This document discusses key concepts related to real estate finance and contracts, including the two main contracts in a mortgage (the note and mortgage/deed of trust), different types of mortgage rates and payments, prepayment penalties, recourse vs. non-recourse loans, foreclosure, and the time value of money principles of present value, internal rate of return, and net present value. Key terms covered include adjustable rate mortgages, balloon payments, deficiency judgments, power of sale foreclosures, and the order of priority for lien holders.

1. MBA 590
Real Estate Analysis
College
of Business
AlfaisalUNIVERSITY

2. Chapter 9
Finance
Laws and Contracts

3. Mortgage
debt secured with real
estate

4. Two contracts
note
mortgage
(deed of trust)

5. Note
rate of interest
early payoff
personal liability
late payments
due on sale
call due option

6. Note
default
foreclosure

7. Rates
fixed
adjustable - ARM
indexed
LIBOR
margin
caps
teaser

8. Payments
monthly
amortizing
interest-only
term
balloon

9. Pre-Payments
right
penalty

10. Personal Liability
recourse
non-recourse

11. Demand Clause
must pay now

12. Mortgage vs.
Deed of Trust
power of sale clause

13. Mortgage vs.
Deed of Trust
title
lien

14. Deed of Trust
third party holds the
deed - trustee
power of sale

15. Default
failure to meet a
requirement
foreclosure

16. Short Sale
seller will pay the
difference

17. Foreclosure
court-ordered
order of liens

18. Order of Liens
satisfy in order
first 1,000,000
second 500,000
sale 1,300,000
Who would get?

19. Deficiency judgment
borrower may be liable
for difference

20. Power of Sale
fast and cheap
no right of redemption

21. Possession
occupy property

22. Title
legal ownership

23. Chapter 14
The Effects of
Time and Risk
onValue

24. Chapter 14
present value
compound and divide
risk
internal rate of return
net present value

25. TimeValue
(1 + r)
n
compounding
multiplying

26. TimeValue
discounting
(1 + r)
n
1
dividing

27. what is r?
includes all risk
factors

28. Internal Rate of Return
IRR
Discounts all
cash flows to
balance