>NY (“Taking the Distress Out of Distressed Properties”) CE CLASS Questions with no Answers for Preview

NY “Taking the Distress Out of Distressed Properties” Questions only (no answers)
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1) Property that has gone through a foreclosure sale and is owned by the original lender, a private mortgage insurance (PMI) company, or an intermediary, becomes a _______.
a. cash-value property.
b. forbearance property.
c. REO property.
d. short sale property.

NY Taking the Distress Out of Distressed Properties

2) What is the purpose of the equitable right of redemption?
a. It gives the borrower the right to reasonable treatment under state law.
b. It gives the borrower the right to redeem the property before foreclosure.
c. It gives the lender the right to redeem the property when the borrower defaults on the mortgage loan.
d. It lets the borrower make slightly higher payments to make up for late payments.
3) The process when the lender causes collateral for a debt to be sold so that the mortgagee can be paid out of the proceeds of the sale is known as
a. collateral remedy.
b. debt collection.
c. debt consolidation.
d. foreclosure.
4) At the core of every illegal property flipping scheme is an inflated appraisal. This occurs when a property is appraised at
a. an “as is” value.
b. a higher-than-market value.
c. a lower-than-market value.
d. market value.
5) An agent may list an REO property
a. after the title to the property is in the lender’s name.
b. as soon as the foreclosure process is completed.
c. once the appraisal has been completed.
d. once the property has been vacated.
6) All of these are conditions that can cause a homeowner to have no equity in the home EXCEPT
a. certain subprime mortgage loans.
b. being in a market that is flooded with foreclosed homes.
c. prior owner purchased the home below market value.
d. purchasing a property that was illegally flipped.
7) Which loan type will likely contribute to the increase in foreclosures in the event of interest rate increases?
a. adjustable rate mortgage loan
b. conventional loan
c. low down payment loan
d. no equity loan
8) Which mortgage relief scam involves an offer to find a buyer for the home if the owner signs over the deed and moves out, and once done, the scammers rent the property and pocket the money?
a. bait and switch
b. equity skimming
c. forensic audit
d. phantom help
9) How many appraisals are performed during a typical foreclosure process?
a. none
b. one or more
c. only one
d. two or more
10) Which is NOT an issue that agents may encounter with properties that have been vacant for a long time?
a. damage from exposure to weather
b. property taken off market
c. vandalized property
d. zoning change
11) What information would a lender ask an agent to provide for an REO property?
a. as is value
b. comparative market analysis
c. market conditions addendum
d. quick sale value
12) All of the following are causes of foreclosure by homeowners EXCEPT
a. having many credit cards.
b. having too much debt.
c. living beyond their means.
d. unable to control their addictions.
13) A buyer who purchased a home for more than the value of the home is likely a victim of
a. creative financing.
b. illegal flipping.
c. liberal lending.
d. predatory lending.
14) Which type of mortgage loan requires no down payment?
a. 100 percent mortgage
b. adjustable rate mortgage
c. conventional mortgage
d. interest-only mortgage
15) There are typical situations in which illegal property flipping occurs. Which is NOT considered one of those situations?
a. The lender does not use local appraisers for appraising the property.
b. The poor condition of the property is revealed in the appraisal report.
c. The prior purchase price of the property is not revealed in the appraisal report.
d. The properties are in distressed neighborhoods.
16) The value of a property sold “as is” is the value
a. after minor repairs.
b. after a quick sale.
c. in comparison to other homes.
d. in its current condition.
17) A borrower who does not qualify for a prime rate loan may apply for an adjustable rate mortgage which is a
a. conventional loan.
b. high down payment loan.
c. negative-equity loan.
d. subprime loan.
18) When an agent is authorized by the lender to offer a set amount of money to the occupants of a house, provided they vacate by a certain date, it is known as
a. actual eviction.
b. cash for keys.
c. friendly foreclosure.
d. a payoff.
19) Evan, who is a real estate agent and an appraiser, was hired to handle an REO listing. Which is NOT one of Evan’s duties?
a. arranging for lawn mowing and snow shoveling
b. arranging for re-keying and securing the property
c. checking the property periodically to make certain no one has broken in
d. completing the appraisal
20) A contract whereby the borrower agrees to pledge real property as the collateral for the debt is a
a. deed.
b. lien.
c. promissory note.
d. security instrument.
21) A mortgage company only hires appraisers they know will “hit the number” so the mortgage loans go through. To make the transactions work, they need a(n)
a. inflated appraisal.
b. market value appraisal.
c. overstated appraisal.
d. undervalued appraisal.
