Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
32 Cards in this Set
- Front
- Back
|
In Colorado, a property subject to general ad valorem taxes is assessed on the first day of January of the current year, and the lien against the property for the taxes attaches: On the same date - Jan 1st of the current year The following January 1st The following February 28th The following April 30th |
A: On the same date - Jan 1st of the current year Since taxes are paid in arrears the lien attaches at that time and it does not have to be recorded. |
|
|
Money realized in excess of the indebtedness and the foreclosure belong to: the court the PMI, FHA, or VA, whichever insured the loan mortgagee mortgagor |
A: mortgagor The Mortgagor is the owner of the property. The owner placed the voluntary lien on the property which the mortgage represents to secure a loan for the property. Money left over from the sale of the foreclosed property, after all obligations were settled, would have been returned to the Mortgagor (AKA foreclosed owners). The IRS views a foreclosure sale as a normal sale of the property. The owners would need to consider the tax consequences of the sale as the excess money may be viewed by the IRS as a capital gain and thus subject to capital gain taxes. |
|
|
Which of the following would have first priority in a foreclosure IRS tax lien Mechanics lien Ad valorem taxes A first mortgage |
A: Ad valorem taxes Property taxes come first the remainder would be by the date they were filed. |
|
|
Common purpose(s) of a "buydown" of an interest rate would be to: To help a buyer to afford a more expensive home To help a buyer qualify for a home more easily To help the seller make their home more attractive to a prospective buyer All of the above |
A: All of the above A "buydown" is paying money to a lender in exchange for a lower interest rate. It reduces the the monthly payment for a homebuyer. The payment made to a lender is in the form of "discount points." One discount point is one percent of the loan amount, hence paying 2 discount points to a lender would be paying 2% of the loan amount for a negotiated reduction in the interest rate. As a marketing tool it is frequently used by builders and sellers to make properties more attractive to buyers. |
|
|
A statement in a mortgage or trust deed to the effect that when a debt has been paid the lien will be canceled is a(n): defeasance clause alienation clause liquidation provision habendum clause |
A: defeasance clause The defeasance clause states that, when paid in full, a mortgage or deed of trust lien will be canceled. |
|
|
A three-day right of rescission can be invoked for which contract? Residential contract to buy/sell real estate Commercial contract to buy/sell real estate Exclusive right-to-buy contract (buyer's agency) Refinancing of your primary residence |
A: Refinancing of your primary residence No 3-day right on any of the approved contracts. Only on refinances. |
|
|
The assessed value is 35% of a property valued at $250,000. The mill rate is 40. What are the monthly taxes on the property? 3500 933.32 4721.28 291.66 |
A: 291.66 $250,000 X .35 = $87,500 X .04 = $3500 / 12 = $291.66 |
|
|
At a trustee's sale, a property was sold for $160,800. The fees and court costs amounted to $1,600. The property was encumbered with a first deed of trust in the amount of $156,500 and a second deed of trust in the amount of $2,000. Which of the following is correct? There would be a surplus, which would go to the beneficiary There would be a surplus, which would go to the trustor There would be a surplus, which would go to the trustee The beneficiary of the second trust deed could initiate court action for a deficiency against the trustor |
A: There would be a surplus, which would go to the trustor The total of the liens and foreclosure costs was $160,100. The property sold for $160,800, with a surplus of $700. It belongs to the trustor (the borrower). |
|
|
A court order that authorizes and directs the proper officer of the court to sell the property of a defendant as required by the judgment or decree of the court is known as: a writ of attachment a writ of execution constructive eviction actual eviction |
A: a writ of execution A writ of execution is a court order authorizing the sale of a property whose proceeds will be used to satisfy a creditor who has won a court judgement. Don't confuse this with writ of attachment, which is an action taken by a creditor in which the court simply retains custody of the property while a lawsuit is being decided. |
|
|
The trustor in connection with a trust deed is the party who: lends the money receives the payments signs the note holds the deed of trust |
A: signs the note The trustor is the borrower under a deed of trust. |
|
|
A due on sale clause: is an alienation provision requiring that the loan be paid off immediately if the property is sold. allows that the payment responsibilities can be assumed by a third party is contained in all FHA and VA loans. is synonymous with an acceleration clause |
A: is an alienation provision requiring that the loan be paid off immediately if the property is sold. FHA and VA loans do not have a strict due on sale clause. |
|
|
Which of the following is not required by RESPA? A uniform settlement statement must be used in loan closings. Lenders must provide borrowers with a good faith estimate of closing costs. No kickbacks may be given to any party in connection with the loan. The borrower must be given 5 days to back out of the loan transaction after receiving the settlement statement. |
A: The borrower must be given 5 days to back out of the loan transaction after receiving the settlement statement. In a real estate transaction there is not time to back out of the transaction. |
|
|
The rescission provisions of truth-in-lending apply to what type of loan? purchase money construction business home equity |
