Real Estate Express- Finance Study Guide

Federal Farm Loan Act of 1916

A United States federal law which established 12 regional Farm Loan Banks to serve members of Farm Loan Associations. Farmers could borrow up to 50% of the value of their land and 20% of the value of their improvements

disintermediation

When depositors invest their own funds directly

Public Housing Development program

provides Federal grants to local public housing authorities (PHAs) to develop housing for low-income families that cannot afford housing in the private market.

Texas State Affordable Housing Corporation (TSAHC)

provides a variety of affordable housing programs that range from First-time Homebuyer Programs for individuals and families to assisting in the development of affordable multifamily housing.

What is ECOA?

A law prohibiting lending discrimination

What does the Mortgage Credit Certificate (MCC) Program do?

Allows qualified homebuyers to take a portion of the annual interest paid on the mortgage as a tax credit, up to $2,000, each year they occupy the home as their principal residence.

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.

What kinds of costs are allowed by the Texas Industry Development (TID) Loan Program?

Costs include acquisition, construction, reconstruction, improvement and expansion of land, buildings and improvements (including rights of way, property rights and easements), machinery and equipment, financing charges, necessary reserve funds, engineering and legal services.

What are the three common ways to get title assurance?

Deed Abstract and opinion Title insurance

What does ECOA prohibit?

Discrimination against applicants on the basis of race, color, religion, national origin, sex, marital status, age or dependency on public assistance

Which type of leasehold estate has a definite beginning and ending date?

Estate for years

1. What is the purpose of the Farm Credit System and what agency regulates their activities?

Farm Credit System serves the unique financial needs of farmers, ranchers, producers/harvesters of agricultural products and rural homeowners by providing loans for real estate, operating costs and rural homes. They also offer credit-related life insurance and crop insurance. FCS is regulated by the Farm Credit Administration.

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

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.

Who are the three major players in the secondary mortgage market?

Ginnie Mae Fannie Mae Freddie Mac

What Act, in 1974, added sex to the list of prohibited discriminations under the Fair Housing Act?

Housing and Community Development Act

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.

What was the first mortgage-backed security called and why was it called this?

It was called a pass-through security because the monthly principal and interest payments were collected from the borrowers and then "passed through" to the investors.

4. What is Ginnie Mae's most heavily traded product and what is the minimum pool size?

MBS is the most heavily-traded MBS product, based on single-family pools. The minimum pool size is $1 million.

3. What are the three home loan programs offered by TSAHC?

Professional Educators Program-Designed for a person defined as a full time Classroom Teacher, Teacher Aide, School Librarian, School Nurse or School Counselor employed by a public school district in the state of Texas; or a full time faculty member of either an undergraduate or graduate professional nursing or allied health program in the State of Texas Homes for Texas Heroes Program-Program - Designed for a person defined as a full time, paid Firefighter, Emergency Medical Services Personnel, Peace Officer, Corrections Officer, Juvenile Corrections Officer, County Jailer, or a Public Security Officer working in the State of Texas Home Sweet Texas Home Loan Program-Designed for an individual at or below 80% of the Area Median Family Income (AMFI)

What did the Colonias Fair Land Sales Act do?

Protects those who must rely on contracts for deed to finance property by requiring developers to record the contract and counties to keep a record of contracts for deed. It also requires developers to provide a statement of available services, such as water, wastewater and electricity, and whether the property is located in a floodplain.

When does supply and demand usually improve for a buyer?

Recession

Why are the savings of individuals important to the economy?

Savings become the eventual source of funds for borrowing.

List three major HUD activities.

Supervising the Federal Housing Administration. Regulating Ginnie Mae. Overseeing (but not regulating) the operations of Freddie Mac and Fannie Mae.

2. What kinds of programs does USDA Rural Development support?

Supports essential public facilities and services, such as water and sewer systems, housing, health clinics, emergency service facilities and electric and telephone service. Promotes economic development by supporting loans to businesses through banks and community-managed lending pools. Offers technical assistance and information to help agricultural and other cooperatives get started and improve the effectiveness of their member services

Which Board is responsible to license, certify, and regulate real estate appraisers in Texas under state and federal laws?

Texas Appraiser Licensing and Certification Board (TALCB)

To what does the Interstate Land Sales Act apply and what does it require?

The Act applies to subdivisions of undeveloped land sold or offered for sale or lease through interstate commerce. It requires submission of a statement of record describing a proposed subdivision in detail, accompanied by maps, contract documents and certifications that fully disclose relevant information about the subdivision.

What was the first law to prohibit discrimination in housing based on race?

The Civil Rights Act of 1866

Which of the following limits the effect a bank or thrift institution failure has on our nation's economy and the financial system?

