurance, the amount of coverage decreases as the principal declines

Answer: A. Be careful to read the terms of coverage because often it does not start immediately upon the disability, but after a specified period, sometimes forty-five days.

202. Which is the best definition of “multi-dwelling units”?

A. They are properties that provide separate housing units for more than one family with several different mortgages
B. They are properties that provide separate housing units for more than one family, but with a single mortgage
C. They are properties that provide separate housing units for more than one family, but are leased rather than owned
D. They are properties that provide separate housing units for more than one family on a lease-option basis

Answer: B. Multi-dwelling units provide separate housing units for more than one family, although they secure only a single mortgage.

203. Which of the following is true of “negative amortization”?

A. It is also called “deferred interest”
B. Because some ARM’s allow the interest rate to fluctuate, the borrower’s minimum payment may not cover all the interest
C. The unpaid interest is added to the balance of the loan and the loan balance grows larger instead of smaller
D. All of the above

Answer: D. Because some adjustable rate mortgages allow the interest rate to fluctuate independently of a required minimum payment, if a borrower makes the minimum payment it may not cover all the interest. The borrower is deferring the interest payment, called “deferred interest.” It is then added to the balance, making it grow larger, and thus the term “negative amortization.

204. For someone to be determined to be “pre-qualified” for a loan, what has taken place?

A. The person has given a written statement saying he can afford the loan
B. A loan officer has given a written opinion of the borrower’s ability to qualify based on debt, income, or savings
C. The loan officer has reviewed a credit report on the borrower
D. The information given to the loan officer is in the form of written documentation

Answer: B. Pre-qualification usually refers to the loan officer’s written opinion of the ability of a borrower to qualify for a home loan, after the loan officer has made inquiries about debt, income, and savings. This information provided to the loan officer may have been presented verbally or in the form of documentation, and the loan officer may or may not have reviewed a credit report on the borrower.

205. The four components of a monthly mortgage payment on impounded loans are

A. principal, interest, taxes, maintenance
B. principal, interest, insurance, bank fees
C. principal, interest, taxes, miscellaneous charge
D. principal, interest, taxes, insurance

Answer: D. The four components of a monthly mortgage payment on impounded loans are principal, interest, taxes and insurance (PITI). While taxes and insurance are usually paid into an escrow account until they’re due, principal refers to the part of the monthly payment that reduces the remaining balance and interest is the fee charged for borrowing money.

206. The term “periodic rate cap” refers to

A. an adjustable rate mortgage
B. a limit on the amount the interest rate can increase or decrease during any one adjustment period
C. conventional fixed-rate loans
D. both A and B

Answer: D. For an adjustable rate mortgage, a limit on the amount that the interest rate can increase or decrease during any one adjustment period, regardless of how high or low the index might be is called a periodic rate cap.

207. The acquisition of property through the payment of money or its equivalent is called

A. a purchase money transaction
B. having a down payment and mortgage
C. simply, buying property
D. a sales transaction

Answer: A. The acquisition of property through the payment of money or its equivalent is called a purchase money transaction.

208. What is a recording?

A. A sound file of music to study real estate by
B. Details of a properly executed legal document noted in the registrar’s office
C. A document, such as a deed or mortgage note which becomes public record
D. Both B and C

Answer: D. The noting in the registrar’s office of the details of a properly executed legal document, such as deed, mortgage note, satisfaction of mortgage, or extension of mortgage, thereby making it a part of the public record is called a recording.

209. If a landlord wants to protect himself against loss or rent or rental value due to fire or other casualty that would render the premises unusable for a time he would purchase

A. hazard insurance
B. fire insurance
C. rent-loss insurance
D. there is no such insurance

Answer: C. Rent loss insurance protects a landlord against loss or rent or rental value due to fire or other casualty that renders the leased premises unavailable for use and as a result of which the tenant is excused from paying rent.

210. The right to enter or leave designated premises is called

A. the right of ingress or egress
B. the right to enter or leave
C. the right of non-trespass
D. an easement

Answer: A. The right to enter or leave designated premises is called the right of ingress or egress.

