Exam 1- Part 1 Flashcards
(28 cards)
Primary Mortgage Market
originating lender
Secondary Mortgage Market
purchases assets from primary mortgage market
Conventional Mortgage
- underlying terms and conditions meet funding criteria of FNMA and FDMC
- safest and most secure loans
- 20% down or more
Amortizing Mortgage
- closed end mortgage loan that the monthly payments will include principle and interest with the principle amount being paid off in its entirety by the last payment of the term
- fixed rate
- low risk
5/1 ARM (Adjustable Rate Mortgage)
- monthly rate may change
- rate tied to an index
- renegotiate every 5 years
Interest Only/Straight Loan
- do not amortize
- high risk
- shorter terms (5-20 years)
- payments are for interest only and principle is due at end of term
Two Type of Step Rate Mortgages
Graduated Payment
Growing Equity
Graduated Payment Mortgage
- high risk
- payments grow 7-12% annually until full payment is reached
- initial payment may be lower than interest in the beginning creating negative amortization
Growing Equity Mortgage (GEM)
- low risk
- payments increase over time; excess amount is paid toward principle balance
- no negative amortization
Reverse Mortgage (HECM)
- loan for senior homeowners that uses home’s equity as collateral
- doesn’t have to be repaid until the last surviving homeowner permanently moves out or passes away
What must you do to qualify the buyer? (9 things)
- Borrower’s income
- Borrower’s assets
- Payments on this loan
- Monthly payment for property taxes + insurance
- Costs related to property (homeowner’s association)
- Payments on simultaneous loans
- Other debt obligations
- Calculate the monthly debt-income ration (should not exceed 43%)
- Credit history
What are the two protections for lenders that follow the rules?
- Safe harbor- loans not higher priced
2. Rebuttable presumption of compliance- higher priced loans
Non-freehold Estates
real property interest that is determinant (finite) in time
What happens in a leasehold?
- Owner transfers possession- real property
2. Owner and tenant have a contract (the lease)- personal property
General rules for leasehold contracts
terms of < or = 1 year: oral
terms of > 1 year: must be in writing
Warranty of Habitability
must make sure property is safe to live in
What are issues that are covered under the warranty of habitability?
Health, safety, and welfare
Serious problems with property: structural, sanitation, safety
How does a tenant invoke the warranty of habitability?
- Tenant must notify landlord of issues
- certified mail return receipt
- clearly state problem
- give reasonable period of time for landlord to correct it - If no response from landlord, tenant may
- make the repair themselves, save repair receipt, deduct from rent, and send copy of receipt with lower rent
- withhold rent until landlord makes repair (must deposit rent in an interest bearing account)
4 Forms of Leasehold Estates
- Estate for years
- Estate from year to year
- Estate at will
- Estate at sufferance
Estate For Years
right in real property for a specific period
- automatically terminates at end of period; no notice of termination
- to extend period of possession, must enter a new agreement
Estate From Year to Year
right in real property for a specific period that will continue indefinitely
- lease rolls over at the end of its term
- automatically renews itself at previous terms
- requires notice for termination
Estate at Will
consensual and not contractual; no specific terms of time
Estate at Sufferance
person in possession originally had the legal right to be there, but that right ended and now they have possession with no legal right to be there
*holdover tenant
What is included in a notice to quit? (4)
- What is the default?
- What will cure the default?
- If not cured, what happens next?
- Need to include the date that the 10 days expires