A: home equity A home equity loan has a three day right of rescission. |
|
|
In an installment sales contract when does title usually pass? upon closing upon signing a preliminary agreement upon signing of the installment land contract upon satisfaction of the installment land contract |
A: Title does not pass until the loan has been paid off. More info on Installment Land Contracts: Installment Land Contracts AKA "Land Contracts" is a purchase agreement in which the owner retains legal title to a property while the buyer, usually a tenant, makes payments. ONCE THE BUYERS COMPLETES THESE PAYMENTS, THE SELLER DEEDS THE PROPERTY TO THE BUYER. Two big points here: 1) Since the buyer does not take legal ownership until they complete payments, this means the buyer, who usually has possession of the property, has no legal rights to the property beyond that of a renter. THEY DO NOT OWN IT - THE SELLER DOES. 2) Because of the number of creeps who have used installment land contracts to defraud unknowing buyers, the real estate commission does not have an approved form for us as agents to use. These contracts are not illegal, if you have clients who want to enter into such an agreement, they (notice the "they" here - I for one would not touch a land contract transaction for all the tea in China) need to bring in an attorney to draw up the necessary paperwork. The real estate commission feels so strongly about this, they issued a position statement on it. Here it is: CP-39 Commission Position on Lease Options, Lease Purchase Agreements and Installment Land Contracts (4-5-2011) The Commission recognizes that in order to maintain the resilience of the real estate market during times when conventional lending requirements are rigorous, alternative funding practices are utilized to sustain the market conditions of supply and demand. The Commission has received and investigated numerous complaints pertaining to lease options, lease purchase agreements and installment land contracts. Although the Commission does not have the authority to prohibit the types of real estate transactions that real estate brokers participate in, the Commission strongly cautions real estate brokers to utilize the services of an attorney licensed to practice law within the State of Colorado. It has been the Commission’s observation, based on complaints received, that lease option and lease purchase transactions are complex and generally contain provisions with significant financial risk posed to the prospective buyer and seller. Installment land contracts and the other transactions mentioned in this position statement afford buyers the opportunity to take possession of the real property and make installment payments to the seller. There is a significant potential for harm to the seller, buyer or assignee if the installment land contract is not properly drafted. In all of the above transactions, the seller retains legal title to the property while the buyer may acquire equitable title. The Commission does not have an approved contract form necessary to memorialize the terms and nuances related to these complex transactions, or any jurisdictional regulations that may be germane. Pursuant to Rule F, the appropriate provisions of the license law and the brokerage relationship act (§§12-61-113, 12-61-804, 805 and 807, C.R.S.), real estate brokers are prohibited from drafting a contract document that would reflect the terms of such a transaction as it would exceed their level of competency and is a matter requiring the expertise and advice of an attorney. Additionally, such behavior may be construed as the unauthorized practice of law by the real estate broker and subject to civil penalties. The contracts for these transactions should not be prepared by a real estate broker; rather, the documents should be drafted by a licensed Colorado attorney-at-law engaged for each particular transaction. |
|
|
A home was appraised for tax purposes at 70 percent of its $150,000 purchase price. The mill rate is 28.6. What are the annual taxes? 2889 4290 3003 3182 |
A: 3003 ($150,000 x 70 % x .0286) = $3003 |
|
|
Discount points are charged by the lender to: To reduce the price of the property To reduce the down payment To reduce the interest rate To reduce the closing costs |
A: To reduce the interest rate A discount point is one percent of the loan amount and is used to buy down the interest rate. Each discount point paid reduces the interest rate by 1/8 of one percent |
|
|
At time of closing, a lender is allowed to collect a loan origination fee that: does not exceed 1% does not exceed the usury rate has been agreed to by the buyer in the contract does not exceed 2% |
A: has been agreed to by the buyer in the contract While many lenders charge a 1% loan origination fee, it is negotiated between the lender and the buyer and referenced in the contract. |
|
|
Which of the following is (are) correct concerning the parties of a trust deed? The trustee has naked title The lender is named the beneficiary The trustor has legal title All of the above |
A: All of the above Trustee oversees the provisions of the Trust Deed. The lender benefits from any action taken by the Trustee. The trustor is the borrower and has legal title in a lien theory state. |
|
|
A clause in a mortgage that allows a lender to declare the loan balance due on default of the mortgage payment is: Habendum clause Escalator clause Acceleration clause Alienation clause |
A: Acceleration clause Once a borrower falls behind on the loan payments the acceleration clause can be exercised by the lender to declare the total loan balance due. |
|
|
In Colorado the minimum time following recording a Notice of Election and Demand before a residential foreclosure sale can be held is: 45 days 30 - 60 days 60 - 90 days 110 to 125 days |
A: 110 to 125 days A residential foreclosure sale must be within 110 to 125 days of the recording of the Notice of Election and Demand. For agricultural properties the window is 215-230 days. |
