Question 1

18-19.If the developer fails to initiate construction,he will generally:

Accepted Answer

A)  be subject to a fee 
B)  have the commitment fee returned 
C)  have no right to a return of the commitment fee 
D)  not be penalized 
A)  be subject to a fee 
B)  have the commitment fee returned 
C)  have no right to a return of the commitment fee 
D)  not be penalized C

Question 2

18-18.A construction loan commitment is:

Accepted Answer

A)  a reserve of funds held from subcontractors 
B)  an agreement to make a loan in exchange for a fee 
C)  an agreement to meet building codes 
D)  an agreement for an appraisal according to federally mandated requirements 
A)  a reserve of funds held from subcontractors 
B)  an agreement to make a loan in exchange for a fee 
C)  an agreement to meet building codes 
D)  an agreement for an appraisal according to federally mandated requirements B

Question 3

18-21.An independent third party that is a specialist in monitoring the disbursement of the loan to the proper contractors is a:

Accepted Answer

A)  construction loan administrator 
B)  construction loan processor 
C)  voucher control agent 
D)  institutional lender 
A)  construction loan administrator 
B)  construction loan processor 
C)  voucher control agent 
D)  institutional lender C

Question 4

18-42.The following should be covered under a construction loan commitment:

Accepted Answer

A)  the interest charge 
B)  the amount of the loan 
C)  description of any collateral 
D)  all of the above 
A)  the interest charge 
B)  the amount of the loan 
C)  description of any collateral 
D)  all of the above

Question 5

18-26.Raw land is acquired by two types of investors.They are:

Accepted Answer

A)  developer/warehouser 
B)  developer/speculator 
C)  speculator/warehouser 
D)  speculator/lender 
A)  developer/warehouser 
B)  developer/speculator 
C)  speculator/warehouser 
D)  speculator/lender

Question 6

The speculator is interested in:

Accepted Answer

A)  appreciation of the land 
B)  depreciation of the land 
C)  immediate plans for the land 
D)  none of the above 
A)  appreciation of the land 
B)  depreciation of the land 
C)  immediate plans for the land 
D)  none of the above

Question 7

18-45.When a developer puts up only a portion of the sales price and agrees to pay the balance when the property is developed and sold,this is referred to as:

Accepted Answer

A)  subdivision trust 
B)  rolling options 
C)  subdivision control 
D)  exaction 
A)  subdivision trust 
B)  rolling options 
C)  subdivision control 
D)  exaction

Question 8

18-14.In the case of seller financing,after the seller's note is subordinated,the remaining parties will act:

Accepted Answer

A)  in their own behalf 
B)  in the seller's behalf 
C)  in everyone's behalf 
D)  in the junior position's behalf 
A)  in their own behalf 
B)  in the seller's behalf 
C)  in everyone's behalf 
D)  in the junior position's behalf

Question 9

18-11.Development includes:

Accepted Answer

A)  subdividing 
B)  engineering 
C)  physical work 
D)  all of the above 
A)  subdividing 
B)  engineering 
C)  physical work 
D)  all of the above

Question 10

The developer is interested in:

Accepted Answer

A)  appreciation of the land 
B)  depreciation of the land 
C)  immediate plans for the land 
D)  none of the above 
A)  appreciation of the land 
B)  depreciation of the land 
C)  immediate plans for the land 
D)  none of the above

Question 11

18-36.Loan-to-Value ratios for commercial projects are usually:

Accepted Answer

A)  40-50% 
B)  50-60% 
C)  60-70% 
D)  70-80% e 80-90% 
A)  40-50% 
B)  50-60% 
C)  60-70% 
D)  70-80% e 80-90%

Question 12

18-25.ADC financing is done primarily:

Accepted Answer

A)  by institutions that specialize in such lending 
B)  all at once by one "Master Lender" 
C)  by small lending institutions 
D)  without the use of a lawyer 
A)  by institutions that specialize in such lending 
B)  all at once by one "Master Lender" 
C)  by small lending institutions 
D)  without the use of a lawyer

Question 13

The most likely reason for different lenders financing,distinctly different stages of the development process is:

Accepted Answer

A)  to protect the lender 
B)  specialization 
C)  to protect the seller 
D)  to protect the developer 
A)  to protect the lender 
B)  specialization 
C)  to protect the seller 
D)  to protect the developer

Question 14

18-34.The following are covered in a "construction loan commitment":

Accepted Answer

A)  interest rate 
B)  loan amount 
C)  description of collateral 
D)  all of the above. 
A)  interest rate 
B)  loan amount 
C)  description of collateral 
D)  all of the above.

