Commercial Real Estate Finance
Test Preparation
Course Introduction
Commercial Real Estate Finance explores the principles and practices underpinning the financing of income-producing properties such as office buildings, shopping centers, industrial facilities, and multifamily housing. The course covers key concepts including loan structures, risk assessment, property valuation, cash flow analysis, and sources of capital. Students will examine various debt and equity financing options, analyze the roles of lenders and investors, and consider the impact of macroeconomic trends and regulations on the commercial property market. Through case studies and real-world applications, learners develop the skills to evaluate investment opportunities, structure financing deals, and manage financial risks in commercial real estate transactions.
Recommended Textbook
Real Estate Finance 9th Edition by John P. Wiedemer
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16 Chapters
189 Verified Questions
189 Flashcards
Source URL: https://quizplus.com/study-set/3714 Page 2
Chapter 1: History and Background
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14 Verified Questions
14 Flashcards
Source URL: https://quizplus.com/quiz/73998
Sample Questions
Q1) Of the following, the more precise description of a share of stock is:
A) An indication of an obligation.
B) A form of unsecured debt.
C) An evidence of ownership
D) A kind of security.
Answer: C
Q2) Bonds are sold in the financial market by corporations for the purpose of A) raising equity cash
B) Borrowing money
C) Providing additional brokerage fees
D) Generating greater income
Answer: B
Q3) When a lender who's primary aim is to pool mortgages to resell or commit them to a Mortgage Back Security and then service the mortgages uses a funding vehicle called a: A) REMIC
B) Mortgage Conduit
C) Ginnie Mae
D) Warehouse Line
Answer: B
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Page 3
Chapter 2: Money and Interest Rates
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11 Verified Questions
11 Flashcards
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Sample Questions
Q1) Usury can best be described as
A) Interest rates set by the federal government
B) Rates charged by unscrupulous lenders
C) Interest paid or received that exceeds state laws
D) Interest limitations based on religious beliefs
Answer: B
Q2) Fiscal policies of the government can best be described as
A) Budgetary control measures
B) Management of the U.S. Treasury
C) Government taxing and spending policies
D) Policies that control the banking system
Answer: C
Q3) The agency responsible for raising the money and paying federal government obligations is the
A) Office of Management and Budget
B) U.S. Treasury
C) Federal Reserve Bank
D) Comptroller of Currency
Answer: B
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Page 4
Chapter 3: Mortgage Money: Regulated Lenders
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12 Verified Questions
12 Flashcards
Source URL: https://quizplus.com/quiz/73989
Sample Questions
Q1) Most of the money available for mortgage lending comes from
A) Federal Government sponsored funding programs
B) State and municipal housing agencies
C) Private sources of investment capital
D) Federal agencies that underwrite loans
Answer: C
Q2) While the distinction between mortgage bankers and brokers is diminishing, a full service mortgage banker means being capable of all of the following EXCEPT
A) Originating or negotiating a loan
B) Funding a loan a closing
C) Servicing a loan until pay off
D) Holding a whole loan in portfolio
Answer: C
Q3) Which of the following is most descriptive of the primary market?
A) The loan origination market
B) Trading in second mortgages
C) The buying and selling of mortgage loans
D) The market created by Fannie Mae and Freddie Mac
Answer: A
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Page 5
Chapter 4: Other Primary Market Lenders
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12 Verified Questions
12 Flashcards
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Sample Questions
Q1) The continued acceptance and growth of Real Estate Investment Trust has been enhanced by
A) the sale of REIT stock in the financial markets
B) the collapse of Foreign Investment in real estate
C) improved management
D) greater publicity
Q2) The Farm Credit System consists primarily of
A) a Cooperative, borrower-owned network of farm lending banks
B) the Rural Development Service of the Department of Agriculture and related agencies
C) only the Federal Land Bank Associations
D) the government agency that underwrites all qualifying farms loans.
Q3) Mortgage brokers residential mortgage loan market share has decreased substantially because of
A) the rapid consolidation of the mortgage banking industry and new compensation disclosure rules.
B) the complexity of mortgage loans has grown beyond the capabilities of mortgage brokers .
C) legislation that restricts major company lenders.
D) a decline in the number of companies that qualify as mortgage bankers.
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Page 6
Chapter 5: Mortgage Money: the Secondary Market
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12 Verified Questions
12 Flashcards
Source URL: https://quizplus.com/quiz/73987
Sample Questions
Q1) A unit of measure when used as a real estate finance term amounting to one hundredth of one percent is:
A) One Discount Point
B) One Basis Point
C) A Fraction
D) One Point
Q2) Which of the following best describe the difference between a CMO and a CDO?
A) The CDO is a security the CMO is not.
B) The CMO can be tranched and the CDO cannot.
C) The CDO can have other asset classes other than mortgage loans.