22) A(n) _____ management company is obligated to locate agents to market foreclosed bank-owned properties.
a. asset
b. investment
c. property
d. security
23) When a borrower falls behind on mortgage loan payments, the lender will begin the foreclosure process by filing a Notice of
a. Action.
b. Default.
c. Eviction.
d. Foreclosure.
24) In collusion with certain lenders and appraisers, Jared buys depressed properties and then sells them for an inflated price without improving the property. This type of scheme is known as
a. creative financing.
b. illegal flipping.
c. predatory lending.
d. property collusion.
25) A buyer found a home she wants to make an offer on, but she has had credit problems in the past and her credit score is low. Because she is considered a high credit risk, the lender would likely recommend that she apply for which mortgage?
a. 100 percent
b. adjustable rate
c. fixed rate
d. interest-only
26) Buyers who have low credit scores can typically qualify for which type of loan?
a. conventional loan
b. high-down payment loan
c. low-equity loan
d. subprime loan
27) When a foreclosed property is sold at auction, who is most often the purchaser?
a. asset management company
b. bank (mortgagee)
c. investor
d. property management company
28) Certain conditions contribute to the problem of homes being “upside down.” Which is NOT one of those conditions?
a. continual falling prices of homes
b. inflated appraisals
c. market flooded with foreclosed homes
d. undervalued homes.
29) Which factor is NOT a consideration for a short sale?
a. home has negative equity
b. homeowner is behind on mortgage payments
c. homeowner is expecting to be laid off from work
d. homeowner’s loan is adjusting to a higher payment he cannot afford
30) The primary reason that short sales are a time-consuming process is the
a. difficulty in obtaining prompt legal advice from an attorney
b. homeowner must sell off all assets.
c. lender always rejects the initial offer.
d. stakeholders must decide whether to approve the short sale.
31) A lender would most likely reject a short sale that has
a. contingencies.
b. a high down payment.
c. a lowball offer.
d. an offer slightly under market value.
32) All of these are considered disadvantages to the homeowner selling his property as short sale EXCEPT
a. credit score is negatively affected.
b. liens against the title.
c. loss of assets.
d. time-consuming process.
33) Which property would most likely qualify for a short sale?
a. market value: $175,000; balance owed $170,000
b. market value: $201,000; balance owed $210,000
c. market value: $325,000; balance owed $315,000
d. market value: $459,000; balance owed $450,000
34) The buyer of a short sale property being sold “as is” should
a. include many contingencies in the offer.
b. make a lowball offer.
c. obtain a home inspection.
d. request repairs.
35) Which phrase would NOT be used on the MLS to indicate a short sale property?
a. subject to bank approval
b. subject to lien holder approval
c. subject to seller approval
d. subject to third-party review
36) Which is NOT an advantage to the seller of a short sale property?
a. fewer years on a credit report than a foreclosure.
b. less damage to credit than bankruptcy.
c. may be able to purchase another home sooner than with a foreclosure.
d. title will be free and clear of liens.
37) Which is a requirement for a short sale?
a. The homeowner must be current on mortgage payments.
b. The homeowner must receive lender approval to hold a short sale.
c. The property must have adequate equity.
d. A short sale is simple compared to a traditional property sale.
38) When working with short sales, a deal breaker may stop the sale. Which is NOT considered a deal breaker?
a. lender forecloses on the property
b. liens are uncovered during a title search
c. seller files for bankruptcy
d. zoning issues are discovered
39) All of these are reasons that short sales occur EXCEPT for
a. a decline in home values.
b. easy profits for investors.
c. financial hardships.
d. loans adjusting to a higher interest rate.
40) Certain obstacles can prevent a short sale transaction. Which is NOT one?
a. property sold as is
b. title issue
c. unrecorded deed
d. zoning issue
41) When a lender accepts less than is owed on a mortgage loan, the lender is agreeing to what?
a. deed in lieu of foreclosure
b. deficiency judgment
c. forbearance agreement
d. short sale
42) If a lien is discovered during a title search of a property being sold as a short sale, it
a. could take more time to process the sale.
b. must be deducted from the sale price.
c. must be paid by the buyer.
d. will prevent the sale of the property.
43) Which statement about buying a short sale property “as is” is NOT an advantage?
a. The property can be bought at a reduced price.
b. The property can be purchased without a home inspection.
c. The property can be rented and produce an income stream.
d. The property can be resold for a profit.
44) A short sale will remain on the seller’s credit report for
a. 5 years.
b. 7 years.
c. 10 years.
d. 12 years.
45) The buyer of a short sale property must complete many tasks. Which is NOT one?
a. contact the loss mitigator at the bank
b. establish financing
c. order a home inspection
d. price renovation and repair costs
46) In a short sale transaction, why is it important to nail down exactly how much is owed by the seller?
a. The agent can recommend a listing price and negotiate the sale.
b. The buyer will have a baseline for the pricing the offer.
c. The lender will know the minimum acceptable price.
d. The seller can determine whether or not to agree to a short sale.
