real estate finance - full book (500 pgs)

Dynastyschoolcom 4 5 real estate finance mortgage

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Unformatted text preview: s may in some cases collect themselves. The setup and collection fees charged by commercial and savings banks are relatively small, since these institutions are interested in obtaining the customer's account. Some offer free collection service when the customer maintains a minimum balance in a savings or checking account. USURY LAW Many states have passed laws establishing the maximum rate of interest that can be charged on various types of loans. Interest rates that exceed the maximum rate are considered usurious and therefore illegal. In some instances if a tender is found guilty of usury, the borrower would not have to pay any interest! Maximum Rate – In California the maximum rate for loans secured by real property is the greater of 10% or 5% above the Federal Reserve Bank discount rate, unless the lender is exempt from the law. Exemptions – California regulations exempt from the usury law Institutional lenders such as banks, thrift institutions, and life insurance companies. Also exempt from usury laws are noninstitutional lenders including mortgage companies, credit unions, personal property brokers, owners who carry back paper when they sell, and any transaction that uses a real estate broker. However, direct private lenders are not exempt. For example, real estate loans from regulated Institutional lenders can be at any rate, whereas an actual direct hard money real estate loan (not a seller carryback loan) from a private lender is not exempt, unless a real estate licensee is handling the transaction. Dynasty School ( 4-5 REAL ESTATE FINANCE MORTGAGE COMPANIES Mortgage bankers, mortgage brokers, or mortgage companies are primarily representatives of the ultimate sources of money, such as life insurance companies, savings banks, trust or pension funds, or private parties. They are essentially money brokers who may or may not service the loans they originate. These entities are not thrift institutions, nor are they depository institutions, but they do assist by bringing the borrower together with a lender and charge a fee for this service. TYPES OF MORTGAGE COMPANIES Investment bankers – Investment bankers make a market for both new and seasoned mortgage–backed s...
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This note was uploaded on 12/30/2010 for the course SOC 101 taught by Professor Zhung during the Spring '10 term at Punjab Engineering College.

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