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Flashcards in Nature & Cycle of Finance Deck (27)
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1
Q

What are the two major differences between freehold estates and leasehold estates?

A

Freehold estates last for an indefinite period of time, while leasehold estates expire on a definite date.
A freehold estate denotes property ownership by the estate holder, while a leasehold estate involves the right to possess and use property that is owned by someone else.

2
Q

Which type of leasehold estate has a definite beginning and ending date?

A

Estate for Years

3
Q

What are the three common ways to get title assurance?

A

Deed
Abstract and opinion
Title insurance

4
Q

Title insurance policies protect policy holders from what kinds of losses?

A

Forged documents, such as deeds or mortgages
Undisclosed heirs
Mistaken legal interpretation of a will
Misfiled documents
Confusion arising from similarity of names
Incorrectly stated marital status
Mental incompetence

5
Q

When does supply and demand usually improve for a buyer?

A

When the economy is in a recession.

6
Q

What determines how healthy the real estate market is at any given point in time?

A

How healthy the real estate market is at any given point in time relates directly to the cost of money or interest rates.

7
Q

Why are the savings of individuals important to the economy?

A

Savings become the eventual source of funds for borrowing.

8
Q

What role does the United States Treasury play in our economy?

A

The United States Treasury plays a critical role by managing the debt of the entire federal government. Some of the Treasury’s functions include:
Managing federal finances.
Managing government accounts and the public debt.
Supervising national banks and thrift institutions.
Enforcing federal finance and tax laws.

9
Q

The Finance Commission of Texas oversees and coordinates the activities of what other Texas agencies?

A

The Texas Department of Banking (TXDOB), the Department of Savings and Mortgage Lending (SML), and the Office of Consumer Credit Commissioner (OCCC)

10
Q

Name three issues that lenders deal with that can affect the cost of mortgage money.

A

Cost of getting people to deposit, costs of floating bonds and costs associated with advertising. (See screen 31 for other correct answers.)

11
Q

When the national economy is in a recession

A

supply and demand usually improve for a buyer. On the other hand

12
Q

when the economy is expanding

A

conditions generally move in favor of the seller.

13
Q

The United States Treasury plays a critical role in

A

maintaining the economic balance of our country by managing the debt of the entire federal government

14
Q

The Office of the Comptroller of the Currency (OCC)

A

charters, regulates, and supervises all national banks.

15
Q

In Texas, there are several agencies that regulate the savings and loan associations, banks, insurance companies, credit unions and mortgage companies that operate in the state.

A

Finance Commission of Texas
Texas Appraiser Licensing and Certification Board (TALCB)
Texas Department of Insurance (TDI)
Texas Department of Banking (TXDOB)
Department of Savings and Mortgage Lending (SML)
Office of Consumer Credit Commissioner (OCCC)
Texas Real Estate Commission (TREC)

16
Q

The appraisal rules for high-cost mortgages do not apply to:

A
reverse mortgages
Qualified Mortgages
some mortgages secured by a manufactured home
loans on boats, trailers, and mobile homes that are not manufactured homes
new home construction loans
bridge loans for 12 months or less
certain streamlined refinance mortgages
loans for $25,000 or less
17
Q

Qualified Mortgage

A

A Qualified Mortgage is one that meets the “ability-to-repay” requirements, has certain required features and is not allowed to have others. There are exceptions to these rules for certain kinds of small lenders. Issuing a Qualified Mortgage gives the lender certain legal protections in case the borrower fails to repay the loan.

18
Q

Loan underwriting is the process of assessing the lender’s risk in giving a loan. Mortgage underwriting includes:

A

evaluating the borrower’s ability to repay the loan
appraising the value of the property offered as security
determining the terms of the loan

19
Q

A promissory note is a negotiable instrument

A

which means the payee may assign it to a third party. The assignee would then have the right to receive the borrower’s periodic payments.

20
Q

Hypothecation

A

The process of securing a loan by pledging a property without giving up ownership of the property is called hypothecation.

21
Q

Department of Savings and Mortgage Lending (SML)

A

Chartering, regulation and supervision of the state’s thrift industry
Licensing/registration and regulation of the state’s mortgage industry

22
Q

Office of Consumer Credit Commissioner (OCCC) regulates

A
Home Equity Loans
Secondary Mortgages
Home Improvement Loans
Motor Vehicle Sales Financing
Pawnshop Transactions
Signature Loans
Payday Loans
Consumer Installment Loans
Retail Credit Accounts
23
Q

Texas Real Estate Commission

A

Enforces the real estate law to ensure the protection of the public in real estate transactions.
Provides licensing and regulation of licensees.
Investigates complaints filed against licensees.

24
Q

TREC regulates the following persons:

A
Real Estate Brokers and Salespersons
Real Estate Inspectors
Education Providers for Real Estate and Inspection Courses
Residential Service Companies
Timeshare Developers
Easement Or Right-of-Way (ERW) agents
25
Q

General Warranty Deed

A

This deed offers the most complete warranties about the quality of the property. For this reason it is the most attractive deed from the purchaser’s perspective. Essentially, the grantor is saying that the title is free and clear of all encumbrances, except those that are specifically listed in the deed. In addition, the grantor guarantees that if the title ever fails, he or she will compensate the grantee for any losses.

26
Q

Special Warranty Deed

A

This deed makes essentially the same guarantees as the general warranty deed, except the grantor guarantees the title against only those defects that arose during the period of his or her ownership of the property and not against any defects that existed before that time.

27
Q

Quitclaim Deed

A

This deed conveys only those rights, interests and title that the grantor has in the property without offering any warranty about the quality of the title. This deed offers a purchaser the least protection.