47) Which is NOT a condition for approval of a short sale?
a. behind on the mortgage payments
b. lender agreement to hold a short sale
c. property has negative equity
d. suffering a financial hardship
48) Why would a listing agreement state that the “seller’s acceptance of any offers is subject to third-party approval”?
a. All creditors must approve the sale.
b. It is standard language in all listing agreements.
c. It protects the seller in case the lender doesn’t approve the sale.
d. The short sale negotiator must review and approve the sale.
49) To protect the buyer from possible legal issues, certain contingencies should be written into the offer for a short sale. Which is NOT one of the suggested contingencies?
a. subject to an appraisal
b. subject to approval of a title policy
c. subject to loan funding
d. subject to seller approval
50) Which property would most likely qualify for a short sale?
a. market value: $165,000; balance owed $160,000
b. market value: $199,000; balance owed $194,000
c. market value: $355,000; balance owed $375,000
d. market value: $694,000; balance owed $634,000
51) The buyer of a short sale property must complete many tasks. Which is NOT one?
a. contact the loss mitigator at the bank
b. establish financing
c. order a home inspection
d. price renovation and repair costs
52) Making a lowball offer on a short sale property is
a. appropriate if the property is being sold as is.
b. not recommended as it impedes lender approval.
c. suggested if the buyer is going to quickly flip it.
d. typically only done by investors of rental properties.
53) When a licensee prepares a comparative market analysis for a short sale package, she should include homes sold in the past six months, homes active on the market, and homes that are
a. lower priced.
b. pending sales.
c. REO properties.
d. sold at auction.
54) The comparative market analysis for inclusion in a short sale package should include sales from the past six months, pending sales, and
a. any properties in the area that were short sales.
b. foreclosed properties.
c. homes active on the market.
d. REO properties.
55) Why is a short sale considered short?
a. The agent’s commissions are shorted by the lender.
b. The homeowner sells the property for less than the appraised value.
c. The lender accepts less than what is owed on the mortgage loan.
d. The process is shorter than a typical real estate transaction.
56) To protect the seller in case the lender doesn’t approve the short sale, what should the listing agreement state?
a. “seller’s acceptance is subject to an appraisal”
b. “seller’s acceptance is subject to loan funding”
c. “seller’s acceptance is subject to approval of a title policy”
d. “seller’s acceptance of any offers is subject to third-party approval”
57) Why would the seller’s agent contact the lender’s loss mitigation department after receiving an offer?
a. to find out where to mail the completed application and forms
b. to request a list of documents needed for the short sale package
c. to see if the offer is acceptable
d. to speed up the short sale process
58) A type of report included in the short sale package that shows housing marketing strategies, home showings, and results is called a
a. Market Conditions and History Report.
b. Market Conditions and Trends Report.
c. Marketing History Report.
d. Marketing Trends and History Report.
59) The seller’s agent is preparing a short sale package for her client. To increase the seller’s chances of a faster, successful short sale, the agent should perform all of these tasks EXCEPT
a. make copies of everything in the package.
b. note the seller’s name and loan number on all documents.
c. submit documents individually as they are completed.
d. verify the forms the lender requires.
60) A short sale could be rejected for a number of reasons. Which is NOT one of them?
a. bank sold the loan
b. incomplete documentation
c. market value is too high
d. seller does not qualify
61) What is the purpose of the seller’s agent preparing a Market Conditions and Trends Report?
a. demonstrate sincerity in putting together a strong short sale package
b. prove the highest price was sought by the agent
c. reveal the number of home showings
d. show what marketing strategies were launched
62) All of these are factors that warrant the lender to use a BPO instead of an appraisal to value a short sale property EXCEPT
a. loan status.
b. lower cost.
c. market condition.
d. recent refinance.
63) If the seller of a short sale property has a mortgage loan and a home equity loan with two different lenders, the seller’s agent should
a. request a list of documents required by each lender.
b. request that the first lender negotiate with the second lender.
c. suggest the seller pay off the second lender.
d. work only with the first lender as the second lender has no recourse.
64) An agent who is working with the lender’s loss mitigator should ask all of these questions EXCEPT
a. what documents are required by the lender.
b. what market value the lender’s appraiser reported.
c. when the appraiser is planning to do the appraisal.
d. when she’ll hear back from the loss mitigator.
65) Before a lender can discuss a short sale with the seller’s agent, the seller must submit a ________ to the lender.
a. consent letter
b. hardship letter
c. letter of authorization
d. letter of release
66) A homeowner must indicate to the lender how to solve the deficiency resulting from the short sale of the home in the
a. authorization letter.
b. cover letter.
c. hardship letter.
d. net sheet.
