Virginia Broker Flashcards
Become a Virginia Broker
1
Q
Describe active status.
A
Broker or salesperson legally engaged in regulated acts of real estate brokerage. Things such as continuing education can differ between active and inactive licenses.
2
Q
What is actively engaged?
A
With an active license is engaged in at least 40 hours per week in regulated real estate activity.
3
Q
What is broker experience requirement?
A
Must be a salesperson actively engaged in 36 of 48 months.
4
Q
What is an applicant?
A
Someone who applies to the Board for a real estate license.
5
Q
What is an associate broker?
A
A licensed broker other than the person designated as principal broker at a firm.
6
Q
Describe a broker agreement.
A
Written agreement establishing the brokerage relationship between a client and a licensee, which must state whether the licensee will represent the client as an agent (standard or limited service) or as an independent contractor.
7
Q
Describe a brokerage relationship.
A
The contractual relationship between a client and a licensee.
8
Q
What is a client?
A
Person who has entered into a brokerage relationship with a licensee.
9
Q
Describe a firm.
A
Partnership, association, corporation, limited liability company, or sole proprietorship (principal broker owner) engaged in the sale of real estate on behalf of others for profit. Firms must be licensed (unless the firm is a sole proprietor-principal broker owner).
10
Q
Describe inactive status
A
a broker or salesperson who is not under the supervision of a principal or supervising broker, not active with a firm, and prohibited from performing any acts of brokerage (compare this to active status, above).
11
Q
Describe an independent contractor.
A
Licensee who enters into a brokerage agreement with a client, which specifically states that the licensee is acting as an independent contractor and not as an agent. An independent contractor has the obligations agreed upon by the parties in the brokerage agreement, as well as some of the duties (but not all) that a standard agent has towards a client.
12
Q
What is a limited services agent?
A
Licensee who acts for a client pursuant to a brokerage agreement in a residential transaction, which states that the agent will not provide one or more of the duties that a standard agent is required to provide. A limited service agent has the obligations agreed upon by the parties in the brokerage agreement, as well as some disclosure obligations required by law.
13
Q
What is a principal broker?
A
Individual broker who must be designated by each firm to ensure compliance with the Virginia License Law, to receive communications from the Board, and to supervise affiliated licensee and firm activity.
14
Q
What is a principal to a transaction?
A
A party to a real estate transaction, including without limitation a seller or buyer, landlord, tenant, or optionor or optionee. For the purposes of Virginia License Law, the listing or selling broker, or both, are not principals to the transaction by virtue of their brokerage relationship.
15
Q
What is a Sole Proprietor (Principal Broker Owner)?
A
Brokerage firm that does not require a firm license, as long as the individual broker/owner is licensed. Principal broker owners may operate under legal or fictitious names as approved by the Board.
16
Q
What is a standard agent?
A
Licensee who acts for or represents a client in an agency relationship (other than as a limited service agent) in a residential transaction.
17
Q
What is a supervising broker?
A
Either the broker appointed by the principal broker to supervise associate brokers and salespersons (could be the principal broker), or the broker appointed by the principal broker to supervise a designated agent/representative.
18
Q
Virginia Real Estate Board Composition
A
Nine members: 7 licensed brokers or salespersons with 5 years experience and 2 citizens.
19
Q
What are the primary powers of the real estate board?
A
Rulemaking, licensing, enforcement (can suspend, deny, or revoke licenses) education (regulates education requirements as well as schools.)
20
Q
Who can sell real estate but be exempt from licensing requirements?
A
Individual selling their own property; act without compensation under a power of attorney; resolve client issues as a licensed attorney; follow a court order (bankruptcy, wills, trusts, estates); auction property (auctioneers); orshow rental property (rental agents). Also, sole proprietor-broker owned firms with a single location do not require a firm license (but the principal broker owner must be licensed).
21
Q
What are qualifications for licensee and broker?
A
Licensee: Must have a high school diploma or its equivalent, at least 18 years old, in good standing in all other jurisdictions where licensed, and be reputed to act honestly, truthfully, fairly, and competently. Broker candidates must have experience as licensed active salespersons for 36 of the preceding 48 months before application.
