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Chapter 14Chapter 14

Charles J.Jacobus

Thomas E.Gillett

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Georgia Real Estate Georgia Real Estate An Introduction to the ProfessionAn Introduction to the Profession

Seventh EditionSeventh Edition

Chapter 14Chapter 14

Types of FinancingTypes of Financing

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Adjustable Rate MortgageAdjustable Rate Mortgage

Interest rateTied to an indexReflects current market conditions

MarginAmount added to

the index

Adjustment Period

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Adjustable Rate MortgageAdjustable Rate Mortgage

CapsInterest rate

Payment

Negative

AmortizationRising loan balance

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Adjustable Rate MortgageAdjustable Rate Mortgage

Disclosures

Regulation ZHistorical Examples

“The Consumers Handbook on Adjustable Rate and Mortgages”

Maximum rate

Choosing WiselyTeaser rate

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Graduated Payment MortgageGraduated Payment Mortgage

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Types of FinancingTypes of Financing

Equity SharingSAM: Shared appreciation mortgage

Rich Uncle

Package MortgageReal & personal property

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Types of FinancingTypes of Financing

Blanket MortgageSecured by more than one property

Reverse Annuity Mortgage (RAM)

Monthly payment to homeowner

Repayment upon sale or death

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Types of FinancingTypes of Financing

Construction Loan

Construction LoanConstruction Loan Interim LoanInterim Loan

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Types of FinancingTypes of Financing

Blended Rate LoanCombines existing rate with current rate

Equity MortgageLine of credit against

equity in the home

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Affordable Housing LoansAffordable Housing Loans

Target first time homebuyersCredit criteria

Consumer education

97% Conventional

Nehemiah Program

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Conventional Mortgage vs. AIMConventional Mortgage vs. AIM

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Seller FinancingSeller Financing

Purchase Money MortgageSeller becomes the LenderPromissory note & security instrument.

Wraparound MortgageJunior MortgageNew mortgage wraps round the existing mortgage

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Wraparound MortgageWraparound Mortgage

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FinancingFinancing

SubordinationChange in priority

Contract for DeedInstallment or land contract

Buyer makes payments to the Seller

Seller retains title until final payment

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FinancingFinancing

Option

Overly Creative Financing

Over-encumbered property

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Mortgage FraudMortgage Fraud

Illegal Flipping

Silent Second

Chunking

Identity Theft

Debt Cancellation / Deed Transfer

Red Flags

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Mortgage FraudMortgage Fraud

Reporting Mortgage Fraudwww.grefpac.org

www.gscca.org

www.mortgagefruadblog.org

www.ustaxcourt.gov

www.usgovsearch.com

www.stopmortgagefraud.com

www.mbaa.org/alerts

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FinancingFinancing

Investing in MortgagesInvesting in MortgagesMortgage loan poolsJunior mortgages

RentalSale and leaseback

Land LeasesStep-up leases

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Key TermsKey Terms

ARMAffordable housing loanAsset intergrated mortgageBlanket mortgageConstruction loanEquity sharingGPM

Negative amortizationOptionPackage mortgageRAMSeller financingWraparound mortgage