• 51. A(n) _______________ refers to a single trust deed which describes more than one parcel of real estate as security for the referenced debt.
• a) beneficiary statement
• b) blanket mortgage
• c) all-inclusive trust deed (AITD)
• d) substitute mortgage
• 52. A(n) ________________, used most frequently from the late 1960s to the late 1970s, occurs in a sale of real estate when the seller retains title to the property until all or a prescribed part of the purchase price has been paid.
• a) land sales contract
• b) contract escrow
• c) equitable conversion
• d) verbal agreement
• 53. A transaction structured as a lease-option is classified as a(n) ________________ and does not change a buyer's or seller's rights and obligations under mortgage and contract law.
• a) month-to-month rental agreement
• b) lease
• c) sale
• d) adverse possession
• 54. The ________________ mandates lenders and mortgage holders active in the secondary mortgage market disclose all mortgage related charges on mortgages used to purchase, refinance or improve one-to-four unit residential properties.
• a) Truth-in-Lending Act (TILA)
• b) Home Affordable Modification Program (HAMP)
• c) Real Estate Settlement Procedures Act (RESPA)
• d) None of the above.
• 55. The ________________ is used by lenders to evaluate a buyer's ability to make timely mortgage payments, known as the buyer's mortgage capacity.
• a) loan-to-value ratio (LTV)
• b) debt-to-income ratio (DTI)
• c) Both a. and b.
• d) Neither a. nor b.
• 56. To be enforceable, a mortgage commitment needs to be in writing, signed and:
• a) funded by a bank or mortgage broker.
• b) serviced by the lender funding the mortgage.
• c) delivered via certified mail within 3 days.
• d) given in exchange for consideration.
• 57. A(n) ________________ is a lender's conditional, unsigned commitment to fund a mortgage at a quoted interest rate, origination fee and points, regardless of whether interest rates rise or fall prior to funding.
• a) good faith estimate
• b) rate lock
• c) appraisal report
• d) verbal quote
• 58. A fee improperly paid to a transaction agent as compensation for rendering no service other than the referral of a principal in a transaction for which the agent is already paid a fee is an example of a(n):
• a) lender-paid point.
• b) kickback.
• c) advance fee.
• d) customary charge.
• 59. Allowable MLO compensation does not include:
• a) credit report fees.
• b) annual bonuses.
• c) awards of merchandise.
• d) trips.
• 60. A fee an MLO receives before the MLO services are fully completed is called a(n):
• a) rent.
• b) kickback.
• c) steering fee.
• d) advance fee.
• 61. The only fee a lender may charge and receive before the Loan Estimate is delivered to the homebuyer is a reasonable:
• a) appraisal fee.
• b) title report fee.
• c) credit report fee.
• d) origination fee.
• 62. Regulation Z (Reg Z) lenders provide homebuyers with a Loan Estimate within ____________ after a homebuyer submits a consumer mortgage application.
• a) three business days
• b) three calendar days
• c) seven calendar days
• d) 90 days
• 63. To qualify for a Federal Housing Administration (FHA)-insured fixed-rate mortgage (FRM), a first-time homebuyer is required to make a down payment of at least _____________ of the purchase price.
• a) 2.5%
• b) 3.5%
• c) 5%
• d) 7.5%
• 64. _____________ is a buyer's effective income before any reduction for the payment of taxes.
• a) net equity income
• b) adjusted gross income
• c) net effective income
• d) gross effective income
• 65. Homebuyers and homeowners have a way to finance energy efficient improvements under the Federal Housing Administration's (FHA's) _____________ program.
• a) Energy Efficient Mortgage (EEM)
• b) Solar Energy Mortgage (SEM)
• c) Retrofit Efficiency Mortgage (REM)
• d) Green Home Mortgage (GHM)
• 66. _____________ is used to indemnify a mortgage holder against losses on their investment in a mortgage when a borrower defaults.
• a) Term life insurance
• b) Errors and Omissions (E & O) insurance
• c) Hazard insurance
• d) Private mortgage insurance (PMI)
• 67. _____________ pays off the insured mortgage in the event a borrower dies, becomes disabled, or loses their health or income.
