1. © 2008 by South-Western, Cengage Learning Chapter 14 Chapter 14 Charles J. Jacobus Thomas E. Gillett

2. © 2008 by South-Western, Cengage Learning Georgia Real Estate An Introduction to the Profession Seventh Edition Chapter 14 Types of Financing

3. © 2008 by South-Western, Cengage Learning Adjustable Rate Mortgage Adjustable Rate Mortgage Interest rate Tied to an index Reflects current market conditions Margin Amount added to the index Adjustment Period

4. © 2008 by South-Western, Cengage Learning Adjustable Rate Mortgage Adjustable Rate Mortgage Caps Interest rate Payment Negative Amortization Rising loan balance

5. © 2008 by South-Western, Cengage Learning Adjustable Rate Mortgage Adjustable Rate Mortgage Disclosures Regulation Z Historical Examples “The Consumers Handbook on Adjustable Rate and Mortgages” Maximum rate Choosing Wisely Teaser rate

6. © 2008 by South-Western, Cengage Learning Graduated Payment Mortgage

7. © 2008 by South-Western, Cengage Learning Types of Financing Equity Sharing SAM: Shared appreciation mortgage Rich Uncle Package Mortgage Real & personal property

8. © 2008 by South-Western, Cengage Learning Types of Financing Blanket Mortgage Secured by more than one property Reverse Annuity Mortgage (RAM) Monthly payment to homeowner Repayment upon sale or death

9. © 2008 by South-Western, Cengage Learning Types of Financing Construction Loan Construction Loan Construction Loan Interim Loan Interim Loan

10. © 2008 by South-Western, Cengage Learning Types of Financing Blended Rate Loan Combines existing rate with current rate Equity Mortgage Line of credit against equity in the home

11. © 2008 by South-Western, Cengage Learning Affordable Housing Loans Affordable Housing Loans Target first time homebuyers Credit criteria Consumer education 97% Conventional Nehemiah Program

12. © 2008 by South-Western, Cengage Learning Conventional Mortgage vs. AIM

13. © 2008 by South-Western, Cengage Learning Seller Financing Seller Financing Purchase Money Mortgage Seller becomes the Lender Promissory note & security instrument. Wraparound Mortgage Junior Mortgage New mortgage wraps round the existing mortgage

14. © 2008 by South-Western, Cengage Learning Wraparound Mortgage

15. © 2008 by South-Western, Cengage Learning Financing Subordination Change in priority Contract for Deed Installment or land contract Buyer makes payments to the Seller Seller retains title until final payment

16. © 2008 by South-Western, Cengage Learning Financing Option Overly Creative Financing Over-encumbered property

17. © 2008 by South-Western, Cengage Learning Mortgage Fraud Illegal Flipping Silent Second Chunking Identity Theft Debt Cancellation / Deed Transfer Red Flags

18. © 2008 by South-Western, Cengage Learning Mortgage Fraud Reporting Mortgage Fraud www.grefpac.org www.gscca.org www.mortgagefruadblog.org www.ustaxcourt.gov www.usgovsearch.com www.stopmortgagefraud.com www.mbaa.org/alerts

19. © 2008 by South-Western, Cengage Learning Financing Investing in Mortgages Mortgage loan pools Junior mortgages Rental Sale and leaseback Land Leases Step-up leases

20. © 2008 by South-Western, Cengage Learning Key Terms Key Terms ARM Affordable housing loan Asset intergrated mortgage Blanket mortgage Construction loan Equity sharing GPM Negative amortization Option Package mortgage RAM Seller financing Wraparound mortgage