RE25RC08: Financing
This course is designed for real estate brokers and salespersons and provides a comprehensive overview of the application, procedures and mentality regarding mortgage financing in general.
I. Loam Origination - From initiation of process until disbursement of funds
- Statute of Frauds requires only writings are enforceable
- Loan originator includes all lenders and mortgage brokers
- Mortgage lender versus mortgage broker
- Lender mentality - What lenders are looking for?
II. Primary Loan Application
- Credit report/credit score is first step
- Significance of FICO score (as opposed to other credit score programs)
- Survey of market (e.g. rates, terms and special programs)
- Pros and cons of mortgage brokers.
- Initial application
- Final submission
III. Loan Package/Application
- Concept of project/overview
- Market studies to justify pro forma revenue
- Site analysis
- Construction or improvement plan
- Project cost analysis
- Management plan
- Operating cost analysis
- Cash flow analysis
- Lease terms analysis
- Loan request analysis
IV. Type of Loan
- Short term versus long term loans
- Conventional loan
- Direct Reduction loan
- Blanket Loan
- Package Loan
- Straight loan
- Construction/Interim loan versus Permanent/End Loan
- Purchase money mortgage
- Balloon payment loan
- Wraparound loan
- Adjustable rate mortgage loan (ARM)
- Private mortgage insurance
- Soft second mortgage
- VA versus FHA loans
- Home equity loan (HELOC)
V. Terms of Loan
- Loan to value ratio (LTV)
- Prime rate and other benchmarks
- Loan term
- Taxes/ Insurance
- Assumption/Assignment
- Exculpatory provisions
- Partial release provisions
- Appraisal
- Due on sale clause - The real meaning
VI. Disbursement of Funds/Closing
- Attorneys role
- Municipal lien certificate
- Title insurance
- Real Estate transfer tax/stamps
- Settlement
- Junior financing
- Payoff letter
- Satisfaction of mortgage
VII. Sources of Financing - Primary Market
- Commercial and savings banks
- Credit unions
- Mortgage brokers
- Mortgage bankers
- Life Insurance companies
- Pension funds
- REIT's
- Community financing
- Owner financing
- Equity financing
- Trusts
- Joint ventures
- Sale and leaseback
VIII. One to four Dwelling Unit Owner Occupied Residential
- Attorney for mortgagee disclosure
- Appraisal availability for mortgagor
- When one-four owner occupied the mortgage originator must be licensed
- Identification of mortgage broker
Statutes and Regulations
- M.G.L. c. 259, § 1
- M.G.L. c. 184, §§ 17B, 17C
- M.G.L. c. 183, §§ 54, 54D
- M.G.L. c. 183, §§ 54, 55
- M.G.L. c. 255, § 1
- M.G.L. c. 255F
- M.G.L. c. 183, § 6D