Download New York Real Estate for Brokers

Survey
yes no Was this document useful for you?
   Thank you for your participation!

* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project

Document related concepts

Peer-to-peer lending wikipedia , lookup

Federal takeover of Fannie Mae and Freddie Mac wikipedia , lookup

Debt wikipedia , lookup

Security interest wikipedia , lookup

Moral hazard wikipedia , lookup

Public finance wikipedia , lookup

Real estate broker wikipedia , lookup

Syndicated loan wikipedia , lookup

Mortgage broker wikipedia , lookup

Adjustable-rate mortgage wikipedia , lookup

Continuous-repayment mortgage wikipedia , lookup

Yield spread premium wikipedia , lookup

United States housing bubble wikipedia , lookup

Loan shark wikipedia , lookup

Mortgage law wikipedia , lookup

Transcript
New York Real Estate for
Brokers, 5th e
By Marcia Darvin Spada
Cengage Learning
© 2013 All rights reserved.
Chapter 3 Real Estate Finance II
1
Chapter 3
Real Estate
Finance II
© 2013 All rights reserved.
Chapter 3 Real Estate Finance II
2
Chapter 3 Key Terms
 Adjustable rate mortgage
(ARM)
 Amortized mortgage
 Bridge loan
 Buydown
 Construction loan
 Conventional loans
 Convertible mortgage
 Department of Veteran
Affairs (VA)
© 2013 All rights reserved.
Chapter 3 Real Estate Finance II
 Depression
 Disintermediation
 Federal Housing
Administration (FHA)
 Gap financing
 Ground lease
 Home equity loan
 Inflation
3
Chapter 3 Key Terms (continued)
 Installment land contract
(contract for deed)
 Mortgagee/mortgagor
 Primary mortgage
market
 Recession
 Redlining
 Release clause
© 2013 All rights reserved.
Chapter 3 Real Estate Finance II
 Sale leaseback
 Secondary mortgage
market
 Stagflation
 State of New York
Mortgage Agency
(SONYMA)
 Subordinate lease
 Underwriting
 Usury
4
Mortgagor and Mortgagee
The borrower gives a
mortgage to the
lender
Mortgagor
© 2013 All rights reserved.
Chapter 3 Real Estate Finance II
The lender receives a
mortgage from the
borrower
Mortgagee
5
Mortgage Clauses
Mortgage
Note or
Alienation
Bond
Clause
© 2013 All rights reserved.
Acceleration Prepayment
Penalty
clause
Clause
Chapter 3 Real Estate Finance II
Defeasance
Clause
6
Monthly Mortgage Payment
 P = Principal
 I = Interest
 T = Taxes
 I = Insurance
© 2013 All rights reserved.
Chapter 3 Real Estate Finance II
7
Lender’s Criteria for Granting a
Loan
$ Investment quality
of the property
$ Borrower’s ability
to repay loan
$ Loan-to-value ratio
© 2013 All rights reserved.
Chapter 3 Real Estate Finance II
8
Loan-to-Value Ratio
Ratio of loan amount
to property value
Loan ÷value = ratio
Example:
Loan = $144,000
Value = $160,000
144,000 = 90%
160,000
© 2013 All rights reserved.
Chapter 3 Real Estate Finance II
9
Qualifying Ratios
Monthly Housing
Expense
Total
Obligations
Fixed rate
conventional loan
28%
36%
Adjustable rate
Conventional loan
28 %
36%
FHA loans
31%
41%
VA loans
None
41%
© 2013 All rights reserved.
Chapter 3 Real Estate Finance II
10
Mortgage Loan Origination
© 2013 All rights reserved.
Chapter 3 Real Estate Finance II
11
Conventional and Government
Loans
Conventional loan
Government loan
No participation by a
government agency
Guaranteed, insured
or funded by a
government agency
© 2013 All rights reserved.
Chapter 3 Real Estate Finance II
12
Types of Mortgages
FHA-insured loans
VA Guaranteed loans
Rural Housing Service
State of New York
Mortgage Association
(SONYMA)
© 2013 All rights reserved.
Chapter 3 Real Estate Finance II
13
Mortgages
Amortized
Straightterm
Balloon
Mortgage
Adjustable
rate
© 2013 All rights reserved.
Blanket
Chapter 3 Real Estate Finance II
14
Other Mortgages
Special
Mortgages
Graduated
Pledged
Reverse
payment
account
annuity
© 2013 All rights reserved.
Chapter 3 Real Estate Finance II
Package
Shared
appreciation
15
Special Types of
Mortgages
Home equity loan
Convertible Mortgage
Gap financing
Purchase Money
Mortgage
Wraparound
Subordinate
or Junior Mortgages
© 2013 All rights reserved.
Chapter 3 Real Estate Finance II
16
Construction Mortgage
Short term loan
When project is
Disbursed in stages
complete,
Interest not
converted to
