Nature & Cycle of Finance Flashcards
What are the two major differences between freehold estates and leasehold estates?
Freehold estates last for an indefinite period of time, while leasehold estates expire on a definite date.
A freehold estate denotes property ownership by the estate holder, while a leasehold estate involves the right to possess and use property that is owned by someone else.
Which type of leasehold estate has a definite beginning and ending date?
Estate for Years
What are the three common ways to get title assurance?
Deed
Abstract and opinion
Title insurance
Title insurance policies protect policy holders from what kinds of losses?
Forged documents, such as deeds or mortgages
Undisclosed heirs
Mistaken legal interpretation of a will
Misfiled documents
Confusion arising from similarity of names
Incorrectly stated marital status
Mental incompetence
When does supply and demand usually improve for a buyer?
When the economy is in a recession.
What determines how healthy the real estate market is at any given point in time?
How healthy the real estate market is at any given point in time relates directly to the cost of money or interest rates.
Why are the savings of individuals important to the economy?
Savings become the eventual source of funds for borrowing.
What role does the United States Treasury play in our economy?
The United States Treasury plays a critical role by managing the debt of the entire federal government. Some of the Treasury’s functions include:
Managing federal finances.
Managing government accounts and the public debt.
Supervising national banks and thrift institutions.
Enforcing federal finance and tax laws.
The Finance Commission of Texas oversees and coordinates the activities of what other Texas agencies?
The Texas Department of Banking (TXDOB), the Department of Savings and Mortgage Lending (SML), and the Office of Consumer Credit Commissioner (OCCC)
Name three issues that lenders deal with that can affect the cost of mortgage money.
Cost of getting people to deposit, costs of floating bonds and costs associated with advertising. (See screen 31 for other correct answers.)
When the national economy is in a recession
supply and demand usually improve for a buyer. On the other hand
when the economy is expanding
conditions generally move in favor of the seller.
The United States Treasury plays a critical role in
maintaining the economic balance of our country by managing the debt of the entire federal government
The Office of the Comptroller of the Currency (OCC)
charters, regulates, and supervises all national banks.
In Texas, there are several agencies that regulate the savings and loan associations, banks, insurance companies, credit unions and mortgage companies that operate in the state.
Finance Commission of Texas
Texas Appraiser Licensing and Certification Board (TALCB)
Texas Department of Insurance (TDI)
Texas Department of Banking (TXDOB)
Department of Savings and Mortgage Lending (SML)
Office of Consumer Credit Commissioner (OCCC)
Texas Real Estate Commission (TREC)
The appraisal rules for high-cost mortgages do not apply to:
reverse mortgages Qualified Mortgages some mortgages secured by a manufactured home loans on boats, trailers, and mobile homes that are not manufactured homes new home construction loans bridge loans for 12 months or less certain streamlined refinance mortgages loans for $25,000 or less
Qualified Mortgage
A Qualified Mortgage is one that meets the “ability-to-repay” requirements, has certain required features and is not allowed to have others. There are exceptions to these rules for certain kinds of small lenders. Issuing a Qualified Mortgage gives the lender certain legal protections in case the borrower fails to repay the loan.
Loan underwriting is the process of assessing the lender’s risk in giving a loan. Mortgage underwriting includes:
evaluating the borrower’s ability to repay the loan
appraising the value of the property offered as security
determining the terms of the loan
A promissory note is a negotiable instrument
which means the payee may assign it to a third party. The assignee would then have the right to receive the borrower’s periodic payments.
Hypothecation
The process of securing a loan by pledging a property without giving up ownership of the property is called hypothecation.
Department of Savings and Mortgage Lending (SML)
Chartering, regulation and supervision of the state’s thrift industry
Licensing/registration and regulation of the state’s mortgage industry
Office of Consumer Credit Commissioner (OCCC) regulates
Home Equity Loans Secondary Mortgages Home Improvement Loans Motor Vehicle Sales Financing Pawnshop Transactions Signature Loans Payday Loans Consumer Installment Loans Retail Credit Accounts
Texas Real Estate Commission
Enforces the real estate law to ensure the protection of the public in real estate transactions.
Provides licensing and regulation of licensees.
Investigates complaints filed against licensees.
TREC regulates the following persons:
Real Estate Brokers and Salespersons Real Estate Inspectors Education Providers for Real Estate and Inspection Courses Residential Service Companies Timeshare Developers Easement Or Right-of-Way (ERW) agents
General Warranty Deed
This deed offers the most complete warranties about the quality of the property. For this reason it is the most attractive deed from the purchaser’s perspective. Essentially, the grantor is saying that the title is free and clear of all encumbrances, except those that are specifically listed in the deed. In addition, the grantor guarantees that if the title ever fails, he or she will compensate the grantee for any losses.
Special Warranty Deed
This deed makes essentially the same guarantees as the general warranty deed, except the grantor guarantees the title against only those defects that arose during the period of his or her ownership of the property and not against any defects that existed before that time.
Quitclaim Deed
This deed conveys only those rights, interests and title that the grantor has in the property without offering any warranty about the quality of the title. This deed offers a purchaser the least protection.
