laura

What is RESPA?

(Real Estate Settlement Procedures Act) prohibits licensees from giving or receiving referral or finder fees from or to mortgage brokers, title reps, or any other settlement provider.

4 essentials of a valid contract

1. consideration 2. offer and acceptance 3. capable parties 4. lawful object

What are the three different methods for estimating value within the income approach ?

1.the capitalization method 2.the gross income multiplier 3.the gross rent multiplier.

Residential real estate transactions involving properties built before ________ must provide a lead-based paint disclosure and EPA- produced lead safety pamphlet.

1978

All lenders have different underwriting standards, but traditionally, the housing debt-to-income ratio has been ______%, with a total debt-to-income ratio of ______

25-28, 33- 36%

adjustable rate mortgage

A loan with a rate that fluctuates based on the economic index to which it is tied

right-of-way

A right of way provides a pass-through to other property but doesn't allow usage of the land.

avulsion

A sudden loss of land by a swift, large-scale change in water flow

Simon is looking for a facility for a large grocery distribution operation. He found two options, one of which is offering him a triple net lease and the other an absolute net lease. Why is his attorney arguing against the latter?

An absolute net lease has no legal defenses if Simon fails to pay. Simon has absolutely no legal recourse with an absolute net lease. With an absolute lease, Simon is still on the line for payment, even if the building is damaged or destroyed through no fault of his own. Question 11 of 100

Shannon doesn't understand why her agent wants her to add a contingency to her purchase offer. Her agent, Scott, explains that the property is in a transitional neighborhood, and it might be overpriced. What type of contingency is Scott recommending?

Appraisal An appraisal contingency gives the buyer the opportunity to renegotiate the price if the appraisal comes in less than the agreed-upon purchase price. This is an important contingency in an area where values are shifting.

In the sales comparison approach, using comparables that are five and 15 years old when appraising a subject that is 10 years old is an example of what?

Bracketing Bracketing is a process in which an appraiser determines a probable range of values for a property by comparing a group of comparable sales to the subject. The appraiser attempts to include both superior and inferior units of comparison such as age, transaction price, etc.

After switching careers, Alice just graduated from culinary school and is looking to purchase a house. Until she gets her feet wet with her new job, she knows the cost of living with her mortgage is going to be tight. Which mortgage might help her manage her expenses each month?

Budget Budget mortgages help borrowers "budget" their expenses since the interest, principal, taxes, and insurance are all included in the monthly payment.

Sam has a mortgage payment that includes his property taxes and property insurance. What type of mortgage does Sam have?

Budget Sam has a budget mortgage, so named because it helps borrowers budget their monthly expenses by combining them into one payment.

bulk zoning

Bulk zoning regulates the density of a given area by requiring certain building height limitations, lot width, setback requirements, etc. Bulk zoning applies to both residential and commercial zoning.Bulk zoning also addresses the floor-to-area ratio, known as FAR. A higher ratio indicates denser construction (typical in urban areas), and a lower ratio indicates less density.

The Baxters are looking at a $425,000 home near Camelback Mountain in Phoenix, Arizona. They have $90,000 in savings to use as a down payment. What loan type(s) would likely be the best option for them?

Conventional A $90,000 down payment would be a little more than 20% down ($90,000 ÷ $425,000 = 0.212, or 21.2%). The Baxters should qualify for a conventional loan with that much to put down on the home, and will avoid having to buy mortgage insurance.

Replacement Cost

Cost to build a functionally equivalent improvement

State usury laws are typically not applicable to what type of lending?

Credit cards, retail installment contracts, and consumer leases are typically exempt from usury laws.

The Richards' farm is located on a 10-acre parcel of land, which is very rare to come by in their area. However, the house is rundown and in need of many repairs. Buyers in the area looking for a move-in ready home would need to either look elsewhere or wait several months for the home to be renovated. Which factors are negatively impacting the value of the Richards' property?

Demand and utility Although large parcels in the area are scarce, the low demand of buyers willing to buy and wait to live in a property that needs significant repairs is affecting the value.

The Truth in Lending Act requires lenders to make certain ______ to consumers.

Disclosures

What are the two categories of comparison when evaluating comparables to a subject property in the market comparison approach?

Elements and units There are two categories of comparison: elements, which look at physical and locational characteristics, and units, which look at the numbers.

At the federal level, the Sunshine Act is part of the ...

Freedom of Information Act (FOIA)

Conventional Loan

From sources other than federal agencies, such as commercial banks. Not government insured. Higher interest rates, but typically more flexible terms

erosion

Gradual loss of land due to a natural force

Home Mortgage Disclosure Act

Home Mortgage Disclosure Act The key purpose of HMDA is to provide the public and elected officials with sufficient information to enable them to determine whether financial institutions are fulfilling their obligations to serve the housing needs of the communities in which they're located.

Prior to the ______, there was no legal protection for women who endured sexual harassment from landlords and sellers when they attempted to obtain housing.

