1. pre-qualification 2. pre-approval 3. final loan approval

RE2 Study Flashcards by Brooke Dunlap

code that appraisers must follow

Uniform Standard of Professional Appraisal Practice (USPAP)

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regulates appraisers

TX Appraiser Licensing & Certification Board (TALCB)

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Characteristics that make real estate valuable

DUST (Demand, Utility, Scarcity, Transferability)

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construction cost

cost approach

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cost of building similar features using modern materials

replacement cost

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loss of value due to economic/functional factors

obsolscence

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gives long term residential loans

savings associations

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gives long term mortgage loans

savings banks

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3 step loan approval

pre-qualification 2. pre-approval 3. final loan approval

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document by GSE (fannie mae & fannie mac) for loans under their underwriting requirements

Uniform Residential Loan Application (URLA)

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network for handling loan applications

Computerized Loan Origination (CLO)

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loan that can be sold in the secondary market

conforming loans

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conventional loan has 80% of property value or less, requires 20% down payment

LVT ratio

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fee paid upfront in exchange for below market intrest rate

buydown mortgage

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graduated payment, similar to buydown, funds drawn from savings account for first part of the loan . payments start once savings account runs out

Pledged Account mortgage

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mortgage financing too expensive so title doesn’t transfer until the full price is paid

Contract for Deed

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(investor loan) lender gives deed of trust loan with low intrest rate in exchange for guarenteed share of the gain from property

shared-appreciation loan

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(investor loan) used for more than one lots. mostly used by developers. it comes with a release clause that allows the developer to release one lot from the lien

blanket mortgage

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(investor loan) sells building then leases it back from the buyer for working capital

sale/leaseback loan

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mandates licensing/registration system for MLO’s

SAFE ACT

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created new government agencies to oversee banking system

DODD-FRANK ACT

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title 1 of consumer credit protection act

Truth in Lending Act (TILA)

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requires certain disclosures to be made. borrow has 3 days to rescind the transaction

Regulation Z

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educate consumers about closing & settlement services and protect from abusive lending practices

(RESPA) Real Estate Settlement procedures Act

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loan estimate and closing disclosure

(TRID) TILA-RESPA Integrated Disclosure

financial institution pursue responisibilities to meet deposit and credit needs

(CRA) Community Reinvestment Act

state laws that limit interst rates

Usury Laws

zoning changed but people continue to use it anyways

Nonconforming-Use

building structure, design, ect.

building codes

finance cost of redeveloping in a part of the city

(TIRZ) Tax Increment Reinvestment Zones

non government limitations controlling how buyers use land within subdivisions

Restrictive Covenants

(PETE) 1. Police Power 2. Eminent Domain 3. Taxation 4. Escheat

4 Public Land Use Controls

1. Conditions 2. Covenants 3. Restrictions

3 Private Land Use Controls

state level enforcement of federal environmental legislation

(TCEQ) TX Commission on Environmental Quality

$9 billion superfund to clean up hazardous spills

(CERCLA) Comphrehsenive Environmental Response, Compensation, Liability Act

needs a license. Protects property owners investment & maximize return on investment

property manager

property owned by a lender as a result of not finding a 3rd party buyer at foreclosure auction

(REO) Real Estate Owned

no reserve or restriction on price

absolute auction (no reserve auction)

minimum sale price is in place

minimum bid auction

seller can accept or reject highest bid

reserve auction

entire loan amount is due upon default

acceleration clause

transfer title from borrower to lender and releases borrower from debt owed to lender

Deed in Lieu of Foreclosure

allow defaulting buyers to pay defaulted portion of debt to lender in order to prevent foreclosure sale

Equitable Redemption

percentage gain or loss on the cost of investment over a period of time

Rate of Return

investment concept saying todays money is worth more now than the same amount will be in the future

Time Value of Money (TMV)

taking on debt in order to realize a greater return

leverage

used to determine the cash flow potential of a property

operating statement

represents what the revenue generation would be in the best case scenario where property is enjoyed 100% occupancy and collected 100% of the rent due

Potential Gross Income

pre-tax amount of income after deduction of expenses

Net Operating Income

ratio of price of investment property to its annual rental income before considering expanses

Gross Rent Multiplier (GRM)

money deducted to making payments on principle/interest of loan

Debt Service

net sales price-adjusted investor basis

capital gains

two or more individuals pool financial resources

Syndication

company may sell securities to investors

Regulation D

business arrangement that a partnership will use wen joining forces for single objective. Temparary relationship

Joint Venture

limited partnership

syndicate

general partner

sponser

limited partner

investor

company that owns & operates income producing real estate

RIET

income by rent collecting or sale of properties

Equity RIET

provide money for real estate owners

Mortgage RIET

both equity and mortgage RIET

Hybrid RIET

type of special purpose vehicle that is compromised of a pool of mortgage loans sold as investment- grade bonds known as mortgage backed securities

(REMICs) Real Estate Mortgage Investment Conduits

mortgage backed securities sold to investors at different risk levels

tranches

landlord give signed lease to tenant in how many days

landlod has how many days to return security deposit

landlord has how many days to make repairs

landload has how many days to rekey residense

landloard can discard personal property of dead tenant after how many days

tenant responible for fixed monthly payments

gross lease

tenant pays base rent + property taxes

Net Lease

lease that increases relative to economic indicator

index lease

a report that list # of units, identifies tenants, lease terms, Ect.

rent roll

ACTOR Avoid risks Control risks Transfer insurance policy Or Retain Risks

Property Manager Risk Management

Clause where interest in property covered by grantor

Granting Clause

Clause where limited ownership of grantee

Habendum Clause

Clause where borrower pledges collateral

Hypothecation Clause

Clause where mortgager has the right to redeem property upon obligated payments

Defeasance Clause

clause where one party withdraws under certain circumstances

Release Clause

deed with conveyance carries only one convenant

Special warrenty Deed

deed with greatest protection

general warrenty deed

Deed where grantor holds title/possession of property. No warrenty against encumbrances

Bargain and Sale Deed

deed where the grantee has least protection and grantor has least liability

Quitclaim deed

written instrument used for transfer of title

conveyance

protect consumers from abusive lending practices

RESPA

helps borrowers select the best mortgage

TRID

buyer borrows from seller and lender

Purchase Money Mortgage

financing based on value of asset

Hard Money Loan

trigger payment of full loan upon sale of property

Alienation Clause/Due-on-Sale

gain ownership or interest in real property

aquisition

causing the owner to sell because they fear a protected class is moving in

blockbusting

funds used to upgrade physical assets

capital expenditures

the entire chronological record of property ownship

chain of title

collaterized debt obligations made up of bundles of mortgage backed securities

(CMO) collateralized mortgage obligations

investment products similar to bonds. consists of a bundle of home loans and other real estate debt bought from the banks that issued them

mortgage backed securities

something of value exchanged by parties as evidence of agreement

consideration

termination of lease because of the landlord

constructive eviction

finance institution that is not for profit

credit union

outlaws against false/misleading statements

deceptive trade practice act

extend mortgage loans from customers savings account

depository institution

gift of real property by will

devise

land benefits from easement appurtenant

dominant tenement

require tenant to pay base rent, property taxes, and insurence

double net lease

allowed on property for specific purpose

easement in gross

property passed to state if theres no will, relatives, hiers

escheat

constructive/actual notice of real property ownership

evidence of title