Question 15

18-46.When improvements in the infrastructure are financed by additional property taxes applied to properties in the geographical area of the development it is termed:

Accepted Answer

A)  density bonus 
B)  tax-increment financing 
C)  senior financing 
D)  partial release provision 
A)  density bonus 
B)  tax-increment financing 
C)  senior financing 
D)  partial release provision

Question 16

18-33.A developer that constructs and donates a public park is most likely:

Accepted Answer

A)  palm greasing 
B)  paying "dollar based" impact fees 
C)  looking for a density bonus 
D)  none of the above 
A)  palm greasing 
B)  paying "dollar based" impact fees 
C)  looking for a density bonus 
D)  none of the above

Question 17

18-40.In order to develop a parcel of land the developer may have to pay the local governmental jurisdiction:

Accepted Answer

A)  impact fees 
B)  carrying fees 
C)  community growth fees 
D)  all of the above 
A)  impact fees 
B)  carrying fees 
C)  community growth fees 
D)  all of the above

Question 18

18-47.A separate agreement whereby a lender makes a commitment to make a loan in exchange for a fee is referred to as a(n):

Accepted Answer

A)  construction loan commitment 
B)  impact fee 
C)  land acquisition loan 
D)  cost recovery fee 
A)  construction loan commitment 
B)  impact fee 
C)  land acquisition loan 
D)  cost recovery fee

Question 19

18-24.The purpose of an option is:

Accepted Answer

A)  to exercise a lease on the property 
B)  to be able to purchase the land at a future time 
C)  to secure land without securing immediate financing 
D)  both b and c 
A)  to exercise a lease on the property 
B)  to be able to purchase the land at a future time 
C)  to secure land without securing immediate financing 
D)  both b and c

Question 20

18-20.Construction loan provisions:

Accepted Answer

A)  ensure the availability of the construction loan 
B)  are details designed to expedite the construction of the facility 
C)  are details of how the construction is to proceed and how the loan proceeds are to be disbursed 
D)  both b and c 
A)  ensure the availability of the construction loan 
B)  are details designed to expedite the construction of the facility 
C)  are details of how the construction is to proceed and how the loan proceeds are to be disbursed 
D)  both b and c

Exam 18: Acquisition, Development, and Construction Financing

18-19.If the developer fails to initiate construction,he will generally:

18-18.A construction loan commitment is:

18-21.An independent third party that is a specialist in monitoring the disbursement of the loan to the proper contractors is a:

18-42.The following should be covered under a construction loan commitment:

18-26.Raw land is acquired by two types of investors.They are:

The speculator is interested in:

18-45.When a developer puts up only a portion of the sales price and agrees to pay the balance when the property is developed and sold,this is referred to as:

18-14.In the case of seller financing,after the seller's note is subordinated,the remaining parties will act:

18-11.Development includes:

The developer is interested in:

18-36.Loan-to-Value ratios for commercial projects are usually:

18-25.ADC financing is done primarily:

The most likely reason for different lenders financing,distinctly different stages of the development process is:

18-34.The following are covered in a "construction loan commitment":

18-46.When improvements in the infrastructure are financed by additional property taxes applied to properties in the geographical area of the development it is termed:

18-33.A developer that constructs and donates a public park is most likely:

18-40.In order to develop a parcel of land the developer may have to pay the local governmental jurisdiction:

18-47.A separate agreement whereby a lender makes a commitment to make a loan in exchange for a fee is referred to as a(n):

18-24.The purpose of an option is:

18-20.Construction loan provisions:

Finance and Real Estate

Money Credit and the Determination of Interest Rates

Finance Theory and Real Estate

The Early History of Residential Finance and Creation of the Fixed Rate Mortgage

Modern Residential Finance

Alternative Mortgage Instruments

Financing and Property Values

Federal Housing Policies: Part 1

Federal Housing Policies: Part 2

The Secondary Mortgage Market

Valuation of Mortgage Securities

Controlling Default Risk Through Borrower Qualification Loan Underwriting and Contractual Relationships

Loan Origination, Processing, and Closing

Mortgage Default Insurance, Foreclosure, Title Insurance

Value, Leverage, and Capital Structure

Federal Taxation and Real Estate Finance

Sources of Funds for Commercial Real Estate Properties

Permanent Financing of Commercial Real Estate Properties

Ownership Structures for Financing and Holding Real Estate

Real Estate in a Portfolio Context

Liability, Agency Problems, Fraud, and Ethics in Real Estate Finance

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