22
Q
Rules on prior convictions?
A
Candidates must disclose convictions of certain misdemeanors that occurred within 5 years of application (moral turpitude, sexual offense, drug distribution, physical injury) and must also disclose any felony convictions that occurred within the candidate’s lifetime. Candidates must also submit a set of fingerprints to the Virginia Central Criminal Records Exchange so the Board may procure a state and national fingerprint-based criminal history record. Additionally, candidates must not have had a license suspended, revoked, or surrendered in any state.
23
Q
What kind of prelicense education must candidates complete?
A
Candidates for a real estate license must pass an approved pre-license education course. Candidates must also sit for and pass the state examination (National and State portions) following successful completion of their pre-license education. Salesperson need 60 hours of prelicensing. Brokers need 180 hours of prelicensing.
24
Q
What are requirements for reciprocity?
A
Must be 18, HS diploma, similar licensing from another jurisdiction, sign statement saying understands VA license law, passed Virginia license law exam withing previous 12 months, must be in good standing in all other jurisdictions, paid all fees, etc., honesty, truthfulness, fair dealing. All misdemeanor convictions involving moral turpitude, sexual offense, drug distribution or physical injury within five years of the date of the application., disclose felony convictions in lifetime.
25
What is a broker-owned sole proprietorship?
Firms owned by a single licensed broker (sole proprietor) with a single location (no branch offices) do not need a firm license.
26
What does a broker-owned sole proprietorship branch office need?
All branch offices must be licensed (and supervised by a broker), even if owned by a single licensed broker. Branch licenses must be posted at the licensed branch office.
27
Requirements to operate under fictitious name for broker-owned sole proprietorship ?
Firms may operate under fictitious names. However, licensed (single) broker owners must first register their legal name w/Board along with fictitious name, and residential and business addresses.
28
What must firms owned by multiple brokers have?
Firms owned by multiple brokers, non-brokers, or organized as a corporation, partnership, association, or LLC must have a firm license (in addition to individual licenses). Firm must also be authorized to do business in Virginia by the Virginia State Corporation Commission.
29
How many pre-licensing hours must salesperson have
60 hours.
30
What is personal property?
Personal property Personal property is generally moveable and unattached to land--cars, boats, jewelry, horses, and cattle, or intangible like stocks, bonds, notes, and mortgages, trade fixtures, leases, and fructus industriales (emblements). It is also known as personalty and chattel.
31
What is real property?
Real Property: Includes land, improvements (valuable additions to land such as buildings and infrastructure development), and real estate (land plus improvements). Houses are a common improvement. Other improvements include:
32
What are rights in real property?
Rights in Real Property: Includes ownership rights in the surface of land, airspace above land, space below the surface (mining rights), any easements (use of land), and use of appurtenant (adjoining) land.
33
What is bundle of Legal Rights?
In short, these rights are: possess, control, enjoy, exclude, encumber, and dispose.
34
Water Rights
riparian (reasonable use for those with property bordering moving water), littoral (reasonable use for those with property bordering non-moving water), and prior appropriation (owner who first diverts water has superior rights to all others).
35
Common types of real property uses?
Commonly available property uses include: residential, commercial, industrial, agricultural, recreational, specific purpose (churches, hospitals, colleges, cemeteries), and public (state, federal, and municipal land).
36
Assemblage
how combining two or more contiguous parcels of real estate into a single parcel under the same ownership can increase its overall value. Assemblage is viable when the combined property will be more valuable than the sum of the individual parcels. Any increase in value resulting from assemblage is known as plottage value.
37
Types of legal property descriptions?
The three principal methods of legally describing real property are: metes and bounds; government survey; and lot, block, and subdivision.
