Outline - NYU Law



REAL ESTATE TRANSACTIONS

Fall 2003, Prof. Tracht

A. MORTGAGE LENDERS AND MORTGAGE LOANS 2

1. Introduction to the Mortgage Market 2

2. Thrifts and Commercial Banks 2

3. The Credit Quartet 3

a. Valuing a Mortgage 3

b. Length of Mortgage 4

c. Rate of Interest 4

d. Amortization 5

4. Alternative Mortgage Instruments 5

5. Practice Problems on Mortgage Finance / Review Questions on Mortgagee Protections 6

B. BASIC CONCEPTS OF RECORDING STATUTES 6

1. The Basics of Recording Statutes 6

2. More on Recording 7

C. REAL PROPERTY SECURITY INSTRUMENTS 8

1. Forms of Security Devices 8

2. Junior Mortgages 8

3. Construction Financing 9

4. Transfers of Encumbered Property 11

5. Remedies of Secured Creditors 12

a. Pre-foreclosure Rights 12

b. Foreclosure 13

1) Foreclosure Sale Terms and Conditions 13

2) Junior Interests 14

c. Post-foreclosure Redemption Rights 14

d. Deficiency Judgments 14

e. Reforming Mortgage Foreclosure 15

f. Lending Discrimination 15

D. PURCHASE AND SALE OF REAL PROPERTY 16

1. The Contract of Sale and Statute of Frauds 16

2. Conditions 17

3. Caveat Emptor and Quality of the Property 18

4. Representations, Warranties, and Statutory Protections 19

5. Seller's Title Obligation 20

6. Title Insurance 21

Appendix 22

REAL ESTATE TRANSACTIONS

Fall 2003, Prof. Tracht

MORTGAGE LENDERS AND MORTGAGE LOANS

1. Introduction to the Mortgage Market

a. Real Estate is thought of as state law; each state is a sovereign government

1) Usually governed by juris where property is located; fragmented, not uniform across 50 states

2) 2 main areas of federal preemption:

a. Due on sale – mortgage becomes due on sale of property; Garn-St. Germain act (1982) preempted state law on “due on sale” clauses

b. Usury laws – state-law restrictions on interest rates that could be charged; Congress said that these laws could not apply to first mortgage loans on real property

3) Since at least Depression, federal government has taken role in fostering home ownership

4) Before Depression, mortgages typically made by Thrifts (S&Ls, Savings Banks)

a. Mortgage – a promise by someone to make a stream of payments in the future, secured by something (a house); security interest in real property

b. 2 separate documents – note that evidences the loan terms and mortgage that creates and evidences the mortgage

c. Deed: document that creates and/or transfers an interest in property

5) Mortgages financed are different than those we’re used to today (2 ways):

a. Terms were relatively short (5 and 7 years common, maybe 10 years) [today, 15-30Y]

b. Low loan-to-value ratio (LTV) – relationship between the amount of the loan and the value of the property (typically ................
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