MRP Real Estate Law & Regulations 2 — Questions and Answers
Question 1: Under the Servicemembers Civil Relief Act (SCRA), what is the maximum interest rate that can be charged on pre-service mortgage obligations for active-duty military members?
- 4%
- 6% (Correct answer)
- 8%
- 10%
Correct answer: 6%
The SCRA caps interest rates at 6% per year on financial obligations incurred before active-duty service.
Question 2: Which federal law requires lenders to disclose the Annual Percentage Rate (APR) and other loan terms to borrowers before closing?
- RESPA
- TILA (Truth in Lending Act) (Correct answer)
- ECOA
- HMDA
Correct answer: TILA (Truth in Lending Act)
The Truth in Lending Act (TILA) mandates clear disclosure of APR and loan terms so borrowers can compare credit offers.
Question 3: A military buyer uses a VA loan to purchase a home. The seller's agent insists the buyer must pay for a termite inspection. Is this permitted?
- Yes, the buyer can pay for any inspection
- No, VA guidelines prohibit the buyer from paying for termite inspections in most states (Correct answer)
- Yes, but only if it is disclosed in the purchase contract
- No, termite inspections are never required for VA loans
Correct answer: No, VA guidelines prohibit the buyer from paying for termite inspections in most states
VA guidelines in most states classify termite inspections as a non-allowable fee that the buyer cannot pay; the seller or lender typically covers it.
Question 4: What does the term 'equitable title' mean in a real estate transaction?
- The right to use property without ownership
- The buyer's interest in property after signing a purchase contract but before closing (Correct answer)
- Equal ownership shares between co-buyers
- Title free of all liens and encumbrances
Correct answer: The buyer's interest in property after signing a purchase contract but before closing
Equitable title is the beneficial interest a buyer holds once under contract, giving them the right to obtain legal title upon fulfilling contract terms.
Question 5: A PCS-relocated service member sells a home after only 18 months of residence. Under the IRS military exception, what is the maximum capital gains exclusion available?
- $125,000 for single filers
- $250,000 for single filers / $500,000 for married filers (Correct answer)
- $100,000 regardless of filing status
- No exclusion is available before 2 years
Correct answer: $250,000 for single filers / $500,000 for married filers
Military members can claim the full $250,000/$500,000 capital gains exclusion even if they have not met the standard 2-year residency requirement due to PCS orders.
Question 6: Which type of deed provides the LEAST protection to the buyer because the grantor makes no warranties about the title?
- General warranty deed
- Special warranty deed
- Quitclaim deed (Correct answer)
- Bargain and sale deed
Correct answer: Quitclaim deed
A quitclaim deed conveys only whatever interest the grantor currently holds, with no warranties of title whatsoever.
Question 7: Under RESPA, a lender's Good Faith Estimate (now Loan Estimate under TRID) must be provided to the borrower within how many business days of receiving a loan application?
- 1 business day
- 3 business days (Correct answer)
- 5 business days
- 10 business days
Correct answer: 3 business days
Under TRID rules, lenders must deliver the Loan Estimate within three business days of receiving a completed loan application.
MRP Real Estate Law & Regulations 2
Under the Servicemembers Civil Relief Act (SCRA), what is the maximum interest rate that can be charged on pre-service mortgage obligations for active-duty military members?