Chapters 1-20 Real Estate Tax Loan Mortgage
This lesson covers real estate tax loan mortgage.
conforming/nonconforming loans
1. conforming: meet specified underwriting standards (maximum size of the loan, the loan documentation required, the maximum loan-to-value ratio, and whether or not insurance is require) -> can be used as collateral for agency mortgage backed security)
2. nonconforming: privately used mortgage passthrough securities that are issued by thirfts, commercial banks, and private conduits
conventional loan
The most common type of home loan. Refers to any standard home loan that is not insured or guaranteed by an agency o of the US government., Loan that is neither FHA nor VA; does not require insurance or guarantee, although today high LTV loans are made along with PMI (private mortgage insurance
discount points
Money paid when a loan is initially obtained which is considered prepaid interest and permanently lowers the interest rate. Also know as a buy down.
fannie mae
Federal National Mortgage Association A government-owned enterprise established to purchase any kind of mortgage loans in the secondary mortgage market from the primary lenders.
finance instruments
legal instruments that establish the rights and duties of all parties involved in transaction
freddie mac
Federal Home Loan Mortgage Corporation, A government sponsored enterprise established to purchase primarily conventional mortgage loans in the secondary market
ginnie mae
Government National Mortgage Association. A government agency that plays an important role in the secondary mortgage market. It guarantees mortgage-backed securities using FHA and VA loans as collateral. 15:242
grace period
A time period during which no finance charges will be added to your account.
home ownership and equity protection act (hoepa)
An act of Congress that addresses abusive, predatory practices in subprime lending and sets a trigger annual percentage rate (APR) and fee levels at which loans become subject to the law’s restrictions.
hypothecate
to make the property the security for a loan without giving up possession of it (as with a mortgage)
loan-to-value ratio
Relationship between amount of mortgage loan and value of the real estate being pledged as collateral
mortgage
a conditional conveyance of property as security for the repayment of a loan
mortgage insurance premium (mip)
Upfront insurance premium required by FHA-insured loans.
mortgagee
the lender, the person who accepts a mortgage
mortgagor
the person who gives a mortgage in return for money to be repaid
negative amortization
Occurs when the loan payment is not sufficient to cover the interest cost and results in the unpaid interest being added to the original balance, causing the loan amount to increase.
point
one percent of the loan amount. charged for any reason but mostly for buydowns
predatory lending
Any of a number of fraudulent, deceptive, discriminatory, or unfavorable lending practices. Many of these practices are illegal, while others are legal but not in the best interest of the borrowers.
private mortgage insurance (pmi)
Insurance offered by private companies that reimburses the lender for capital losses in the event of default by the borrower.
primary mortgage market
Mortgage market in which loans are originated; includes commercial banks, savings banks, mutual banks; the market that meets borrowers face to face
promissory note
a promise to pay a specified amount on demand or at a certain time
secondary mortgage market
Market for purchase and sale of existing mortgages; designed to provide greater liquidity for mortgages; generally does not deal directly with borrowers
securitization
The process of transforming loans or other financial assets into securities
acceleration clause
Clause in mortgage or deed of trust that can be enforced to make the entire debt payable immediately if borrower defaults
adjustable rate mortgage (arm)
a mortgage for which the interest rate changes in response to the movement of interest rates in the economy as a whole
alienation/due on sale clause
Says you must repay your mortgage if you sell your home to a new owner (loan is not assumable)
annual percentage rate (apr)
cost of credit expressed as a yearly percentage
blanket mortgage
A mortgage which covers more than one piece of real estate. Often used by a developer in the financing of undeveloped lots. Contains a partial release clause.
construction mortgage
A loan to finance the cost of constructing a building, usually providing that the loan funds will be advanced in installments as the work progresses.
debt-to income ratio
This is the percentage of gross monthly income that goes toward paying for your monthly housing expanse, alimony, child support, car payments, and other installment debts, and payments on revolving or open-ended accounts, such as credit cards.
