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Florida Real Estate Principles, Practices & Law 38th EditionLinda L. Crawford Copyright © 2015 Kaplan, Inc. All rights reserved.
Residential MortgagesChapter 12 Residential Mortgages
Mortgage Law Lien Theory (Florida) Title TheoryBorrower retains legal title Lender is protected with a lien Title Theory Title conveyed to Lender through a mortgage deed, or Trustee through a deed of trust Borrower retains equitable title ©2015 Kaplan, Inc.
Loan Instruments Promissory Note MortgagePromise to repay; evidence of a debt Terms of the loan Mortgage Pledges property as collateral Hypothecation—pledging property as security without surrendering possession Written instrument ©2015 Kaplan, Inc.
Parties to a Mortgage Mortgagor Mortgagee BorrowerGives mortgage as security to repay Mortgagee Lender Owns the mortgage ©2015 Kaplan, Inc.
Satisfaction of MortgageRelease of mortgage is recorded by lender Mortgagee must cancel the mortgage and send the recorded satisfaction to the mortgagor within 60 days ©2015 Kaplan, Inc.
Mortgage Lien PriorityPriority is normally determined by the order liens are recorded First mortgage is the first mortgage loan to be recorded Junior mortgage is a second mortgage or later mortgage Subordination agreement used to voluntarily take lower priority ©2015 Kaplan, Inc.
Borrower’s Covenants and AgreementsPromise to repay Taxes and liens Property insurance Occupancy Maintenance and covenant of good repair Covenant against removal ©2015 Kaplan, Inc.
Other Mortgage ProvisionsPrepayment clause Included in FHA and VA mortgages Prepayment penalty clause Acceleration clause Upon default, accelerate entire debt due Right to reinstate Due-on-sale clause Defeasance clause ©2015 Kaplan, Inc.
Loan-to-Value (LTV) RatioRelationship between amount borrowed and value (or sale price) Loan Amount ÷ Price (or value) = LTV ratio Example: Buyer will get a loan of $234,000 with a $260,000 purchase price. $234,000 ÷ $260,000 = .9 (90%) LTV ratio = 90% ©2015 Kaplan, Inc.
Another Example of LTV What is the loan amount for a property appraised for $150,000 if the lender will make a 80% LTV ratio loan? Appraised value x LTV ratio = Loan amount $150,000 x 80% = $120,000 Loan amount = $120,000 ©2015 Kaplan, Inc.
Common Mortgage FeaturesDown payment Loan-to-Value ratio Equity Current market value – mortgage debt = equity Interest Cost for use of borrowed funds Escrow (impound) account Monthly installment of property taxes and hazard insurance Discount points ©2015 Kaplan, Inc.
Sources of Income to LendersLoan origination fee Takeout commitment Loan servicing ©2014 Kaplan, Inc.
Mortgage Discounting Discount pointsUp-front fee to increase the real yield, or annual percentage rate (APR) to lender Allows lender to increase return without increasing the contract interest rate ©2015 Kaplan, Inc.
Discount Point Cost to the BorrowerEach point is equal to 1% of the loan amount Example: On a $120,000 loan for which the lender is charging 2 points, find the cost of the points $120,000 x 2% = $2,400 ©2014 Kaplan, Inc.
Discount Point Yield to the LenderKnown as the lender’s yield, return, or APR Each discount point paid will increase the yield (return) to lender by 1/8% For each point charged, add 1/8% to the stated interest rate Example: A lender charges 2 points on a loan of $120,000 at 6% interest. 2/8% + 6% = 6¼% ©2015 Kaplan, Inc.
Assignment of MortgageAssignment is when ownership of a mortgage is transferred from one company or individual to another Estoppel certificate (letter) verifies the amount of the unpaid balance, interest rate, and date to which interest has been paid prior to the assignment ©2015 Kaplan, Inc.
Two Methods of Purchasing Property Encumbered by an Existing MortgageSubject to mortgage Assumption of an existing mortgage Novation agreement makes the buyer solely responsible for a default ©2015 Kaplan, Inc.
Contract for Deed Land contract, agreement for deed, installment sale contract Seller financing Usually small down payment Buyer makes payments to seller Seller retains legal title until loan is repaid If recorded, buyer gets equitable title and can file for homestead tax exemption ©2015 Kaplan, Inc.
Foreclosure If the borrower defaultsInitiate a suit on the promissory note Sue on the note, obtain a judgment, and then execute the judgment against any real or personal property Initiate a foreclosure proceeding Foreclose on the property Caveat emptor applies to purchase at foreclosure sale Deed in lieu of foreclosure Non-judicial procedure ©2015 Kaplan, Inc.