38
metes and bounds description
Identifies the outer edges of a parcel by establishing a well-marked starting point, called a point of beginning or POB, then describing in which direction and how far the property boundary runs from the POB. For easier locating, POBs are usually marked by permanent artificial monuments, like a survey stake. A legal metes and bounds description must start and finish at the POB or the description is defective. Metes and bounds is well suited for identifying irregularly shaped parcels
39
Government Survey description
Adopted 1785, also known as the geodetic or rectangular survey system, and it is used in more than 30 states, mostly in the mid-west. This method employs the use of imaginary lines running north/south and east/west. These lines form a checkerboard pattern as they intersect, which are further divided into smaller units. This method works well for identifying large parcels, but not so well for describing small or irregularly shaped lots.
40
Lot, Block, and Subdivision (Recorded Plat):
legally describing property, which begins with a large tract of land known as a subdivision plat. Subdivision plats are initially located by either metes and bounds or government survey. A subdivision plat is a large map which notes the layout of lots and their numbers. Once established and named, subdivision plats are further divided into blocks and lots. Before they may be recorded, subdivision plats must be pre-approved by local governmental units in charge of zoning. Each recorded plat receives a book and page reference number, and all plat books are available for public inspection. If a parcel of real property is part of a recorded plat, the legal description need only include the lot and block number, tract name, map book reference, county, and state.
41
ENCUMBRANCES
Interest in land held or asserted by someone other than the landowner, which may diminish its value. Encumbrances can affect rights to use, as well as rights to convey property. These limitations may be created by both individual and government action. In order to protect the purchaser of property, as well as the person benefiting from the encumbrance (mortgagor, lienholder, etc.), encumbrances should be noted in deeds and in the public record.
42
Liens
Encumbrance on property to guaranty payment of debts by using property as collateral. If a borrower defaults on a loan secured by a lien, creditor can seek his share of the collateral to satisfy the debt. Liens always create an impediment to clear title. There are two types: voluntary (created through an agreement) and involuntary (created by operation of law). Satisfying a lien implicates three basic concepts: priority, satisfaction, and enforcement. The priority of a lien is determined by law (tax lien), the date it was recorded, or by the date it attached to the property (collateral).
43
Lien Priority
Generally, lien priority follows the following order: tax liens, mortgages, mechanic’s liens, other liens in the order they were recorded, and unrecorded liens.
44
Satisfying a Lien
Pay it off. Ensure lien holder removes lien. Evidence of satisfaction is usually in the form of an instrument called a “quitclaim deed.”
45
Lien enforcement
Typically requires a court order. Creditor typically must take legal action.
46
Lis Pendens:
Latin, means “action pending” -- the concept of providing notice of a possible future lien. It provides constructive notice that an action affecting particular real estate has been filed and is, or is about to become, involved in a lawsuit. If the suit is successful, the priority of the lien dates back to the date the lis pendens was filed (not the date of the final court decision).
47
Scope of Liens
General liens apply to the individual and all of his personal and real property (like federal tax liens and some judicial liens). Specific liens apply to specific property of the debtor only (like mortgages, property tax liens, and mechanic’s liens).
48
Common Liens
Mechanic’s liens (specific, statutory, and involuntary; generally effective when work begins), judgment liens (general, equitable, and involuntary), and attachment liens (property seized and held pending a lawsuit).
49
Property Tax Lien
Specific (attaches to a specific parcel of real estate), statutory (arising from legislation), and involuntary (created by operation of law) typically filed at the beginning of each tax year (usually January 1). The effective date of property tax liens is the date taxes are assessed. Property tax liens are superior and take priority over other liens, regardless of when they were recorded. Overdue property taxes become liens automatically, without a requirement to file or record the lien.
50
Seisin
the possession and ownership of a freehold estate.
51
Remainder Estate
Estate that automatically arises after an existing estate terminates. The remainder estate converts from a future estate to a possessory estate automatically upon the termination of the prior estate.
52
How many years does a new builder home warranty cover for structural issues?
?
53
How many feet in an acre
43,560
54
Accrued expenses
Accrued expenses are expenses that are paid in arrears—that is, paid after they have been earned by the creditor. Accrued expenses include such items as property taxes that are paid in arrears, water bills and interest on assumed mortgages. The seller pays the buyer for the seller's share of these expenses at closing.