|
|
Which of the following best describes an installment land contract? A contract to buy land only A mortgage on land A means of conveying title immediately while the buyer pays for the property A means of selling a property whereby the buyer pays for the property in regular installments while the seller retains title to the property. |
A: A means of selling a property whereby the buyer pays for the property in regular installments while the seller retains title to the property. An installment land contract can be very risky for the buyer but does allow the buyer to get into a property which they may not qualify for. Can be used to avoid the acceleration clause in a mortgage. |
|
|
The defeasance clause in a mortgage prevents the loan from being assumed. prevents the loan from being sold. allow for interest rate changes to be made. cancels the mortgage when the loan is repaid. |
A: cancels the mortgage when the loan is repaid. The defeasance clause in a mortgage cancels the mortgage when the loan is repaid. |
|
|
An example of negative amortization is a loan: where the amount applied to interest declines each month that is only partially amortized where the payments are insufficient to cover the loan interest where monthly payments are “plus interest” rather than “including interest” |
A: where the payments are insufficient to cover the loan interest Negative amortization occurs when the payments are insufficient to cover the interest on the loan. |
|
|
You lease a storeroom on a percentage basis. The lease calls for a minimum rental of $300 per month and 5% of the gross annual sales over $80,000. How much is the annual rent with a gross annual business of $150,000? 7500 3500 3600 7100 |
A: 7100 1) Calculate minimum annual rent - $300 (monthly minimum rent) x 12 (months) = $3,600 (annual minimum rent) 2) To calculate rent from percentage of gross sales a. $150,000 (annual gross sales) - $80,000 = $70,000 (amount of gross sales to be applied towards percentage rent) b. $70,000 X .05 (5%) = $3,500 (5% of gross sales over $80,000) 3) $3,600 (annual minimum rent) + $3,500 (5% of gross sales over $80,000) =$7,100 annual rent |
|
|
An installment land contract: A way for the vendor to help the vendee finance the property Is a contract on land Conveys title from the vendor to the vendee None of the above |
A: A way for the vendor to help the vendee finance the property The vendor retains title to the property and is not only for land but does help the buyer to purchase a property they usually could not qualify for. |
|
|
A purchaser obtains a fixed rate loan to finance a home. Which of the following characteristics is true of this loan? The loan cannot be sold in the secondary market. The amount of interest to be paid is predetermined. The monthly payment amount will fluctuate each month. The loan’s interest rate will change according to an index. |
A: The amount of interest to be paid is predetermined. A fixed loan has a predetermined interest rate. |
|
|
A trust deed is held by a private trustee in Colorado, the foreclosure must be: Strict foreclosure Judicial Conducted by the state public trustee Conducted by the county public trustee |
A: Judicial Since it is a private trustee it must be done through a judicial process, were it held by the public trustee than it could be conducted by the county trustee |
|
|
A prepayment penalty refers to: a borrower making his loan payments before they are due a penalty incurred when a loan is paid off before its payoff date a habendum clause none of the above |
A: a penalty incurred when a loan is paid off before its payoff date In some conventional loans, a penalty for paying off the loan before its due date is assessed. In Colorado this will never be higher than 1 1/2 % of the loan amount. |
|
|
A real estate contract or land contract is described as a method of financing often substituted for mortgage or trust deed financing. Consequently a land contract can be: the same as a mortgage a security device similar to a lease a lease with an option to buy |
A: a security device The real estate land contract secures the debt for the seller (vendor). |
|
|
The purpose of the alienation clause in a mortgage is to prevent the loan from being assumed. prevent the loan from being sold. allow for interest rate changes to be made. allow negative amortization to accrue. |
A: prevent the loan from being assumed. A clause closely associated in meaning with Due-On-Sale Clause and Acceleration Clause. An alienation clause in a mortgage can give the lender the option to call the loan (declare the entire balance due) when the proper ty owner transfers ownership, title or interest without the lender' s consent. An Acceleration Clause is a contract provision that allows a lender to require a borrower to repay all or part of an outstanding loan if certain requirements are not met. An acceleration clause outlines the reasons that the lender can demand loan repayment. |
|
|
The clause in a mortgage that can be enforced to make the entire debt due immediately if the mortgagor defaults on the loan is the: alienation clause acceleration clause due-on-sale clause a satisfaction |
A: acceleration clause The acceleration clause allows the lender to move up the date when the entire sum is due. |
|
|
Regarding trust deeds and mortgages: a trust deed must be foreclosed without court intervention a mortgage is never foreclosed through court intervention a trust deed may be foreclosed without court intervention a mortgage may be foreclosed without court intervention |
A: a trust deed may be foreclosed without court intervention By not having to go through the courts to foreclose, a trust deed provides a faster and less expensive foreclosure process. In Colorado, to avoid having to use the courts, the Public Trustee must be named trustee in the Deed of Trust. |