charged until the
money has been
disbursed
© 2013 All rights reserved.
permanent longterm loan called
take-out or end
loan
Chapter 3 Real Estate Finance II
17
Sale Leaseback
© 2013 All rights reserved.
Chapter 3 Real Estate Finance II
18
How to Secure FHA Financing
 FHA does not make
mortgage loans
 FHA-insured loans
protects lenders against
financial loss
 Buyer pays for this
insurance protection by
paying an upfront
mortgage insurance
premium
© 2013 All rights reserved.
 FHA does not set
maximum sales price,
only a maximum loan
amount
 FHA insured mortgages
Chapter 3 Real Estate Finance II
require mortgage
insurance
19
FHA Mortgage
 Advantages
 Credit criteria for a
borrower are not as
strict
 Borrower’s allowable
costs can be partially
wrapped into loan
 100% of down
payment and closing
costs can be gifted
 Loans are assumable
© 2013 All rights reserved.
 Disadvantages
 With a 30-year FHA loan, and a
down payment of more than 5%
of the loan amount, the upfront
mortgage insurance premium
Chapter 3 Real Estate Finance II
(MIP) is 2.25 percent of the loan
amount in addition to the 1.10
percent annual renewal premium
that a borrower pays for the life
of the loan
 FHA limits the amount that
can be borrowed
20
The Primary and Secondary
Mortgage Market
Mortgage
Assignable
Sold to secondary
mortgage
(conforming
Loans)
market
Primary
lender
© 2013 All rights reserved.
Chapter 3 Real Estate Finance II
21
Secondary Mortgage Market
Organizations
Name
Ownership
Purchases
Fannie Mae
(FNMA)
Privately
owned
FHA, VA, RHS,
conventional
Ginnie Mae
(GNMA)
HUD
VA, FHA, RHS
Freddie Mac
(FHLMC)
Savings.
savings and
loan banks
Members of
Fed. Home
Loan Bank,
other banks
© 2013 All rights reserved.
Chapter 3 Real Estate Finance II
22
Truth-in-Lending Act
o Disclosure
o Cooling off period
o Advertising (Regulation Z)
o Penalties
© 2013 All rights reserved.
Chapter 3 Real Estate Finance II
23
Lending
Discrimination Laws
ACTS
Truth in Lending
Act
© 2013 All rights reserved.
Community
Reinvestment
Act
Chapter 3 Real Estate Finance II
Real Estate Settlement
& Procedures Act
Home Mortgage
Disclosure Act
24
The Economy and How it Affects the Real
Estate Market
Employment
Affordability
of property
for buyers
Interest
rates/indices
The
Economy
Valuation
of
Seller’s
property
© 2013 All rights reserved.
Stock
Market
Chapter 3 Real Estate Finance II
25
Predatory Lending PracticesWhat is it?
High-cost (subprime
loans) include
conventional first
mortgages that have
an interest rate of
more than 8 percent
and junior
mortgages that have
an interest rate of
more than 9 percent
© 2013 All rights reserved.
 High-cost loans also
Chapter 3 Real Estate Finance II
include conventional
loans for more than
$50,000 when the points
and fees exceed 5
percent of the loan
26
Predatory Lending
Lender may target
certain ethnic group
Induces refinancing
(flipping)
Takes advantage of
consumer
Fraud regarding true
nature of loan
obligation
Lender makes
unaffordable loans
based on assets of
borrower, not ability to
repay
© 2013 All rights reserved.
Chapter 3 Real Estate Finance II
27
Flipping
Real estate investors
or speculators
believe that they can
turn quick profits by
buying the property
at a certain price and
then immediately
selling the property
at a higher price
© 2013 All rights reserved.
Flipping may be a
problem because it can
drive up prices
The investor attempts
Chapter 3 Real Estate Finance II
to buy low and sell
high
28
Subprime Loans
Borrowers considered subprime if they have a
less-than-perfect credit report
Subprime lenders
Companies that provide loans to home-
buyers who do not have good credit
histories or who are risky candidates for
loans because of their incomes
© 2013 All rights reserved.
Chapter 3 Real Estate Finance II
29
New York Anti-Predatory Lending Law
Places many restrictions on high-cost (subprime)
loans that are first or junior (second) mortgages
Loans covered under New York Law
Maximum indebtedness of $300,000
For family or personal reasons
Applies to one- to four-unit property that is the
borrower’s personal residence
© 2013 All rights reserved.
Chapter 3 Real Estate Finance II
30