TEXTBOOK OUTLINE – FOR CHAPTERS
LOAN PROCESSING @ NSCC – RES 166
Textbook: Financing Residential Real Estate, 14th Edition
Chapter 4: Government Policy and Real Estate Finance
a) Fiscal Policy
i) Spending and Debt Financing
ii) Taxation
b) Monetary Policy
i) The Federal Reserve System
ii) Economic Growth and Inflation
iii) Tools for Implementing Monetary Policy
c) Changes in Monetary Policy
Chapter 5: Finance Instruments
a) Promissory Notes
i) Basic Provisions of a Note
ii) Negotiability
iii) Types of Notes
b) Security Instruments
i) The Purpose of Security Instruments
ii) Historical Background
iii) Mortgages
iv) Deeds of Trust
v) Foreclosure
c) Land Contracts
d) Finance Instrument Provisions
i) Subordination Clauses
ii) Late Charge Provisions
iii) Prepayment Provisions
iv) Partial Release Clauses
v) Acceleration Clauses
vi) Alienation Clauses and Assumptions
e) Types of Real Estate Loans
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Chapter 6: Basic Features of a Residential Loan
a)
b)
c)
d)
e)
f)
Amortization
Repayment Period
Loan-to-Value Ratio
Mortgage Insurance or Loan Guaranty
Secondary Financing
Fixed or Adjustable Interest Rate
i) How ARMs Work
ii) ARM Features
iii) Explaining ARMs
g) Loan Features and Financing Options
Chapter 7: The Financing Process
a) Shopping for a Loan
i) Assessing the Buyers’ Circumstances
ii) Choosing a Lender
iii) Loan Costs
iv) Evaluating Financing Options
b) Applying for a Loan
i) The Loan Interview
ii) The Loan Application Form
iii) Disclosure Statements
iv) Locking In the Interest Rate
c) Application Processing
i) The Underwriting Decision
d) Closing the Loan
i) The Closing Agent
ii) Steps in the Closing Process
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Chapter 8: Qualifying the Buyer
a) The Underwriting Process
i) Qualifying Standards
ii) Automated Underwriting
b) Evaluating Creditworthiness
c) Income Analysis
i) Characteristics of Income
ii) Stable Monthly Income
iii) Calculating Stable Monthly Income
iv) Income Ratios
d) Net Worth
i) Funds for Closing
ii) Assets
iii) Liabilities
iv) Gift Funds
e) Credit Reputation
i) Credit Reports
ii) Length of Credit History
iii) Payment Record
iv) Major Derogatory Incidents
v) Credit Scores
vi) Explaining Credit Problems
f) Other Factors in Underwriting
Chapter 9: Qualifying the Property
The Lender’s Perception of Value
Appraisal Standards
The Appraisal Process
Appraisal Methods
Key Considerations in a Sales Comparison Appraisal
i) Neighborhood Considerations
ii) Property Features
iii) Replacement Cost Method
iv) Income Method
v) Final Value Estimate
f) Dealing with Low Appraisals
a)
b)
c)
d)
e)
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Chapter 10: Conventional Financing
a) Conforming and Nonconforming Loans
b) Conventional Loan Characteristics
i) Property Types and Owner-Occupancy Rules
ii) Loan Amounts
iii) Repayment Periods
iv) Amortization
v) Loan-to-Value Ratios
vi) Private Mortgage Insurance
vii) Secondary Financing
c) Qualifying Standards
i) Evaluating Risk Factors
ii) Income Analysis
iii) Net Worth
iv) Credit Reputation
d) Special Programs and Payment Plans
i) Buydown Plans
ii) Loans with Lower Initial Payments
iii) Low-Downpayment Programs
iv) Accelerated Payment Plans
Chapter 11: FHA-Insured Loans
a)
b)
c)
d)
e)
f)
g)
h)
i)
The FHA Insurance Plan
Characteristics of FHA Loans
FHA Loan Programs
FHA Insurance Premiums
Sales Concessions and FHA Loans
Secondary Financing with FHA Loans
Assumption of FHA Loans
FHA Underwriting
i) Income Analysis
ii) Assets for Closing
Other FHA Closing Requirements
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Chapter 12: VA-Guaranteed Loans
a) Characteristics of VA Loans
b) Eligibility for VA Loans
c) VA Guaranty
i) Guaranty Amount
ii) The Veteran’s Liability
iii) Substitution of Entitlement
iv) Remaining Entitlement
v) Entitlement and Co-Ownership
vi) Refinancing with a VA Loan
d) VA Loan Amounts
i) Making a Downpayment
ii) Secondary Financing
e) Underwriting Guidelines
i) Income Ratio Analysis
ii) Residual Income Analysis
iii) Compensating Factors
Chapter 14: Fair Lending and Consumer Protection
a) Fair Lending Laws
i) Equal Credit Opportunity Act
ii) Fair Housing Act
iii) Home Mortgage Disclosure Act
b) Consumer Protection Laws
i) Truth in Lending Act
ii) Real Estate Settlement Procedures Act
c) Predatory Lending
i) Predatory Lending Practices
ii) Targeted Victims
iii) Predatory Lending Laws
iv) Other Efforts to Stop Predatory Lending
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