ch 16-18 Flashcards
what is a primary mortgage market and secondary mortgage market
lenders who lend money directly to borrowers (primary mortgage market)
Loans originated in the primary mortgage market can be bought sold or traded in the secondary mortgage market.
Primary lenders sell their notes to generate more money to make more loans
Ginnie Mae?
Govt national mortgage association (GNMA)- a govt agency
It is a division within the dept of housing and urban development (HUD). Its basic mission when it was established in 1968 was to create and operate a mortgage-backed security program for the federal housing administration and veterans administration mortgages
Fannie Mae?
Govt national mortgage association (GNMA)- a govt agency
It is a division within the dept of housing and urban development (HUD). Its basic mission when it was established in 1968 was to create and operate a mortgage-backed security program for the federal housing administration and veterans administration mortgages
Jumbo Loan
a loan that exceeds the conforming loan limits set by Fannie Mae and Freddie Mac
what is Freddie Mac
federal home loan mortgage corporation (FHLMC) a quasi govt agency.
Freddie Mac was chartered by Congress in 1970 to keep money flowing to mortgage lenders in support of homeownership and rental housing. Our statutory mission is to provide liquidity, stability and affordability to the U.S. housing market.
Freddie Mac does not make loans directly to homebuyers. Our primary business is to purchase loans from lenders to replenish their supply of funds so that they can make more mortgage loans to other borrowers.
What is the truth in lending act, title 1 of the consumer credit protection act, implemented by regulation z
this law requires lenders to disclose to buyers the true cost of obtaining credit, so that borrowers can compare the costs of various lenders
what happens if licensees violate advertising requirements of regulation z
penalty for violation is twice the amount of the finance charge or a minimum of $100, up to a max of $1000
lenders base their decisions about whether or not to grant a loan on the following criteria
The economy
The investment quality
The borrower;s ability to repay the loan
In order to lessen the risk, lenders need to determine the value of the property as collateral in the event that something unforeseen happens with the borrowers. It is important for the lender to determine the market value of a particular piece of property at any given point in time. Each piece of property must be inspected and appraised carefully to get a proper estimate of its market value
what is the right to rescind
borrower has right to cancel the transaction by notifying the lender with in 3 days. Does not apply to residential first mortgage loan
what is a fully modified pass through security
a mortgage backed security, security holder receives payment of both principal and interest
what is loan to value ratio (LTV)
is the ratio of the mortgage principal to the value of the property the borrowers are purchasing. Lenders use LTVs to determine the max amt of their loans
how to qualify for a mortgage loan
qualify using qualifying standards or loan underwriting standards.
Income, debt, cash, and net worth (incase lose job), and sufficient creditworthiness
what is predatory lending
typically prey on elderly/ low educated/ immigrants
Basing an unaffordable loan on the applicant’s assets rather than his or her ability to repay the loan
Encouraging a borrower to refinance a loan so that the lender can charge high points and fees for the new loan. This is called loan flipping. Sometimes the borrower also pays a higher interest rate than with the original loan.
Using fraud or deception to hide the true obligations of the loan from the borrower
Actions against predatory lending
NY anti-predatory lending law puts considerable restrictions on high-cost sub-prime loans that are either first or second mortgages.
A borrower can bring affirmative action for predatory lending practices against a lender or mortgage broker within six years from the date of the loan origination. If the borrower proves that the lender or broker violated the law, the borrower is entitled to actual damages, attorney fees, and statutory damages.
