Term
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Definition
| Change, claim, or liability on real estate. (Liens, judgments, easements, encroachments, deed restrictions) |
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Term
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Definition
| The right to use someone's land |
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Term
| Easement by Express Grant |
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Definition
| Deed with easement given by the owner of the property |
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Term
| Easement by Expressed Reservation |
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Definition
Party giving the title has an easement right over the property
(example: owner sells property but creates an easement to have the right to enter the property to fish) |
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Term
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Definition
Acquired when someone uses another's land for a period of time uninterrupted and continuous use without the owners consent, visible and in the open.
(example: edge of driveway is over neighbors property line)
20 years in IL. Tacking is allowed. |
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Term
|
Definition
Personal right to use another's land.
(used mostly for utilities like power lines, telephone lines, and pipelines) |
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Term
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Definition
Owner of land is allowed to use the land next to it.
-Dominant: benefits from
-Servient: land over where easement runs
(example: easement to cross land to get to a lake) |
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Term
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Definition
Government's power of eminent domain can acquire land for public use.
(example: roadways, sidewalks, public safety) |
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Term
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Definition
Unauthorized physical intrusions of a building or other form of real property onto another property. Discovery by survey.
(example: a fence is built over neighbors property line.) |
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Term
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Definition
| Claim or change against a property to provide security for a debt or obligation |
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Term
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Definition
| Claim against all of a persons property (real or personal) |
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Term
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Definition
Claim against specific property (real or personal)
(Example: mortgage, taxes, auto loans) |
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Term
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Definition
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Term
|
Definition
Created bu law and do not require owners consent.
(example: real estate tax liens) |
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Term
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Definition
| Notice in public records of pending lawsuits involving the real estate |
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Term
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Definition
Lien on property to satisfy unpaid utility bills
Specific, Involuntary |
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Term
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Definition
Lien on property owned by tax payer for taxed owed
General, Involuntary |
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Term
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Definition
Issued by court at end of a lawsuit. Sheriff could seize and sell debtors property to cover debt.
general, incoluntary |
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Term
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Definition
Property owner doesn't pay for work and/or materials to a mechanic will have a lien of property until paid
specific, involuntary |
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Term
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Definition
Lender makes a loan using real estate as security, property owner signs mortgage document to create lien.
specific, voluntary |
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Term
|
Definition
Tax added to pay for local improvements
(example: sidewalks, streets, curbs, streetlights) |
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Term
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Definition
Real estate tax added to raise money for operation of government agencies. Tax is based on assessed value of the property.
assessed value = land value + improvements x %
an equalizer could be added to raise or lower assessed value to achieve uniformity in properties. |
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Term
|
Definition
Exact way of describing location of real estate that is acceptable by court.
Metes and bounds, rectangular system, and plat of survey method. |
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Term
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Definition
| Legal description system used in urban areas where land is subdivided into numbered lots, blocks and tracts. Used with both metes and bounds and rectangular survey |
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Term
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Definition
Oldest method of legal description. Uses monuments.
Point of Beginning --> distance (metes) --> direction (bounds) |
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Term
| Rectangular Survey System |
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Definition
Describes location of property using two sets of intersecting lines.
Principal meridians (PM): North and South (IL PM are 2, 3 and 4)
Base Lines: East and West
Range Lines: North and South parallel to PM's but 6 miles apart
Township Lines: East and West parallel to base lines but 6 miles apart. divided into 36 sections. 1 sq mile = 640 acres.
Format:
1) part of section
2) section number
3) Township row
4) Range column
5) name or # of the principal meridian
*NW1/4, S1/2, Section 2, T3N, R4E, and 3rd PM |
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Term
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Definition
| Trust created by a will after property owner's death |
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Term
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Definition
| Created by owner during their lifetime |
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Term
| Trustor, Trustee and Beneficiary |
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Definition
Trustor: party who transfers the property into the trust
Trustee: party who holds legal title to assets of the trust. Manages the trusts assets.
