© 2008 by South-Western, Cengage Learning Chapter 14 Chapter 14 Charles J. Jacobus Thomas E. Gillett.

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© 2008 by South-Western, Cengage Learning Chapter 14 Chapter 14 Charles J. Jacobus Thomas E. Gillett

© 2008 by South-Western, Cengage Learning Georgia Real Estate An Introduction to the Profession Seventh Edition Chapter 14 Types of Financing

© 2008 by South-Western, Cengage Learning Adjustable Rate Mortgage Adjustable Rate Mortgage Interest rate Tied to an index Reflects current market conditions Margin Amount added to the index Adjustment Period

© 2008 by South-Western, Cengage Learning Adjustable Rate Mortgage Adjustable Rate Mortgage Caps Interest rate Payment Negative Amortization Rising loan balance

© 2008 by South-Western, Cengage Learning Adjustable Rate Mortgage Adjustable Rate Mortgage Disclosures Regulation Z Historical Examples “The Consumers Handbook on Adjustable Rate and Mortgages” Maximum rate Choosing Wisely Teaser rate

© 2008 by South-Western, Cengage Learning Graduated Payment Mortgage

© 2008 by South-Western, Cengage Learning Types of Financing Equity Sharing SAM: Shared appreciation mortgage Rich Uncle Package Mortgage Real & personal property

© 2008 by South-Western, Cengage Learning Types of Financing Blanket Mortgage Secured by more than one property Reverse Annuity Mortgage (RAM) Monthly payment to homeowner Repayment upon sale or death

© 2008 by South-Western, Cengage Learning Types of Financing Construction Loan Construction Loan Construction Loan Interim Loan Interim Loan

© 2008 by South-Western, Cengage Learning Types of Financing Blended Rate Loan Combines existing rate with current rate Equity Mortgage Line of credit against equity in the home

© 2008 by South-Western, Cengage Learning Affordable Housing Loans Affordable Housing Loans Target first time homebuyers Credit criteria Consumer education 97% Conventional Nehemiah Program

© 2008 by South-Western, Cengage Learning Conventional Mortgage vs. AIM

© 2008 by South-Western, Cengage Learning Seller Financing Seller Financing Purchase Money Mortgage Seller becomes the Lender Promissory note & security instrument. Wraparound Mortgage Junior Mortgage New mortgage wraps round the existing mortgage

© 2008 by South-Western, Cengage Learning Wraparound Mortgage

© 2008 by South-Western, Cengage Learning Financing Subordination Change in priority Contract for Deed Installment or land contract Buyer makes payments to the Seller Seller retains title until final payment

© 2008 by South-Western, Cengage Learning Financing Option Overly Creative Financing Over-encumbered property

© 2008 by South-Western, Cengage Learning Mortgage Fraud Illegal Flipping Silent Second Chunking Identity Theft Debt Cancellation / Deed Transfer Red Flags

© 2008 by South-Western, Cengage Learning Mortgage Fraud Reporting Mortgage Fraud

© 2008 by South-Western, Cengage Learning Financing Investing in Mortgages Mortgage loan pools Junior mortgages Rental Sale and leaseback Land Leases Step-up leases

© 2008 by South-Western, Cengage Learning Key Terms Key Terms ARM Affordable housing loan Asset intergrated mortgage Blanket mortgage Construction loan Equity sharing GPM Negative amortization Option Package mortgage RAM Seller financing Wraparound mortgage