67) A Marketing History Report is part of the short sale package. The primary purpose of this report is to
a. illustrate the true condition of the market.
b. prove that the agent attempted to sell the property.
c. reveal market trends in the immediate area.
d. show that the highest price was sought by the agent.
68) One disadvantage to the lender when processing a short sale application is
a. avoiding REO property.
b. preventing foreclosure.
c. reducing bad debt on their books.
d. securing approval by investors.
69) The seller’s agent received a legitimate offer on a short sale property. Before submitting the short sale package to the lender, the agent needs to contact the lender’s loss mitigation department to find out if the
a. buyer has been preapproved.
b. buyer’s offer is acceptable.
c. lender already has offers on the property.
d. lender has their own short sale processes, procedures, and forms.
70) A Preliminary Net Sheet, if required by the lender in the short sale package, must
a. contain proof of payment of liens against the property.
b. include marketing strategies to prove the highest price was sought.
c. itemize the final closing costs associated with the sale.
d. show zero profit for the seller.
71) A seller’s agent just received a legitimate offer on a short sale property. Now he is preparing the documents for the short sale package which include all of these tasks EXCEPT
a. keeping copies of everything.
b. noting the seller’s name and loan number of all documents.
c. ordering an appraisal or a BPO.
d. verifying which forms the lender requires.
72) The ____________ has a great deal of control over the approval of short sale transactions.
a. primary market
b. principal market
c. secondary market
d. securities market
73) Which of these is NOT a task the seller’s agent should do in preparation of a short sale package?
a. keep copies of everything
b. note the seller’s name and loan number of all documents
c. order an appraisal or a BPO
d. verify which forms the lender requires
74) Which would cause a delay in approval of a short sale?
a. incomplete short sale package
b. offer is the same as market value
c. persistent follow up by the agent
d. revealing issues about the property
75) What price would the lender expect from a property sold as a short sale?
a. assessed value
b. last sales price
c. loan payoff amount
d. near market value
76) Which question is NOT appropriate for the seller’s agent to ask the lender’s loss mitigator who is handling the short sale application?
a. How can I keep in touch with you?
b. What documents do you need?
c. What market value did the appraiser report?
d. When will I hear back from you?
77) A lender will consider a short sale only when
a. an agent is representing the seller.
b. the buyer is willing to negotiate the purchase price.
c. an involuntary issue caused the hardship.
d. the seller lacks funds to pay the mortgage.
78) A type of report included in the short sale package that shows housing marketing strategies, home showings, and results is called a
a. Market Conditions and History Report.
b. Market Conditions and Trends Report.
c. Marketing History Report.
d. Marketing Trends and History Report.
79) A type of report included in the short sale package that can be in narrative format and contains graphs or charts and other supporting materials is called a
a. Market Conditions and History Report.
b. Market Conditions and Trends Report.
c. Marketing History Report.
d. Marketing Trends and History Report.
80) Government agencies and private investors make up the secondary market with the purpose of
a. buying and selling real estate mortgages.
b. making loans directly to borrowers.
c. marketing foreclosure and short sale properties to other investors.
d. pledging assets as security for debts.
81) All of these are valid reasons for a short sale request by the seller EXCEPT
a. enormous debt
b. job loss due to layoff
c. recent divorce
d. unexpected medical cost
82) A lender will reject a short sale application for all of these reasons EXCEPT when the
a. bank does not own the loan.
b. buyer does not qualify.
c. net sheet shows zero profit to the seller.
d. offer is too low.
83) A drive-by BPO order for a property requires the broker to drive by the property and take photos. The report must also include all of this information EXCEPT
a. estimated square feet.
b. occupancy status.
c. repair and cleaning estimates.
d. three recently sold comparables.
84) Once the seller’s agent receives a legitimate offer on the short sale property, what is the next step?
a. contact the lender’s loss mitigation department
b. mail the short sale package
c. prepare a broker price opinion
d. write the hardship letter
85) In order for a lender to consider a short sale, the homeowner must
a. have a good credit score.
b. have some equity in the home.
c. hire an agent to negotiate the deal with the lender.
d. prove financial hardship.
86) A claim, legal right, or interest in land that affects a clear title is called a(n)
a. hindrance.
b. deficiency judgement.
c. lis pendens.
d. encumbrance.
87) Because of past credit issues, Quinn and Sandra do not qualify for a prime rate loan, so their lender recommended an adjustable rate mortgage. What type of loan is this?
a. conventional loan
b. high-down payment loan
c. negative-equity loan
d. subprime loan
88) Property investor Glen accepts REO properties in their current condition; thus, he purchases the properties at their
a. “as is” value.
b. “as repaired” value.
c. “quick sale” value.
d. “true” value.
