Legal, Regulatory & Ethical Standards Flashcards
7 cards from real REA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Legal, Regulatory & Ethical Standards flashcards as text
The Community Reinvestment Act (CRA) was enacted to address:
Answer: Discriminatory lending practices by banks that denied credit to low- and moderate-income neighborhoods
The CRA of 1977 was designed to encourage depository institutions to meet the credit needs of all communities, including low- and moderate-income neighborhoods.
A real estate analyst prepares a market study that omits material negative information about a site because the client requested optimistic projections. This action most likely violates:
Answer: The analyst's professional duty of objectivity and standards against misleading reports
Professional standards require analysts to maintain objectivity and include material negative information; omitting it to satisfy a client constitutes a breach of professional ethics.
Under the Dodd-Frank Act, the Consumer Financial Protection Bureau (CFPB) has authority over:
Answer: Mortgage origination, servicing, and consumer financial protection in real estate transactions
The CFPB, created by Dodd-Frank, regulates mortgage origination, servicing, and consumer financial products to protect borrowers in real estate transactions.
Which doctrine holds that a government's power to acquire private property for public use is limited by the requirement of 'just compensation'?
Answer: Eminent domain under the Fifth Amendment
The Fifth Amendment's Takings Clause grants the government eminent domain power but requires just compensation when private property is taken for public use.
A 'material fact' in a real estate transaction is best defined as:
Answer: Information that would likely affect a buyer's decision to purchase or the price they would pay
A material fact is any information that a reasonable buyer would consider important in deciding to purchase or in determining the purchase price, and must be disclosed.
Under the Truth in Lending Act (TILA), lenders must disclose which of the following to mortgage borrowers?
Answer: The annual percentage rate (APR) and total cost of the loan
TILA requires lenders to disclose the APR, total finance charges, and other key loan terms so borrowers can compare credit offers accurately.
Which of the following best describes an 'arm's length transaction' in real estate?
Answer: A sale between unrelated parties acting in their own self-interest without undue pressure
An arm's length transaction occurs between independent, unrelated parties each acting rationally in their own self-interest, which is the basis for market value determinations.