Chapter 5 & 6 Flashcards
Institutional Lender in Texas
- commercial banks
- savings and loan associations
- life insurance companies
Commercial bank
Home equity loan example ( short term loan)
Life insurance companies
Major source of credit for shopping centers, office buildings, hotels and motels, industrial buildings, and large apartment complexes. These companies typically invest up to a third of their assets in real estate loans.
Non-institutional lenders => private party
private party lenders are not exempt from usury laws.
Mortgage Banker
Mortgage bankers are managers of real estate loans. They receive a fee for originating, processing, and closing a loan. They may also collect payments, periodically inspect the property, and supervise a foreclosure if necessary.
How REITS are exempt from corporate TAX ?
if they invest at least 75% of their assets in real estate and distribute 95% or more of their annual real estate income to their investors.
General obligation (GO) bonds
common form of municipal bond, are used to raise capital for community development projects such as parks and schools.
Endowment funds
they offer a good source of mortgage financing for commercial and industrial properties. Many commercial banks and mortgage companies handle investments for endowment funds.
Credit Unions
Nonprofit financial institutions. They pay no income tax, so they can pay higher interest rates on deposits than other savings institutions. They also offer a wide variety of loans at far lower interest rates than their competitors. This makes credit union membership very attractive.
legal documents that are used to finance real estate in Texas
note and mortgage
note and deed of trust
land contract
Land contract
Real estate contract, Installment sales contract, agreement for deed, agreement to convey, contract for deed.
IT IS NOT TIED TO THE NOTE !
Exculpatory clause
An exculpatory clause is inserted in a financing document when the lender agrees to waive the right to a deficiency judgment.