89) Which value is at the core of every illegal property flipping scheme that includes an inflated appraisal?
a. “as is” value
b. higher-than-market value
c. lower-than-market value
d. quick sale value
90) The seller’s agent may ask the lender’s loss mitigator certain questions such as “Who is handling the short sale application?,” but he should NOT ask
a. “How can I keep in touch with you?”
b. “What documents do you need?”
c. “What market value did the appraiser report?”
d. “When will I hear back from you?”
91) Several factors warrant the lender to use a BPO instead of an appraisal to value a short sale property. Which is NOT one of them?
a. loan status
b. lower cost
c. market condition
d. recent refinance
92) A written agreement between the borrower and the mortgage company that permanently changes one or more of the original terms of the note to make the payments more affordable is called a
a. blended mortgage.
b. loan modification.
c. deed in lieu of foreclosure.
d. Adjusted rate mortgage.
93) Real estate agent Marty prepared a Market Conditions and Trends Report. The purpose of the report is to
a. demonstrate sincerity in putting together a strong short sale package.
b. prove the highest price was sought by the agent.
c. reveal the number of home showings.
d. show what marketing strategies were launched.
94) Patrick’s agent, Carla, is scanning the MLS in search of a short sale property. She can locate short sale listings by searching for certain phrases. Which is NOT one of those phrases?
a. subject to bank approval
b. subject to lien holder approval
c. subject to seller approval
d. subject to third-party review
95) Private investors and government agencies that buy and sell real estate mortgages are called the
a. tertiary market.
b. secondary market.
c. bond market
d. intermediary market
96) All of these are tasks the seller’s agent should perform when preparing a short sale package EXCEPT for
a. keeping copies of everything.
b. noting the seller’s name and loan number on all documents.
c. ordering a BPO or appraisal.
d. verifying which forms the lender requires.
97) If Lee sells his property as a short sale, he will likely experience all these issues EXCEPT a
a. lien against the title.
b. loss of assets.
c. negatively affected credit score.
d. time-consuming process.
98) A settlement statement prepared by the lender or closing agent itemizing all expenses and costs paid by the buyer and seller that are needed to close the real estate transaction as required for RESPA-related transactions is called a
a. debit statement
b. credit statement
c. Form 711
d. closing disclosure.
99) Holly must indicate to the lender how she wants to solve the deficiency resulting from the short sale of her home. Holly would address this in the
a. authorization letter.
b. cover letter.
c. hardship letter.
d. net sheet.
100) A seller must state a valid reason for a short sale request. Which is NOT considered a valid reason by the lender?
a. enormous debt
b. job loss due to layoff
c. recent divorce
d. unexpected medical cost
101) In case the seller’s lender doesn’t approve a short sale, licensee Lin always includes in the listing agreement the
a. “seller’s acceptance is subject to an appraisal.”
b. “seller’s acceptance is subject to approval of a title policy.”
c. “seller’s acceptance is subject to loan funding.”
d. “seller’s acceptance of any offers is subject to third-party approval.”
102) Lucy is working on a short sale with a seller who has a mortgage loan and a home equity loan with two different lenders. To expedite the short sale process, Lucy should
a. request a list of documents required by each lender.
b. request that the first lender negotiate with the second lender.
c. suggest the seller pay off the second lender.
d. work only with the first lender as the second lender has no recourse.
103) Michelle, a real estate agent and appraiser, has listed an REO property for her client. All of these can be duties that her client wants her to handle EXCEPT for
a. arranging for lawn mowing and snow shoveling.
b. arranging for re-keying and securing the property.
c. checking the property periodically to make certain no one has broken into it.
d. completing an appraisal.
104) A lender may agree to reduce, postpone, or suspend the mortgage payment and not proceed with foreclosure as long as the borrower brings the loan current within the specified time. This is called a ________________agreement.
a. “as is” value
b. forbearance
c. lower-than-market value
d. quick sale value
105) Of these properties, which would qualify for a short sale?
a. market value: $154,000; balance owed $145,000
b. market value: $187,000; balance owed $197,000
c. market value: $199,000; balance owed $189,000
d. market value: $545,000; balance owed $525,000
106) A loan (such as a mortgage loan) made to borrowers with previous credit problems by charging slightly higher, but still fair, fees is known as
a. inflated lending.
b. subprime lending.
c. liberal lending.
d. predatory lending.
107) Rohan and Kiara purchase REO and short sale properties to use as investment rental properties. Before purchasing a property being sold “as is,” they should
a. include many contingencies in the offer.
b. make a lowball offer.
c. obtain a home inspection.
d. request repairs.
