Posted by admin on July 31, 2010 under Real Estate News | 
According to the New York Times, many of the mortgages that are being defaulted on are by the wealthy. It seems as though the rich look upon it as more of an impersonal business decision than the average homeowner. One in seven homeowners in trouble has a mortgage in excess of one million dollars, and it appears that they are much quicker to walk away from the property as simply a bad investment.
You do not have to look too hard to find the silver lining in this scenario. Affordability of many luxury homes is incredibly high right now. That, together with the historically low interest rates that are available right now makes investing in a luxury property very tempting. This is excellent news if you make your living with a real estate license.
Commissions have suffered for many real estate agents and brokers as prices plummeted during the real estate crisis. Increased affordability of higher end homes has created an ideal situation to increase business in the luxury home market. The higher the sale price, the better the commission for the sale, and better commissions are a welcome change from the last couple of years in the real estate market.
Prices across the country are beginning to stabilize. For a time it seemed as though the housing crisis might go on forever, but it is important to remember that the affordability we are seeing in the housing market will not last. The nations real estate market is growing stronger every day and before you know it, the incredible prices and interest rates we are seeing right now will be gone. The time to cash in on the real estate market affordability is right now and buyers that are in a position to qualify for financing know it. Individuals earning a living with a real estate license know it too.
Business is on the rise, so the need for licensees with real estate training will rise as well. People looking for a career change can, in most cases, complete the real estate courses required to take the real estate licensing exam in a matter of weeks. Online real estate schools make the classes a quick and convenient alternative to traditional college courses, and at a fraction of the cost.
The housing market still has a ways to go before we reach solid ground, but make no mistake it is on its way up. What better time than now to get in on the action and ride the wave to prosperity. Jobs in real estate are expected to increase in the years to come, something that is not being said of many industries in today’s economy. It is an ideal time to look into starting a brand new career with your real estate license.
Posted by admin on July 10, 2010 under Real Estate License Basics |
Foreclosure is a subject that is all too familiar to many people these days. For the purposes of getting your real estate license, there are some details about the foreclosure process that you will need to know. In this installment of Real Estate Basics we will try to simplify what you will need to know to successfully complete your real estate courses and pass the real estate exam.
Foreclosure is defined as the legal process where a property that has been offered as security for a debt is sold in order to satisfy that debt. Once the property is sold, the proceeds are distributed in order beginning with paying for the costs associated with the sale. Once those have been paid, the next in line for payment is “ad valorem”, the special assessment and general taxes. When the taxes associated with the property’s value are paid then the first mortgage is paid. Whatever proceeds remain will be paid to cover any other liens or judgments in order of the date they were recorded.
A foreclosure can be judicial or non-judicial. A judicial foreclosure goes through the court system and is required to foreclose on a mortgage. Non-judicial foreclosure is a much quicker process for a lender because it does not require the courts to foreclose on a Deed of Trust. With a Deed of Trust the trustee holds a title without possessory rights known as “Naked Legal Title”, allowing them to claim the property without having to go through the long and drawn out court process.
When foreclosure is looming for a property owner, they do have rights to clear the debt and retain the property. Prior to the sale of the property the borrower has what is called Equitable Right of Redemption. This allows them the opportunity to clear up their debt and end the foreclosure process before the property is sold. Once the sale is complete the borrower has the Statutory Right of Redemption which allows them a limited amount of time in order to clear the debt. The Statutory Right of Redemption is something that varies from state to state and will not be included on the state exam in detail, but you will need to know that this right exists.
Many times, especially given the recent housing crisis, the amount a foreclosure property is sold for is not enough to cover the debt owed. If this is the case the lender has a couple of different options. They have the right to file a Deficiency judgment which is a general lien against the borrower that applies to all of their assets in an attempt to recover the debt. The other option they have is the Deed in Lieu of Foreclosure. This is a process where the borrower agrees that the lender will become the property owner. Also called the friendly foreclosure, a Deed in Lieu of Foreclosure will not clear up any junior liens, but it saves the lender the time and expense of the foreclosure process.
Posted by admin on July 3, 2010 under Real Estate License Basics |
This edition of Real Estate Basics will cover what you need to know about encumbrances in order to earn your real estate license. An encumbrance on a property is something that interferes with your holding title to a property or someone else having rights to your property. There are many types of encumbrances that will be covered in your real estate courses. Here we will break down these different types of encumbrances for you.
