Unit 2 Flashcards
explain the purpose of the Real Estate License Act of 2000
Essentially to not fuck shit up. real estate agents need to know it so they know the proper way to do things
Identify the various categories of licensure
broker, managing broker, sponsoring broker
Distinguish the processes involved in sponsoring and terminating a license (unit 14)
Sponsoring: after the test is taken the person is given a blank sponsor card at the testing site with the person’s picture on it. When completed by a sponsoring broker, this sponsor card is valid for 45 days while the wall license and pocket card are being processed. The sponsoring broker then signs the card, makes a copy for the new licensee and for office records and sends the original to IDFPR. That card acts as a temporary license until the real license is being processed.
Terminating:
Describe the actions that result in the discipline against a licensee
fucking a lot dude like:
*making a false or fraudulent representation in attempting to obtain or renew a license
*making any substantial misrepresentation or untruthful advertising
*making any false promises to influence, persuade, or induce
*
Distinguish between lien, title, and intermediate theories
Title Theory: the mortgagor actually gives legal title tot he mortgagee.
Lien Theory: the mortgagor/borrower holds both legal and equitable title.
intermediate mortgage theory: based on the principles of title-theory states but still requiring the mortgagee to formally foreclose to obtain legal title.
Identify the basic provision of security and debt instruments: promissory notes, mortgage documents, deeds of trust, and land contracts
Promissory note: the borrower’s personal promise to repay a debt according to agreed terms.
Deeds of trust/mortgage document: an instrument that grants a trustee under a land trust full power to sell, mortgage and subdivide a parcel of real estate. The beneficiary controls the trustee’s use of these powers under the provisions of the trust agreement
land contracts: a contract for the sale of real estate whereby the purchase price is paid in periodic installments by the purchaser, who is in possession of the property even though title is retained by the seller until all payments are received in full.
Explain the procedures involved in a foreclosure
nonjudicial: procedures to be used when the security instrument contains a power of sale clause. No court action is required
Judicial: allows the property to be sold by court order after the mortgagee has given sufficient public notice.
strict foreclosure: appropriate notice must first be given to the delinquent borrower. the court establishes a deadline by which the balance of the defaulted debt must be paid in full. If the borrower does not pay off the loan by that date, the court simply awards full legal title to the lender. No sale takes place.
Identify the types of institutions in the primary and secondary mortgage markets
primary: Thrifts, savings associations, commercial banks, insurance companies, credit unions, pension funds, endowment funds, investment group financing, mortgage banking companies,mortgage brokers
Secondary: Fannie Mae, Freddie Mac, Ginnie Mae
Identify the types of institutions in the primary and secondary mortgage markets
primary: Thrifts, savings associations, commercial banks, insurance companies, credit unions, pension funds, endowment funds, investment group financing, mortgage banking companies,mortgage brokers
Secondary: Fannie Mae, Freddie Mac, Ginnie Mae
Distinguish among difference financing techniques:
Straight loan: Non Amortized loan that essentially divides the loan into ttwo amounts to be paid off separately.
amortized loan: Each payment partially pays off both principal and interest
Fully amortized loan: The mortgagor pays a constant amount, usually monthly. The lender credits each payment first to the interest due, then the principal amount of the loan
Adjustable rate mortgages: Originate at one rate of interest then fluctuate up or down during the loan term, based on some objective economic indicator
Explain the requirements and qualifications for conventional, FHA, and VA loan programs
conventional: Good credit score, good credit history
FHA: qualifying ratios between 31% and 43%,
VA: The VA doesn’t normally lend money. It guarantees loans made by lending institutions approved by the agency.
Describe the various types of financing available to real estate purchasers
Purchase money mortgage: a note and mortgage created at the time or purchase when the seller agrees to finance all or part of the purchase price and consists of a first or junior lien, depending of whether prior mortgage liens exist
package loan: includes real and personal property
blanket loan: covers more than one parcel or lot
wraparound loan: enables a borrower with an existing mortgage or deed of trust loan to obtain additional financing from a second lender without paying off the first loan
open-end loan: secures a note executed by the borrower to the lender
construction loan:made to finance the construction of improvements on real estate such as homes, apartments, and office buildings.
sale-leaseback arrangements: used to finance large commercial or industrial properties.
buydown: a way to temporarily or permanently lower the initial interest rate on a mortgage or deed of trust loan.
home equity loan: provide a source of funds using the equity built up in a home.
describe the role of government financing regulations
regulates the lending practices of mortgage lenders through he Truth in Lending Act, the Equal Credit Opportunity Act, the Community Reinvestment Act, The Real Estate Settlement Procedures Act and the TILA and RESPA Integrated Disclosure Rule.
Identify the four types of leasehold estates
Estate for years: A leasehold estate for a defined period of time
Estate from Period to Period: The lease does not contain a specific expiration date
Estate at will: gives the tenant right to possess property with the landlord’s consent for an unspecified or uncertain term.
Estate at Sufferance: When a tenant who lawfully possessed real Property continues in possession of the premises without the landlord’s consent after the rights expire.
Describe the requirments and general conditions of a valid lease
Capacity to contract, legal objectives, offer and acceptance, Consideration
