Real Estate Finance: The Laws and Contracts

Study Questions

1. Mortgage law is as clear, consistent, and enforceable in the United States as in any place in the world, and far more so than in many countries. Why is this a vital element of an efficient real estate finance system?.

2. The Congress has adopted changes in bankruptcy law that would make Chapter 7 bankruptcy more difficult for households, requiring greater use of Chapter 13, thus providing greater protection to unsecured credit card companies. As a mortgage lender, do you care about this? If so, what would be your position?

3. Residential mortgage terms (mortgage notes) have become increasingly uniform as the mortgage market has become more national and efficient. Is there any downside to this for the homeowner?.

4. Most lenders making adjustable rate mortgage loans offer a "teaser rate." Is this a good policy or is it misrepresentation?

5. Home mortgage lending is heavily regulated by federal laws. Is this a result of Congressional pandering to consumer groups, or are there good reasons why home mortgage lending should be regulated more than, say, automobile financing?.

6. For your own state, determine whether:

a. It is a judicial or non-judicial foreclosure state.
b. The standard home loan is based on a deed of trust or a mortgage.
c. There is a statutory right of redemption, and, if so, how long.
d. Deficiency judgments are allowed against defaulted homeowners.

Based on this information can you judge your state is relatively debtor friendly or borrower friendly?

7. Download one mortgage and one deed of trust from the Freddie Mac website. Compare them to see what differences you can find in their clauses