what is underwriting
evaluation process used to determine the borrower’s ability to repay a loan and estimate the value of the property being used as collateral
what is stable income
permanent employment
Self-employment under certain conditions
Employment that has generated a regular income for atleast 1/2 years, also bonuses and commission
Secondary source income such as rental income or investments
what is a deed restriction
individual owners have the right to put private controls on their own property. Or can put private subdivision regulations that affect the entire subdivision
what are restrictive covenants
they are limitations places on the use of land by the developer of a residential subdivision. Restrictions must be reasonable and they must benefit all property owners alike
what is an injunction
property owner can enforce the covenants by taking court action as known as an injunction. It prevents the owner or owners from using a property in a way that is contrary to the recorded restrictions
what is doctrine of laches
states if a property owner is lax in protecting his or her rights, the property owner may lose those rights
what is the NYS enviormental quality review act (SEQR)
requires all state and local govt agencies to assess the environment significance f all actions they have discretion to approve, fund, or directly undertake
what is an enviormental impact statement (EIS)
if an action is determined to have possible significant adverse environmental impacts, this is required. The agency that oversees a project and makes the final decisions is called the lead agency
what is police power
gives a government entity the ability to fulfill its responsibility to provide for the health, safety and welfare of the public
what is the interstate land sales full disclosure act
it is a fed law that regulates the interstate (across state lines) sales of unimproved lots. The purpose of this act is to prevent fraud in marketing land that can be sold sight unseen. Developers must file a statement of record with HUD before they can offer any unimproved lots for sale by telephone or through the mail. Developers must also provide a buyer or lessee with a printed property report, which gives specific info about the property, BEFORE the buyer or lessee signs a purchase contract or lease
where does a subdivider have to make a filing when offering to sell or lease subdivided vacant land to nys residents on an installment plan
requires a sub divider to make a filing with the NYS dept of state according to article 9-a
what is eminent domain
allows a govt entity to purchase a fee, leasehold, or easement interest in privately owned real property for the public good and for public use, regardless of the owner’s desire to sell or otherwise transfer any interest. In exchange for the interest, the govt must pay the owner just compensation
what is a taking
refers to the taking clause of the fifth amendment which says in part that private property cannot be taken for public use without just compensation
what are building codes
allow the county and municipality to protect the public against the hazards of unregulated construction. Building codes establish standards for virtually every aspect of a construction project
what is a building permit
NY requires an owner/contractor/ developer obtain these which gives permission for the contrusction or renovation of a building or improvement. A building permit must be obtained before the project starts
what is zoning ordinane
intent is to specify land usage for every parcel within the jurisdiction. One of the primary applications of zoning power is the separation of residential properties from commercial and industrial uses.
Residential zoning restricts land use to private, non-commercial dwellings
Commercial zoning includes restaurants, stores, hotels, motels, service businesses and the like. Commercial zoning controls the location of office and retail land usage
Industrial zones are made up of manufacturing companies and warehouses
Vacant land has no buildings or improvements
Agricultural zoning restricts land use to farming, ranching, and other agricultural enterprises
Public open space is space that is not developed for a particular residential, commercial, industrial or institutional use
Parklands are areas of recreation for the public
Recreational areas include parks, shorelines, public fishing access areas, trails and access to waterways (NYS office of parks, recreation and historic preservation (OPRHP) supervises)
Institutional areas include hospitals, prisons, courthouses, colleges and public schools
what is cluster zoning
it is a type of zoning in which density is determined for an entire area, rather than on a lot-by-lot basis. W/in the cluster zone, the developer has greater flexibility in designing and placing structure so long as the overall density requirement is met
what is the transfer of development rights (TDR)
is a voluntary, incentive- based program that allows landowners to sell development rights from their land to a developer or other interested party who then can use these rights to increase the density of development at another designated location.
what is master plan
a public use planning incorporates long-term usage strategies and growth policies in a land use plan
what is a moratorium
it is a temporary suspension of the development of a property
what is spot zoning
occurs when a small area of land or section in an existing neighborhood is signaled out and placed in a different zone from that of neighboring property
what is a plat of subdivision
a developer must submit this containing a surveyed plat maps and comprehensive building specifications. The project can commence only after the relevant authority has approved the plat
what is an article 78 proceedings
a county or local board administers zoning ordinances. The board rules on interpretations of zoning ordinances as they apply to specific land use cases presented by property owners in the jurisdiction. If they board rejects an appeal, the land owner may appeal the ruling by petitioning the NY supreme court through this.