211. “Secondary market” means

A. a market which is not as important as the primary market
B. the buying and selling of existing mortgages, usually as part of a “pool” of mortgages
C. a market of lower real estate values
D. none of the above

Answer: B. The buying and selling of existing mortgages, usually as a “pool,” is called the secondary market.

212. The property that will be pledged as collateral for a loan is called

A. the back-up plan
B. the credit
C. security
D. the borrower’s former home

Answer: C. Security is the property that will be pledged as collateral for a loan.

213. If you were purchasing a piece of property, either you or your bank would want to know if you were paying a fair price and would order

A. a market analysis by a realtor
B. an appraisal
C. survey
D. termite inspection

Answer: B. An appraisal is a written justification of the price paid for a property, primarily based on an analysis of comparable sales of similar homes nearby.

214. Which of the following is an example of “transfer of ownership”?

A. The purchase of property “subject to” the mortgage
B. Joint tenancy
C. The assumption of the mortgage debt by the property purchaser
D. Both A and C

Answer: D. Lenders consider the following to be a transfer of ownership: the purchase of a property “subject to” the mortgage, the assumption of the mortgage debt by the property purchaser, and any exchange of possession of the property under a land sales contract or any other land trust device.

215. Which of the following does not apply the Treasury index?

A. An index used to determine interest rate changes for certain fixed-rate loans
B. It is based on the results of auctions that the U. S. Treasury holds for its Treasury bills and securities
C. derived from the U. S. Treasury’s daily yield curve
D. None of the above

Answer: A. The Treasury index is an index used to determine interest rate changes for certain adjustable rate loans.

216. What are assets?

A. Items of value owned by an individual
B. Items that can be quickly converted into cash are called “liquid assets”
C. Real estate, personal property, and debts owed to someone by others
D. All of the above.

Answer: D. Assets are items of value owned by an individual. Assets quickly converted to cash are considered “liquid assets” and include bank accounts, stocks, bonds, mutual funds, etc. Other assets include real estate, personal property, and debts owed to an individual by others.

217. One who establishes the value of a property for taxation purposes is called

A. a government tax appraiser
B. an assessor
C. an appraiser
D. all of the above

Answer: B. A public official who establishes the value of a property for taxation purposes is called an assessor.

218. A certificate of deposit index is

A. one of the indexes used for determining interest rate changes on some adjustable rate mortgages
B. is an average of what banks are paying on certificates of deposit
C. both A and B
D. neither A nor B

Answer: C. A certificate of deposit index is used for determining interest rate changes on some adjustable rate mortgages. It is an average of what banks are paying on certificates of deposit.

219. Which of the following is true of “common areas”?

A. They include swimming pools, tennis courts, and other recreational facilities
B. They are portions of a building, land, and amenities owned or managed by a planned unit development or condominium project’s homeowners’ association
C. They have shared expenses by the project owners for the operation and maintenance
D. all of the above

Answer: D. Common areas include portions of a building, land, and amenities owned by or managed by a planned unit development or condo project’s homeowners’ association (or a cooperative project’s cooperative corporation) that are used by all of the unit owners, who share in the common expenses of their operation and maintenance. They include swimming pools,, tennis courts, and other recreational facilities, as well as common corridors of buildings, parking areas, means of ingress and egress, etc.

220. In a condominium hotel you would find the following:

A. Rental or registrations desks
B. Daily cleaning services
C. No individual ownership
D. Both A and B

Answer: D. Often found in resort areas, this is a condominium project with rental or registration desks, short-term occupancy, food and telephone services, and daily cleaning services. It is operated like a commercial hotel even though the units are individually owned.

221. A type of multiple ownership where the residents of a multi-unit housing complex own shares in the cooperative corporation that owns the property and gives each resident the right to occupy a specific apartment or unit is called

A. an investment condominium
B. an investment planned unit development
C. a cooperative
D. a government-run housing project

Answer: C. A cooperative (co-op) is a type of multiple ownership where the residents of a multi-unit housing complex own shares in the cooperative corporation that owns the property and gives each resident the right to occupy a specific unit.