Beneficiary: party who benefits from the trust. (possession of property/income) |
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Term
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Definition
| Expiration, end of purpose, merger, agreement, abandonment, court action |
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Term
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Definition
| Privelage - Can be revoked. |
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Term
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Definition
| Rent determined by percent of gross income of the tenant. |
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Term
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Definition
| Tenant pays set amount of rent plus some or all of building expenses |
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Term
|
Definition
| Tenant pays set amount of rent each month. Landlord pays building expenses. |
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Term
|
Definition
Residential
Commercial
Agricultural
Industrial
Special Purpose |
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Term
| Physical Characteristics of Real Estate |
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Definition
Immobility
Indestructibility
Nonhomogeneity |
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Term
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Definition
| Location of property remains the same |
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Term
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Definition
| Land cannot be destroyed or worn out |
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Term
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Definition
| no parcels or real estate are exactly alike |
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Term
| Economic Characteristics of Real Estate |
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Definition
Scarcity
Modification
Permanence of Investment (fixity)
Situs (area preference) |
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Term
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Definition
| Supply of real estate is limited |
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Term
|
Definition
| Changes of parcel of land affect it's value |
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Term
Fixity
Permanence of Investment) |
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Definition
| Investments in real estate are long term |
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Term
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Definition
| (area preference) People's preference to a certain locations. |
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Term
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Definition
Prices increase when demand increases or supplies decrease
Price decreases when demand decreases or supplies increase |
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Term
| Supply and Demand: Government Controls |
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Definition
| Government affect the supply of Real Estate through regulatory controls (amount of money available for construction loans) |
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Term
| Supply and Demand: Government Financial Policy |
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Definition
| Interest rates can determine the amount of real estate that can be added to the supply |
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Term
| Supply and Demand: Population and Demographics |
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Definition
| Characteristics of the population (age, family size, and population movements)can affect the total demand for real estate but also types of housing demanded |
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Term
| Supply and Demand: Employment and Wage levels |
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Definition
| THe amount of employment in the area could affect the demand of real estate in an area |
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Term
| Economic Characteristics of Real Estate |
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Definition
Scarcity
Modification
Permanence of Investment (fixity)
Situs (area preference) |
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Term
|
Definition
| Supply of real estate is limited |
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Term
|
Definition
| Changes of parcel of land affect it's value |
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Term
Fixity
Permanence of Investment) |
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Definition
| Investments in real estate are long term |
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Term
|
Definition
| (area preference) People's preference to a certain locations. |
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Term
| Economic Characteristics of Real Estate |
|
Definition
Scarcity
Modification
Permanence of Investment (fixity)
Situs (area preference) |
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Term
|
Definition
| Supply of real estate is limited |
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Term
|
Definition
| Changes of parcel of land affect it's value |
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Term
Fixity
Permanence of Investment) |
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Definition
| Investments in real estate are long term |
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Term
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Definition
| (area preference) People's preference to a certain locations. |
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Term
| Supply and Demand: Vacancy Levels |
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Definition
| Percent of all units that are not occupied can indicate the demand for property in the area |
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Term
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Definition
| Legal system that recognizes full property ownership rights of individuals. |
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Term
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Definition
| Body of law developed through court based on custom and usage |
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Term
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Definition
| Surface of the earth, area below to the center of the earth, area above it to infinity, and all natural things permanently attached. |
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Term
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Definition
| Land plus artificial things placed and attached by humans (buildings, garages, fences) |
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Term
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Definition
| everything in real estate as well as legal interest, rights and privileges associated with the property |
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Term
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Definition
| Land development including buildings, streets, fences and sewers. |
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Term
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Definition
| Rights to the space above the surface of the earth. |
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Term
|
Definition
Rights someone has in something. (Budndle of legal rights)
Possession - right to occupy
Enjoyment - right to possess the property without interference
Disposition - right to sell or give
Control - right to use property the ways the owner wishes
Exclusion - right to keep other people from using the property |
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Term
|
Definition
| Lights to the land below the ground to the center of the earth |
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Term
|
Definition
| Property that cannot be moved |
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Term
|
Definition
| Any property that is not real property. Property that can be moved |
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Term
|
Definition
| Changing real property to personal property |
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Term
|
Definition
| Changing personal property to real property |
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Term
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Definition
| Objects that were once personal property that are not real property because it has been attatched |
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Term
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Definition
| Object attached by the tenant for use in conducting business. Can be removed by the tenant. Considered personal property. |
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Term
|
Definition
M - Method of attachment
I - Intention of the parties
A - Agreement of the parties
A - Adaption of the item |
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Term
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Definition
| Benchmarks used to measure elevations |
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Term
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Definition
| Asbestos, lead, radon, carbon monoxide, mold, EMFs, groundwater contamination, usts, pesticides |
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Term
|
Definition
| Material used as insulation until 1978. Encapsulation is the preferred method or removing asbestos which seals it off. |
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Term
|
Definition
| Used in paint until 1978. Also found in pipes, solder and other products. |
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Term
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Definition
| Radioactive gas produced naturally from the decay of radioactive substances below the ground. Mitigation (ventilation) is the best way to remedy radon levels. |
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Term
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Definition
| Odorless, colorless gas that occurs when certain fuels are burned. Regular maintenance of heating systems and the installation of a CO detector help prevent high levels of CO. |
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Term
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Definition
| Molds can grow anywhere with moisture. EPA has guidelines for the remediation of mold. |
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Term
| Lead Based Paint Act of 1978 |
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Definition
Act requires that people receive certain information before renting, buying or renovating a property build before 1978.