what is planned unit development (PUD)
a housing concept that produces a high density of residential housing units, a max use of open spaces, and a greater development flexibility, which results in lower priced homes and minimum maintenance costs
what is the sunshine laws
requires meetings of government agencies of dept to be open to the public
what is nonconforming use
is one that clearly differs from current zoning
what is a special use permit or exception grant
authorizes use that is not consistent with the zoning ordinance in a literal sense yet is clearly beneficial or essential to the public welfare and does not materially impair other uses in the zone
what is rezoning
a current or potential property owner may petition the zoning board for an outright change in the zoning of a particular property, known as a rezoning
what is a zoning variance
allows a use that differs from the applicable ordinance for a variety of justifiable reasons
what is a use variance
gives permission to use the land for a purpose not allowed by the current zoning
what is an area variance
permits an applicant to vary one or more of the dimensional or physical requirements of the applicable zoning law, code or ordinance in connection with some proposed construction
define as of right zoning
refers to those uses that are automatically allowed by the zoning code. They are allowed as a matter of right
what is the challenge of a master plan
to incorporate long term usage strategies and growth policies reflecting the needs of the local area, and also conforming to state and federal environmental laws and the plans of regional and state planning agencies
what do planning personnel analyze when formulating the master plan
Population and demographic trends Economic trends Existing land use Existing support facilities Traffic patterns
what do subdivisions regulations usually cover
Location, grading, surfacing, alignment, and widths of streets and highways
Sewer and water main installation
Minimum dimensions of property lots
Setback lines for structures
Areas reserved for public use, such as parks and schools
Public utility easements
who is responsible for the costs associated with a subdivision development
the developer is responsible for the cost of many of these items although the planning board through its regulations may agree that the municipality can help defray these cots
What does the NYS dept of health (NYSDOH)
Provides guidelines for the construction of on-site wells
Regulates the installation of individual wastewater treatment systems that receive domestic type sewage flows of less than 1,000 gallons per day
developers must consider all of these site issues prior to and during contruction
Drainage
Landscaping
Shading (help energy efficiency)
Walkways (from front door-street)
typical parts of the structure are
Footings (They are typically made of concrete with rebar reinforcement that has been poured into an excavated trench atleast 6" thick and 12" depth) Foundation wall (about 8" wide poured concrete/blocks) Wood framing (vertical studs exterior walls 2"x4". In 3 story building studs in bottom need to be 3x4 or 2x6.) Slab on concrete (around slab stem well is 2ft deep, rest of slab is 4"-6" thich and 4"-6" layer of gravel below slab. 4mm sheet of plastic between concrete and gravel to keep moisture out. Embedded in concrete is 6"x6" wire mesh and steel reinforcing bars. cold climates concrete around the edge stem wall has to be below frost line) Floor framing (system of sills, girders, joists or floor trusses and sub-flooring. sillplate wooden support member laid on foundation wall and bolted)
what is platform-frame contruction
first floor joists are completely covered with sub-flooring to form a platform upon which exterior walls and interior partitions are erected
what is balloon-frame construction
exterior wall studs continue through the first and second stories
post and beam construction
wider beams are spaced up to eight feet apart. Floors and roofs are covered with 2” thick planks, which serve as subflooring and roof sheathing
what are the different types on insulation
Loose fill Batts and blankets Rigid board Spray foam reflective
what are most common residential heating systems
Hot water
Steam
Forced air
Electric
What are the different types of furnances
Electric
Oil fired
Gas fired
What is a hot water heating system
Hydronics is the name for the use of water as the heat-transfer-medium in heating and cooling systems. Some of the oldest and most common examples are steam and hot-water radiators. In any hot water system, the water is heated in a boiler and circulated by means of one or more circulator pumps. A system may be broken up into individual heating zones using either multiple circulator pumps or a single pump and electrically operated zone valves
What is a steam heating system
A steam system delivers steam to radiators or other heating elements where the steam gives up its heat and is condensed back to water. The radiators and steam supply pipes are pitched so that gravity eventually takes this condensed water back down through the steam supply piping to the boiler where it can once again be turned into steam and returned to the radiators
What is forced air heating system
A forced air heating system draws room air through ductwork and a filter into a furnace, where the air is heated. The warmed air is then blown back to rooms through ductwork. A forced air system consists of an air filter, blower, heat exchanger/element/coil, and various controls. Like any other kind of central heating system, thermostats are used to control forced air heating systems. Forced air heating is probably the type most commonly installed in North America
