LOANS DIRECTLY TO BORROWERS PRIMARY MORTGAGE MARKET

***Real Estate Exam Prep Cheat Sheet Flashcards excessive interest (illegal)USURY

= LOANS DIRECTLY TO BORROWERSPRIMARY MORTGAGE MARKET =

contract must be fulfilled by parties involved. (courts)SPECIFIC PERFORMANCE when property is taken into legal custody ATTACHMENT

adds protection for: - Familial status (Presence of children /

Age) - Handicaps (physical or mental disabilities) this includes people with Aids or alcoholics (but not drug addicts)

FAIR HOUSING AMENDMENTS ACT 1988....

• TESTS OF HIGHEST & BEST USE.most profitable, legally permitted, economically feasible,

and physically possible

1ST LOANS =PRIMARY FINANCING

neither party can sue to force performance. (e.g. some type of verbal agreement)

UNENFORCEABLE

prohibits discrimination on basis of religion, race, color, natl. origin (selling/ leasing residential)

FAIR HOUSING ACT 1968 (TITLE 8)

ownership use of the property only for a specific number of days per year. (could be fee-simple ownership or a "certificate", kind of like a long term lease, eg. 20 yrs or Leasehold)

TIMESHARES

= BUYING/SELLING OF EXISTING LOANSSECONDARY MORTGAGE MARKET

owner borrows against equity in home & receives monthly tax-free payments from the lender.

REVERSE ANNUITY

• AGENTS OF PRODUCTIONland, labor, capital, entrepreneurship/coordination

homeowner/borrower because they are "giving" note to lender to get a loan.MORTGAGOR"ORS" GIVE Lease Tenant =Lessee WHICH APPROACH?"best method for single family properties"Typically used for single-fam homes, land etc...when there are recent comparables are available ( also with similar sale terms etc.).

SALES APPROACH...

2ND & JUNIOR LOANSSECONDARY FINANCING tenant remains in possession of property, after lease ended. Eviction likely & may be liable for rent.

TENANCY AT SUFFERANCE

P.M.I.point of maximum impulse interest indicator that interest is based on. INDEX a registration system to identify person(s) who have been convicted of kidnapping a child, committed a sexual crime etc. (check you state laws, this might affect your disclosure duties.)

MEGAN'S LAW

Types of Leasestenant pays rent plus expenses associated with the tenancy.

NET

acts & conduct "implies" agreement, but no official promises

IMPLIED CONTRACT

FIRREAFEDERAL FINANCIAL INSTITUTIONS REFORM

RECOVERY AND ENFORCEMENT ACT

individually owned unit (interior space) within a multiunit building. The land & building is owned in common by all unit owners.(Fee-simple for one unit plus share in common elements.

CONDOS

replacing of something old for something new (e.g. old debt with a new debt)

NOVATION

TYPES OF LEASEStenant pays rent, owner pays insurance, taxes etc GROSS funneling buyers to particular areas to keep the makeup of that area the same or intentionally change it. illegal

STEERING.

• SECTION = how many square miles= 1 SQUARE MILE
• COMPONENTS OF DEPRECIATIONphysical, functional, external

TYPES OF LEASESThis has built in periods of rent adjustments.

GRADUATED

contract is a 1-sided agreement. 1 party agrees to something in order to persuade the other party to act. (e.g.

• party agreeing to pay a commission if another party can

find a renter)

UNILATERAL

• GREAT (BROAD) FORCESeconomic, social, governmental, environmental

promises made in the contract are in the process of being fulfilled. (e.g. yet to be completely fulfilled from either one or both of parties)

EXECUTORY CONTRACT

week to week, year to year etc., determined by the term of the payment of rent. e.g. lease ends with a "notice" of 6 months or a 1 month notice etc., law varies state to state

PERIODIC ESTATE/TENANCY

giving reasonable notice a lessee or lessor may terminate the tenancy at any time.

TENANCY AT WILL

• SQUARE YARD(SQ. YD.) = how many square feet = 9 SQ. FT.

Mortgate includes home, furniture & other personal property

PACKAGE MORTGAGE

Mortgage-Not guaranteed or insured by Gov'- Lender sets terms (legally)-LTV ratio lower than insured/guaranteed loans- LTV exceeds certain lvl, then PMI required

CONVENTIONAL

Mortgage-Mortgages are insured-- Interest rates set by lender- Borrower pays insurance premium- Appraised by FHA approved appraiser- Prepayment penalties not allowed- Mortgages can be assumable FHA

• ELEMENTS OF VALUE(DUST)demand, utility, scarcity, transferability

STATUTE OF FRAUDS States thatcertain Real Estate contracts must be in writing in order to be enforceable.

adds "improvements" (build) to land and sells. DEVELOPER max amount that interest can increase/decrease. CAP RATE

• COMMON APPROACHES TO VALUE..sales (most common), income, cost

Lender because they are "receiving" note from borrower.MORTGAGEE"EES" RECEIVE Listing Agreement e.g. we are dating exclusively (in agency sense) & only I have the right to sell your property. Broker payed, even if owner sells without help

EXCLUSIVE RIGHT TO SELL

3 MORTGAGESCONVENTIONAL.FHADVA (DEPT. OF VETERAN

AFFAIRS).

added sex/gender to FAIR HOUSING ACT 1968 HOUSING & COMMUNITY DEVELOP. ACT 1974 payment starts low and rises over time.GRADUATED PAYMENT the price that a willing informed buyer & willing informed seller would agree to. (in a open market, reasonable timeframe). This probable sales price is the most common for appraisers.

