Virginia Real Estate Financing Principles (11)

Question 1

Regarding institutional financing in VA, __________, rather than mortgages, are the instruments primarily used in residential sales transactions. In the deed of trust there are three parties: the ______, ________, and a ________ (a neutral third party) who holds the deed of trust for both the borrower and the lender.

Answer 1

deeds of trust

borrower

lender

trustee (neutral 3rd party)

Question 2

In VA regarding institutional financing, the note and deed of trust give the lender, in the event the borrower should default, the right to declare _____________. In that situation, the _________ clause in the deed of trust gives the trustee the right to sell the property (foreclose) without _________, hence the term ____________ is most commonly associated with the deed of trust.

Answer 2

the entire debt due and payable

power of sale

going to court

nonjudicial foreclosure

Question 3

T/F. In VA regarding institutional financing, by signing the note and deed of trust, the borrower waives various rights, including the right to a court hearing?

Answer 3

True

Question 4

In VA regarding late charges, late charges may not exceed ________ of the installment due and cannot be collected unless the payment is not made within________ after the due date.

Answer 4

5%

7 calendar days

Question 5

T/F. Virginia law does NOT permit lenders to charge a loan origination fee for granting a loan?

Answer 5

False

Question 6

In VA regarding institutional financing, the lender generally requires a _________. The survey must be current (within the past _______), and the survey must be done by a ________.

Answer 6

house location survey

6 months

certified land surveyor

Question 7

T/F. In VA regarding HELOC’s, From the date of the recording of a credit line deed of trust, the lien has priority over all other deeds, conveyances, and other instruments or contracts in writing that are unrecorded at that time and of which the note holder has no knowledge. The credit line deed of trust also has priority over judgment liens subsequently docketed?

Answer 7

True. However, if a judgment creditor gives notice to the note holder at the address indicated on the credit line deed of trust, the deed of trust has no priority over the judgment for any advances or extensions of credit subsequently made under the deed of trust.

Question 8

Most HELOCs are __________. An increasing number, however, are first mortgages. Using a HELOC as a substitute for a first mortgage is risky. Because the balance of a HELOC may change from day to day, depending on draws and repayments, interest on a HELOC is calculated ________ rather than monthly.

Answer 8

2nd mortgages

daily

Question 9

Due on Sale Clause (Alienation Clause)

Answer 9

Clause that states the loan is NOT assumable unless the lender chooses to waive the due-on-sale clause.

Question 10

Purchase-Money Financing

Answer 10

A form of seller financing which occurs when a mortgage or deed of trust is given as part of the purchaser’s consideration for the purchase of real property. Purchase-money financing may be provided by a third party such as an institutional lender or the seller. When provided by the seller, it commonly refers to a seller “taking back” a second trust in lieu of cash to make up the difference between the first trust from the institutional lender and the selling price for the property.

Question 11

Deferred Purchase-Money Deed of Trust

Answer 11

Sellers having no immediate need to take the full amount of the proceeds of a sale may choose to defer the income

Question 12

The ________ was created in _____ by the ________. Its purpose is to make housing more affordable for those with low or moderate incomes. Currently, VHDA is self-supporting, and funding for its programs is provided by the private sector through the sales of ________. Federal and state tax dollars are not used to fund VHDA lending programs.

A board of commissioners composed of ________ appointed by the ________ provides for oversight.

Answer 12

Virginia Housing Development Authority (VHDA)

1972

Virginia General Assembly

VHDA bonds

10 members

governor

Question 13

What is the Virginia Housing Development Authority’s(VHDA) purpose?

Answer 13

Its purpose is to make housing more affordable for those with low or moderate incomes.

Question 14

The Virginia Housing Partnership Fund?

Answer 14

Managed by the VHDA and was created to provide decent residential housing at prices that low and moderate income families can afford.

Question 15

What are 4 basic services of the Virginia Housing Development Authority (VHDA)?

Answer 15

1) Single-Family Loan Programs
2) Multi-Family Loan Products
3) Administration of the federal low-income housing Tax Credit Program
4) Administration of the federal Section 8 rent subsidy programs.

Question 16

In regards to foreclosures in VA, what are three ways to foreclose a deed of trust in Virginia?

Answer 16

1) Decree of court (strict foreclosure)
2) Conveyance of the property by the grantors and the trustees to the beneficiary in consideration of the debt (“deed in lieu of foreclosure”)
3) Sale by the trustee pursuant to a power of sale (“trustee sale”)

Question 17

T/F. In VA regarding foreclosure, bankruptcy of the mortgagor, person who has borrowed money, is an automatic stay of foreclosure?

Answer 17

True

Question 18

Regarding foreclosure of VA and FHA loans, in comparison to normal loans, VA and FHA loans are subject to certain additional requirements. What are these 3 requirements of foreclosure?

Answer 18

1) loan must have been in default for three months prior to the commencement of foreclosure
2) notices must be given to both the debtor and the insuring agency
3) the lender must take affirmative steps to avoid foreclosure

Question 19

Virginia is a __________ state. The _______ is the agent for both the ________ (the homeowner) and the _________ (the lender) and is bound to act impartially between them. The trustee is obliged to seek every possible advantage to the trust in the course of any sale. This includes using all reasonable diligence to obtain the best price possible

Answer 19

title theory

trustee

grantor

beneficiary

Question 20

Describe a title theory state?

Answer 20

• Legal title to the property is vested in the trustee for the benefit of the note holder.
• The trustee can act only in a manner authorized by statute or the express or implied terms of the trust.

Question 21

T/F. In VA regarding foreclosures, the rule of caveat emptor (“let the buyer beware”) does NOT apply in foreclosure sales, with regard to both the quality of title and the condition of the property.

Answer 21

False

Question 22

Regarding advertisements of foreclosures in VA, the terms of the _________ will determine how the property is advertised. Even if the number of advertisements meets the terms, Virginia law provides that the sale may take place no earlier than the _________ after the___________ and no later than ________ after the __________.

Answer 22

deed of trust

8th day

1st advertisement

30 days

last advertisement

Question 23

T/F. Regarding trustee’s duties, the trustee is bound by law to secure the highest possible price for the property?

Answer 23

True

Question 24

T/F. In regards to foreclosure and auctions, unless the deed of trust states otherwise, the sale is held at the property itself, near the circuit court building, or at some other place selected by the trustee in the city or county in which the property is located?

Answer 24

True

Question 25

In regards to usury laws in Virginia, what is the legal limit on the amont of interest charged on loans secured by a first deed of trust on real estate?

Answer 25

There is NO legal limit in VA, if that arrangement is properly stated in the instrument or separate agreement.

Question 26

T/F. An interest rate that varies in accordance with any exterior standard or that cannot be ascertained from the contract without reference to exterior circumstances or documents is enforceable as agreed in the signed contract?

Answer 26

True