Electric-An electric furnace uses a resistance heating element to create heat directly in the air stream. Inside the jacket or cabinet will be controls, a blower, and the circuit breakers for the heating elements. Some furnaces have the breakers accessible from the outside of the cabinet
Oil fired- have a heat exchanger, which is the place where the fuel is burned. Oil fired systems require a storage tank-either above or below ground -to hold the fuel that is delivered to the homeowner. Oil fired furnaces and boilers are a popular choice in areas of the country with limited access to natural gas, such as the northeast
Gas-fired- have a heat exchanger to burn the fuel, which in this case is either natural gas or a petroleum gas such as propane or butane. This type of heating is popular in NY because it is less expensive and eliminates the need for oil deliver
how does air conditioner work
it pumps liquid refrigerant (a liquid that cools something) into the air-handling unit (AHU), the unit inside the home that generates heated or cooled air. The most common refrigerant used in air conditioners is Freon. The AHU generates cool air and forces it through the home through the ductwork and into rooms. the ductwork system also returns air from the rooms back into the AHU for re-circulation. Meanwhile, the slightly warmed refrigerant travels back outside to the air conditioner, where it’s cooled and re-circulated
what is the difference between air cooled and water cooled systems
the difference is the method used to condense the refrigerant as it leaves the compressor. Air-cooled units use air as the condensing medium and have a fan that moves the air over the coils. Water-cooled units use water as the condensing medium and use a pump to circulate the water through the condenser and out to a cooling tower
Air-cooled units typically cost less to purchase and maintain because they do not require a cooling tower, pumps and condenser water chemical treatment. However, water-cooled units are generally much less expensive to operate because they can take advantage of lower condensing temperatures
what is a british thermal unit (BTU)
is the amount of heat energy needed to raise the temp of one pound of water by one degree F. BTUs measure the amount of heat an air conditioning unit can remove from the room. As the BTU rating increases, so does the size, weight and cost of the unit
what are the life expectancies of air conditioning
most can expect to last about 15-20 years. Will be affected by the climate in the geographical location of the unit
what does a heat pump do
used primarily for climates with moderate heating and cooling needs. Energy efficient alternative to furnaces and air conditioners. Like a refrigerator, heat pumps use electricity to move heat from a cool space into a warm space, making the cool space cooler and the warm space warmer. During heating season, heat pumps move heat from the cool outdoors into the warm house. During the cooling season, heat pumps move heat from the cool house into the the warm outdoors. because they move heat rather than generate heat, heat pumps can provide up to 4 times the amount of energy they consume.
what is an air source heat pump
most common type of heat pump, transfers heat between the building and the outside air
what is a geothermal heat pump
more energy efficient, which transfer heat between the building and the ground or a nearby water source
what are advantages and disadvantages of heat pumps
Air-to-air advantages of an air source heat pump is its simple installation and competitive pricing. Disadvantage of an air-source heat pump is that climates with extended periods of freezing temperatures, such as NY, they have large limitations. The air temp outside is usually the lowest when the need for heat inside is the greatest, compelling users to use electric or gas heaters as back up
Ground source an advantage of a geothermal heat pump system is that it typically has lower maintenance costs than conventional systems as all equipment is installed inside the building or underground. The main disadvantage is that geothermal systems tend to have a somewhat higher first cost than conventional systems
what are the different types of hot water heaters
Gas hot water heaters-they have insulated tank where water is heated and stored until it is needed. They offer fast recovery times and can offer more economy over electric water heaters. The standing pilot light gas water heater has a pilot light which remains lit 24 hours a day and consumes gas to stay lit, while a gas-fired water heater with electronic ignition only lights a pilot light when it is necessary to fire the main burners
Electric hot water heaters-are also storage tank units and are very popular because they are inexpensive and easy to install. Electric heat is 100% efficient, but the cost per KWH of electricity is more than the cost of using a gas fired water heater. Electric hot water heaters are also slow to recover as compared with gas-fired water heaters. However maintenance of the electric water heater is easier as it requires very little maintenance
Tankless hot water heaters- are basically “on demand” water heaters. When the consumer opens the hot water faucet, a flow switch senses the flow of water and the water heater fires up and begins heating the water passing through its heat exchanger. Within seconds hot water comes out of the faucet. There is no tank to maintain or worry about leaking in the future. These systems are economical and last many more years than a regular water heater with a tank. They require little maintenance. since they are on-demand, the tankless water heater only uses fuel when hot water is needed.
