RE Law MT 2

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  1. Four FActors that impact value
    • utility
    • scarcity
    • demand
    • transferability
  2. market approach to appriasial
    value based on the sales an purchases of similar properties
  3. cost approach
    value based on how much it would cost to build a comparable property
  4. Income approach
    value based on how much income can be generated from the property
  5. Levels of certification for appraisal
    • trainnee
    • licensed residential
    • certified residential
    • certified general
  6. What two documents create a mortgage
    • 1. Promissory Note: contract to repay the money borrowed
    • 2. Mortage: Real property is hypothecated as collateral to promissory note
  7. Usury
    When lener charges in excess of a state's maximum interest rate

    higher of 10% or 5% over CA Fed Reserve
  8. Penalities for Usurious rates
  9. Lien Theory
    • 1. Mortgage does not ransfer title to lender
    • 2. Lender has lien on property
    • 3. Lender must foreclose to take possesion
  10. Title Theory
    • 1. Mortgage TRANSFERS TITLE from borrower to lender
    • 2. Lender retains title for duration of mortgage

    borrower has right of posseion until default
  11. Types of a Mortage
    • 1. Apply for loan
    • 2. gather necessary docs
    • 3. underwriting
    • 4. approval/enial
    • 5. Lender may sell loan on 2nd market
  12. Government Backed Loan
    Gov. guarantees loan balance in event of default
  13. Wrap ARound Mortgage
    Seller keeps existing mortgage on property and extends to the buyer a junior mortgage that wraps around an dexists in addition to senior
  14. Piggyback Mortgage
    Borrower takes out two motgages for the same property
  15. Interest only
    borrower pays interest only for set period

    then payment amount increase to reduce principle
  16. Wrap-Around Mortgage 2.0
    Seller has orginal loan w/lender

    Seller creates junior loan w/ buyer
  17. Taking Subject-To a Mortgage
    Buyer purchases home, subject to existing mortgage

    • 1. buyer takes title
    • 2. seller liable for payment
    • 3. Lender can only enforce payment aginst the seller
  18. Assuming Existing Mortgage
    • 1. Buyer assumes the seller mortgage
    • 2. Buyer and Seller BOTH liable for debt
    • 3. Seller can avoid liability by having lender release them
  19. Deeds of Trust
    Benefiricary (lener)  Trustor (borrower)  Trustee (financial Institution)
  20. Regulation Z
    1. Requires Disclosures to consumer about terms and costs of loans

    Broker and lenders and brokers are subject to it

    Not apply to: business transaction, ag, organizational credit transactions, commercial transactions
  21. REquired Disclosures of Reg Z
    • 1. APR
    • 2. Finance charge
    • 3. Amount financed
    • 4. Payment terms
    • 5. Right of rescission (right to cancel second mort. or home equity line within 3 days of closing) (Does NOT apply to first mortgage)
  22. Failure to comply with Reg Z means
    Borrower has 3 yr right of recession on ALL mortgage types
  23. Trigger Terms in Lender ads that require extra disclosures
    • 1. amount or number of monthly payment
    • 2. amount of down payment
    • 3. length of loan
    • 4. finance chargers

    Must disclose amount for all trigger terms and the APR
  24. Installment Land Sale Contract
    • 1. Seller provides financing to buyer
    • 2. Seller retains title unitl debt is paid
  25. Requirements for Valid Deed
    • 1. in Writing
    • 2.Grantor/grantee clearly identifed
    • 3. granot w/ legal capacity
    • 4. property described
    • 5. express intent to immediately covey interest to grantee
    • 6. type of interest and rights given to grantee
    • 7. acknowledgement
    • 8. delievery and acceptance
  26. Indentifying Grantor and Grantee
    • proper spelling required
    • list aliases

    •  percentages of ownership must be listed
    • give status of grantee (married,unmarried)
  27. For legal capacity, what must grantors understand
    • 1. Legal significance of deed conveyance
    • 2. to whom property is conveyed
    • 3. nature and value of property