55
Blake is allowed to use his property in a way that's prohibited under current zoning ordinances, because those ordinances would cause undue hardship for him. What gives him this permission?
This is a use variance. In contrast, an applicant for a special use permit doesn't have to show hardship, simply that the proposed use meets the conditions already contained in the ordinance (e.g., change in setback).
56
What is the difference between a use variance and a special use permit?
A use variance is granted in cases of hardship. In contrast, an applicant for a special use permit doesn't have to show hardship, simply that the proposed use meets the conditions already contained in the ordinance (e.g., change in setback).
57
The Real Estate Board has issued a charge of discrimination against a real estate licensee in Virginia. What should the licensee expect to happen next?
The charge will be referred to the Attorney General’s office
58
What does Tila require in an ad noting APR?
An ad can show the APR without disclosing all the other credit terms. But if certain other “trigger” terms are included, such as down payment, payment amount, number of payments, or interest rate (other than APR), this would require full disclosure.
59
Insurable title
Insurable title is one that may have known defects but is still insurable. A buyer should carefully review the title policy.
60
How do lenders determine LTV for loans?
Lenders use the lesser of the sales price or appraised value.
61
Which approach to value is typically used for investment property of two- to four-family units?
Sales Comparison
62
When can a landlord ask for verification of disability for renter with service animal.
Only if the disability is not obvious. If the disability for which the tenant is making the request is obvious, the landlord may not ask why it is needed. Cannot ask for pet deposit.
63
John and Amy purchased a builder's home warranty when they bought their home. They have found structural damage that could be a detriment to their home. On average, how many years does a home warranty cover structural damage?
10 years. Structural damage can take a while to appear, so homeowners will want to file a claim if it’s a decade or less.
64
Property managers have fiduciary duties to whom?
Landlord and tenants both.
65
Do sellers have to disclose septic systems
Septic systems that don’t involve additional maintenance requirements and a waiver don’t have to be disclosed
66
Ashton, an appraiser, is estimating value using the sales comparison approach. He applies more weight to two comparables over several others he used. What process is he utilizing?
Correction: Through a correlation process, the most weight may be given to one or two comparables, or equal weight may be given to all. The term reconciliation is often synonymous with correlation.
67
Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 states that its purpose, in part, is to require that real estate appraisals used in connection with federally related transactions be performed ______.
In writing, and in accordance with uniform standards
FIRREA helps to regulate the ways that lenders value real property by requiring that appraisals be done by licensed, qualified personnel, and that the appraisal report be in writing.
68
Servient estate
n. real property which has an easement or other use imposed upon it in favor of another property (called the "dominant estate"), such as right of way or use for access to an adjoining property or utility lines. The property giving usage is the servient estate, and the property holding usage of the easement is the dominant estate
69
What is an execrutory contract?
A valid contract that is in progress is an executory contract, which means that one or more terms of the agreement remain undone.
70
UETA: What is it, what does it do?
The Uniform Electronic Transactions Act is an attempt to standardize states’ acceptance of electronic documents and signatures. It’s not legally binding on anyone, and thus provides no guarantees regarding the validity of electronic signatures. The UETA recommends that states accept electronic signatures just as they would “wet” signatures, but again, they can’t guarantee that states will accommodate electronic signatures. While most states do now recognize electronic documents and signatures, state laws take precedence over UETA provisions. In many states, electronic documents and signatures can be used only if the parties to the contract agree.
71
Virginia law regarding electronic signatures
Virginia’s Uniform Electronic Transactions Act (UETA), makes electronic signatures valid in Virginia.
But certain documents must be signed in hard copy form, such as wills testamentary trusts, and more.
72
A contract involving two parties who both make a promise to the other party in exchange for consideration is a ...
Bilateral contract.
73
Difference between an addendum and an amendment to a contract.
An amendment changes existing contract terms. can be done with an additional document or redlining and initially original document. Use for price changes, lease extensions.
Addenda add something to the original contract with an additional document.