What are the types of pipe used in plumbing systems
Cast iron- used for underground drainage systems because of its strength and sturdiness. It can be lightweight or heavyweight, depending on the application. Iron pipes are very heavy and are prone to rusting on the inside
Galvanized- used for hot and cold water supply lines. Galvanized steel pipe was commonly used years ago for the water supply lines, but more recently it has been replaced by other types of pipe. Steel is not used for underground plumbing
Copper-Used for both water supply lines and drainage. Copper lasts longer than other metal pipes. It is easy to work with and resists corrosion. Copper is used for both hot and cold water supply lines. Copper pipe can be rigid or flexible, depending on the application.
PVC-used mostly in areas where hard water is a problem. PVC is plastic pipe, so it is very lightweight and inexpensive. Unlike metal pipe, PVC crushes more easily, is less resistant to heat and requires more support because it is so much more flexible than metal. Some municipalities including NYC have restrictions on the use of PVC pipe.
Brass-rarely used in plumbing installations today because it is expensive.
PEX-ideally suited for potable water plumbing applications. It is flexible, making it easy to install and service. PEX is able to withstand the high and low temps found in plumbing and heating applications, and it is highly resistant to chemicals found in the plumbing environment. PEX is also very resistant to freezing and breaking. PEX systems have fewer joints and are easier to install providing a lower cost installation over traditional plumbing materials
What is the standard service volts of electricity
120/240 volts
How much does NY business law state about home improvement contractors who enter in a contract must keep payments received into escrow account until the project is completed
$5000
According to NY business law, every contract for the sale of new housing implies warranties for…
A 1 year builder’s warranty against construction defects
A 2 year warranty for plumbing, electrical, heating, and air conditioning systems
A 6 year warranty for material defects
What is voltage
is a measure of how much pressure the electrons in a circuit are under
What is amperage
is a measure of the amount of electrons moving through the circuit. For example, when a light is on, there is a voltage across the filament of the bulb that is pushing amperage through the circuit. When the switch is off there is a voltage across the switch, but there is no current flowing because it is “blocked” by the switch.
Amperage is calculated in watts or kilowatts
how can you identify if an appliance, tool, or fixture is 110 or 220 volts
You can look on the tag that is attached to the item. Also the plugs and receptacles for the two types of voltage are different. In most cases, 110 volt plugs have either two straight prongs or three prongs, while 220 plugs have three prongs, one straight and two that are L-shaped
what happens in the wire size or service is not strong enough for the building needs
the circuit will overheat, resulting in a blown fuse or tripped circuit breaker.
where can you locate the amperage rating
the panel where the fuses or circuit breakers are located. The only sure way to know is the service size is by looking at the service entrance cables for a size indication
aluminum vs copper wiring
Aluminum wiring is used where the current is the heaviest, usually where the current comes into the building. It is also used for heavy appliances, such as dryers and air conditioners. Aluminum wiring has been known to cause overheating in outlets and switches that are not designed for use with aluminum wire, so older buildings should be inspected to be sure there are no potential wiring problems
Copper wiring does not overheat and it can carry both large and small loads. Most new buildings have copper wire throughout, except at the service entrance where the aluminum is still used
what is BX cable
is technically known as armored cable or “AC”. It has a flexible aluminum or steel sheath over the conductors and is fairly resistant to damage
what is romex cable
it is a brand name for a type of plastic insulated wire, sometimes called non-metallic sheath. The formal name is NM. This cable is suitable for use in dry, protected areas that are not subject to mechanical damage or excessive heat. Most new homes are wired almost exclusively with NM wire
what is conduit
a pipe made from plastic, steel or aluminum that is used for protection and routing of electrical wiring. Conduit can be used for both above ground and underground applications
what is greenfield conductors
this is a type of flexible metal conduit (FMC) similar to armored cable, except that the conductors are installed by the electrician. With armored cable, the armor is wrapped around the conductors at the factory to form a complete cable assembly. FMC is often referred to as Greenfield after the person who submitted the product for listing in 1902. FMC is not suitable for wet locations and it should not be buried underground or in concrete. It is easy to use and work with in small, confined spaces
the National Electric Code covers the installation of electrical conductors, equipment, and optical fiber cables fro the following
Public and private buildings, structures, mobile homes, recreational vehicles, and floating buildings
Yards, lots, parking lots, carnivals, and industrial substations
Installation of conductors and equipment that connect to the supply of electricity
Installations used by the electrical utility, such as office buildings, warehouses, garages, machine shops, and recreational buildings, that are not an integral part of a generating plant, substation, or control center
how long does the owner have to cancel a contract with a contractor
three business day after signing it by providing written notice to the contractor. The 3 day right to cancel the contract can be waived for emergency repairs if the owner initials the contract and gives the contractor a written waiver statement
if contractor secures a contract through fraudulent misrepresentation, the owner can sue the contractor and if successful the own can receive how much
$500 plus attorney’s fees and other damages
if a contractor violates the deposit provision, they could be fined how much
up to $250 or 5 percent of the contract price up to $2500
what Ginnie Mae, Fannie Mae, Freddie Mac
A borrower goes to a bank and asks for a loan. If he qualifies, he might be offered a loan guaranteed by the FHA. (The FHA was created, long before subprime loans became widely available, to help borrowers who couldn’t get conventional home loans because they had low credit scores or limited resources.)