default
loss resulting from failure of a debt to be paid
deficiency judgement
A personal judgement levied against the borrower when a foreclosure sale does not produce suffiecient funds to pay the mortgage back in full.
equitable right of redemption
The right of a defaulted property owner to recover the property prior to its sale by paying the appropriate fees and charges
graduate payment mortgage
starts with unusually low payments that rise over several years to a fixed payment
home equity line of credit/home equity loan
WORKS LIKE A CREDIT CARD. THE HOMEOWNER BORROWS UP TO A CERTAIN AMOUNT FOR THE LIFE OF THE LOAN, WITH THE TIME LIMIT SET BY THE LENDER. DURING THAT TIME, THE BORROWER CAN WITHDRAW MONEY AS IT IS NEEDED. AS THE PRINCIPAL IS REDUCED, THE CREDIT REVOLVES, AND IT CAN BE USED AGAIN, a loan secured by equity value in the borrower’s home
interest rate cap
On adjustable rate mortgage, limit on the amount that the interest rate increase each adjustment period.
judicial foreclosure
allows the property to be sold by court order after the mortgagee has given sufficient public notice
mortgage banker
A financial middleman who, in addition to bringing the borrower and the lender together, makes loans, packages them, and sells the packages to both primary and secondary investors. Also services loans.
mortgage broker
Firm that finds lenders willing to grant the mortgage loans under the desired terms.
mortgage loan originator
any individual that takes or negotiates the terms of a mortgage loan.
open-end mortgage
A loan containing a clause which allows the mortgagor to borrow additional money without rewriting the mortgage.
package mortgage
Home mortgage loans that include funds for items of personal property such as a range, dishwasher, refrigerator, and furnishings.
payment-to-income ratio
monthly payments to monthly income; measures applicant’s ability to make monthly payments; lower ratio=greater likelihood to meet payments
pre-approval/pre-qualification
before you visit a dealer, a loan officer determines how much money he/she would be willing to lend you, The process of being pre-approved by a lender to assume a specific mortgage amount.
prepayment penalty clause
Requires the borrower to pay a penalty if the mortgage is repaid in full within a certain period.
purchase money mortgage
A mortgage given by the seller to the buyer to cover all or part of the sale price. Seller financing.
regulation z
provision extending truth-in-lending disclosures to consumers
release clause
When a blanket loan has been given, this clause will allow part of the property to be removed as security for the loan when certain requirements have been met, sometimes called a partial release clause.
reverse equity mortgage
From HUD and is federally insured private loan, making it safe for both the senior borrower and lender
sale-and-leaseback financing
a method for financing commercial or industrial properties in which a company constructs the building then becomes a tenant by selling the building to an investor
straight mortgage
ALSO KNOWN AS A TERM MORTGAGE, IS USUALLY A SHORT-TERM OR MEDIUM-TERM LOAN REQUIRING THE PAYMENT OF INTEREST ONLY DURING ITS TERM. IT’S COMMON WITH CONSTRUCTION LOANS.
subordination agreement
A written agreement between holders of liens on a property that changes the priority of mortgage, judgment, and other liens under certain circumstances.
truth-in-lending act (tila)
A federal law requiring lenders to provide residential loan applicants with estimates of the total finance charges and the annual percentage rate (APR).
wraparound mortgage
When a seller keeps the existing loan and continues to pay on it while giving the buyer another mortgage loan.
architectural review board
Determines the effects a proposed building or other structure will have on the area.
building department
the division of a business responsible for building and maintaining the physical plant
city council
. a municipal body that can pass ordinances and appropriate funds etc., a group of elected people who govern a city
conservation advisory council
Studies matters affecting the environment, preservation, development and use of a city’s natural and physical features.
county health department
A human service and regulatory agency responsible for public health programs and approving septic and other sanitary systems.
historic preservation office
Identifies, evaluates, preserves, and revitalizes any given city’s historic, archaeological and cultural resources.