Landlords, sellers, lessors and renovators are required to disclose prior knowledge of lead-based paint hazards. Must be disclosed in listings. |
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Term
|
Definition
| If RE Taxes are not paid after the second installment they may be sold at the annual tax sale. Total amount of the taxes due is put up for sale. Lowest bidder wins the certificate of purchase after paying outstanding taxes. |
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Term
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Definition
| Property not sold at a tax sale is considered forfeited to the state. Owner has 30 days to pay the taxes in full to redeem the property, otherwise the certificate of purchase is given to the applicant who paid the taxes. |
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Term
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Definition
| If taxes are not sold in 2 years, the county must go to a scavenger sale which will sell the property to the highest cash bidder who will also pay the current taxes. |
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Term
| Illinois Special Assessments |
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Definition
| Due in equal annual installments over 3 to 10 years. Payments are due on January 2nd. |
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Term
| Tax Incremental Financing (TIF) |
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Definition
| Financing tool that helps redevelop a defined geographic area. |
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Term
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Definition
| Used if subdividing less than 5 acres. |
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Term
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Definition
| Complete ownership. Highest form of ownership. |
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Term
|
Definition
Title passes through 1 of 3 processes. Property goes to:
1) original grantor
2) original grantor's heirs
3) specified 3rd party |
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Term
|
Definition
Estate includes prohibited use of the property.
(Example: Owner gives a church group 10 acres of land but they must not allow any gambling on the property, otherwise the estate is terminated.) |
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Term
|
Definition
Estate remains in effect as long as condition is satisfied.
Example: deed is for an environmental group which states that estate will continue as long as a bird sanctuary is operated on the property. |
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Term
|
Definition
| Freehold estate based on someone's life |
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Term
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Definition
| Person who owns the life estate |
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Term
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Definition
| Ownership will pass to a 3rd party names in the deed when the grantee dies. |
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Term
|
Definition
Husband's life estate in deceased wife's property
Not in IL |
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Term
|
Definition
Wife's life estate in deceased husband's property
Not in IL |
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Term
|
Definition
Portion of the value in a homeowner's principal residence is protected from certain judgments for debts.
IN ILLINOIS: Homeowners are entitled to up to $15,000 and married couple can combine for up to $30,000 in homestead estates. Pertains to unsecured creditors. |
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Term
| Water Rights: Riparian (flowing water) |
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Definition
If water is non navigable, ownership extends to center of the water.
If water is navigable, ownership extends to the high water mark at the water's edge. Government owns the water and public has an easement to travel on the water. |
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Term
| Water Rights: Littoral (Non-flowing) |
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Definition
| Ownership is to the high-water mark |
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Term
| Forces of Nature: Accretion |
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Definition
| Gradual addition of land by the forces of nature |
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Term
| Forces of Nature: Alluvion |
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Definition
| New deposits of land as a result of accretion |
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Term
| Forces of Nature: Erosion |
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Definition
| Gradual loss of land through nature such as water, wind, or ice. |
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Term
| Forces of Nature: Avulsion |
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Definition
| Sudden removal of land by forces of nature (hurricane, tornado) |
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Term
| Forces of Nature: Reliction |
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Definition
| Gradual subsiding of water leaving additional land -- will belong to the riparian owner. |
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Term
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Definition
| Definite period of time. No notice is required to terminate this type of estate. |
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Term
| Estates From Period to Period |
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Definition
No expiration date -- continue for indefinite period of time. Rent is paid in definite intervals. No notice must be given.