• a) Lender-Paid Mortgage Insurance (LPMI)
• b) Mortgage life insurance
• c) Health insurance
• d) Liability insurance
• 68. A borrower needs to _____________ to qualify for private mortgage insurance (PMI).
• a) take title as the vested owner of the property
• b) be a natural person
• c) Both a. and b.
• d) Neither a. nor b.
• 69. _____________ regulate the amount of interest a non-exempt lender may charge a borrower.
• a) Ability-to-repay (ATR) rules
• b) Fair Housing laws
• c) Usury laws
• d) Qualified mortgage (QM) laws
• 70. _____________ real estate mortgages are exempt from usury restrictions.
• a) Fixed-rate
• b) Adjustable-rate
• c) Brokered
• d) Non-brokered
• 71. A non-exempt lender in violation of usury law may be subject to:
• a) the forfeiture of all interest on the mortgage.
• b) treble damages.
• c) Both a. and b.
• d) Neither a. nor b.
• 72. An attorney not licensed as a broker:
• a) qualifies for exemption from usury laws.
• b) does not qualify for exemption from usury laws.
• c) will be expelled from the California State Bar.
• d) None of the above.
• 73. Usury laws apply only to a(n):
• a) loan origination or credit sale.
• b) loan origination or forbearance of lender rights on the default of a money loan.
• c) credit sale or seller carryback financing.
• d) credit sale or forbearance of lender rights on the default of a money loan.
• 74. _______________ laws set a limitation on the amount recoverable as a money judgment for debts secured by real estate when the mortgaged property's value is insufficient to satisfy the mortgage debt.
• a) Anti-competition
• b) Price-fixing
• c) Anti-deficiency
• d) Dodd-Frank
• 75. During a pre-foreclosure workout, when a mortgage holder accepts the net proceeds from an owner's sale of their property in exchange for cancelling the unpaid mortgage balance, this is referred to as a(n):
• a) short payoff.
• b) short sale.
• c) Either a. or b.
• d) Neither a. nor b.
• 76. When the carryback debt to a seller becomes secured by real estate other than the real estate sold, this is referred to as:
• a) subordination of security.
• b) exhaustion of security.
• c) release of security.
• d) substitution of security.
• 77. A lender or carryback seller may draw on a _______________ before or after a trustee's sale without violating anti-deficiency statutes or the security first rule.
• a) home equity line of credit
• b) letter of credit
• c) Both a. and b.
• d) Neither a. nor b.
• 78. A provision authorizing a mortgage holder to call all amounts remaining unpaid due on a material default under the trust deed is referred to as a(n):
• a) acceleration clause.
• b) power-of-sale provision.
• c) lock-in clause.
• d) put option.
• 79. An owner may bring current any monetary or curable default stated in a notice of default (NOD) prior to five business days before the trustee's sale during the:
• a) reinstatement period.
• b) redemption period.
• c) sheriff's sale period.
• d) All of the above.
• 80. The court-ordered sale by public auction of a secured property is called a(n):
• a) trustee's sale.
• b) judicial foreclosure.
• c) Both a. and b.
• d) Neither a. nor b.
• 81. After a judicial foreclosure action, the court may appoint a(n) _______________ at the fair value hearing to advise the court on the property's fair market value (FMV).
• a) sheriff
• b) probate referee
• c) home inspector
• d) probate judge
• 82. The mortgage holder delivers a(n) _______________ to the trustee when a mortgage is in default and the mortgage holder has chosen to foreclose.
• a) notice of default (NOD)
• b) declaration of default and demand for sale
• c) notice of delinquency (NODq)
• d) lis pendens
• 83. A full credit bid is the _______________ amount the foreclosing mortgage holder may bid at a trustee's sale, equal to the debt secured by the property being sold, plus trustee's fees and foreclosure expenses.
• a) only
• b) minimum
• c) maximum
• d) None of the above.
• 84. _______________ are funds remaining when the price paid for property by the successful bidder at a trustee's sale exceeds the amount of debt and costs due the foreclosing mortgage holder.
• a) Carryover equity funds
• b) Mortgage funds
• c) Tax credits
• d) Surplus funds
• 85. A recorded request for notice of default identifies the person requesting a copy of the notice of default (NOD) and:
• a) written authorization which verifies they are entitled to request the NOD.
