real estate finance - full book (500 pgs)

Credit disclosure even though a loan may be based on

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Unformatted text preview: r home at risk of foreclosure. PENSION FUNDS Pension funds are not taxed on earnings so theoretically they should be able to make investments with lesser yields. In practice, pension funds are being pushed to perform well. Pension funds have discovered real property secured loans as an acceptable balance between risk and yield. Both private individuals and private pension funds can avoid the usury limitations and receive higher rates of interest by using brokers as arrangers of 6-2 Licensing School for Appraisal, CPA, Contractors, Insurance, Real Estate, Notary, Nurse, Food Handlers, Tax and Securities 6: HARD MONEY LOAN & CONVENTIONAL LOANS their loans. (If they made the loans direct, the usury law would apply.) Public pension plans are exempt from usury limitations as are other licensed lenders. Disclosure statements as to the particulars of a loan being offered that is secured by real estate is required. Disclosures need not be given to trustees of pension, profit sharing or welfare funds having assets of $15 million or more. Pension funds with less than $15 million in assets are treated as other non–institutional lenders. These pension funds receive the Protection of required disclosures. Persons who are borrowers on these hard money loans are generally willing to pay interest charges greater than they would have to pay from institutional lenders because, for a variety of reasons, they are unable to obtain financing from banks or savings bank institutions. LOAN CHARACTERISTICS INCOME Income indicates a borrower's capacity to make loan payments. The income figures should be obtained from the borrower and verified where possible. Verification might be from the borrower's pay check stubs or even copies of prior income tax returns. Information of the income and what verification was made must be given to the lender. Reported income on tax returns for owners of small businesses may be less significant to a lender than would wage income. In cases of under reporting of i...
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