Housing and Community Development Act of 1974

Katherine is purchasing a second home as an investment/vacation property. She has a large down payment, and the seller is financing the rest of the purchase. In a seller-financed transaction, the _____ and _____ aren't required.

In a seller-financed transaction, the LE(loan estimate) and CD (closing disclosure) aren't required. Some other form of statement may be prepared to show the buyer and the seller their respective closing figures.

What purpose does bulk zoning serve?

It restricts building density.

What's one benefit of a rural development loan?

Its optional longer term means a lower monthly payment.

What's the relationship between the Loan Estimate and the Closing Disclosure?

Lenders issue the Loan Estimate at application, and Closing Disclosure figures should be similar to the loan estimate. Lenders first issue the Loan Estimate; borrowers can compare the Closing Disclosure, issued before closing, to the estimate's figures.

Marsha's title insurance policy was issued on closing day, June 18. The policy lists the standard exclusions as well as requirements for the company to issue the policy, such as paying off existing recorded liens. Which of these will NOT be addressed in the schedule of exceptions? -The local cable company's easement through the property for underground wiring. Marsha disclosed this to the title company. -Karen has an unrecorded lease on the property. -Marsha's second mortgage on the property, which was properly recorded in January. -Smith and Martin Building and Rehab files a mechanic's lien on June 18.

Marsha's second mortgage on the property, which was properly recorded in January. Title insurance typically covers events or claims filed on the public record before the title insurance policy's effective date but excludes disclosed and undisclosed easements.

triple net lease

NNN: he tenant is paying all for property taxes, insurance, and maintenance along with the rent

alluvion

New deposits of land that are the result of accretion

Who can enforce an option contract?

Only the optionee Only an optionee (buyer) can enforce an option contract. Because an option contract is a unilateral contract, only the optionor (seller) is bound by it.

What might the government do if property owners fail to pay taxes on their property?

Place a lien on the property. Unpaid taxes become a lien on real estate.

What does PITI stand for?

Principal, interest, taxes, insurance

Tammy and Reginald bought a house with a gas line easement on the property. An easement like this one placed by the utility company is an example of a ________.

Private land control Private land controls include conditions, covenants, and restrictions (CC&Rs), HOA or subdivision regulations, liens, and easements.

accretion

Process by which water carries rock, sand, and soil and causes land build-up

A requirement that all property owners in a subdivision have a six-foot privacy fence surrounding their entire property is an example of a ______.

Restrictive covenant

Capital gains fall into which stage of the property ownership life cycle?

Reversion Sellers may be liable for capital gains tax upon the reversion (sale) of property they own.

Margaret isn't ready to buy Jill's property, but she pays Jill a fee that guarantees she'll be notified if another buyer appears. If another buyer does make an offer, Margaret has the opportunity to purchase at the price and terms of the offer. Margaret has a(n) ______ on Jill's property.

Right of first refusal Right of first refusal gives Margaret, as the right holder, the opportunity to be notified if another buyer makes an offer on a specific property, and to buy the property herself if she still wants it at that time.

Two essential elements of a deed are ______.

Signature of the grantor and habendum clause Only the grantor's signature is required, not the grantee's. The habendum clause is required only if the deed is conveying less than a fee simple estate.

Simon is looking for a facility for a large grocery distribution operation. He found two options, one of which is offering him a triple net lease and the other an absolute net lease. Why is his attorney arguing against the latter?

Simon has absolutely no legal recourse with an absolute net lease. With an absolute lease, Simon is still on the line for payment, even if the building is damaged or destroyed through no fault of his own.

Nellie and Victor own a suburban ranch home and fell behind on paying their property taxes when Victor lost his job last year. Victor is working again, but they still haven't saved enough to pay their back taxes. They're worried that the county may begin foreclosure proceedings. What type of lien is this?

Specific Property tax liens are specific, because they represent a lien against a specific piece of property.

Which act requires a permit for a construction project that is next to a wetland ?

The Clean Water Act

Home Mortgage Disclosure Act

The key purpose of HMDA is to provide the public and elected officials with sufficient information to enable them to determine whether financial institutions are fulfilling their obligations to serve the housing needs of the communities in which they're located.

Carly's closing on an REO property was suddenly delayed due to an internal audit. What does this mean?

The lender has requested a title audit to ensure that the foreclosure was properly handled.

Carly's closing on an REO property was suddenly delayed due to an internal audit. What does this mean?

The lender has requested a title audit to ensure that the foreclosure was properly handled. Lenders may request a title audit to ensure that the bank that owns Carly's property performed the foreclosure correctly.

In an ideal real estate transaction, what happens to the buyer's earnest money?

The money goes toward the down payment on the property.

Farquhar bought a house at a foreclosure auction. A few weeks later, he was notified that he couldn't take possession of or title to the property. What likely happened?

The previous owners redeemed the property by paying all mortgage payments and fees. Some states have a statutory redemption period after a foreclosure sale within which the homeowners can pay all funds owed to the lender to retain ownership.

