Questions and Answers of Real Estate Principles

Name three primary market lenders that are not subject to banking regulations?
Explain the origin and purpose of Real Estate Investment Trusts?
Describe qualification for the Rural Development Service’s home loan program?
How does the Farm Credit System structure the various agencies that handle oversight of the farm mortgage lending function?
Identify the principal sources of mortgage company income?
What is meant by loan servicing?
What qualifications are necessary to become a mortgage banker? Are there any special requirements for mortgage lenders in your state?
Distinguish between the operations of a mortgage banker and a mortgage broker. What are the five major minimum standards that an independent mortgage broker or loan office must pass to be licensed
Identify at least two kinds of shorter-term mortgage loans made by commercial banks?
What advantages do credit unions have that banks consider unfair?
Identify the basic responsibility of each of the following four banking regulators: the Federal Reserve Bank Board, the Office of Thrift Supervision, the Comptroller of the Currency, and the Federal
What is the general policy of life insurance companies toward mortgage lending?
In what way has the Community Reinvestment Act affected the operation of regulated institutions?
Explain why the Federal Reserve Bank places reserve requirements on depository institutions?
What is the present status of federal deposit insurance?
How does the government intend to simplify the banking system?
Identify the classes of regulated lenders?
How would you define the term primary mortgage market?
Suggest ways to improve our banking system?
Discuss the effects of the new loan commitment software applications on residential mortgage lending?
How does a change in interest rates affect business borrowing?
Identify the four major areas of demand for money?
Define discount rate of interest and prime rate?
Explain the meaning of the terms fiscal policies and monetary policies?
Explain the major factors that influence interest rates and describe the effects interest rate factors have on the residential mortgage market?
How does the Treasury raise money when it has to borrow?
How does the Federal Reserve increase the money supply?
Outline the monetary system used in this country?
How can pre-purchase home-buyer education programs affect the mortgage market?
What are some of the constraints on the recovery and growth of the GSE and private mortgage-backed securities market?
Discuss the effects of risk and term of a bond on the interest rate paid?
Distinguish between the functions of the primary and secondary mortgage markets?
Compare and contrast the two categories of bonds and how they differ from mortgage backed securities and the collateral pledged for each?
What is the federal agency underwriting function and what does it do for the mortgage market, and ultimately for the borrower?
Describe the origin of a loan discount?
What is the purpose of a promissory note? Of a mortgage?
What is meant by the term collateral? By hypothecation?
Define security interest and how it has been used in real estate finance since the Industrial Revolution?
Discuss the purpose of the Real Estate Settlement Procedures Act (RESPA) and its key provisions?
Explain the key liability issue that owners, investors, and lenders might face if they, their employees, or the public are harmed by environment problems that they are responsible for creating or
Discuss a landowner’s rights in a regulatory taking of land?
What happens to land containing an endangered species habitat?
Identify the criteria for determining existence of wetlands?
Where is lead most likely to be found in a household?
Discuss the EPA’s asbestos-managing plan for building owners. What threat is considered the “new asbestos”?
What is an ASTM transaction screen?
Explain the innocent landowner defense as defined by CERCLA?
Discuss Fannie Mae/Freddie Mac environmental requirements as stated in their mortgage instruments?
Define an environmental site assessment?
Describe risk-based pricing as it applies to mortgage loans?
Describe the dominant online mortgage originators and real estate online offerings and list the key online players today?
Describe the kinds of people who may want to arrange mortgage loans through the Internet?
Explain the three categories of Internet mortgage originators and how they differ in approach?
Describe the loan risk ratings within which subprime loans fall?
Explain how credit scoring operates?
What does Fannie Mae offer in terms of automated underwriting?
Describe the principal features of Freddie Mac’s Loan Prospector?
Explain what is meant by manual underwriting and automated underwriting?
What is HUD’s position on computerized loan origination?
Describe a judicial foreclosure proceeding. How is it different from a nonjudicial?
What is syndication? What is a realty fund?
Describe two of the three ways that title to property is protected against adverse claims?
What is the risk involved in an unsubordinated leasehold mortgage, and how might protection from this risk be obtained?
Who benefits from a sale-and-leaseback deal, and how?
What kind of real property transaction might fall under jurisdiction of the SEC?
How is loan-to-value ratio used in lending practices?
When is refinancing a mortgage loan practical? Why?
Discuss maximum and minimum dollar limits on loan amounts?
Discuss methods a builder might use to assist with a home buyer’s permanent financing?
Distinguish between issues of valuation in commercial and farm loans?
Evaluate preleased space as a factor in obtaining a building loan?
Discuss who builds office buildings and why?
How does a shopping center utilize percentage leases?
Why does shopping center management promote shopper-attraction activities?
Define net lease?
What part of the federal Fair Housing Act is applicable to an apartment project?
Discuss each of the three factors in the operation of a commercial building: location, physical facilities, and management?
Compare and contrast two widely different types of commercial real estate loans that you had not previously had any experience discussed in this chapter?
Describe a special purpose building?
List two ways a lender can be assured that release of construction money is delivered to the right contractor?
How is a takeout commitment normally used?
Define construction loan?
Describe the function of the Office of Interstate Land Sales?
What is an audited statement and who can prepare one?
What is a pro forma statement?
Describe the information normally found in a profit and loss statement; in an operating statement?
What type of work is covered in a land development loan?
Describe the risks involved in commercial real estate investment and financing?
Where are loan closings normally held in your community?
Discuss the differences in the loan application for a commercial loan and a home loan?
Give an example of a physical characteristic of a house that could cause loan rejection?
Distinguish between a survey and a legal description?
Why is a loan for a condominium more difficult to analyze than one for a free-standing house?
Discuss how the occupancy status of a home might affect the appraisal and lender maximum loan-to-value ratios, the two methods of using age of property as a criterion for loan approval?
How would you capitalize an income stream so as to show a property value? What is the advantage of a discounted or present-worth analysis over capitalization?
Identify the three categories of depreciation associated with real property?
Describe each of the three approaches to value and give examples of the property type for which each would be most applicable?
Name the three most common appraisal report formats and how they differ in content and use?
What qualifications does a mortgage lender require of an appraiser?
Define an appraisal?

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