• b) the trust deed on which a copy of the NOD commencing foreclosure is requested.
• c) Both a. and b.
• d) Neither a. nor b.
• 86. Within _______________ following the recording of the notice of default (NOD), the trustee is required to mail two copies of the NOD to each person who recorded a request for notice.
• a) three business days
• b) five business days
• c) 10 business days
• d) 15 business days
• 87. A junior lienholder will be notified when a delinquency in installments has existed for more than four months and 15 days by recording a(n):
• a) request for notice of default.
• b) declaration of default (DOD).
• c) request for notice of delinquency.
• d) request for notice of trustee's sale.
• 88. On accepting regular payments from a defaulting owner after declaring a default which cannot be cured by a reinstatement, a mortgage holder:
• a) waives its right to foreclose based on that default.
• b) may proceed with a foreclosure at any time.
• c) may charge a reinstatement fee.
• d) None of the above.
• 89. A property owner uses a(n) _______________, prepared on the same grant deed form used for the conveyance of fee title, to convey their property to a mortgage holder in exchange for the mortgage holder's cancellation of the debt.
• a) deed absolute
• b) land sales contract
• c) quit claim deed
• d) deed-in-lieu
• 90. A deed-in-lieu does not function as a deed absolute but as a mortgage-in-fact when the property owner retains their rights to:
• a) continue in possession of the property under a lease and purchase option.
• b) receive a payment of surplus net proceeds if the mortgage holder later resells the property.
• c) cure their default and have the property reconveyed to them at a later date.
• d) Any of the above.
• 91. Attorney fees awarded in the judicial action are added to the property owner's mortgage balance by the mortgage holder as a(n) _______________ authorized by the trust deed.
• a) future advance
• b) foreclosure decree
• c) uncollectable award
• d) None of the above.
• 92. Taxwise, interest which has accrued and been paid on a mortgage can be written off when determining income tax liability if the interest qualifies as a(n) _______________ from income.
• a) expense
• b) deduction
• c) Either a. or b.
• d) Neither a. nor b.
• 93. When a mortgage is secured solely by property other than the residence purchased with the mortgage funds, such as rental property owned by the homeowner, the points are:
• a) deducted over the life of the mortgage.
• b) deducted in the year they are paid.
• c) deducted in the year the property is sold.
• d) Never deductible.
• 94. Mortgaged homeowners may deduct the interest accrued and paid on first and second homes from their adjusted gross income (AGI) under:
• a) the Truth-in-Lending Act (TILA).
• b) Proposition 13.
• c) mortgage interest deduction (MID) rules.
• d) Real Estate Settlement Procedures Act (RESPA).
• 95. Substantial new improvements that _______________ need to be made to qualify home improvement mortgages for interest deductions.
• a) prolong the property's useful life
• b) add to the property's market value
• c) adapt the property to residential use
• d) Any of the above.
• 96. A mortgage needs to be secured by the owner's _______________ to qualify for the mortgage interest deduction (MID).
• a) principal residence
• b) second home
• c) Both a. and b.
• d) Neither a. nor b.
• 97. _______________ refers to real estate held for sale to customers in the ordinary course of an owner's trade or business, where the earnings on the sales of the properties are taxed as business inventory at ordinary income rates.
• a) Dealer property
• b) Principal residence
• c) Rental units
• d) None of the above.
• 98. _______________ are profits and losses generated from rental real estate, operations and sales, and from non-owner-operated businesses.
• a) Portfolio category income
• b) Passive category income
• c) Both a. and b.
• d) Neither a. nor b.
• 99. Under the California Franchise Tax Board installment sales rules, the buyer, through escrow, withholds _______________ of the sales price from the seller's proceeds on all sales, unless the transaction is excluded from withholding.
• a) 1 1/2%
• b) 2 3/4%
• c) 3 1/3%
• d) 4 1/2%
• 100. _______________ are set by the Internal Revenue Service (IRS) and used by carryback sellers to impute and report as minimum interest income when the note rate on the carryback debt is a lesser rate.
• a) Amortization rates
• b) Applicable Federal Rates (AFR)
• c) Broker fee schedules
• d) fixed-rate mortgage (FRM) rates