Real Estate Paper 51

The correct answer is (C)
Choice (A) is incorrect because HUD may impose a fine of up to $1,000 for each violation. Choice (B) is the maximum amount of a fine in a criminal prosecution for fraud in interstate land sales. Choice (D) is a distracter because $1 million seems like a lot of money, but how would HUD know what someone’s lifetime would be?

The correct answer is (C)
Choice (A) is incorrect because the vendee doesn’t get title to the property until a certain number of monthly payments have been made. Choice (B) is incorrect because the mortgagor is the vendor of the property, not a financial institution. Contract for deed is used when financing is difficult for the vendee to get. Choice (D) is incorrect for the same reason as choice (B). A wraparound mortgage is one in which the buyer takes out a mortgage that includes the remaining amount on the seller’s mortgage and makes payments to his or her lender that include payments on the original mortgage. This lender then pays the original seller’s mortgage; it is usually a method of refinancing. The new loan is second to the original debt, but the whole is considered one obligation.

The correct answer is (D)
$80,090 ÷ 12 = $6,674.17
$2,340 ÷ $6,6674.17 = 0.35

The correct answer is (C)
Answering this question correctly requires knowing that the generally accepted guidelines are that the percentage of the sum of payments for monthly mortgage, taxes, and nonhousing debt payments cannot be more than 35 percent of gross monthly income. Even without knowing what the Floyds’ other monthly expenses are, you can tell that they cannot afford this mortgage. They are already at 35 percent.

The correct answer is (B)
Choice (B) is a mortgage clause, not a deed clause, used in some states. It promises that the borrower will gain title when the mortgage has been satisfied. Choice (A) states the interest that the deed is granting and reiterates choice (C). Choice (D) is necessary in order for the deed, which is a contract, to be valid.

The correct answer is (C)
Choice (C) is the only item in the list paid to the seller. Choice (A) is a disbursement to the seller’s broker. Choice (B) is paid to the appropriate government department. Choice (D) is paid to the pest inspection company.

The correct answer is (C).
Choice (C) is an economic factor that influences housing values. Choices (A), (B), and (D) are political or governmental factors that influence housing values, so they are incorrect answers to the question.

The correct answer is (C).
Choice (B) is a person who sublets an apartment. Choices (A) and (D) are distracters. They seem familiar so they might be the right answer, but they are meant to confuse.

The correct answer is (D).
100% – 22% = 78%$240,000 = $150,000
+ $90,000
$150,000 × 0.07 = $10,500
$90,000 × 0.03 = $2,700
$10,500 + $2,700 = $13,200
$240,000 × 0.78 = $187,200
$187,200 = $150,000 + $37,200
$37,200 × 0.03 = $1,116
$10,500 + $1,116 = $11,616
$13,200 – $11,616 = $1,584

The correct answer is (C).
In choice (A), the legal title passes to the buyer, and the mortgage is a lien on the property until it is paid off. Choices (B) and (D) are distracters. The third theory on which mortgage law is based is the intermediate theory, which is similar to title theory except in how foreclosure is done.