In Illinois - written notice needs to be within 7 days if week to week. If month to month, 30 days notice needs to be given. Year to year, 60 days notice. |
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Term
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Definition
| Allows future changes in the amount of rent. |
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Term
|
Definition
| Long-term lease, usually 50+ years. |
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Term
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Definition
| Landowner receives rent from a company to allow drilling on property for oil or gas. |
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Term
|
Definition
| Tenant leases the property for a period of time with the intention of buying the property at a later date. |
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Term
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Definition
| Owner sells a property and in turn leases the property back. |
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Term
| IL Rule for Security Deposits |
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Definition
25+ units, landlords must pay interest on security deposits held for at least 6 months. Must be paid to tenant 30 days from the end of the 12 month rental period.
Landlords can withhold security deposit if they give tenant an itemized list of damages within 30 days after vacating. |
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Term
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Definition
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Term
|
Definition
| Right of survivorship. New joint tenants cannot be added. Time, Title, Interest, Possession |
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Term
|
Definition
| No rights of survivorship. Can hold different percentage of ownership. |
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Term
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Definition
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Term
|
Definition
Owned by both spouses. Both spouses can own different property.
ILLINOIS uses marital property |
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Term
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Definition
| Corporation owns the building. Tenants hold shares. Governed by a board of directors |
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Term
|
Definition
| Occupants own units and share common areas. Owners receive their own tax bills and have their own financing. Responsible for maintaining their own unit. Monthly maintenance fee. |
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Term
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Definition
| Tenants own unit for a specific period of time and share with others at different time. |
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Term
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Definition
| Owner dies intestate (w/o will). If there are no heirs, the property escheats. |
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Term
|
Definition
| Right to own property if used in the open for 20 consecutive years (or 7 years if taxes are paid) |
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Term
|
Definition
Eminent domain (gov power)
Lien foreclosure
Escheat |
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Term
|
Definition
| grantor provides guarantees that good and marketable title is being given to the grantee. Greatest assurance of title. Most desirable. |
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Term
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Definition
| Warrants that the grantor has title and limits the grantors liability to encumberances against the property that occored after they acquired the title. |
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Term
| Grant, Bargain and Sale Deed |
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Definition
|
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Term
|
Definition
| Provides lease protection to the grantee. Usually used to fix defects in a title |
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Term
|
Definition
| Gives assurance that the grantor has the power and authority to convey the title and has the ownership interest that is being conveyed by the deed |
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Term
|
Definition
| Grantor gives assurance that there are no enumberances on the property except those stated in the deed. |
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Term
|
Definition
| provides assurance that the title being given by the grantor is good against others because no one else has the superior title to the property |
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Term
|
Definition
Grantor promises to perform any reasonable acts to correct defects in the title.
(example: misspellings) |
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Term
|
Definition
| Grantor will pay for expenses if someone else is claiming superior title. |
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Term
|
Definition
| Agreement among three parties (trustor, trustee and beneficiary) to secure a real estate loan |
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Term
|
Definition
| Creates security for a loan by conveying title to a trustee who holds it as a security for the benefit of the lender (beneficiary) |
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Term
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Definition
| Given by a trustee when a loan is repaid |
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Term
| Deed in Lieu of Foreclosure |
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Definition
| Nonjudicial foreclosure where the lender accepts the title from the borrower in exchange for ending the debt |
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Term
| Illinois Real Estate Transfer Tax |
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Definition
State tax = $.50 per $500
County tax = $.75 per $500
Total state and county tax = $.75/$500 |
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Term
|
Definition
| any claim that may impair an owner's title to a property |
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Term
|
Definition
| condensed history of all documents affecting the title |
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Term
|
Definition
| record of a property's ownership |
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Term
|
Definition
| Used to remove any clouds on the title |
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Term
| Abstract of Title with Lawyer's Opinion |
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Definition
| Buyers lawyer examines the abstract and writes a report on the title's status but does not provide any guarantees. |
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Term
|
Definition
| Policy that indemnify the owner against loss due to title defects. One time premium. |
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Term
| Closing: Face-to-Face vs. Escrow |
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Definition
Face-to-Face: Closing with both parties present
Escrow Closing: Escrow agent is appointed to handle all of the closing activities without the parties present. |
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Term
|
Definition
| Ensures that the fixtures and personal property included in the transaction are still present and that no damage has been done to the property. Done on day of closing. |
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Term
|
Definition
| Thorough examination of the physical structure to determine condition. (foundation, roof, basement, windows, doors, heating/cooling, electrical,plumbing) Buyer typically pays. |
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Term
|
Definition
| Only if property is not attached to a public sewer system. Test determines the rate of effluent absorption by the soil from the septic system. |
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Term
| Real Estate Settlement Procedures Act (RESPA) |
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Definition
consumers receive disclosures at various times in the transaction and outlaws kickbacks.