222. Which is true of the cost of funds index (COFI)?

A. It represents the weighted-average cost of savings, borrowings, and advances of the financial institutions such as banks and savings & loans in the 11th District of the Federal Home Loan Bank
B. It is one of the indexes used to determine interest rate changes for certain government fixed rate mortgages
C. It is an index used to determine interest rate changes for certain adjustable-rate mortgages
D. Both A and C

Answer: D. The cost of funds index is one of the indexes used to determine interest rate changes for certain adjustable-rate mortgages. It represents the weight-average cost of savings, borrowings, and advances of the financial institutions such as banks and savings and loans, in the 11th District of the Federal Home Loan Bank.

223. Once you buy a house, the amount you pay each month includes an extra amount above principal and interest. This extra money is held in a special account to pay your taxes and homeowners insurance when it comes due. This account is called

A. an escrow account
B. a savings account
C. a regular checking account
D. both B and C

Answer: A. Once you close your transaction, you probably have an escrow account with your lender which is composed of extra money taken from your monthly payments to be put in escrow and pay your taxes and insurance when they come due. The lender pays them with your money instead of you paying them yourself.

224. Which of the following does the Federal Housing Administration do?

A. Lends money and plans and constructs housing
B. Insures residential mortgage loans made by government lenders
C. Sets standards for construction and underwriting
D. None of the above

Answer: C. The main activity of the FHA is the insuring of residential mortgage loans made by private lenders. It sets standards for construction and underwriting but does not lend money or plan or construct housing.

225. If you purchase a type of insurance called homeowner’s warranty, you would do so because

A. It will cover repairs to certain items, such as heating or air conditioning if they break down within the coverage period
B. The seller will sometimes pay for it
C. Both A and B
D. Neither A nor B

Answer: C. Homeowner’s warranty will cover repairs to certain items like air conditioning or heating during the coverage period. The buyer often requests the seller to pay for this, but either party can pay.

226. A type of foreclosure proceeding used in some states that is handled as a civil lawsuit and conducted entirely under the auspices of a court is called

A. a legal foreclosure
B. a court-appointed foreclosure
C. a judicial foreclosure
D. a civil foreclosure

Answer: C. A type of foreclosure proceeding used in some states that is handled as a civil lawsuit and conducted entirely under the auspices of a court is called a judicial foreclosure.

227. Which of the following is not part of loan servicing?

A. Processing payments, sending statements
B. Managing the escrow account
C. Handling pay-offs and assumptions
D. Sending a monthly statement to the owner

Answer: D. The company you make your loan payments to is “servicing” your loan by processing payments, sending statements, managing the escrow account, providing collection efforts on delinquent loans, making sure insurance and property taxes are made, handling pay-offs and assumptions and other services.

228. A period payment cap applies to

A. any mortgage taken out in the U.S.
B. adjustable rate mortgages
C. fixed-rate loans
D. government loans

Answer: B. The period payment cap applies to an adjustable-rate mortgage where the interest rate and the minimum payment amount fluctuate independently of one another. It is a limit on the amount that payments can increase or decrease during any one adjustment period.

229. The commitment issued by a lender to borrower or other mortgage originator guaranteeing a specified interest rate for a specified period of time at a specific cost is called

A. a rate lock
B. under lock and key
C. a promissory note
D. a deed of trust

Answer: A. A rate lock is a commitment from a lender to the borrower or other mortgage originator guaranteeing a specific rate for a specific time at a specific cost.

230. A fund set aside for replacement of common property in a condominium, PUD, or cooperative project, particularly that which has a short life expectancy, such as carpet or furniture is called

A. a capital improvements fund
B. a replacement reserve fund
C. a savings fund
D. a contingency fund

Answer: B. The fund set aside for replacement of common property in a condominium, PUD or cooperative project is called a replacement reserve fund.

231. The term “servicing” describes

A. the collection of mortgage payments from borrowers
B. what the mechanic does to your car
C. duties of a loan servicer
D. both A and C

Answer: D. Servicing is the collection of mortgage payments from borrowers and related responsibilities of a loan servicer.

232. A two- to-four family property

A. consists of a structure that provides living space for two to four families and ownership is evidenced by two to four deeds
B. consists of a structure that provides living space for two to four families and ownership is evidenced by a single deed
C. is not a deeded property
D. is an illegal form of ownership

Answer: B. A two-to-four family property consists of a structure that provides living space for two to four families and ownership is evidenced by a single deed.