The Federal Deposit Insurance Corporation

Banks are required to keep a certain amount of money in reserve. If their reserves are getting low, they may borrow money from

The Federal Reserve

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)

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.

intermediation

The act of pooling and investing the money of many people

What is the right to rescind and what is not covered by this rule?

The borrower has a right to cancel the transaction by notifying the lender within three days. This does not apply to residential first mortgage loans

Why did the federal government establish Fannie Mae?

The federal government established Fannie Mae to increase the flow of mortgage money by creating a secondary market to purchase Federal Housing Administration (FHA)-insured mortgages.

What is the role of the secondary mortgage market?

The secondary mortgage market consists of holding warehouse agencies that purchase a number of mortgage loans and assemble them into one or more packages of loans for resale to investors.

Financial Institutions Reform, Recovery and Enforcement Act (FIRREA)- 1989

This legislation provided government funds to insolvent savings and loan associations and mandated massive changes in the examination and supervision of savings and loans. 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. These agencies include: • 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)

Why did Congress pass the Community Reinvestment Act?

To prevent redlining and to encourage banks and thrifts to help meet the credit needs of all segments of their communities, including low- and moderate-income neighborhoods.

Farm Credit Administration (FCA)

an independent federal agency responsible for regulating and examining the banks, associations, and related entities of the Farm Credit System (FCS).

Texas Military Value Revolving Loan Fund

assists defense communities in enhancing the military value of a military facility in their area, provides financial assistance to defense communities for job-creating economic development projects, and provides financial assistance to defense communities for an infrastructure project to accommodate new or expanded military missions resulting from a base realignment and closure.

Interstate Land Sales Full Disclosure Act (Title XIV of the Housing and Urban Development Act of 1968)

authorizes a nationwide program of registration of subdivisions marketed in interstate commerce. The Act requires submission of a statement of record describing a proposed subdivision in detail, accompanied by maps, contract documents and certifications designed to fully disclose relevant information about the subdivision.

Office of the Comptroller of the Currency (OCC)

charters, regulates, and supervises all national banks

State of Texas Industrial Revenue Bond Program (IRB)

designed to provide tax-exempt or taxable financing for eligible industrial or manufacturing projects.

Community Development Block Grant Program (CDBG)

flexible program that provides communities with resources to address a wide range of unique community development needs. Begun in 1974, the CDBG program is one of the longest continuously run programs at HUD. The CDBG program provides annual grants on a formula basis to general units of local government and States

US Department of Agriculture Rural Development Program (USDA Rural Development)

helps rural individuals, communities and businesses obtain financial and technical assistance to address their diverse and unique needs. USDA Rural Development programs support such essential public facilities and services as water and sewer systems, housing, health clinics, emergency service facilities and electric and telephone service.

Hurricane Discount Home Sales

offers HUD homes for sale at a discount to evacuees displaced by Hurricanes Katrina, Rita or Wilma. Evacuees can purchase these homes at a 10% discount from the appraised value of the home. In addition, HUD will pay up to 5% of the purchaser's reasonable and customary closing costs.

Good Neighbor Next Door program

offers a discount of 50% from the list price of a home to law enforcement officers, pre-Kindergarten through 12th grade teachers, and firefighters/emergency medical technicians. In return, the buyer must commit to live in the property for 36 months as his or her sole residence.

Indian Housing Loan Guarantee Program

offers home ownership, property rehabilitation, and new construction opportunities for eligible tribes, Indian Housing Authorities and Native American individuals and families wanting to own a home on trust land or land located in an approved Indian or Alaska Native area.

The Department of the Treasury is organized into two major components the Departmental offices and the:

operating bureaus

United States Treasury

plays a critical role in maintaining the economic balance of our country by managing the debt of the entire federal government

Texas Industry Development (TID) Loan Program

supports eligible tax-exempt public purpose projects that stimulate economic development within the community.

Department of Housing and Urban Development (HUD)

the principal federal agency responsible for programs concerned with America's housing needs, fair housing opportunities, and improvement and development of our communities. HUD programs include urban renewal, public housing, model cities, rehabilitation loans, FHA-subsidy programs and water and sewer grants.

The process of assessing the lender's risk in giving a loan is called

underwriting

Farm Credit System (FCS)

was inaugurated under the Federal Farm Loan Act. It is designed to serve the unique financial needs of farmers, ranchers, producers and harvesters of agricultural products. It also assists rural homeowners and owners of some types of farm-related businesses. The banks in the FCS provide loans for real estate, operating costs and rural homes. They also offer credit-related life insurance and crop insurance.

Which of the following are banks prohibited from doing with high-cost mortgages?

• Issue a prepayment penalty • Implement a balloon payment • Issue a late fee of more than 4%