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Unit 9: Processing Real Estate Loans
Terms in this set (47)
abstract of title
is described as a synopsis of the current recorded condition of a property's title. Abstracting is the process of searching the records to accumulate information that is then distilled by the abstractor and presented as a formal report.
broker price opinion (BPO)
which is not to be confused with an appraisal. A BPO may consist of a drive-by appraisal plus available computer information.
The income approach measures the value of a property on the basis of its ability to generate income by capitalizing the net annual income using a current market
which is a combination of the HUD-1 Settlement Statement and the truth-in-lending disclosure. This form must be provided to the consumer at least three business days before settlement. The new forms are mandated for use as of August 1, 2015. Before that date, the GFE, TIL, and HUD-1 remain in use.
cloud on the title
Whether the abstract and opinion, the title insurance policy, or the Torrens system is used, in all cases a property's title is searched by an experienced abstractor, who prepares a report of those recorded documents that clearly affect the current quality of ownership. In addition, a survey is sometimes required. If a fault is found
estimating a property's value is based on the current value of its physical parts.
-an appraiser examines and evaluates the subject property, its improvements, amenities, and land value. This technique includes an estimation of the current cost to reproduce the improvements, an estimate of the improvements' depreciation, and an estimate of the land value as derived by using the direct sales comparison approach.
a lessening in value from physical deterioration, functional obsolescence, or economic obsolescence.
An example of physical deterioration is an older roof that may need patching or replacement.
Functional obsolescence describes a situation in which access to one bedroom is available only through an adjoining bedroom.
An example of economic obsolescence is a location downwind from a sewage treatment plant. The appraiser must include in the adjustments a consideration of the present physical condition of the improvements, their functional utility, and the effects of forces outside the property on its value.
direct sales comparison approach
is based on a comparison of the subject property with similar properties in the same locale that have sold recently. An appraiser searches the records of the county recorder's office and the various multiple listing services and maintains a comprehensive and current filing system.
of the property when more detail is not required. Drive-by appraising involves the appraiser literally driving by the property for a quick inspection to form an opinion of its outward appearance. If it appears to be well-kept and in good condition, it is assumed that the interior is also well-maintained, and the appraisal will be made on the square footage and location.
gross rent multiplier (GRM)
When estimating the value of single-family or small commercial and industrial properties,
he GRM is derived by locating comparable properties that have sold recently, then dividing their sales prices by a monthly market gross rent to derive the multiplier.
actually measures the present worth of a property's income stream based on an investor's required rate of return.
is the price a property would most likely bring if it were exposed for sale in the open market for a reasonable period.
suit to quiet title
In certain instances where clouds are difficult to remove by ordinary means, they will need to be cleared by the seller of the property or by the borrower's filing a
which includes a search of the records to determine all the interests in a property.
is issued, which includes the state as guarantor of the title in the event of a claim. A charge is made for this certificate to cover the costs of the search, and in some states, an additional premium is charged to provide a reserve fund to cover any contingent losses.
tri-merge credit report
value in exchange
value in use
weighted average/ reconcillation
which assigns percentages to illustrate the importance of one approach over another.
50% 30% 20%
Texas is a community property state, which may affect the information provided in which section of the Uniform Residential Loan Application?
The answer is Property Information and Purpose of Loan. This section of the form asks how title is to be held. In some states, the answer may be joint tenants, tenants in common, or tenants by the entirety. In Texas, the answer would be community property. Property may only be considered separate property if it is acquired before marriage, by gift, or by a will.
A nonprofit housing counseling organization should call their customer intake form any of the following EXCEPT
Most of the items on a Request for Verification of Deposit are filled in by the
The answer is lender and the bank. The lender fills in items 1-8 and the bank fills in 10-18. The borrower only provides a signature at item 9.
The lender may require a Request for Verification of Employment in all of the following situations EXCEPT
the employee is guaranteed 12 hours of overtime per week in the future.
there is part-time income to be added to full-time employment income.
funds have been received from more than one employer over the past two years.
when the borrower has an anticipated increase in the hourly rate.
Items that are included in the verification of employment that are not apparent to the lender on the borrower's pay stubs and W-2s include all of the following EXCEPT
reason for leaving past employment.
amount of overtime pay for the year.
probability of continued employment.
remarks regarding periods of time off.
Why do businesses pay to report their customers' payment histories to credit bureaus?
To be able to later purchase qualified lists to use in direct marketing campaigns
Payment history makes up what percentage of a credit score?
Why won't all credit accounts show up on a personal credit report
The answer is because not all credit grantors use the same credit reporting services. This is why consumers should check their credit reports with all three credit bureaus.
In order to raise her credit score, a consumer starts paying her credit card bills BEFORE even receiving them in the mail. Will this help her credit score?
No, because her creditor will not report her timely payments to the credit bureau.
Standard exceptions include:
restrictive covenants and deed restrictions; the survey exception (discrepancies, conflicts, or shortages in area) that can (and, for buyers should) be deleted for a fee; homestead, community, and survivorship rights; the exception for riparian rights, water rights, and tidelands; the tax exception, including rollback taxes; the mechanic's lien exception; the exception for leases and subordinate liens; the rights of parties in possession; and, if there is no survey, easements and encroachments. Lack of legal access to and from the property coverage requires the buyer, seller, or agent to prove through a survey or other means that there is access; otherwise, the title company will generally delete the insuring provision covering access to and from the land
typically, standard coverage in title insurance covers all of the following EXCEPT
restrictive covenants and deed restrictions.
improperly delivered deeds.
defects that may be found in the public records.
According to Texas promulgated sales contracts, who is responsible for delivering the title commitment to the buyer?
The title commitment includes all of the following EXCEPT
the estate or interest covered.
a legal description.
a survey of the property.
the name of the insured party.
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