A lien is a type of encumbrance that is a charge against a property to secure a debt. A mortgage lien is the only voluntary type of lien which is the loan taken out to purchase the property. All other types of liens are considered involuntary. A specific lien is one that is placed on one specific property and will only affect that property. Mechanics liens that are filed when repairs or construction are done on the property and Property Tax liens filed when a person fails to pay their property taxes are both examples of specific liens. A general lien is awarded by court judgment and affects not only the property, but the person owning the property at the time of the judgment and all of their assets. Examples of general liens are Income tax liens and Judgment liens.
Another type of encumbrance is an easement. An easement provides specific rights to use a property to someone while you retain the ownership rights. Because there are no rights of possession with an easement, only rights of ingress and egress, an easement is considered interest in the property and not the estate. Easements can occur by implication, reservation, necessity, condemnation, or by express contract. We will explore easements deeper in a future installment of the Real Estate Basics series.
An encroachment is an encumbrance that occurs when an unauthorized building or improvement intrudes onto another property. Some examples of encroachments would be when an addition or a newly erected fence crosses over a property line onto someone else’s property. Encroachments are usually uncovered upon a survey or physical inspection of the property. All encroachments are considered encumbrances even though all encumbrances are not encroachments.
Covenants and deed restrictions are also encumbrances. These are limits of use placed on the property. Limiting restrictions are things that can never be done on a piece of property. An example of a limiting restriction includes things like no fences to be built on the property. Affirmative restrictions are rules that must be abided by such as building setbacks and minimum square footage requirements. Enforcing deed restrictions must always be done in a court of law.
Finally there is a license encumbrance. This type of encumbrance gives the right to use a property for a specific purpose. License is not assignable and can be revoked at any time by whoever issued the license. Some examples of license include tickets to sporting events, hunting and fishing licenses or granting permission to occupy a property temporarily. A license encumbrance is terminated upon the death of the licensee.
Posted by admin on July 4, 2010 under Real Estate License Basics |
Even though you are studying to earn your real estate license to become a real estate agent or broker, your real estate training will include a great deal of information on financing. In this edition of Real Estate Basics we will review some of the sources of financing available to buyers. The three most well-known primary mortgage lenders are savings and loans, banks and mortgage brokers.
Savings and Loan institutions used to be the leader in mortgage lending. Since the financial crisis of the 1980s savings and loan institutions have been regulated by the Federal Housing Financing Board (FHFB) and deposits are insured by the Deposit Insurance fund for a minimum of $250,000. Since then they have been replaced institutional banks at the forefront of mortgage lending.
Banks offer real estate loans for just about any type of real estate including commercial, industrial and land loans in addition to residential mortgages. Loans are available in a variety of short term and long term options for straight purchases or new construction. Bank deposits are insures by the FDIC for up to $250,000 per account.
Mortgage brokers are individuals, corporations or firms that will either provide funding for loans or arranges, negotiates and sells loans in exchange for compensation. Mortgage brokers are not otherwise in the banking and finance industry and can in some cases continue to service the loan after closing.
There are a couple of lesser known sources of financing also available. Mutual savings banks offer loans in the primary mortgage market, although mainly on the east coast. Insurance companies also lend money. Although they prefer to stick to larger commercial ventures, they have been known to make residential loans available as well. Insurance companies tend to lean toward project where they have an equity position, sometimes partnering with real estate developers. This type of loan where the lender receives income on the mortgaged property beyond the fixed return is known as participation financing.
The secondary mortgage market is where promissory notes are bought and sold. These exchanges provide funds for the primary market. Lenders sell the notes in order to have more money on hand to lend. They work like holding warehouses, purchasing many loans they bundling them in packages for resale to investors. To succeed in your real estate training you will need to know the big three in the secondary mortgage market, Fannie Mae, Ginny Mae and Freddie Mac.
Known to most as Fannie Mae, the Federal National Mortgage Association (FNMA) was established in 1938 and sells seasoned FHA, VA and conventional mortgages and deeds of trust in good standing to investors and financial institutions. Originally Fannie Mae was a government organization and now they are a privately owned corporation. They are the largest of the secondary market purchasers.
Ginny Mae is the Government National Mortgage Association (GNMA). They purchase FHA and VA loans under the control of a HUD agency.
The Federal Home Loan Mortgage Association (FHMLA) is also known as Freddie Mac. Like Ginny Mae they are also under HUD and they purchase conventional loans.