Equity of Redemption Mortgagor can prevent foreclosure by paying the principal and interest due plus collection expenses Right ends once property has been sold at foreclosure sale ©2015 Kaplan, Inc.
Short Sale Net proceeds at closing will not satisfy the payoff amount of mortgages and other liens on the property Seller is selling the home for an amount less than the amount owed to the lender ©2015 Kaplan, Inc.
Lis Pendens Notice recorded in public records of pending legal action involving real estate Constructive notice ©2015 Kaplan, Inc.
Chapter 14 Real Estate Financing: Principles This financing chapter focuses on the documents and concepts involved in real estate lending.
Modern Real Estate Practice in Illinois Eighth Edition Chapter 15: Real Estate Financing: Principles ©2014 Kaplan, Inc.
Real Estate Financing Principles. Mortgages What is a mortgage? Who is the mortgagor? Who is the mortgagee? Title theory vs. lien theory states What is.
Financing Principles Chapter 14 Zaharopoulos. 3 Financing Instruments 1. Mortgage 2. Deed of Trust 3. Carryback, Installment, Land Contract, Contract.
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Modern Real Estate Practice in Pennsylvania 12th Edition Chapter 12: Principles of Real Estate Financing.
McGraw-Hill/Irwin ©2008 The McGraw-Hill Companies, All Rights Reserved CHAPTER2CHAPTER2 CHAPTER2CHAPTER2 Financing: Notes and Mortgages.
David M. Harrison, Ph.D. Real Estate Finance Texas Tech University Common Covenants and Clauses Promise to Pay - Specifies principal, interest, penalties,
Real Estate Law Mortgage Foreclosures Real Estate Law Mortgage Foreclosures.
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Thomson/South-Western©2008 Chapter 9 Mortgage Theory and Law _______________________________________.
Real Estate Principles and Practices Chapter 11 Financing © 2010 by South-Western, Cengage Learning.
Mortgage Basics. Types of Mortgages Types of Collateral: –Residential 1 to 4 family homes (up to 4 units) –Commercial Larger apartments & non-residential.
2-1 Copyright ©2008 by The McGraw-Hill Companies, Inc. All Rights Reserved Chapter 02: Real Estate Financing: Notes and Mortgages McGraw-Hill/Irwin Copyright.
David M. Harrison, Ph.D. Real Estate Finance Texas Tech University What is a Mortgage? Definition: Mortgage Components Mortgage Deed or Deed of Trust Lien.
Financing: Notes and Mortgages Objectives Define the mortgage note Define and explain the mortgage Identify the different mortgage clauses Identify what.
1 Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin CHAPTER 14 THE MORTGAGE The mortgage creates an interest in.
© 2010 by Cengage Learning Mortgages and Notes Chapter 9 ________________ Mortgages and Notes.
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CHAPTER TWO FINANCING: NOTES AND MORTGAGES. Chapter Objectives Define the mortgage note Define and explain the mortgage Identify the different mortgage.
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Fundamentals of Real Estate Lecture 16 Spring, 2003 Copyright © Joseph A. Petry
1 簡介抵押貸款初級市場 The Mortgage Market. 2 簡介 不動產業是一個資本密集的產業 主要資金的來源是負債 買房子或是蓋一棟建築物的主要資金都是借來的 提供這些借款資金的市場叫抵押貸款初級市場 the mortgage market 抵押貸款市場是負債市場中最大的一個。
© 2012 Cengage Learning. Residential Mortgage Lending: Principles and Practices, 6e Chapter 2 Real Estate Law and Security Instruments.
2011©Cengage Learning. All Rights Reserved.. Mortgages and Deeds of Trust 2011©Cengage Learning. All Rights Reserved.
© 2013 All rights reserved. Chapter 6 Real Estate Finance1 New York Real Estate for Salespersons, 5th e By Marcia Darvin Spada Cengage Learning.
© 2015 OnCourse Learning Chapter 8 Real Estate Finance Principles.
CREATION OF MORTGAGES LEARNING OBJECTIVES Describe the ways state laws define security interests in mortgage contracts. Discuss how funds are allocated.
Chapter 8 Real Estate Finance Principles 2010©Cengage Learning. All Rights Reserved.
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1 The Mortgage Market. 2 Introduction We have already noted real estate is capital intensive The typical capital structure is dominated by debt That is.
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1 簡介 The Mortgage Market. 2 Introduction We have already noted real estate is capital intensive The typical capital structure is dominated by debt That.
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Exam Review Course Manual – Page 5 F. TRUST DEEDS AND MORTGAGES 1. General Information a. Trustor – Signs the trust deed b. Beneficiary – Loans money Consent.
Finding and Selecting a Home. What Are the Steps for Buying a Home? 1.Determine if you should rent or buy 2.Determine how much you can afford to spend.
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