MARKET VALUE

denying/restricting loans based on certain communities.illegal

REDLINING

prohibits credit discrimination based on race, color, religion, national origin, sex, martial status & age. (legally can only consider income,net worth, credit rating & job stability)

EQUAL CREDIT OPPORTUNITY ACT

parties agree on specifically on terms(written/oral)EXPRESS CONTRACT TYPES OF LEASESrequires rent adjustments based upon a specific economic data statistic INDEX seller/owner financing (buyer borrows from seller instead of or in addition to a bank).

PURCHASE MONEY

• acre = ______ square feet43,560 SQ. FT.

lessee/tenant "holds" & occupies property due to a lease.LEASEHOLD ESTATE.Listing Agreement open relationship, not committed. But will pay if any broker procures sale.

OPEN NON-EXCLUSIVE AGENCY

can increase lender yield, cover costs, give lower ratesPOINTS Contract Lacks at least 1 essential element of a valid contract. Does not have any legal force.

VOID more than one piece of property.BLANKET mortgagor can re-borrow against principal that has been paid so far

OPEN END MORTGAGE

Listing Agreementbroker is entitled to keep any amount over a certain amount of money. (e.g. sells property over a set amount, then broker keeps remaining "net" profits)

NET LISTING

Listing agreement without exclusive rights to sell. paid only if broker procured the sale.

EXCLUSIVE AGENCY....

cancels contract. All parties back before contract existed.RESCISSION This 1989 Act requires that appraisers are state licensed or certified when appraising for properties that are being used for FRT's (federally related transactions)

FIRREAFEDERAL FINANCIAL INSTITUTIONS REFORM

RECOVERY AND ENFORCEMENT ACT

prohibits racial bias in buying renting, selling, holding etc.1968 Jones V Mayer says no exceptions.

CIVIL RIGHTS ACT 1866

ESSENTIAL ELEMENTS of a contract1.COMPETENT PARTIES2.LAWFUL OBJECT3CONSIDERATION4. Written

• parties have exchanged promises and thus the "meeting

of the minds" are willing participants in the contract. (e.g.one party agrees to buy and the other party agrees to sell.)

BILATERAL

Contract Seemingly valid, however may be rescinded. (e.g.party is not of legal age, misrepresentation etc.)

VOIDABLE

interest rate is periodically adjusted.ARM LOAN PROVISIONif borrower defaults, then entire amount due

ACCELERATION CLAUSE..

LOAN PROVISIONmortgagee honors current leases should foreclosure occur.

NON DISTURBANCE CLAUSE

"holds" & occupies property via a lease"lessee/tenant" Lease Owner =LESSOR

• township = ___ sections.36

lender is entitled to a share of the property's income or has a share of equity.

PARTICIPATION

TYPES OF LEASEStenant agrees to pay a specific amount of rent every month, plus a % of any gross sales above a certain amount. Common for commercial property

PERCENTAGE

one point == 1 percent of the loan.not to be confused with appraisal market value. This value is related to tax assessors. (not an appraisal!)

ASSESSED VALUE

AMERICANS WITH DISABILITIES ACT..became effective in 1992

2 TYPES OF VALUE1.MARKET VALUE2.ASSESSED VALUE

lease lasts for some fixed period of time. "Surrender" of lease to owner at the ending date.

ESTATE/TENANCY FOR YEARS

property is returned from tenant to owner at the end of the lease.

RIGHT OF REVERSION

became effective in 1992 to protect from discrimination & to provide access to public spaces (signed into law in 1990).Affects public & commercial buildings. New multi-fam.housing of 4 or more units must accessible.

AMERICANS WITH DISABILITIES ACT.

contract (promises) have been fulfilled by all partiesEXECUTED CONTRACT LOAN PROVISIONfull mortgage balance due upon the transfer of title. (prevents buyer from assuming loan)

ALIENATION CLAUSE

transfer of rights & interest (mrtg, lease etc) ASSIGNMENT property title is owned by a corporation. Owners are stockholders and have right to occupy a unit.("proprietary lease"..agreement with coop corporation & share holder)

CO OP'S

LOAN PROVISIONborrower has right to redeem the property after they pay the full debt and fees incurred.

DEFEASANCE CLAUSE