landmarks preservation commission
NYC agency responsible for identifying and designating the city’s landmarks
municipal engineer’s office
the municipal agency responsible for the planning design and construction of ny public works facilities and projects
planning board
, Holds public hearings, investigate solutions for planning issues at hand, and makes recommendations to appropriate legislative bodies.
planning department
A government body that plans for a community’s future with regard to space, land use, water supplies, et
real property tax
taxes based on value of real estate property; government sends property owner a bill for this tax
receiver of taxes
Party or entity charged with the collection of real property taxes on all properties contained within the assessment roll.
tax assessor
an official who evaluates property for the purpose of taxing it
village board of trustees
serves as the primary governing bodies of ny villages
zoning board of appeals
A board that must he formed when the local legislature adopts a new zoning law. 19:343
actual cash value (acv)
The required amount to pay damages or for property loss, which is calculated based on the property’s current replacement value minus depreciation.
deductible
a clause in an insurance policy that relieves the insurer of responsibility to pay the initial loss up to a stated amount
direct loss
Damage to property in which the proximate cause of the loss is an insured peril. Example: Fire damage to an insured residence, or water damage to the residence resulting from a ruptured water pipe.
indirect loss
occurs as a consequence of the direct loss; fire would be a direct loss; loss of rental dollars due to fire would be the indirect loss
liability
the state of being legally obliged and responsible
liability insurance
insurance that provides protection from claims arising from injuries or damage to other people or property
monoline policy
Type of insurance policy designed to cover one specific area
mortgage clause
A provision in a written mortgage, or note which in the event of default the whole amount of the principle becomes due and payable.
package policy
An insurance policy that covers more than one type of insurance.
peril
a state of danger involving risk
property insurance
insurance that covers for losses resulting from perils such as fire, theft, or windstorm
replacement cost basis
The cost, for insurance purposes, of replacing property without deduction for depreciation.
umbrella policy
provides broad coverage for an insured ‘s liability over and above liability covered by underlying contracts
ad valorem
in proportion to the estimated value of the goods taxed
administrative review
A prerequisite to judicial review and is initiated when a taxpayer files a grievance with the assessing unit.
appropriation
the authorization of the expenditure of funds and the source of those funds. 2. taking private property for public use through the governments power of eminent domain aka condemnation
approved assessing unit
a governmental taxing authority that has completed a property reevaluation and has been certified by the New York State Office of Real Property Services.
assessed value
The value of an asset determined by tax authorities for the purpose of calculating taxes
assessing unit
City, town, or county
department of assessment with the power to
assess real property.
assessment
percentage of a property’s market value
assessment roll
a list of all taxable property showing the assessed value of each parcel; establishes the tax base
board of assessment review
a group that does assessmemts
equalization
The raising or lowering of assessed values for tax purposes in a particular county or taxing district to make them equal to assessments in other countries or districts
equitable right of redemption
The right of a defaulted property owner to recover the property prior to its sale by paying the appropriate fees and charges
homestead
dwelling that is usually a farmhouse and adjoining land
in rem
Against a thing. A legal proceeding instituted to obtain decrees of judgments against property.
judicial review
..review by a court of law of actions of a government official or entity or of some other legally appointed person or body or the review by an appellate court of the decision of a trial court
level of assessment
the ratio of total assessed value to the municipalitys total market value.
lien
legal claim until a debt on it is repaid
non-homestead
Not used as the owner’s primary residence.
reassessment
the new assessment of a property
special assessment
an additional tax levied on private property for public improvements that enhance the value of the property
special assessment districts
Geographic areas designated to pay for infrastructure cost for a specific project. Such as side walks, traffic lights, curbs ect.
statutory right of redemption
operty after its sale by paying the appropriate fees and charges.
tax levy
Authorized action taken by a governmental organization to collect taxes by legal authority
tentative assessment roll
Shows the level of assessment used and the proposed assessed value of each property.
true tax
The amount of property tax that would be assessed against a specific property before any exemptions held by the present owner are subtracted.
active income
Includes earnings received from any of the following: wages, salaries, commissions, bonuses, and other payments for services rendered.