Unit 8-Govt Loan Programs, Income Taxes, Fair Housing Flashcards by jeff sewell

This type of loan is a mortgage loan that is not insured or guaranteed by a government agency.

Conventional

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A borrower/mortgagor pays PMI when the LTV is above _________.

80%

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FHA-insured loans provide its own mortgage _______ ________.

Default Insurance–insures the LENDER against default from the borrower

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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

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FHA loans usually allow a higher _______ ratio than conventional loan programs.

LTV

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FHA loans have no _______ penalty.

Prepayment

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FHA loans have an _______ clause(contingency clause) that offers a refund provision(if loan cant be obtained, buyer can cancel)

Escape

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FHA loans are always _________, no due-on-sale clause–lender approval is required for assumption, and it does not need an appraisal.

Assumable

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VA guaranteed loans guarantee _______ against losses on loans to eligible veterans.

Lenders

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In this loan no down payment is required and the LTV could be up to 100%.

VA Guaranteed–must contain an escape clause too

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Who regulates the supply of money and interest rates in the US?

The Federal Reserve

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This is the market where loans are made.

Primary Mortgage market

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Mortgage bankers provide _______, they are direct lenders.

Financing

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What loan requires a Certificate of eligibility/entitlement and a Certificate of reasonable value (CRV)?

VA loan

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This is who brings together borrowers and lenders and act as an intermediary?

Mortgage Brokers

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This is where loans are bought and sold.

Secondary Market

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In the _______ market, loans are originated.

Primary

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In the secondary market, _____ ______ _______ are sold to investors

Mortgage-backed securities

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Government sponsored corporation that buys all types of mortgages.

FNMA–Federal National Mortgage Association

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This agency is within HUD and buy FHA and VA mortgages.

GNMA–Government National Mortgage Ass.

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This government sponsored corporation mainly buys conventional mortgages from savings and loans associations and commercial banks.

FHLMC–Freddie Mac

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If a loan meets the standards of FannieMae and GinnieMae and can be readily sold in the secondary market it is ___________.

A Conforming loan

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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

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The true cost of credit and lender costs is the ______.

APR–Annual % Rate

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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?

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

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