D) A CMO will always be higher rated by S & P and Moody's than a CDO.
Q3) As used in mortgage lending, yield means
A) the flexibility allowed in a mortgage loan.
B) to give priority to another.
C) the return of interest plus discount.
D) the interest earned on the loan.
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Chapter 6: The Mortgage Documents
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12 Verified Questions
12 Flashcards
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Sample Questions
Q1) A written agreement that grants priority of claim to another party is called a/an:
A) subordination agreement
B) adjustment of priorities instrument
C) second Lien
D) latent claim
Q2) Which of the following folds the highest priority of claim if properly filed against property?
A) Property Taxes
B) First Mortgage Lien
C) Second Mortgage Lien
D) Homestead Claim
Q3) If a buyer accepts the responsibility to pay an existing loan on the property purchased, it is called:
A) Release of Liability
B) Exercise of the Due-on-Sale Clause
C) A Liability Exchange
D) A Loan Assumption
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Chapter 7: Mortgage Repayment Plans
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12 Verified Questions
12 Flashcards
Source URL: https://quizplus.com/quiz/73985
Sample Questions
Q1) A buy-down mortgage is distinguished by which of the following?
A) Any mortgage with lower initial monthly payments
B) A mortgage with less-than-market interest rate
C) Payment by seller of a portion of the interest cost at closing to reduce monthly payments in the early years of repayment
D) A second mortgage that reduces, or "buys down, the first mortgage.
Q2) Negative amortization, or an increase in the principal amount due each month, is most likely to be found in which of the following?
A) Adjustable Rate Mortgage
B) Growing Equity Mortgage
C) Pledged Account Mortgage
D) Graduated Payment Mortgage
Q3) A note allowing monthly repayment amounts less than are necessary to fully amortize a loan during its term is called a
A) Growing Equity Mortgage
B) Graduated payment note
C) Balloon payment note
D) Buy-down note
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9
Chapter 8: Federal Government Underwriting Programs
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12 Verified Questions
12 Flashcards
Source URL: https://quizplus.com/quiz/73984
Sample Questions
Q1) Which of the following cash required to close rules apply to an FHA mortgage?
A) Cash required may be added to loan amount
B) 3.5% cash required may be cover by down payment plus closing costs
C) 3.5% cash must be paid as down payment
D) Only required down payment must be in cash
Q2) The Federal Housing Administration implements its programs with which of the following procedures?
A) Providing government bonds as collateral for loans
B) Issuing an insured commitment covering the loan
C) Funding a portion of each loan at closing
D) Guaranteeing a portion of each loan
Q3) When a VA loan has been properly assumed, a veteran has a right to a release of liability upon meeting all of the following requirements EXCEPT
A) loan must be currently paid
B) property must be sold to another veteran
C) purchaser must be qualified to buy
D) purchaser must agree to assume the loan
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Chapter 9: Borrower Quali cation
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12 Verified Questions
12 Flashcards
Source URL: https://quizplus.com/quiz/73983
Sample Questions
Q1) One of the better criteria used to determine an applicant's stability of income is
A) the amount of income in excess of that needed for approval
B) the record of payment to other creditors
C) the length of time on the job
D) whether or not more than one applicant is liable
Q2) The VA residual qualification method determines an applicant's residual income, then measures that against the applicant's
A) mortgage payment amount
B) other shelter expenses
C) other monthly obligations
D) VA calculated cost of living expense
Q3) The percentage ratios used as guidelines in the qualification of an applicant's income by HUD/FHA are based on the applicant's
A) effective income not reduced by taxes
B) net effective income after deduction of both income and social security taxes
C) net effective income reduced only by withholding tax
D) net effective income reduced only by social security taxes
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11
Chapter 10: Property Analysis
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12 Verified Questions
12 Flashcards
Source URL: https://quizplus.com/quiz/73997
Sample Questions
Q1) Which of the following statements regarding certification of appraisers is correct?
A) It is illegal to undertake an appraisal unless that person is properly certified
B) Appraisers may be certified by each state as long as federal guidelines are adhered to
C) Certified appraisers must be used for every loan whether or not the lender is federally related
D) All appraisers with peer designations have been grandfathered into state certified status.
Q2) Which FHA software technology allows a approved FHA seller/servicer to find a FHA approved appraiser?
A) Desktop Underwriter
B) FHA Connection
C) Loan Prospector
D) Uniform Appraisal Dataset
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Chapter 11: Commercial Loans: Construction and Land Loans
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12 Verified Questions
12 Flashcards
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Sample Questions
Q1) A release clause in a real estate development loan agreement is one that:
A) allows the borrower to withdraw from the agreement
B) defines the conditions under which lots can be released from the mortgage for resale to builders
C) calls for releasing collateral back to the lender
D) triggers the release of a lender from any further participation in the loan
Q2) The financial statement most commonly used in preliminary examination of real property investment that show some detail on income and operating expenses is the:
A) Balance Sheet
B) Accrual Statement
C) Profit and Loss Statement
D) Operating Statement
Q3) Failure to properly carrying forward approved work-in-place on the Mortgagors Draw Requisition occurs in which of the following type of mortgage loan?