Transactions covered by RESPA:
1)Loans on 1-4 unit res. property
2)Financing (FDIC, FHA, VA, HUD, GNMA, FNMA, FHLMC)
3)refinance, assumptions, property improvement loans, equity lines of credit |
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Term
| HUD 1 (Uniform Settlement Statement) |
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Definition
| Form that details all the financial particulars of the transaction. |
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Term
| Closing Expenses Paid by Buyer |
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Definition
| Recording fees, loan fees, title fees, appraisal, survey, insurance, real estate taxes, inspection fees, attorney's fees |
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Term
| Closing Expenses Paid by Seller |
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Definition
| Seller's brokers commission, Recording fees, state transfer fees, title fees, real estate tax, inspection fees, attorney's fees |
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Term
|
Definition
| In prorations, each month has exactly 30 days or 360 days a year. |
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Term
|
Definition
| Bringing parties together for the purchase, rent or exchange of real estate in exchange for a fee. |
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Term
|
Definition
| Person who represents another person in activities involving a 3rd party (client) |
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Term
|
Definition
| Agent represents the principal in ALL matters (power of attorney) |
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Term
|
Definition
| Agent represents principal in a particular business |
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Term
|
Definition
| Agent is limited to representing the principal in a specific transaction (sale or purchase of a property) |
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Term
|
Definition
| Agent who represents both the buyer and seller in a real estate transaction (legal in IL) |
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Term
|
Definition
| A brokers salesperson authorized to act as the agent for one of the parties in a RE transaction. |
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Term
|
Definition
COALD:
C are
O bedience
A ccounting
L oyalty
D isclosure |
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Term
| Misrepresentation and Fraud |
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Definition
| misstatement of a fact the broker should have known. Intentional misrepresentation of a fact is fraud. |
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Term
|
Definition
| Exaggeration of a property's benefits. Opinion. |
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Term
|
Definition
| Property that might be deemed undesirable to the public. (ghosts, suicide, gang activity) Does not need to be disclosed. |
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Term
|
Definition
| Protect competition. (price fixing, tie-in agreements) |
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Term
|
Definition
| Brokers conspire with other brokers setting a standard commission rate. (antitrust violation) |
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Term
|
Definition
| Brokers agree to divide the market among themselves and not compete with each other. (antitrust violation) |
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Term
|
Definition
| Parties show intentions with their words (oral or written) |
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Term
|
Definition
| Parties show intentions by their acts |
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Term
|
Definition
| dates and time limits in a contract must be met |
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Term
|
Definition
| Short version of an agreement. Effective until a longer version is completed. |
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Term
|
Definition
| Contains all required elements |
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Term
|
Definition
Does not meet all requirements for the contract and will have no legal effects.
(example: sellers name is forged) |
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Term
|
Definition
At least one of the parties has the power to cancel or enforce the contract at will.
(example: contracts with minors are voidable at the option of the minor) |
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Term
|
Definition
Appears to be valid but is not legally enforceable by either party or the law.
(example: oral agreements are valid between parties but not by law) |
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Term
|
Definition
Most important document in a real estate transaction.
Includes: price, legal description, amount of earnest money, personal property included, type of deed, closing date and prorations, date of possession, names of buyer and seller, title evidence |
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Term
|
Definition
Conditions included in real estate contracts.
