Unit 8-Govt Loan Programs, Income Taxes, Fair Housing Flashcards
This type of loan is a mortgage loan that is not insured or guaranteed by a government agency.
Conventional
A borrower/mortgagor pays PMI when the LTV is above _________.
80%
FHA-insured loans provide its own mortgage _______ ________.
Default Insurance–insures the LENDER against default from the borrower
In an FHA insured loan, funds come from approved ______, NOT the FHA.
Lenders–interest rates are set by the lender not the FHA, properties must be owner occupied
FHA loans usually allow a higher _______ ratio than conventional loan programs.
LTV
FHA loans have no _______ penalty.
Prepayment
FHA loans have an _______ clause(contingency clause) that offers a refund provision(if loan cant be obtained, buyer can cancel)
Escape
FHA loans are always _________, no due-on-sale clause–lender approval is required for assumption, and it does not need an appraisal.
Assumable
VA guaranteed loans guarantee _______ against losses on loans to eligible veterans.
Lenders
In this loan no down payment is required and the LTV could be up to 100%.
VA Guaranteed–must contain an escape clause too
Who regulates the supply of money and interest rates in the US?
The Federal Reserve
This is the market where loans are made.
Primary Mortgage market
Mortgage bankers provide _______, they are direct lenders.
Financing
What loan requires a Certificate of eligibility/entitlement and a Certificate of reasonable value (CRV)?
VA loan
This is who brings together borrowers and lenders and act as an intermediary?
Mortgage Brokers
This is where loans are bought and sold.
Secondary Market
In the _______ market, loans are originated.
Primary
In the secondary market, _____ ______ _______ are sold to investors
Mortgage-backed securities
Government sponsored corporation that buys all types of mortgages.
FNMA–Federal National Mortgage Association
This agency is within HUD and buy FHA and VA mortgages.
GNMA–Government National Mortgage Ass.
This government sponsored corporation mainly buys conventional mortgages from savings and loans associations and commercial banks.
FHLMC–Freddie Mac
If a loan meets the standards of FannieMae and GinnieMae and can be readily sold in the secondary market it is ___________.
A Conforming loan
This loan is sometimes called a “jumbo loan” and is larger than Fannie Mae standards, may be more difficult to sell on the secondary market.
Non-conforming loan
The true cost of credit and lender costs is the ______.
APR–Annual % Rate
This act covers all consumer lending, not just Real estate.
TILA–Truth in Lending Act
This standardizes closing practices for 1 to 4 family residential properties financed by federally related loans.
RESPA–includes FHA and VA loans
This helps restrict the amount of advance escrow payments and prohibits kickbacks.
RESPA
Federal Reserve Regulation Z is also the _______.
TILA
The true cost of obtaining credit is expressed as a loan’s ______.
APR
T or F: TILA applies to all real estate loans except loans to corporations, seller financed(purchase money mortgage and contract for deed), and business or commercial loans.
True
this is the 3 day requirement for refinances of owner-occupied, 1 to 4 unit properties and Home Equity loans.
3 day right of recission
This is the only specific terms allowed in advertising without triggering a full disclosure requirement.
Asking price or APR
TILA is for _______.
Lender’s Costs
RESPA is for ________.
All costs
An integrated disclosure that combines TILA and RESPA is _____.
TRID–shows APR and all estimated loan costs, must be provided no less than 3 days after the loan application is accepted
This must be provided to the borrower 6 days prior, 3 days in person, before closing.
CD–Closing Disclosure
Should brokers advise on tax advantages or disadvantages?
NO–consult a qualified tax consultant
Deductions on a first or second residence can be remembered as POIT, which stands for…
Points Origination Interest Taxes
Insurance, HOA dues, repairs, and capital improvements (are/are not) deductable on 1st or second morgage?
Are Not
Capital gains from a short-term gain of less than 12 months is taxed at a taxpayer’s ______ income tax rate.
Ordinary
Long-term gains on properties held longer than a year are taxed at a _________ rate than ordinary income.
Different
Gains from the sale of a ________ residence is excluded from tax, 250,000 max for single, 500,000 for filing jointly.
Principal–must own and occupy 2 of last 5 years
With capital gains, you are taxed on your ________, NOT equity.
GAIN–Take your adjusted basis from the sales price and that is your capital gain, not equity
Adjusted basis=Acquisition cost + improvements and the Sales Price - selling expenses = Adjusted _____ ______.
Sales Price
Adjusted Sales price - Adjusted Basis = Realized _____ _____
Capital Gain
This is used as a way to have cost recovery for taxes.
Depreciation
Depreciation helps offset the fact that real estate is not a _______ asset.
Liquid
The _______ property allowance is depreciation over 27.5 years.
Residential–straight-line method
The _______ property allowance is 39 years of depreciation.
Commercial
1031 tax-deferred exchanges are also called _________ exchanges.
Like-kind exchanges–used by investors and business property owners to DEFER capital gains taxes on investment properties
1031 exchanges defer payment of capital gains until the sale of the _________ property.
Second
Are personal or second residences eligible for 1031 exchanges?