A) Single Family Conforming Loan
B) FHA REO Property Loan
C) Deed for Contract Loan
D) Construction Loan
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Chapter 12: Commercial Building and Farm Loans
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12 Verified Questions
12 Flashcards
Source URL: https://quizplus.com/quiz/73995
Sample Questions
Q1) A "net lease" means which of the following?
A) The tenant pays a net rent after deducting certain listed operating expenses
B) The tenant pays rent based only on the net interior space under lease
C) The tenant pays for all of its own services
D) The tenant pays all maintenance and building operating expenses plus insurance and taxes on the building
Q2) In analysis of a property's income and expense, the calculation of each item as a percentage of the gross operating income helps an analyst to:
A) add paperwork to the analysis
B) more accurately compare income and costs with those of other similar properties
C) compare income and expense with each other
D) determine if a rent increase is needed.
Q3) Depreciation allowed for tax purposes is a percentage of the:
A) total value of the land and buildings
B) equity interest in the building
C) total value of the building
D) equity interest in the land
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14
Chapter 13: Other Financing Practices
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11 Verified Questions
11 Flashcards
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Sample Questions
Q1) The loan to value ratio is a measure used by lenders for all the following purposes EXCEPT:
A) to determine acceptability of the property as loan collateral
B) as a basis for pricing the loan
C) to determine the need for private mortgage insurance
D) to protect against exceeding legal loan limits
Q2) The private mortgage insurance required by regulated depository financial institutions states that for residential mortgage loans with LTV's higher than _______%must have private insurance coverage.
A) 75
B) 80
C) 85
D) 90
Q3) If a builder holds an unsubordinated leasehold interest in land, it means that a building constructed on the land
A) would pass to the landowner if the land rent is not paid
B) would pass to the mortgagee if the land rent is not paid
C) the builder would only forfeit ownership if the mortgage loan is not paid
D) would remain in possession of the builder as long as the land rent if paid
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Page 15
Chapter 14: Technology Advances in Mortgage Lending
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11 Verified Questions
11 Flashcards
Source URL: https://quizplus.com/quiz/73993
Sample Questions
Q1) An automated underwriting system is one that:
A) automatically takes a loan application
B) can only transmit loan information for automatic analysis by a human underwriter
C) can analyze any loan without special software
D) allows a computer with proper software to analyze a loan application and grant approval if justified
Q2) An ownership interest of one percent or more between parties involved with a CLO operation is called a "controlled business arrangement" and must be:
A) a required used of any affiliated company
B) disclosed to any consumer
C) prohibited to use an affiliated company
D) at least a 25 percent discount given by an affiliated company
Q3) Freddie Mac offers an "expedited" collateral assessment which means
A) no appraisal is necessary
B) must only assure that property exists
C) a short appraisal at lender's option which may be completed within two hours
D) it can only be used if property is in a recognized subdivision
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16
Chapter 15: Environmental Issues
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10 Verified Questions
10 Flashcards
Source URL: https://quizplus.com/quiz/73992
Sample Questions
Q1) Insofar as real estate transaction are concerned, all of the following are true about environmental issues EXCEPT
A) most commercial transactions require an environmental site assessment before an agreement can be reached
B) almost all commercial lenders require a site assessment before committing to a loan
C) it is illegal to convey property that harbors hazardous materials.
D) usage of the land may be restricted if certain environmental conditions are present
Q2) Determining for sure whether or not a particular land area falls under the definition of wetlands must be made by:
A) the landowner following guidelines issued by the EPA and the Corps of Engineers
B) observation of the types of vegetation growing in the area
C) an engineering analysis of water content in the soil
D) inspection and determination by the U.S. Corps of Engineers
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Chapter 16: Settlement Procedures
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12 Verified Questions
12 Flashcards
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Sample Questions
Q1) All of the following charges involved with the settlement of a residential mortgage loan must be paid at time of closing EXCEPT:
A) Prepaid principal
B) Property taxes
C) Hazard insurance premium
D) Prepaid interest
Q2) RESPA requires disclosure of estimated closing costs for residential loans at which of the following times?
A) Any time prior to actual closing
B) Within three days of loan application
C) Only if requested by the borrower
D) Within three days of loan application and again one day prior to closing if the borrower request it
Q3) A mortgagee's title policy protects which of the following against an adverse claim of title?
A) Borrower
B) Trustee
C) Real Estate agent
D) Lender
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Page 18