A bank or other institution bundles a group of FHA mortgages and sells a bond backed by mortgages in the pool to investors.
Ginnie Mae insures the bond, for a fee. But it doesn’t own any bonds itself.
As time goes on, “the bank collects mortgage payments from borrowers and passes payments to Ginnie Mae, which passes them through to investors,”
If a borrower defaults, the bank can foreclose and collect from FHA or VA. But the bank is responsible for making the pass-through payments whether or not the borrower pays.
“If the bank can’t make all or part of the pass-through payment, Ginnie Mae makes sure that bondholders continue to get their promised payments,”
If loans default and FHA or VA insurance doesn’t cover the full amount, Ginnie Mae makes up the difference.
These bonds are sold mainly to institutions including mutual funds. Funds that have Ginnie Mae in their names must invest at least 80 percent of their assets in Ginnie Mae-backed securities.
Ginnie Maes account for about 10 percent of the mortgage-backed securities market,
Fannie and Freddie are much bigger and more diversified.
They buy mortgages from lenders that are not government insured but meet certain standards. Fannie and Freddie package loans into mortgage-backed bonds and sell them to investors. Fannie and Freddie also guarantee bonds that are packaged and sold by others, as long as the mortgages meet their standards.
Unlike Ginnie, Fannie and Freddie keep some bonds on their own books. They also buy and hold some mortgage securities packaged by others.
Fannie and Freddie securities are found in a wide variety of bond funds including government-income funds, which are allowed to buy them even though they had no explicit government backing, at least until now.
Its bonds are safer
Historically, Ginnie Mae bonds have been considered safer than Fannie and Freddie securities.
“You don’t have to worry about credit risk with Ginnie Maes,” . “They are backed by the full faith and credit of the U.S. government, just like a Treasury bond. That’s not the case with Fannie and Freddie, although recent steps suggest that if they don’t have the full faith and credit, they’re pretty close.”
You can still lose money in a Ginnie Mae fund. If interest rates rise, the price of Ginnie Mae bonds and bond funds will fall. (Conversely, if interest rates fall, bond prices will rise.)
Like all mortgage securities, they are also susceptible to prepayment risk. If interest rates fall, many homeowners will refinance their mortgages and investors will get back their principal sooner than expected.
“You don’t want that,” because it forces investors or bond-fund managers to reinvest principal at lower interest rates.
Despite all the drama, Fannie and Freddie bonds haven’t done much worse than Ginnie Maes. In the past three months, a medium-term fixed-rate Ginnie Mae bond is down 0.63 percentage point, compared with a loss of 0.61 and 0.68 percentage points, respectively, for comparable Fannie and Freddie bonds. Over the past 12 months, all three are up roughly 8 percent, Newhall says.
Fannie and Freddie stockholders have fared far worse. Their shares are down 79 and 86 percent, respectively, the past year.
What site requirements are regulated by New York State?
New York regulates wells and sanitary waste systems.
11 of 12 - When a one or two-family property is sold in New York, what is required?
A smoke alarm and carbon monoxide detector