74
When a signed contract is delivered according to the delivery procedures and deadline outlined in the contract it constitutes ....
Binding acceptance
75
Time is of the essence
It means that the parties will proceed without delay. Needless delaying violates this contract clause.
76
When does PMI automatically cancel for a conventional loan?
The provider must automatically terminate PMI when your mortgage balance reaches 78 percent of the original purchase price, provided you are in good standing and haven't missed any scheduled mortgage payments. The lender or servicer is also required to stop the PMI at the halfway point of your amortization schedule.
77
Time is of the essence
A contract phrase stating that "time is of the essence, means that parties agree to strictly adhere to the deadlines listed in the contract. If specific deadlines aren't stated, performance must take place within a reasonable amount of time (often as determined by the courts).
78
Severabilty as it relates to contracts
The concept that a court can strike down one or more contract terms while leaving the remainder in place
79
Lenders lock-in interest rates for a period of no more than
90 Days
80
When must lenders cancel PMI automatically
When principal balance is scheduled to reach 78% of the original property value or when the
mortgage loan reaches its originally scheduled amortization midpoint.
81
budget mortgage
The most common mortgage loan payment; it includes principal, interest, taxes, and insurance, or PITI.
82
title theory states
States that use a deed of trust as the primary security instrument; lender/trustee holds legal title to the property until the mortgage loan is paid in full. Borrowers hold equitable title.
83
power of sale clause
in the deed of trust permits the lender to use a non-judicial foreclosure process.
84
release of deed of trust
Lenders in TITLE THEORY states release this to acknowledge the borrower's loan payoff. Lenders also mark the promissory note "paid" and return it to the borrower.
85
lien theory states
States that use a mortgage as the security instrument are referred to as lien theory states because the mortgage places a lien against the property it secures.
86
In lien theory states, to foreclose lenders must pursue ...
Judicial foreclosure -- EXCEPT if mortgage document includes a power of sale clause, the lender may use a non-judicial foreclosure process.
87
What documents do lenders use to release paid off homes in lien theory states?
Satisfaction or release or mortgage and a reconveyance deed/ The reconveyance deed is required because lenders retain the legal property title until the loanis paid. Lenders also mark the promissory note "paid" and return it to the borrower
88
Defeasance clause in mortgage security instrument
orders the lender or trustee to immediately release full title to the borrower once the loan is paid in full.
89
An acceleration clause in mortgage security instrument
An acceleration clause makes the entire debt due immediately if there's borrower default. Before a foreclosure occurs, lenders must send an Acceleration Letter to the borrower (often not sent until two to three months in default).
90
A due-on-sale clause
Also known as alienation clause, it requires the borrower to repay the loan when transferring ownership to another
91
Another name for Due-on-Sale Clause
Alienation Clause
92
Another name for Alienation Clause
Due on Sale Clause
93
Conforming, Conventional Loan
Meets loan limit and other criteria (related to borrower qualifications) that Fannie Mae and Freddie Mac set.
Make loans marketable to Freddie and Fannie
Homebuyers who wish to borrow more than the loan limit must make up the difference through a larger down payment or finance with a jumbo loan.
94
Jumbo Loan
A conventional non-conforming loan that exceeds conforming loan limits but meets other conforming loan requirements.
95
FHA lending limit
A maximum loan amount that FHA it will guarantee for each borrower. These loan limits typically mimic conventional conforming loan limits. Buyers who wish to borrow more than these limits must make up the difference with their down payment.
96
VA loan eligibility requirements
Depend on the length and type of service,
In general are available to military members who have
served 181 days active duty or three months during war time.
97
How much do VA loans guarantee?
Up to a quarter of the loan limit amount should the buyer default. Enables no down payment loans.
98
The USDA Farm Service Agency (FSA) loans
Offers direct guaranteed loans to farmers and ranchers and for rural HOUSING. Congressional appropriation funds these loans.
99
Rural development loans
Government loans specifically for FAMILY FARMS and rural HOME financing. They offer a longer payback period to reduce monthly payments.