108) Tonya, a mortgage broker with First Choice Mortgage, knows the appraiser she chooses must “hit the number.” To make the transaction work, Tonya needs a(n)
a. inflated appraisal.
b. market value appraisal.
c. overstated appraisal.
d. undervalued appraisal.
109) Agent Kane wants to prove to the lender that he properly marketed the seller’s property to obtain the highest price possible, so he prepared a report that shows marketing strategies, home showings, and results. What is this report called?
a. Market Conditions and History Report
b. Market Conditions and Trends Report
c. Marketing History Report
d. Marketing Trends and History Report
110) It is important to nail down exactly how much is owed by the seller in a short sale transaction so the
a. agent can recommend a listing price and negotiate the sale.
b. buyer will have a baseline for the pricing the offer.
c. lender will know the minimum acceptable price.
d. seller can determine whether or not to agree to a short sale.
111) Chris gathered all the documents for his seller client’s short sale package including certain reports that he prepared. Which is NOT one of the reports that Chris should include?
a. Broker Price Opinion
b. Comparative Market Analysis
c. Market Conditions and Trends Report
d. Marketing History Report
112) Pat has been marketing an REO property that has been vacant for a long time. Pat may encounter several issues with the property EXCEPT for it being
a. damaged from exposure to weather.
b. in an area that had a zoning change.
c. taken off the market.
d. vandalized.
113) Alan is in the business of sales and quick resales of particular properties and colludes with lenders and appraisers to make the deals work. This type of scheme is known as
a. equity skimming.
b. illegal flipping.
c. property collusion.
d. property profiting.
114) Which of these would most likely be rejected by a lender for a property that is being purchased as a short sale?
a. contingencies
b. high down payment
c. lowball offer
d. offer slightly under market value
115) A lien amounting to $1,500 for HOA dues was discovered during a title search of a property being sold as a short sale. This means it
a. could take additional time to process the sale.
b. must be deducted from the sale price.
c. must be paid by the buyer.
d. will prevent the sale of the property.
116) Marcus, a licensed real estate agent and a licensed appraiser, has been hired to list an REO property. Marcus is NOT responsible for which activity?
a. arranging for outdoor maintenance
b. checking the condition of the property
c. completing the appraisal
d. securing the property
117) Licensee Luis prepared a CMA for inclusion in a short sale package. The CMA should contain sales from the past six months, pending sales, and
a. any properties in the area that were short sales.
b. foreclosed properties.
c. homes active on the market.
d. REO properties.
118) Typically, __________________ occurs in distressed neighborhoods where there is poor home maintenance, many rentals, and high crime rates.
a. equity skimming
b. illegal property flipping
c. property flipping
d. property profiting
119) Licensee Marie understands that particular contingencies should be written into the offer for a short sale to protect the buyer from possible legal issues. Which is NOT a recommended contingency for the offer?
a. subject to an appraisal.
b. subject to approval of a title policy.
c. subject to loan funding.
d. subject to seller approval.
120) A mortgage in which the interest rate fluctuates according to changes in the cost of money, is called a(n) _______________ mortgage.
a. adjustable rate.
b. floating rate
c. subprime
d. reflective rate
121) The process of a third party that helps a homeowner, a division within a bank that mitigates the loss of the bank, or an attorney-backed process of negotiation between a homeowner and the homeowner’s lender is known as
a. arbitrage.
b. forced reconciliation.
c. reinstatement
d. loss mitigation.
122) An opinion of value sought by a bank to determine an appropriate market price for a property to be marketed for a short sale (pre-foreclosure) or after foreclosure is known as a(n)
a. Appraisal.
b. Broker Price Opinion.
c. Marketing value.
d. Salesperson Price Opinion.
123) Lenders must secure approval from their investors before agreeing to a short sale. Those investors are known as the
a. primary market.
b. principal market.
c. secondary market.
d. securities market.
124) Michael purchased his home for $160,900 and a recent appraisal showed that is worth $150,000. Many conditions could have caused the negative equity in Michael’s home. Which is NOT one of them?
a. being in a market that is flooded with foreclosed homes
b. having an interest-only mortgage loan
c. prior owner purchased the home below market value
d. purchasing a property that was illegally flipped
125) Ethan and Alyssa decided to avoid foreclosure and sell their home as a short sale mainly because
a. the lienholders will forgive all debts they owe.
b. the short sale will show on their credit report for less time.
c. they may be able to purchase another home more quickly.
d. they will be released from real estate taxes they owe.
126) A property owner has a right to redeem his property before foreclosure if the debt owed is paid by a certain time. This is called the
a. constitutional right of redemption.
b. equitable right of redemption.
c. justifiable right of redemption.
d. statutory right of redemption.
