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Florida Real Estate Principles, Practices & Law 38th Edition Linda L. Crawford Copyright © 2015 Kaplan, Inc. All rights reserved.
Chapter 12 Residential Mortgages
©2015 Kaplan, Inc. Mortgage Law Lien Theory (Florida) –Borrower 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
Loan Instruments Promissory Note –Promise 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 –Borrower –Gives mortgage as security to repay Mortgagee –Lender –Owns the mortgage ©2015 Kaplan, Inc.
Satisfaction of Mortgage Release 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 Priority Priority 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 Agreements Promise to repay Taxes and liens Property insurance Occupancy Maintenance and covenant of good repair Covenant against removal ©2015 Kaplan, Inc.
Other Mortgage Provisions Prepayment 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) Ratio Relationship 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 Features Down 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 Lenders Loan origination fee Takeout commitment Loan servicing ©2014 Kaplan, Inc.
Mortgage Discounting Discount points –Up-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 Borrower Each 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 Lender Known 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 Mortgage Assignment 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 Mortgage 1.Subject to mortgage 2.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 defaults –Initiate 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.
Modern Real Estate Practice in Illinois Chapter 15: Real Estate Financing: Principles.
Revised: Chapter 15 Slide #1 Copyright – David A. McGowan All rights reserved Chapter 15 REAL ESTATE FINANCING: PRINCIPLES Mortgage (Page 295)
© 2008 by South-Western, Cengage Learning Chapter 10 Charles J. Jacobus Thomas E. Gillett.
© 2009 by South-Western, Cengage Learning SAMIRLANDER Chapter 12.
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.
1 Chapter 2 Financing: Notes and Mortgages. 2 Overview Notes The Mortgage Instrument Assumption of Mortgage Acquiring Title “Subject to” a Mortgage Other.
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.
© OnCourse Learning Chapter 9 : Mortgages and Notes.
CHAPTER TWO FINANCING: NOTES AND MORTGAGES. Chapter Objectives Define the mortgage note Define and explain the mortgage Identify the different mortgage.
Chapter 9. Georgia Real Estate An Introduction to the Profession Eighth Edition Chapter 9 Notes and Security Documents.
Real Estate Principles and Practices Chapter 11 Financing © 2014 OnCourse Learning.
Chapter 7 Finance Instruments. I. Promissory Notes.
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.
Financing Residential Real Estate Lesson 5: Finance Instruments.
Chapter 10. Georgia Real Estate An Introduction to the Profession Eighth Edition Chapter 10 Lending Practices.
Chapter 8 REAL ESTATE FINANCE 245. Real Estate is expensive compared to most other possessions. A Buyer generally puts 20% down and must obtain a loan.
Real Estate Sales Contracts Mortgage and Note. Nightly Trivia Q) What city boasts 10 of the 11 biggest hotels in the world? A) Las Vegas.
© 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Chapter 26 Credit and Security Interests in Real Property.
Chapter 16 Residential and Commercial Property Financing This chapter examines the legal framework that facilitates the real estate lending process. Real.
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.
Financing Mortgages, Notes and Foreclosure. Concept Mortgagor- borrower/debtor Mortgagee- secured creditor Writing required Debt Mortgage Note Filing.
Key Terms: Mortgage: a document that makes property security for the repayment of debt Mortgagee: the party receiving the mortgage, the lender Mortgagor:
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.
CH 16 Residential and Commercial Property Financing.
© 2012 Rockwell Publishing Financing Residential Real Estate Lesson 5: Finance Instruments.
CHAPTER 16 MORTGAGE BASICS (CH.16, sects 16.1, 16.2 only) © 2014 OnCourse Learning. All Rights Reserved.1.
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.
Texas Real Estate Contracts 4 th Edition © 2015 OnCourse Learning.
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