Mixed Deck — All PSI Topics Flashcards

Which of the following BEST describes a 'bridge loan' in real estate?

Answer: A short-term loan used to bridge the gap between buying a new home and selling the existing one

A bridge loan is short-term financing that allows a borrower to purchase a new property before their current property is sold.

A lender charges 2 discount points on a $300,000 loan. How much does the borrower pay in points?

Answer: $6,000

Each point equals 1% of the loan amount; 2 points × 1% × $300,000 = $6,000.

A couple advertised their house with a broker. The sale ended when the seller found a buyer after two months. The seller did not have to pay the broker a commission. This listing was probably:

Answer: an exclusive agency listing

In an exclusive agency listing, the seller grants one broker the exclusive right to sell the property, but the seller retains the right to find a buyer themselves without owing a commission to the broker. If the seller finds the buyer, as in this scenario, no commission is paid. This differs from an exclusive right to sell listing, where the broker earns a commission regardless of who finds the buyer.

Which licensing exam scheduling action should a candidate take if they need to reschedule a PSI exam?

Answer: Contact PSI at least 24-48 hours before the scheduled exam to avoid a forfeiture fee

PSI generally requires candidates to reschedule at least 24-48 hours before the appointment to avoid losing the examination fee; exact windows vary by program.

What is the legal effect of a 'time is of the essence' clause in a real estate contract?

Answer: Missing the deadline is a material breach

A 'time is of the essence' clause makes strict compliance with deadlines a material term, so missing the deadline constitutes a material breach allowing the other party to terminate.

What should a candidate do if they encounter a technical malfunction during a PSI exam?

Answer: Raise their hand or notify the proctor immediately

Candidates should immediately alert the proctor to any technical issues so the problem is documented and the exam time can be appropriately managed.

Depreciation, defined as a decrease in value from any cause, is usually classified into three categories. The loss of a property's value due to normal wear and tear is called ______.

Answer: physical deterioration

Physical deterioration is the loss of value that comes from the wear and tear that buildings go through as they age. Floods, earthquakes, fire, UV rays, wind, etc. can cause physical damage.

Which of the following actions would constitute a breach of the agent's duty of disclosure?

Answer: Hiding a known structural problem from a buyer

An agent has a duty to disclose all known material facts that could affect a buyer's decision; concealing a structural defect is a breach of that duty.

A homeowner borrows $50,000 using their home's equity as collateral to fund a renovation. This is best described as a:

Answer: Home equity loan

A home equity loan allows homeowners to borrow against the equity built up in their property.

What does PSI's remote proctoring option allow candidates to do?

Answer: Take the exam on their own computer at home under live supervision

PSI's remote proctoring (PSI Bridge) lets candidates test from home using their computer while a live proctor monitors them via webcam.

What does a PSI 'scaled score' mean on a licensing exam result?

Answer: A standardized score that accounts for slight difficulty variations between exam versions

Scaled scores ensure fairness by adjusting raw scores so that different versions of the exam with varying difficulty are equivalent.

Which of the following criteria must be met by a policy in order to AVOID being labeled as a MEC?

Answer: 7-Pay Test

The 7-Pay Test is a crucial criterion used to determine if a life insurance policy is classified as a Modified Endowment Contract (MEC). If the cumulative premiums paid into a policy during its first seven years exceed the 'seven-pay limit' (the amount that would have paid up the policy in seven years), it becomes a MEC, which alters its tax treatment for withdrawals and loans.

How far in advance can you typically schedule a PSI exam appointment?

Answer: Up to 90 days

PSI allows candidates to schedule appointments up to 90 days in advance through their online scheduling system.

What legal doctrine prevents a party from asserting rights that are inconsistent with a position they previously took, when another party relied on that position?

Answer: Equitable estoppel

Equitable estoppel prevents a party from taking a legal position inconsistent with a prior representation when another party has reasonably relied on that representation to their detriment.

Which of the following loan types does NOT require mortgage insurance regardless of the down payment amount?

Answer: VA loan

VA loans do not require monthly mortgage insurance premiums regardless of the down payment or LTV ratio, a significant benefit for eligible veterans.

A life insurance policy provision that allows the policyowner to reinstate a lapsed policy within a specified period by paying back premiums with interest requires evidence of:

Answer: Insurability

Reinstatement provisions require the policyowner to provide evidence of insurability in addition to paying all overdue premiums plus interest.

Which scheduling technique uses probabilistic time estimates including optimistic, pessimistic, and most likely durations?

Answer: Program Evaluation and Review Technique (PERT)

PERT uses three-point estimates (optimistic, pessimistic, most likely) to account for uncertainty in activity durations.

An applicant for a contractor's license is denied because they failed to disclose a prior felony conviction on their application. The denial is based on the applicant's failure to meet the licensing board's requirement for:

Answer: Good moral character.

Most licensing laws require applicants to possess good moral character. Failing to disclose a criminal conviction is often viewed as a reflection of an applicant's character and truthfulness, which can be grounds for denial of a license, separate from the nature of the conviction itself.

A consumer files a complaint with the real estate licensing board. What is the board's primary role in this process?

Answer: To investigate whether a license law violation occurred

The licensing board's role is regulatory — it investigates violations and imposes professional sanctions, not financial damages.

The 'coinsurance clause' in a commercial property policy is designed to encourage property owners to:

Answer: Purchase coverage equal to at least a specified percentage of the property's value

The coinsurance clause penalizes underinsurance; if the insured carries less than the required percentage (e.g., 80%) of property value, the insurer pays only a proportional share of any loss.