(example: mortgage, property sale, inspection, attorney's review) |
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|
Term
| Installment Sales Contract |
|
Definition
| Seller receives down payment and finances the balance owed by the buyer. Title remains with the seller. Buyer takes possession of the title when the loan balance is paid. |
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Term
|
Definition
| Use of force or threat to obtain an agreement. Contracts under duress are voidable. |
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Term
|
Definition
| Requires certain types of contracts need to be in writing and signed to be enforceable. |
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Term
|
Definition
|
|
Term
|
Definition
| Occurs when a party fails to comply with key terms of the contract (default) |
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Term
|
Definition
| If contract defaults, buyer can force seller to complete the sale |
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Term
|
Definition
| Seller may employ any number of brokers at the same time but the seller owes commission to only the broker who sells the property |
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Term
|
Definition
| Seller employs only one broker. Broker is not entitled to a commission of the owner sells the property on their own. |
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|
Term
| Exclusive Right-to-Sell Listing |
|
Definition
| Seller employs one broker. Broker will receive commission even if they do not sell the property. |
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Term
|
Definition
| The seller sets an amount they want to receive from the sale. The broker's commission is anything above the net amount due to the seller. |
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Term
|
Definition
| Broker may earn a commission from the buyer even if the buyer purchases a property without the broker's assistance |
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|
Term
| Exclusive-agency Buyer Agreement |
|
Definition
| Broker is an exclusive agent to the buyer but is not entitled to a commission if the buyer finds a property without the broker's assistance |
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|
Term
| Open Buyer Agency Agreement |
|
Definition
| Buyer has multiple agents but only owes commission to the agent who helped buyer purchase property. |
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Term
| Competitive Market Analysis |
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Definition
| Reviewing sales of similar properties in the area to arrive at a price range for a listed property. |
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Definition
| Protects against discrimination based on race |
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Definition
| Protects against discrimination based on color, race, national origin, religion, sex, familial status, and people with mental or physical disabilities when selling or renting a residential property |
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| Americans with Disabilities Act (1990) |
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Definition
| Protects employment and accessibility rights of individuals with a mental or physical disability including aids and alcoholism. Does not apply to residential property |
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Definition
| Pushing homeowners to sell by making representation that members of a protected class are moving to the area and will negatively impact the value of their property |
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| Refusing to make loans to purchase without regards to the qualifications of the applicant. |
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| Directing homebuyers to a certain area to maintain homogeneity of an area, steering them away from other areas. promotes segregation. |
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Definition
| Process of estimating and supporting an opinion of value as of a certain date. Not an exact science. |
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| Most probably price of a property |
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| amount for which the property actually sold for |
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| the amount of money used to construct improvements pluse the value of the land |
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Definition
| Belief that some future event will benefit or detract from the value of the property |
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Definition
| Physical and economic conditions can change value |
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| Property reaches maximum value when it conforms to the surrounding land use |
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Definition
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Definition
| Each property has one legal use that gives the property the greatest profitability |
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Term
| Increasing and Diminishing Returns |
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Definition
| Returns are the relationship between the cost of an improvement and the value it adds. |
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Definition
| By combining adjacent lots into one larger lot, the value could increase |
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Definition
| Value of poorer property will increase if it is near better property |
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Definition
| Value of better property will be lessened by the presence of poorer properties |
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Term
| Sales Comparison Approach |
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Definition
| Use information from sale of similar properties (3-5) that have recently been sold to compare to the subject property. |
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Definition
| Estimate value based on cost of purchasing a similar parcel of land and constructing similar improvements. Ideally used in appraisal of special purpose buildings |
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Term
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Definition
Loss of value due to physical wear and tear
Curable - repairs are economically feasible (preventative maintenance)
Incurable - Features are not easily corrected (foundation cracking) |
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Term
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Definition
Loss of value owing to poor design and features that make the building outdated
Curable: Fixtures are not fashionable but they can be replaced at a low cost
Incurable: Building design not easily corrected |
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Definition
Loss of value due to factors that are external to the subject of the property
Incurable |
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Term
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Definition
| Based of the assumption that anticipated net income produced by property such as shopping malls and office buildings can be used to determine its value |
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Term
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Definition
| Rate of return that in investor expects from investing money in a property |
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Term
| Gross Rent Multiplier (GRM) |
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Definition
| Relates the sales price to MONTHLY RENTAL income (1-4 residential units) |
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Term
| Gross Income Multiplier (GIM) |
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Definition
| Relates the sale price to the ANNUAL INCOME from all sources (commercial and industrial) |
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Definition
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Definition
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Definition
Difference between the value of the property and the value of loans against the property.
