Please respond to Cynthia with 200 words Cynthia October 3, 2022 BRE-110 Walt & Huber Chapter # 11 & 12 Overview The topic in Chapter 11 is about Escrow and Closing. It talks about how the closing process in California is slightly different than other states and how escrow closes about 2 days after loan funding in California. In Chapter 12 the topic is about Real Estate Financing, and it covers the mortgage loan process, mortgage default, and Truth in lending disclosure. Key Concept from Chapter 11 The first concept I learned is about the Real Estate Settlement Procedures Act (RESPA). The RESPA is a federal law that was passed by Congress in 1974 and it requires lenders to disclose information about closing costs to loan applicants. The RESPA applies to most federally related loans (p. 403). Key Concept from Chapter 12 The second thing I learned is that a Subordinating Trust Deed is a later-filed trust deed that is given a higher priority (p. 438). Subordination is most common when a seller carries back a trust deed for part of the purchase price (p. 438). Also, a subordination clause can be included in the earlier trust deed, or a separate subordination agreement may be drawn up (p. 438). Key Concept from Chapter 11 The last thing I learned is about the requirements for a valid escrow. The requirements are an enforceable contract, relinquishment of control of documents and funds, a valid deed, escrow agent, and escrow instructions with conditions. A legally binding contract must create an escrow designating an escrow holder and giving him/her escrow instructions (p. 395). The enforceable contract is fulfilled by a purchase agreement. Summary These two chapters had more informative information on escrow and closing as well as real estate and financing. I also learned in a real estate loan transaction; the promissory note should state that it is secured. Another interesting thing is security agreement is made between a lender and a borrower and create a security interest in property pledged and hypothecated.
Victor Valley College
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The more that you read, the
more things you will know,
the more that you learn,
the more places youÂ’ll go.
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Escrow and Closing
“Educating Generations, Building Communities”
I.
Preparing for Closing
II. Escrow
III. Termination of Escrow
IV. When Title Passes
V. Real Estate Settlement Procedures Act (RESPA)
VI. Settlement Statements
VII. Title Insurance
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Part I.
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Preparing for Closing
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“Educating Generations, Building Communities”
? CLOSING is the consummation of a real estate transaction.
? CLOSING DATE is when the documents transferring title from the
seller to the buyer will be delivered and recorded.
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Part II.
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Escrow
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? ESCROW is an arrangement in which a third party holds money
and documents on behalf of the principals in a transaction.
?
Grounds for Disciplinary Action in Escrow
?
Purpose of Escrow
?
Opening Escrow
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? Escrow Agent
?
Escrow Instructions
1.Provisions
2.Escrow AgentÂ’s Duty
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Part III.
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Termination of Escrow
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A. Mutual Agreement
B. Expiration
C. Default
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Part IV.
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When Title Passes
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“Educating Generations, Building Communities”
? Unauthorized Delivery – the unauthorized transfer or use of
another personÂ’s money or property is a tort call CONVERSION
? Doctrine of Relation Back – the transfer relates back to the date
of deposit in escrow
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Part V.
Real Estate Settlement
Procedures Act (RESPA)
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“Educating Generations, Building Communities”
? RESPA is a federal law passed by Congress in 1974.
? It requires lenders to disclose information about closing costs to
loan applicants.
? RESPA applies to most federally related loans.
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Part VI.
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Settlement
Statements
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A. Allocating Expenses
B. Transaction Settlement
Guide
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“Educating Generations, Building Communities”
? Debits
?
Loan Origination Fee
?
Discount Points
?
Impound Account
?
Prepaid Interest
?
Fees (Escrow, Notary, Recording)
? Credits
?
Deposits
?
Taxes, Insurance or Rents
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“Educating Generations, Building Communities”
? Debits
?
Payoff of any existing loans
?
Fees (Notary, Attorney, Recording)
?
Documentary Transfer Tax
? California rate is $ .55 for each $500 of sales price, or $1.10 for
each $1000
? Example: the house is being sold for $100,000
$100,000/500 = 200
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200 x $ .55 = $110
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“Educating Generations, Building Communities”
? Credits
?
Purchase Price
?
Prorated taxes and insurance premiums
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“Educating Generations, Building Communities”
? PRORATE means to divide or distribute proportionately.
?
Property Taxes
?
Hazard Insurance Premiums
?
Rents
?