127) When interest rates increase, foreclosure rates will likely increase on which type of loan?
a. adjustable rate mortgage loans
b. conventional loans
c. low down payment loans
d. no equity loans
128) A judgment against a borrower to cover the difference between what a property sells for and what the bank has at risk is a _______________.
a. deficiency judgement
b. short sale
c. quick sale value
d. hardship judgement
129) When a real estate agent prepares a comparative market analysis for a short sale package, she should include homes sold in the past six months, homes active on the market, and homes that are
a. lower priced.
b. pending sales.
c. REO properties.
d. sold at auction.
130) Wyatt is buying a short sale property and he is concerned that a possible deal breaker may prevent the sale. All of these may be considered a deal breaker EXCEPT
a. the lender forecloses on the property.
b. liens are uncovered during a title search.
c. the seller files for bankruptcy.
d. zoning issues are discovered.
131) An agreement that gives the borrower a fixed amount of time to repay the amount that is behind by combining a portion of the past due amount with the regular monthly payment is known as a
a. modified payment plan.
b. repayment plan.
c. blended mortgage.
d. forgiveness mortgage.
132) Ian is interested in buying a short sale property that he found on the MLS that’s being sold “as is.” All of these are advantages that Ian may realize EXCEPT he can
a. buy the property at a reduced price.
b. pass on the home inspection.
c. rent the property as a source of income.
d. resell the property for a profit.
133) Homeowner Carlos contacted real estate agent Lola to list his home as a short sale. Lola must ask Carlos questions to determine if he would qualify for a short sale. Which is a reason that Carl would NOT qualify?
a. behind on mortgage payments
b. home has negative equity
c. is expecting to be laid off from work
d. mortgage loan is adjusting to a higher payment he cannot afford
134) Real estate agent Erin received a legitimate offer on a short sale property she had listed. Next, Erin should
a. contact the lender’s loss mitigation department.
b. mail the short sale package.
c. prepare a broker price opinion.
d. write the letter of authorization.
135) Ben is facing foreclosure and is desperate to sell his home. Lou promised to find a buyer if Ben signs over the deed and moves out, and once sold, Ben will receive a portion of the profit. Ben does this, but Lou rents the house and pockets the money. Ben still owes the unpaid mortgage and the lender forecloses on the home. This scam is called
a. bait and switch.
b. equity skimming.
c. the forensic audit.
d. phantom help.
136) Yolanda’s lender has agreed to accept less than what she owes on her mortgage loan. Her lender is agreeing to a
a. deed in lieu of foreclosure.
b. deficiency judgment.
c. forbearance agreement.
d. short sale.
137) The equitable right of redemption is allowed by most states, which
a. gives the borrower the right to reasonable treatment under state law.
b. gives the borrower the right to redeem the property before foreclosure.
c. gives the lender the right to redeem the property when the borrower defaults on the mortgage loan.
d. lets the borrower make slightly higher payments to make up for late payments.
138) The legal process that allows a lender to sell or take ownership (repossess) of a property that is in default so that the lender can satisfy the debt owed on the defaulted loan is called
a. default.
b. fallback.
c. promissory note.
d. foreclosure.
139) Short sales occur due to various circumstances. Which is NOT one of them?
a. easy profits for investors
b. financial hardships
c. loans adjusting to a higher interest rate
d. must sell but has negative equity
140) Which property would most likely qualify for a short sale?
a. market value: $142,000; balance owed $124,000
b. market value: $197,000; balance owed $192,000
c. market value: $243,000; balance owed $248,000
d. market value: $659,000; balance owed $657,000
141) Certain conditions can result in the borrower having negative equity in which more is owed on the home than its market value, also known being “upside down” or “under water.” This can be caused by any of these conditions EXCEPT
a. being in a market that is flooded with foreclosed homes.
b. certain subprime mortgage loans.
c. continual falling prices of homes.
d. purchasing the home under market value.
142) The foreclosure process begins when a borrower defaults on a mortgage loan payment, and the lender files a public notice called a Notice of
a. Action.
b. Default.
c. Eviction.
d. Foreclosure
143) Tom purchased a home for more than the value of the home. Tom is likely a victim of
a. creative financing.
b. illegal flipping.
c. liberal lending.
d. predatory lending.
144) A short sale may proceed only when
a. an agent is representing the seller.
b. the buyer is willing to negotiate the purchase price.
c. an involuntary issue caused the hardship.
d. the seller mismanaged his monies and cannot pay the mortgage.