Equity = Property value - Property debt |
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Term
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Definition
| Contract between mortgagor and mortgagee providing security for the debt by creating a lien on the property |
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Term
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Definition
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Term
| Pre-approval vs Pre-qualifying |
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Definition
Pre-approval lenders calculate the maximum loan amount for the buyer
Pre-qualifying is less formal where buyer offers financial information but not credit check is performed. lender estimates loan amount |
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Definition
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Definition
| Act as an intermediaries between borrowers and lenders. Do not make loans. |
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Term
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Definition
| Originate mortgage loans with either own funds or borrowed money from other institutions. Sell them to large investors. (fannie mae, ginnie mae, freddie mac, farmer mac) |
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Term
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Definition
| Largest secondary market participant for VA, FHA and conventional loans. |
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Term
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Definition
| Secondary Market. Does not buy or sell loans. Administers special-assistance programs and guarantees mortgage-backed securities for loans such as VA and FHA loans. |
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Definition
| Works with savings banks to provide a secondary market for their loans |
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Term
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Definition
| Liquidation of the asset to satisfy the debt when a buyer defaults |
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Term
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Definition
Judicial sale: if buyer does not pay the loan, the court will order the property to be sold.
Strict foreclosure: same as judicial sale but there is no sale of the property by the court. Court issues a decree that gives the title to the lender and ends the debt |
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Term
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Definition
| Power of sale clause included in the mortgage allows for the sale of the property if the mortgagor defaults (not allowed in IL) |
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Term
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Definition
| Used to avoid foreclosure. Lender agrees to accept and offer less than the loan balance from the sale |
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Term
| Adjustable Rate Mortgage (ARM) |
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Definition
| Interest rate changes at fixed intervals based on an economic index. This type of loan is risky. |
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Term
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Definition
| Requires periodic payment of both interest and principal. Monthly payments are of a constant amount |
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Term
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Definition
| Payments do not fully amortize the loan. Remaining loan balance is included with the last payment. |
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Term
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Definition
| Amortized loan that is paid every two weeks. Payment is 1/2 of the price of the normal monthly payment |
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Term
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Definition
| covers more than one property. |
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Term
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Definition
| loans made for a short period of time. Usually bridging time between two transactions. |
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Term
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Definition
| collects principal and interest each month but also one-twelfth of the estimated annual cost of the property's estimated real estate taxes and insurance |
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Term
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Definition
| When a party paus interest subsidy to the lender -- loan rate is reduced for the borrower |
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Term
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Definition
| Provides funds for building real estate projects |
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Term
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Definition
| Second loan taken on their property to use the equity in their property. |
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Term
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Definition
| Seller accepts a down payment fro the buyer and finances the rest of the purchase price. Title remains with the seller until the loan is repaid. |
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Term
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Definition
| Mortgagor can borrow up to the original amount of the loan using the same property as security. |
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Term
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Definition
| Loan can include both real and personal property. |
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Term
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Definition
| People 62 and older who have little to no debt who want to convert the property's equity into cash |
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Term
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Definition
| Payments include only interest and the full amount of the principal is due at the end of the loan period |
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Term
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Definition
| Loan not involving the government in the form of insuring or guaranteeing the loan. FHA-insured and VA-insured included |
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Term
| Federal Housing Administration (FHA) Loans |
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Definition
Better way to finance mortgage loans. Administered by the HUD. Lower down payments and discounted points. One time insurance fee is paid at closing.
Section 203(b) is the most popular |
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Term
| Veteran Affairs (VA) Loans |
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Definition
| Only for veterans or non remarried spouses of veterans qualify for the loan. |
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Term
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Definition
| Limit interest rate lenders can charge borrowers. |
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Term
| Truth in Lending Act (regulation Z) |
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Definition
Forces lenders to inform borrowers of the true cost of obtaining a loan. Disclosures must be made are: 1)finance charges, 2)APR, 3)amount financed, and 4)total payments
All need to be disclosed before the loan is completed |
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Term
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Definition
| Borrower has the right to cancel the loan contract until midnight of the 3rd business day following the signing of the loan documents. |
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Term
| Equal Credit Opportunity Act |
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Definition
| Passed to protect borrowers from discrimination when seeking a loan based on race, color, sex, marital status, age, religion. Minors can be denied credit. |
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Term
| Fair Credit Reporting Act of 1977 |
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Definition
| Regulates the action of credit bureaus and the use of consumer credit information. |
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Term
| Community Bank Reinvestment Act |
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Definition
| Passed to prevent redlining and discrimination by lenders. Ensures that banks meet the credit needs of the community, invest in local community development and participate in loan programs for housing, small businesses and farms. |
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Term
| Home Mortgage Disclosure Act |
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Definition
| Lender must make annual disclosures of the number of loan applications, mortgage loans and home improvement loans made by geographic areas. (who are they giving loans to? who are they turning down?) |
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