100
Features of USDA Farm Service Agency Loans
1 -Borrow up to 100% of the purchase price,
2 - Length: 33 years (38 for very low-income borrowers)
3 - Guarantees for up to 95% of the loss of principal and interest.
101
Partially amortized loan
It includes partial amortization over the loan term and a balloon payment at the end of the term.
102
Fixed/adjustable rate note
A special type of ARM
Legal agreement that permits the borrower to convert a fixed rate mortgage to an ARM or an ARM to a fixed rate mortgage under certain conditions.
103
Swing Loan
* Same as a Bridge Loan.
* Short-term until buyers can obtain permanent financing.
* Covers the down paymt; typically secured by existing home.
* Can be interest only.
104
Land contract/contract for deed
Type of seller financing: Requires the buyer to make installment payments to the SELLER for property purchase. The seller retains the title while buyer gets equitable title. Some include provisions that buyer can loose all equity if he/she defaults.
105
A purchase money mortgage
Type of Seller Financing: a loan a seller issues to the buyer as part of the purchase transaction. This typically occurs in
situations where the buyer cannot qualify for a reg mortgage
106
Wrap Around Mortgage
Type of Seller Financing: seller holds a mortgage that wraps the new buyer's mortgage around the seller's existing
mortgage. The seller continues to make payments on the first mortgage, and buyer makes payments to the seller on the wraparound mortgage.
107
Three types of Seller Financing
1 -- Land Contract/contract for deed: buyer installment payments to seller until paid off.
2 -- Purchase Money Mortgage: seller issued loan to buyer
3 -- Wrap Around Mortgage: Seller continues to hold mortgage and gives buyer a mortgage to use buyer payments to pay it seller's morgage.
108
Subordination
The priority of existing mortgages and other liens against the property are determined (and paid off) by the order in
which they were recorded. A subordination agreement can be used to change this priority order.
109
Five types of lenders in primary mortgage market
1 -- Commercial banks: National banks; loan direct and resell
2 -- Savings and loan associations: make loans
3 -- Credit unions: take deposits; auto and home loans
4 -- Mortgage brokers: Match consumers with lenders
5 -- Mortgage bankers: Direct lenders
110
GSEs
* Government Sponsored Enterprises.
* Privately-held corporation that has a public purpose.
* Corporations that are traded on major stock market exchanges. * Fannie Mae and Freddie Mac and Farmer Mac
111
Ginnie May
Ginnie Mae is an AGENCY that is fully backed by the U.S. government; it is not a GSE. guarantees MBSs
that are made up of government insured or guaranteed loans.
112
Federal Agricultural Mortgage Corporation
Farmer Mac, a GSE for Secondary Market Ag loans
113
The Truth in Lending Act (TILA)
Law of 1968: Requires lenders to disclose credit terms and conditions when advertising triggers loan terms, so as not to mislead consumers
114
Trigger terms
Terms in ads that would require the full disclosure of all terms include down payment, payment amount, number of
payments, and interest rate (other than APR)
115
Regulation Z
Regulation Z requires mortgage lenders to follow TILA disclosure requirements for real estate advertisements that include credit terms.
116
What is the difference between Fannie May and Freddi Mac
The main difference between Fannie and Freddie comes down to who they buy mortgages from: Fannie Mae mostly buys mortgage loans from commercial banks, while Freddie Mac mostly buys them from smaller banks that are often called "thrift" banks.
117
RESPA
* Real Estate Settlement Procedures Act (RESPA) of 1974
* Consumer protection law
* No kickbacks for lending referrals
* Requires certain disclosures
* No lending junk fees (must all be actual services)
* Allows free marketing materials, like pens.
* Lenders may may sponsor educational events for agents (i.e., local lunch, not junkets)
118
The Dodd-Frank Wall Street Reform Act of 2010
Handed RESPA responsibility to the
| Consumer Protection Finance Bureau (CFPB).
119
The Equal Credit Opportunity Act ( ECOA) year and definition
* 1974
* prohibits lenders from making credit unavailable or offering lessfavorable terms based on protected class status (race, color, religion, national origin, sex, marital status, or income source) vs.
creditworthiness.