145) Tony, a real estate agent, is representing his client in a short sale. He is about to contact the lender to start the short sale process. What document does the lender require before communications can begin with Tony?
a. consent letter
b. hardship letter
c. letter of authorization
d. letter of release
146) Who has the obligation to locate agents to market foreclosed bank-owned properties in the areas where the properties are located?
a. asset management companies
b. investment management companies
c. property management companies
d. security management companies
147) When an agent is working with the lender’s loss mitigator, there are several critical questions the agent should ask. On the other hand, some questions are inappropriate; for example, she should NOT ask
a. what documents are required by the lender.
b. what market value the lender’s appraiser reported.
c. all the ways to stay in contact with the loss mitigator.
d. when she’ll hear back from the loss mitigator.
148) Real estate agent Carol is instructed to offer money to occupants of a home facing foreclosure if they will vacate the property by a certain date. This is known as
a. actual eviction.
b. cash for keys.
c. friendly foreclosure.
d. a payoff.
149) Seller agent Hana prepared a report to send to the lender and she is including charts, articles, and data as supporting documentation. This demonstrates that she is sincere in putting together a strong short sale package. What is this report called?
a. Market Conditions and History Report
b. Market Conditions and Trends Report
c. Marketing History Report
d. Marketing Trends and History Report
150) Juan received notice from his employer stating that he will be getting laid off in two weeks. This will put Juan in a position where he may not be able to pay his mortgage. Does Juan qualify for a short sale?
a. No, expectation of a job loss is not a qualification.
b. No, the homeowner must be behind on mortgage payments to qualify.
c. Yes, losing a job is one qualification.
d. Yes, this will create a financial hardship.
151) One way to avoid a delay in the approval of a short sale is to avoid
a. calling the loss mitigator persistently.
b. including an offer that is the same as market value.
c. revealing issues about the property.
d. submitting an incomplete short sale package.
152) Most lenders require several items in an appraisal report of an REO property. Which is NOT required?
a. an “as is” value
b. a comparative market analysis
c. at least three competing listings
d. a “quick sale” value
153) A real estate agent is about to contact the lender to start the short sale process for his client. Before the lender can communicate with the agent, the lender will need a
a. consent letter.
b. hardship letter.
c. letter of authorization.
d. letter of release.
154) Martina prepared a Marketing History Report as part of the short sale package for her seller client to
a. illustrate the true condition of the market.
b. prove the agent attempted to sell the property.
c. reveal market trends in the immediate area.
d. show the highest price was sought by the agent.
155) Nick received an offer on a short sale property he recently listed. Next, Nick will need to contact the lender’s loss mitigation department for his seller client to
a. find out where to mail the completed application and forms.
b. request a list of documents needed for the short sale package.
c. request that they accept the offer.
d. see if the offer is legitimate.
156) The secondary market is comprised of government agencies and private investors that
a. buy and sell real estate mortgages.
b. make loans directly to borrowers.
c. market foreclosure and short sale properties to other investors.
d. pledge assets as security for debts.
157) If a listing agreement includes the contingency “seller’s acceptance of any offers is subject to third-party approval,” it is because
a. all creditors must approve the sale.
b. it is standard language in all listing agreements.
c. it protects the seller in case the lender doesn’t approve the sale.
d. the short sale negotiator must review and approve the sale.
158) When Ray completes a short sale on his principal residence, he could realize many advantages. Which is NOT considered an advantage?
a. He may be able to purchase another home sooner than with a foreclosure.
b. It will show on his credit report for fewer years than a foreclosure.
c. There will be less damage to his credit than bankruptcy.
d. The title will be free and clear of liens.
159) The standard calculation used by lenders to determine one’s ability to repay financial obligations is called the ___ Score.
a. MISMO
b. DECO
c. FICO
d. CCDC
160) If the lender requires that a Preliminary Net Sheet is to be included in the short sale package, what must it show?
a. final closing costs associated with the sale
b. marketing strategies to prove the highest price was sought
c. proof of payment of liens against the property
d. zero profit for the seller
161) Brad received a legitimate offer on a short sale property. He has prepared some documents for the short sale package but before sending anything to the lender, Brad needs to contact the lender’s loss mitigation department to find out if the
a. buyer has been preapproved.
b. buyer’s offer is acceptable.
c. lender already has offers on the property.
d. lender has their own short sale processes, procedures, and forms.
162) Before a homeowner can proceed with a short sale, certain conditions must have occurred. Which is NOT one of them?
a. must be behind on the mortgage payments
b. must be suffering a financial hardship
c. must have lender approval to hold a short sale
d. must have property with negative equity
163) Which of these is NOT a valid reason for a short sale to be rejected?
a. bank sold the loan
b. incomplete documentation
c. market value is too high
d. seller does not qualify
164) The chapter of the Bankruptcy Code providing for liquidation is Chapter
a. 3
b. 5
c. 7
d. 13

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