Condensed Chapter 17 Slides

Condensed Chapter 17 Slides - Chapter 17 An Introduction to...

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“Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner Chapter 17 An Introduction to the Process of Real Estate Finance
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“Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner Major Topics Mortgage Terms and Clauses Sources of Real Estate Finance Mortgage Money in the Context of the Capital Market Primary and Secondary Mortgage Markets Commercial Mortgage Backed Securities Economic of Interest Rates Impact of the Federal Reserve Trends in Real Estate Finance
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“Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner Introduction Real estate finance is traditionally the process of borrowing or lending, most often involving a third party that is neither the buyer nor seller of the property in question From the borrower’s point of view a loan is a debt and liability, while from the lender’s point of view a loan is an investment and an asset with the property serving as collateral for the loan Financing a real estate transaction involves significant risk to both the owner of the real estate (the borrower) and to the lender
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“Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner What is a Mortgage Loan? The combination of Equity and Debt used to buy a property is known as the capital structure of the property When debt involves real estate as collateral security for the loan it is referred to as a Mortgage A mortgage loan is a contractual agreement between the mortgagor and the mortgagee Important to have relationship documented
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“Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner Promissory Note A promissory note is a written document containing the contract terms between the borrower and the lender Legally, the promissory note provides evidence of the debt between borrower and lender since a mortgage cannot be enforced unless the mortgagor owes a debt to the mortgagee Practically, the promissory note documents the agreement between the borrower and the lender and contains the financial and legal details of the transaction
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“Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner Clauses contained in “the note” 1.
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