    * Grantee does not have to have legal capacity
  28. What must acknowledgment clause include
    • date
    • name of notary
    • person signin is same as identified in deed
  29. Constructive delivery
    Delivering grant through escrow

    Grantee releases all control of deed

    Grantor intends to relinquish al control of deed
  30. 3 way to create a presumption of delievery
    • 1. actual delivery
    • 2. Deed acknowledged by grantor before a notary
    • 3. Deed is recorded
  31. General Warranty Deed
    Grantor provides 6 warranties to grantee

    • 3 present:
    • seisin
    • right to convey
    • free from encumbrances

    • 3 future:
    • covenant of warranty
    • quiet enjoyment
    • further assurances
  32. Special Warranty Deed
    Same warranties as Warranty Deed except

    Warranties are limited to only the period of time grantor owned the property
  33. Grant Deed
    Has implied warranties:

    Granto has not previously conveyed property to someone other than grantee

    Property is free of undisclosed encumbrances made by GRANTOR
  34. Deed of Bargain and Sale
    Grantor IMPLIES that he has title to property

    Grantor make no other covenant to granteee
  35. Quitclaim Deed
    • 1. No warranties about tie
    • 2. Convey any rights grantor MAY HAVE
    • 3. no promoise of ACUTAL right or interest
  36. When is quitclaim used
    • 1. states with power title insurance companies
    • 2. gifting real property
    • 3. resolve questional title
  37. Judicial Trustee Deeds
    Judicial: result of the court ; NO warranties

    Trustee: result of foreclosing: Few, if any, warranties
  38. Priority of Title Methods
    • 1. pure race
    • 2. notice
    • 3. race.notice
  39. Pure Race System
    First to record take title
  40. Notice Statue
    LAST BFP (Purchaser w/o notice) purchaser keeps title
  41. Race/Notice System
    FIRST BFP that RECORDS (CA uses such system)
  42. Marketable Titel
    Title free form any liens or encumbrances (except ones buyer is aware of and accepts)
  43. Title must be marketable at....
  44. Methods of Providing Marketable Title
    • 1. Abstract of title w/ attorney's opinion
    • 2. purchase title insurance
    • 3. Torrens system for title registration
  45. Abstract of title
    • 1. opinon tracing chaing of title
    • NOT a guarantee but an opinon
  46. Title INsurance
    Protects only insured buyer name in policy for defects AT TIME of CLOSING

    Subsequent purchasers are not given protection
  47. ALTA
    Created Form most widely used by insurers

    • Protects Against:
    • 1. title held by another perons
    • 2. encumbrances
    • 3. unmarketable
    • 4. no right of access to property (ex. landlocked)
  48. Title INsurace exclused
    • 1. boundary disputes
    • 2. nonrecorded easements
    • 3. zoning restrictions
  49. Torrens System
    Use certification and deed to identify ownership
  50. Types of closing
    in Person

    • escrow (Western states and commercial transaction)
    • Escrow agent hold documents in trust unitl conditions are met
  51. RESPA
    1. Consumer info about costs of mortgage and closing

    2. Applies to:

    mortgage loans on 1-4 unit residential property (1st and 2nd mort., refinance, lines of credit) 

    • 3. Does not apply to :
    • business, commercial loans, or construction loans
  52. Disclosures Required for RESPA
    1. Special Info Bookelet within 3 days of loan application

    2. Good FAith Estimate: summary of chares expected as closing  (tolerance percentages that final costs can not exceed GFE)

    3. Whether it intends to service, assign, sell or transfer the loan

    4. HUD 1 statement:  Final summary of costs

    5. Escrow Statement: est. taxes, insruace, oand other charges incurred in first 12 months of loan
  53. RESPA Prohibitions
    • 1. Kickbacks of any type
    • 2. referals by someonw who owns a 1 percent or greater interest in company unless disclosed that:
    • referral has such interest
    • est. of charges
    • use of that provider is not mandatory
    • 3. Cannot require the use of specific title company
Card Set:
RE Law MT 2
2013-10-25 04:54:11

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