Buying Homes in Foreclosure, 4th Edition Study Guide

From: first tuesday, PO Box 20069, Riverside, CA. 92516 1.800.794.0494 General Information Thank you for enrolling in our home study course. Your personal satisfaction with this course will be greatest if you complete the course soon. However, the course is good for one year from the date of your enrollment. If you do not complete your course within one year, you must re-enroll in the course. A re-enrollment fee will apply. This study guide is voluntary and for your personal benefit. Answers are included so you can determine your reading comprehension. Final Examination On completion of your studying, fax or mail us the enclosed Request to Take Final Exam form. The Department of Real Estate (DRE) requires the final examination to be administered by a Test Administrator. You may select a Test Administrator of your choice. The Test Administrator can be anyone except a relative or co-worker. DRE Disclaimer This course is approved by the California Department of Real Estate (DRE) for continuing education courses. However, DRE approval does not constitute endorsement of the views or opinions expressed by the course sponsor or book authors. Refund Policy We will accept refunds on courses if returned within 15 days of your invoice date. Return postage will not be refunded. Please return all course materials to: first tuesday Attn: Returns PO Box 20069 Riverside, CA. 92516

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Buying Homes in Foreclosure, 4th Edition Instructions: Quizzes are open book. All answers are either True or False. Answer key is located on the last page. Quiz 1 Pages 3-33 _____ 1. An equity purchase (EP) transaction occurs when an owner-occupied, oneto-four unit residential property in foreclosure is acquired for investment or dealer purposes. _____ 2. To be subject to equity purchase law, an investor must buy at least three owner-occupied, one-to-four unit residential properties in foreclosure. _____ 3. During the seller-in-foreclosures contract cancellation period for purchase agreements, the equity purchaser may accept a conveyance of the sellers interest in the property. _____ 4. Once escrow closes, an equity purchasers title is subject to the sellers two year right of rescission. _____ 5. Delinquent interest on an existing loan which accrues before an EP investor purchases the property is an expense to the investor, even if the seller pays the interest. _____ 6. A broker representing an EP investor when negotiating transaction must be bonded by a surety for twice the propertys fair market value. _____ 7. A person who, for a fee from the owner-in-foreclosure, agrees to stop or postpone the foreclosure sale is called a foreclosure consultant. _____ 8. A foreclosure consultant may collect an advance fee. _____ 9. On receipt of a notice of rescission from the seller in an EP transaction, the EP investor has two years to reconvey title to the seller. _____ 10. The price the EP investor pays for the property in foreclosure may be considered unconscionable. Quiz 2 Pages 37-81 _____ 1. A lender on owner-occupied, one-to-four unit residential property purchased with the loan proceeds may seek a deficiency judgment on completion of a judicial foreclosure sale. _____ 2. Once an NOD is recorded, the owners right to redeem the property by a full payoff of the loan exists up to the five business days before the date of the trustees sale. _____ 3. In an equity purchase (EP) transaction, the seller is required to complete a condition of property disclosure (transfer) statement. _____ 4. A brokers general duty to disclose all property conditions which affect the propertys value can be eliminated by the broker inserting an as-is disclaimer in the purchase agreement. _____ 5. An EP investor who discovers defects on the property after acceptance, but prior to the close of escrow, has no other remedy but to cancel the purchase agreement.

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6. Home inspectors owe a duty to the buyer to use the skill, prudence and diligence exercised by their licensed professional peers, i.e. general contractors, engineers, etc. 7. The use of the Natural Hazard Disclosure Statement is mandated on the sale of all property. 8. A seller-in-foreclosure who provides good faith estimates about the propertys operating potential as a rental may not be held liable for inaccuracies. 9. An EP investor may rely on the preliminary title report as an accurate representation of the condition of title. 10. A binder, also called a commitment to issue, entitles the insured to title insurance coverage until a new policy is issued to a purchaser on resale of the property or a lender on a refinance.

Quiz 3 Pages 83-116 _____ 1. The Internal Revenue Service (IRS) is authorized to negotiate with an equity purchase (EP) seller (or investor) to accept partial payment of an income tax lien in exchange for a release of the lien. _____ 2. When a homeowner is in bankruptcy, an automatic homestead lien is not enforceable against an IRS tax lien. _____ 3. A declaration of homestead cannot be recorded on a mobilehome which is not considered real estate. _____ 4. The maximum homestead amount a homeowner with no dependents can qualify for is $50,000. _____ 5. The creation of a junior lien on an owner-occupied, single-family residence which the owner continues to occupy will trigger due-on enforcement. _____ 6. A lenders conduct can never constitute a waiver of the lenders due-on-sale rights. _____ 7. Borrowers under programs insured by the Federal Housing Administration (FHA) or the Veterans Administration (VA) receive anti-deficiency protection. _____ 8. A buyer assuming a Veterans Administration (VA) loan originated on or after March 1, 1988, must pay a fee to the VA of .5% of the loan balance. _____ 9. A seller is not personally liable for any deficiencies on non-recourse debt taken over by the EP investor. _____ 10. When a lender enters into an agreement with both the EP investor and the seller for the investors assumption of the loan and the sellers release of liability, the agreement is called an exculpatory agreement. Quiz 4 Pages 119-169 _____ 1. After the EP investor assigns his purchase rights to a substitute buyer, the substitute buyer assumes the investors position as the buyer in escrow. _____ 2. A substitute buyer is not subject to the seller-in-foreclosures two-year right of rescission. _____ 3. A release and substitution agreement requires the seller to look solely to the substitute buyer for performance of the EP agreement.

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4. A blind pool investment program is a corporate security. 5. A beneficiary statement does not have to include the amount of any additional charges incurred by the beneficiary which have become part of the trust deed lien. 6. A payoff demand is a written statement of the amounts required to pay off the loan and obtain a reconveyance of the trust deed. 7. A sale-leaseback and option arrangement is considered a mortgage. 8. A seller-in-foreclosure with an option to repurchase the property may deny the EP investor permission to sell and transfer title without giving any reason. 9. A short sale is the sale of real estate for a price lower than the amount due on the loan. 10. An owner incurs a tax liability on the short sale of real estate encumbered by a nonrecourse note.

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Answer References
The following are the answers to the quizzes for Buying Homes in Foreclosure, 4th Edition and the page numbers where they are located. Buying Homes in Foreclosure, 4th Edition Quiz 2 Quiz 3 1. F 37 1. T 86 2. F 38 2. T 87 3. T 43 3. T 90 4. F 44 4. T 91 5. F 52 5. F 102 6. T 54 6. F 106 7. F 57 7. F 108 8. T 63 8. T 109 9. F 71 9. T 112 10. T 81 10. F 116

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Quiz 1 T 3 F 3 F 4 T 5 F 16 T 23 T 24 F 26 F 30 T 31

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Quiz 4 T 138 F 140 T 142 T 143 F 157 T 158 T 163 F 164 T 167 F 168