Interest on Loans
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“Educating Generations, Building Communities”
? Once the buyerÂ’s loan is approved, the lender forwards the loan
documents to the escrow agent.
? If all the conditions in the escrow instructions have been met, the
transaction is ready to close.
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Part VII.
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Settlement
Statements
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? Obtaining Title Insurance
? Type of Coverage
?
Standard Coverage Policy
?
Extended Coverage Policy
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? Abstract and Opinion
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“Educating Generations, Building Communities”
I.
Preparing for Closing
II.
Escrow
III.
Termination of Escrow
IV. When Title Passes
V.
Real Estate Settlement Procedures Act (RESPA)
VI. Settlement Statements
VII. Title Insurance
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“Educating Generations, Building Communities”
? Read Next Chapter
? Write Reflection Summary
? Study for Quiz
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“Educating Generations, Building Communities”
? Schedule 1 hour of study every day
? Plan to be early!
? Always be ready
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Only what you put into it!
? Take Notes
? Stay Engaged
? Think of How to Apply
? Ask Questions
? Participate / Share
? Do Activities
? Be Grateful
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“Educating Generations, Building Communities”
? Educate yourself by attending class
? Assignments & Activities
? Read every day
? Never stop learning!
“The more you LEARN the more you EARN.”
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Student Learning Objectives met
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Victor Valley College
Victor Valley College
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Life is a succession of
lessons which must be
lived to be understood.
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Real Estate Financing
“Educating Generations, Building Communities”
I.
II.
III.
IV.
V.
VI.
VII.
VIII.
IX.
Promissory Notes
Security Agreements
Common Optional Loan Terms
Foreclosure
Reverse Mortgages
Real Property Sales Contracts
Lending Disclosure Laws
SAFE Act
Agricultural Security Interests
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Part I.
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Promissory Notes
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“Educating Generations, Building Communities”
? PROMISSORY NOTE is a promise to repay a debt.
?
MAKER
?
PAYEE
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“Educating Generations, Building Communities”
? SECURITY AGREEMENT is a contract that makes the real property
collateral for the loan.
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“Educating Generations, Building Communities”
? Principal
? Maturity Date
? Straight Note
? Balloon Payment Loan
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Part II.
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Security Agreements
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“Educating Generations, Building Communities”
? A security agreement is made between a lender and a borrower
that creates a security interest in property pledged or
hypothecated.
?
Pawnbrokers – are the oldest and simplest security
agreement.
? PLEDGING
? HYPOTHECATION
In California – nearly all lenders use deeds of trust instead of
mortgages.
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“Educating Generations, Building Communities”
1. Basic Provisions
? Trustor – borrower
?
Waste
?
Power of Sale Clause
2. Recording
? Beneficiary – lender
?
Fictitious Trust Deed
3. Reconveyance
? Trustee – neutral third party
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?
Beneficiary Statement
?
Full Reconveyance
?
Partial Reconveyance 8/19/2021
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Part III.
Common Optional Loan
Terms
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“Educating Generations, Building Communities”
–give the borrower the right to make a larger payment than required,
to pay off the entire loan before the maturity date.
?
PREPAYMENT PENALTY
? When a loan agreement doesnÂ’t give the borrower the option to
prepay, the loan is said to be LOCKED IN.
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“Educating Generations, Building Communities”
1. Late Charges and Default Rates
?
Residential Property
2. Acceleration on Default
?
Prepayment Charges and Acceleration
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“Educating Generations, Building Communities”
? When real property is sold, the new owner takes title SUBJECT TO any
existing liens, meaning the lienholders still have the power to foreclose on
the property in spite of the transfer
?
DEFICIENCY JUDGMENT
?
ASSUMPTION
1. Due-on-Sale Clauses
?
Alienation clause
? Residential Property
? Prepayment Charges and Due-on-Sale Clauses
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2. Due-on-Encumbrance Provisions
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“Educating Generations, Building Communities”
? Lien priority is extremely important to every lender.
? A trust deed that takes on lower priority is called a SUBORDINATED
TRUST DEED. The later trust deed that is given higher priority is
called the SUBORDINATING TRUST DEED.
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Part IV.
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Foreclosure
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“Educating Generations, Building Communities”
A. Nonjudicial Foreclosure of a Trust Deed
1. Notice of Default
2. Notice of Sale
3. Preventing a TrusteeÂ’s Sale
?
Cure and Reinstatement
?
Redemption
?