No
This act prohibits discrimination based on race in the sale and rental of all property.
Civil Rights Act of 1866–no exceptions to this federal act
This added the protected classes of race, religion, color, sex, national origin, familial status.
Federal Fair Housing/Civil Rights Act of 1968
T or F : Familial Status was added in 1988, and protects families with dependent children, pregnant women, and those fighting for custody.
True–can only refuse to rent based on zoning
Are these protected classes under the Fair Housing law? Sexual orientation, Age, Marital Status, and Occupation
No
T or F: Real Estate brokers and sales people May NOT discriminate for any reason in any situation.
True
T or F: Fresh Corn helps remember the protected classes you cant discriminate against.
True
FSBO, For sale by owner, is one way discrimination is ________.
Allowed–as long as not a real estate professional and no discriminatory advertising
This is channeling potential buyers to or away from particular areas as a means of discrimination.
Steering
Panic selling based information and scare tactics of people moving in or out.
Blockbusting
Refusing to offer financing or limiting loans because of crime or ethnic backgrounds in an area.
Redlining
Any physical or mental impairment that substantially limits one or more major life activities.
Disability–includes HIV/Aids
Do you have to allow a disabled person to modify units to accommodate themselves?
Yes–tenant must return unit to original state, cant charge extra damage deposit–bot DON’T have to rent to disabled tenants with history of violence
If a complaint is filed with HUD for discrimination, the first step is to _________the complaint.
Investigate
HUD does testing studies and DOES NOT consider a salesperson’s/broker’s __________.
Intentions
Registration of sex offenders is required under _________ ________.
Megan’s law
ECOA–Equal Credit Opportunity Act, makes credit available with fairness and doesnt allow ________ in all credit transactions
discrimination
Marital Status, age, and public assistance are added classes with the ________.
ECOA
This is intended to ensure the equal access to public accommodations for disabled persons.
ADA
Refusing to give a loan to an 80-year-old is a violation of _______.
ECOA
Senior housing communities are allowed to discriminate based on ________ ________.
Familial Status
CFPB is the _________________.
Consumer Financing Protection Bureau
When one party employs another to act on their behalf.
Agency
The one who is employed to represent the principal is the _________.
Agent/Fiduciary
A facilitator or transaction broker is a ______ relationship.
Non-agency
Common Law of Agency specifies _________ duties to principal(OLD CAR).
Fiduciary–Obedience(lawful), Loyalty, Disclosure, Confidentiality, Accounting, Reasonable Care & Skill
Agents fiduciary responsibility is to disclose info with their _______.
Principal
Brokers and sellers still must disclose material facts or known problems when selling _________.
As-is
This agency is created when an agent is authorized to perform a particular act WITHOUT the ability to bind the principal.
Special Agency–No ability to bind, brokerage firm to seller, buyer brokerage firm to buyer
This agency is created when an agent is authorized to perform a particular series of acts associated with the continued operation of a particular business…limited ability to bind
General Agency–limited ability to bind, salesperson or broker to employing broker, property manager to property owner
This agency is created when an agent is authorized to perform in place of the principal, agent has unlimited ability to bind the principal
Universal Agency–Authority comes from Power of Attorney, agent legally replaces principal
An _______ ________ may also be called a fiduciary agreement.
Express Contract–oral or written
This agency is created when an agent acts without the principal’s permission
Ostensible
Conspiring to establish fixed fees or prices for services is known as _________.
Price-fixing–not allowed under Sherman Antitrust Laws, all fees are ALWAYS negotiable
This is an employment contract that appoints a brokerage firm as an owner’s special agent for the specific purpose of finding a buyer who is ready, willing, and able to buy according to the contract terms.
Listing(fiduciary) contract, seller is principal, must have negotiable commission clause, definite beginning and end date, NO automatic renewal allowed
This brokerage contract, the brokerage gets paid no matter who finds the buyer, max protection for broker, bilateral contract
Exclusive right to sell
In this agency, seller has NO liability to pay the brokerage if the seller finds the buyer.
Exclusive agency–bilateral contract
This listing is called this and can not be put in the MLS, only the brokerage firm that procures the buyer gets paid.
Open/nonexclusive–seller can sign multiple with different firms, unilateral contract
In a ________ ____________ _________, the buyer is the principal, brokerage firm is agent/fiduciary.
Buyer Representation Contract–can be both exclusive right to buy or exclusive agency
Should brokers complete a visual inspection of the property to look for material defects?
Yes–and ask sellers for property disclosure, point out red flags like sagging floors
Do brokers have to use a trust fund when holding other people’s money?
Yes–earnest money, security deposits, etc. and must maintain accounting of it—broker associates and salespeople CAN NOT have trust funds
Mixing personal and business funds with trust funds is called _____________ funds.
Commingling
When trust funds are used for personal reasons or given to the wrong people it is called _______.
Conversion
The main function of property managing is __________.
Maintaining the value of the property and generating income
In a new home there is a warranty of habitability or suitability, provided by the ________.
Builder–covers roofs, structural failure, poor workmanship–but not from outside forces
When finding commission, it is Rate x ________.
Sales price
