1. FIN 331 Real Estate Phase 3 Exam Chapters 11, 13, 15, 18, 19, 20, 22 Spring 2015

2. Chapter 11 Sources of Funds for Mortgages A.What 3 services do mortgage bankers/brokers provide? B.What does it mean when a mortgage banker services a loan? C.What is pipeline risk? D.What was the primary reason for the creation of Fannie Mae and Freddy Mac? E.What is underwriting and how does it affect lending? F.How are the Housing Expense and Total Debt ratios computed? G.How does the Government define a Qualified Mortgage?

3. Chapter 13 Contracts for Sale and Closing A.What are the basic requirements for a RE contract? B.What does it mean to have a power of attorney? C.What form is required by the RESPA? D.What is earnest money? E.What is meant by constructive notice? F.Describe/Define: Specific performance, Consideration, Equitable title, Contingency

4. Chapter 15 Mortgage Cost Calculations A.What costs must be considered in computing the APR required by the TILA? B.How do points affect the lender’s yield? C.What is one criteria for selecting a mortgage? D.What are balloon payments? How do they affect monthly mortgage payments? E.How do adjustable rate mortgages work? F.Be able to compute: max borrowing amount, monthly payments, lender’s yield, Effective Borrowing costs, balances.

5. Chapter 18 Investment Decisions: Ratios A.Know what is meant by; 1.Operating Expense Ratio 2.Loan-to-Value Ratio 3.Debt Coverage ratio 4.Net Income Mult., Effective Gross Income Mult. 5.Capitalization Rate B.Why do real estate investors prefer using leverage? C.How does above the line and below the line treatment of CAPEX affect NOI?

6. Chapter 19 Investment Decisions: NPV and IRR A.RE investments are subject to the same value analysis as other types of investments: Net Present Value 1.What are the decision rules for NPV? 2.How does leverage affect ROE? 3.Computing NPV

7. Chapter 20 Income Taxation and Value A.What are the two basic types of taxes imposed by governments? B.Which form is business organization is best for minimizing tax liabilities? C.What are the four types of real estate? Which ones can be depreciated? D.What are the three types of income subject to Federal Taxation? E.How are capital expenditures treated? F.Why are like-kind exchanges important?

8. Chapter 22 Leases and Property Types A.What are some of the essential elements in a lease agreement? B.What is an anchor tenant? C.When does a tenant get quiet enjoyment? D.How are commercial rents quoted? E.What is a graduated rent? F.When would a tenant most likely get a concession?