121. Which of the following does not buy loans in the secondary mortgage market?

A. Federal Home Loan Mortgage Corporation (Freddie Mac)

B. Government National Mortgage Association (Ginnie Mae)

C. Federal National Mortgage Association (Fannie Mae)

D. Federal Housing Administration (FHA)

Answer: D. Federal Housing Administration (FHA)

122. The term “mortgage yield,” as used by lenders, best describes:

A. An increase in the value of a property that has a mortgage

B. The effective interest return obtained from a trust deed by an investor

C. All of the money received by a lender after deducting closing costs and loan fees

D. The amount the lender receives when a mortgage is paid off

Answer: B. The effective interest return obtained from a trust deed by an investor

123. Which of the following defines a mortgage?

A. An instrument that is used only in the exchange of real estate

B. A financial obligation which is unsecured but is used to buy real estate

C. A promissory note which is unpaid

D. A loan collateralized with real estate

Answer: D. A loan collateralized with real estate

124. Which of the following would be classified as economic obsolescence?

A. Termite damage

B. Negligent care

C. Outdated kitchen

D. Oversupply of like properties

Answer: D. Oversupply of like properties

125. The primary justification for zoning ordinances is to:

A. Maintain conformity of buildings in the zoned area

B. Prevent an oversupply of certain types of businesses

C. Promote public health, safety, morals and general welfare

D. Control the quality of building construction

Answer: C. Promote public health, safety, morals and general welfare

126. The main purpose of a deed is to:

A. Evidence a change in title or to transfer an interest in real property

B. Identify the parties involved in a real property transfer

C. Provide evidence of a sales transaction

D. Provide a written instrument that can be recorded

Answer: A. Evidence a change in title or to transfer an interest in real property

127. In order to operate a competitive, yet profitable business, a real estate broker needs to be concerned with desk cost. Which of the following most nearly represents the correct way to calculate “desk cost”?

A. Add the total of all of the furniture for each salesperson

B. Calculate the gross annual profit for the firm less the expenses divided by the number of salespersons

C. Divide the total cost of rent, utilities, and advertising by the number of salespersons

D. Divide the total operating expenses of the firm, including salaries, rent, insurance, etc., by the number of salespersons

Answer: D. Divide the total operating expenses of the firm, including salaries, rent, insurance, etc., by the number of salespersons (Note: The document marks C, but D is the standard definition.)

128. Accretion would result in the acquisition of title to real property by:

A. Adverse possession

B. An owner who acquired land by natural causes

C. The county government following a condemnation action

D. None of the above

Answer: B. An owner who acquired land by natural causes

129. Which of the following is true concerning promissory notes?

A. They are used as the security for trust deeds

B. They are recorded at the County Recorder’s office

C. They are always used when real estate is sold

D. They are the evidence of the debt

Answer: D. They are the evidence of the debt

130. A Quitclaim Deed:

A. Conveys any after-acquired title

B. Warrants against encumbrances which are known to the grantor

C. Warrants that there are no recorded encumbrances

D. Has no expressed or implied warranties and guarantees nothing

Answer: D. Has no expressed or implied warranties and guarantees nothing