1. Elderly homeowners paid off their loan 5 years ago. Due to a limited fixed income, they would like to borrow on the equity of the home. Which type of loan would be most desirable?
A. open-end loan
B. reverse mortgage Correct
C. blanket loan
D. growing-equity loan
Explanation
Reverse mortgages are designed for seniors (typically 62+) to borrow against home equity without monthly payments, suitable for fixed income. Open-end loans are lines of credit for additional borrowing, blanket loans cover multiple properties, and growing-equity loans accelerate principal paydown, which is unsuitable for limited income.
2. A Comparative Market Analysis performed by a real estate agent for a seller is a comparison of
A. past real estate appraisals.
B. appraisal feasibility studies.
C. median property values in the seller’s market.
D. recently sold homes similar to the seller’s property. Correct
Explanation
CMA compares recently sold comparable properties (comps) to estimate value for pricing. Appraisals are formal valuations, feasibility studies assess development viability, and median values are broad market indicators, not specific comps.
3. The following statement was found in a real estate sales contract: 'In the event of a default by the purchaser, the forfeiture of the earnest money to the seller will be the only compensation to which the seller will be entitled.' This statement most likely describes a
A. broker protection clause.
B. liquidated damages clause. Correct
C. default delivery clause.
D. indemnification clause.
Explanation
Liquidated damages limit seller's recovery to earnest money upon buyer default, avoiding further claims. Broker protection protects against unauthorized brokers, default delivery relates to title transfer, and indemnification protects against losses from third parties.
4. When lending standards are tightened, lenders typically require
A. a higher loan-to-value ratio.
B. a lower loan-to-value ratio. Correct
C. a balloon payment after 5 years.
D. a waiver of the Equal Credit Opportunity Act.
Explanation
Tightened standards mean lenders require more equity (lower LTV ratio) to reduce risk. Higher LTV increases risk, balloon payments are specific terms, and ECOA waiver is illegal as it's a federal law prohibiting discrimination.
5. The Multiple Listing Service (MLS) board members decided that the population of each area of the city would be best served by the brokerages who have offices actually located within those areas. The board established boundaries dividing the city into six districts and voted to limit listings for each district to only those brokerages with offices within the district. Brokerages who tried to advertise beyond their own district would be prohibited from listing properties in the MLS. This action violates what Real Estate Law?
A. Civil Rights Act
B. Diversity Jurisdiction
C. Sherman Anti-trust Act Correct
D. Housing and Community Development Act of 1974
Explanation
Sherman Antitrust Act prohibits restraints of trade like territorial restrictions on MLS participation, which limit competition. Civil Rights Act addresses discrimination, Diversity Jurisdiction is federal court rule, and Housing Act focuses on development.