Deed in Lieu of Foreclosure
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“Educating Generations, Building Communities”
4. TrusteeÂ’s Sale
?
Sale Proceeds
?
TrusteeÂ’s Deed
5. Protection for Junior Lienholders
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“Educating Generations, Building Communities”
B. Judicial Foreclosure of a Mortgage
?
Mortgagor – borrower
?
Mortgagee – lender
?
Lis Pendens
?
SheriffÂ’s Sale
?
Certificate of Sale
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“Educating Generations, Building Communities”
? When a foreclosing lender is entitled to a deficiency judgment, the
lender must apply to the court for the judgment within three months
after the property is sold at the foreclosure sale.
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Part V.
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Reverse Mortgages
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“Educating Generations, Building Communities”
? Also known as a reverse annuity mortgage (RAM), a REVERSE
MORTGAGE enables older homeowners (62+) to convert their
home equity into tax-free income without having to sell their home,
give up title, or take on a mortgage
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Part VI.
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Real Property Sales
Contracts
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“Educating Generations, Building Communities”
? Land Contract – the buyer pays the seller in installments over a
long period of time, although the buyer usually takes possession
immediately.
?
Vendee – borrower
?
Vendor – seller
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Part VII.
Lending Disclosure Laws
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“Educating Generations, Building Communities”
A. Truth in Lending Act
? Regulation Z
1. Coverage of the Act
? For $55,800 or less; or
? Secured by real property
2. Disclosure Requirements
? Total Finance Charge
? APR
? Home Equity Loan
3. Advertising of Credit Terms
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“Educating Generations, Building Communities”
? When a seller carries back a purchase money loan on residential
property, California law requires that certain disclosures be made
to both buyer and seller.
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?
Coverage of the Law
?
Disclosure Requirements
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“Educating Generations, Building Communities”
? CaliforniaÂ’s Mortgage Loan Broker Law regulates real estate agents
who act as loan brokers.
?
Disclosure Statement
?
Commissions and Costs
?
Balloon Payments
?
Language Translation
?
Prepayment Charges
?
Late Charges
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“Educating Generations, Building Communities”
? In order to stop any unfair dealings by home equity purchasers,
CaliforniaÂ’s legislature has adopted some rules for home equity
purchasers of owner-occupied property with 1 to 4 units after the
recording of a notice of default.
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“Educating Generations, Building Communities”
? California has also placed numerous restrictions on foreclosure
consultants who were found to use fraud and harassment to obtain
a fee from the property owner.
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Part VII.
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SAFE Act
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“Educating Generations, Building Communities”
? The SAFE ACT requires all states and 5 territories to put a licensing
system for residential MORTGAGE LOAN ORIGINATOR
? Within 30 days of commencing loan activity, all licensees must
report to the DRE if they make, arrange or service loans secured by
real property
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Part IX.
BRE – 110 Real Estate Law
Agricultural Security
Interests
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“Educating Generations, Building Communities”
? Sometimes a borrower wants to give a lender a security interest in
standing timber to be cut, or extracted minerals, or crops growing
in a field. This is referred to as an AGRICULTURAL SECURITY
INTEREST.
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“Educating Generations, Building Communities”
I.
II.
III.
IV.
V.
VI.
VII.
VIII.
IX.
BRE – 110 Real Estate Law
Promissory Notes
Security Agreements
Common Optional Loan Terms
Foreclosure
Reverse Mortgages
Real Property Sales Contracts
Lending Disclosure Laws
SAFE Act
Agricultural Security Interests
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“Educating Generations, Building Communities”
? Read Next Chapter
? Write Reflection Summary
? Study for Quiz
BRE – 110 Real Estate Law
8/19/2021
42
“Educating Generations, Building Communities”
? Schedule 1 hour of study every day
? Plan to be early!
? Always be ready
BRE – 110 Real Estate Law
8/19/2021
43
Only what you put into it!
? Take Notes
? Stay Engaged
? Think of How to Apply
? Ask Questions
? Participate / Share
? Do Activities
? Be Grateful
BRE – 110 Real Estate Law
8/19/2021
44
“Educating Generations, Building Communities”
? Educate yourself by attending class
? Assignments & Activities
? Read every day
? Never stop learning!
“The more you LEARN the more you EARN.”
BRE – 110 Real Estate Law
8/19/2021
45
Student Learning Objectives met
BRE – 110 Real Estate Law
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BRE – 110 Real Estate Law
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Victor Valley College