120
CFPB/TRID rules that define a qualified loan.
A loan category that has certain affordability features. Certain loan attributes are prohibited, including:
* Interest-only loans or interest-only periods on a loan
* Negative amortization
* Balloon
* Loan terms of more than 30 years
* Qualified mortgages also must adhere to standard lending ratios and can't exceed specified amounts for up-front loan points and fees.
121
TILA/RESPA Integrated (TRID) disclosures regarding loan estimate.
Loan Estimate (LE) to applicants within THREE BUSINESS DAYS days of loan APPLICATION (and at least SEVEN business days before CLOSING).
A revised LE must be provided no later than THREE business days after receiving the information that triggered the need for a revised LE, and must be received by the borrow at least FOUR days prior to closing.
122
Triggers that demand new loan estimate be provided to buyer
Any increase more than 10 percent of the following: recording fees, fees for lender-required services when the borrower chose a third party from the lender's list.
NOTE: Fees that can't change: the lender or mortgage broker fees, fee for lender-required services that couldn't be shopped for separately, transfer taxes.
123
TRID disclosures apply to what and which are exempt?
Financed home purchases, most loan assumptions, refinances, and home improvement loans.
EXEMPT: Reverse mortgages, home equity lines of credit (HELOCS) and manufactured housing loans that aren't secured by real estate; Commercial and business loans unless the loan is made to purchase or improve a rental property of one to four units.
124
Illegal property flipping
Predatory lending: Property falsely appraised at a higher value, then quickly sold, with the buyer taking the "equity" in the property
125
Equity skimming
Predatory lending: When an investor receives title to a property- often by using a straw buyer-doesn't make the mortgage payments, and usually rents out the home until foreclosure occurs.
126
Straw buyers
Predatory Lending: Conceal their real identity behind someone else's name and credit
127
silent second
Predatory Lending: describes self-serving or perhaps fraudulent schemes where house sellers accept second mortgages as part of a sale transaction, without the full knowledge of the first mortgage lender. The “silence” refers to the absence of full disclosure to the first mortgage lender.
128
Usury
Usury is lending money at an excessive (illegal) rate
129
Housing ratios by type of loan
Conventional loan: Typically 25% - 28%
FHA loan: Typically 31% - 40%
VA loan: Lenders ignore the front-end ratio
130
Housing Ratio
The borrower's projected monthly housing expense (principal, interest, taxes, insurance, second liens, and association fees) divided by income. The required ratio will vary depending on loan
type and lender.
131
Debt Ratio
Also called the back-end ratio, it's the total of all the buyer's debt obligations divided by income. The required ratio will vary depending on loan type and lender.
132
Debt Ratio requirements by loan type
Conventional loan: Typically 33% - 36%
FHA loan: Typically 43% - 50%
VA loan: Typically can't exceed 41%
133
Credit Score requirements for convention and FHA loans
Conventional: typically 620 and above.
FHA: minimum 580 to qualify for a 3.5% down payment;
FHA: borrowers with credit scores between 500 and 579 may have to put down as much as 10%.
134
Straight mortgage
Straight mortgages involve interest-only payments until the end of the loan term, when the entire principal balance comes due
135
intermediary theory”states
where the title remains with the borrower, but the lender may take back title to the property if the borrower defaults on the loan.
136
Most predictable element of severance?
Agreement
137
The developer of a subdivision requires that a property may not have a garage unless it is attached to the single-family home. This is most likely an example of:
A covenant, not a building code or ordinance.
138
What is a written instrument or thing of value that is held by a disinterested third party, but which must be handed over upon satisfaction of specified conditions?
escrow closing
139
The original owner of a condominium unit holds which of the following interests?
Fee simple absolute in unit.
140
Net Lease
Tenant required to pay, in addition to rent, some or all of the property expenses, such as property taxes, insurance, maintenance, repair, and operations, utilities, etc.
141
Which clause states the extent of ownership?
Premesis
142
Constructive notice?
It is of public record.