Annexation

The process of converting personal property to real property.

Why did the Civil Rights Act of 1866 fail to have an immediate impact on practice?

There was no agency put in place to enforce the Civil Rights Act of 1866. It would take another 100 years for real change to occur.

What's one of the ways that bulk zoning achieves its objectives?

Through setbacks One of the ways that bulk zoning achieves its objectives is through setbacks. Maximum building heights and clearance from other buildings help control building density, which is the aim of bulk zoning.

Jennings has received a Closing Disclosure from his lender. What's the purpose of this form?

To detail all costs Jennings will owe at closing

Rectangular survey system is regulated by who?

U.S. Department of the Interior, Bureau of Land Management

Damien and Sandy bought a lot with a condemned house. They want to tear it down and build a duplex, so that they can live on one side and rent out the other. Unfortunately, the property is zoned single-family residential. If they can make a case for economic hardship, they may apply for and be granted a ________.

Use variance

reliction

When water gradually recedes and uncovers new land

You're showing your buyers a house that clearly has a second-story addition. What important thing do you need to find out from the sellers?

Whether or not the addition was permitted It's important to find out whether the work was permitted, because if it weren't, there may be major repercussions.

The economic principle known as ______ means that the value of property today is impacted by the current value of the total expected future benefits.

anticipation

improvements are _____ ________ to land

artificial attachments

improvements are _____ ________ to land

artificial attachments; include items such as fencing, buildings, and walkways.)

The sales price, acquisition costs, and capital improvement costs (such as renovations or additions) of a property combine to make up what?

basis

Why is adjustable rate mortgage attracted ?

because of lower initial interest rate

due on sale

borrower sell the property and then entire balance of the mortgage due immediately

Which department typically decides which development projects require a permit or approval?

building department

____________ leave behind a sawdust-like material called frass when they burrow through wood.

carpenter ants

Property with ownership by more than one person is known as ______.

co-ownership

what's another word for land contract and the definition?

contract for deed: Buyer makes installment payments to the seller for a portion or all of the funds. The seller retains the title while buyer gets down payment.

PMI: Typically required on ________ loans when the down payment is less than ______% and loan-to-value ratio is in excess of ____%. Loans with higher LTVs don't conform to Fannie Mae/Freddie Mac guidelines, so a lender may require PMI to offset the risk.

conventional, 20%, 80

which method would an appraiser most likely use to appraise a newly build (1 year old) apartment building:

cost approach

reproduction cost

cost to build an exact replica of the subject, with the same materials and deficiencies.

When referring to private land use restrictions, fence height, additional structures, and architectural design are generally categorized under ______.

covenants

In an amortized loan, the interest portion of the mortgage payment generally ______ over the life of the loan.

decreases

recording the ___________ provides constructive notice of property ownership.

deed

what is an example of trade fixture?

dentist's chair

Littoral rights do not include the right to..

divert the water, contaminate it, or keep others from using the waterway. ex.Build a dam to create a bigger beach area on her frontage.

Recording a _________ provides constructive notice

document

The right of ___________ gives Elvin the right to refuse other interests in his own property.

exclusion

As part of an acknowledgement who must state the deed signing is voluntary before a public official?

grantor

What's one benefit of a rural development loan?

it has a lower monthly payment because of longer term

example of general lien

judgment liens, federal and state tax liens, and decedent's debts.

The first course of action for disputed home warranty claims is typically ____________. If this is unsuccessful, disputed claims will go to __________________.

mediation, arbitration

Three primary types of legal descriptions

metes and bounds, lot and block and rectangular government survey system

example of specific lien

mortgage liens, real property tax liens, mechanic's liens, special assessment liens, vendor and vendee liens, and HOA liens.

Specific liens affect what kind of property?

only real property

is trade fixture real or personal property?

personal property (it doesn't come with the land)

Which group ensures that community growth is controlled and orderly?

planning board

who develops the comprehensive master plan ?

planning board members

Lot and block uses ______ ___________ to develop a property's legal description.

plat reference

is appurtenance personal or real property?

real property

what is appurtenance?

runs with the land

If a landlord refuses to rent an apartment to two single women who live together, this is discrimination on the basis of what federally protected class?

sex

what is another word for replacement cost approach?

summation approach

Meetings held by planning and zoning boards must be open to the public because of ..

sunshine laws

The presence of mud tunnels in walls may indicate what?

termite infestation

Topography depicts ...

the physical features and contours of a project, including rocks, trees, and other vegetation, soil types.

Considering where pipelines and utilities can be located and their impact on the overall look in the subdivision are factors of ______.

topography

absolute net lease

triple net lease in which the tenant is also responsible for all building expenses and repairs, including roofing and structural repairs.

deed of trust: borrower is _______, lender is ________, third party is ________

trustor, beneficiary, trustee

gross income

what person makes

Net Income

what you bring home (gross income minus taxes and expense)

acceleration

whole debt is due if borrower defaults