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Introduction

Introduction. Presenter Md. Zahangir Alam Department of Business Administration International Islamic University Chittagong. Concept of Real Estate. Property consisting of land and the buildings on it, along with its natural resources.

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Introduction

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  1. Introduction Presenter Md. Zahangir Alam Department of Business Administration International Islamic University Chittagong www.mzafinance.net

  2. Concept of Real Estate • Property consisting of land and the buildings on it, along with its natural resources. • Business of real estate; the profession of buying, selling, or renting land, buildings or housing. www.mzafinance.net

  3. Concept of Real Estate Finance It involves the institutions, markets, and instruments used to transfer money and credit for the purpose of developing or acquiring real property. www.mzafinance.net

  4. Meaning of Title • It establishes the quantity of rights in real estate being transmitted from seller to buyer. • When a person has “title,” he is said to have all of the elements, including the documents, records, and acts, that prove ownership. • When a person or entity has legal evidence, or “proof,” of ownership, they are said to have “title” to a property. • This evidence links ownership by a person to a specific property. www.mzafinance.net

  5. Concept of Deed It is a document that transfers title of an asset from a seller to a buyer. www.mzafinance.net

  6. Meaning of Title Assurance It refers to the means by which buyers of real estate learn in advance whether their sellers have the quality of title they claim to possess, and receive compensation if the title not found as represented, after transfer. www.mzafinance.net

  7. Methods of Title Assurance • Warranty Method Seller may provide a warranty as part of deed. • Abstract and Opinion Method It’s a two -step process • First, there is a search of the title record, which involves locating and examining all of the instruments in the public records that have affected the title of the property in question • Second, when the title search is completed, a lawyer studies the relevant public records and other facts and proceedings affecting title for the purpose of arriving at an expert opinion of the character of the title. www.mzafinance.net

  8. The Title Insurance Method • It is developed to cure the inadequacies of title validation accomplished through an abstract and legal opinion. • Title insurance does all that a carefully drawn abstract and a well-considered opinion by a competent lawyer are expected to do. • It adds the principle of insurance to spread the risk of unseen hazards among many property owners. • It is required for any mortgage that is traded in the secondary mortgage market. www.mzafinance.net

  9. Definition of Mortgage • A debt instrument that is secured by the collateral of specified real estate property and that the borrower is obliged to pay back with a predetermined set of payments. • It is used by individuals and businesses to make large purchases of real estate without paying the entire value of the purchase up front. • It is also known as liens against property or claims on property. www.mzafinance.net

  10. Assumption of Mortgage • It is the purchase of mortgaged property  whereby the buyer accepts liability for an existing debt secured by a mortgage on the property. • It generally requires the consent of the lender that owns or services the existing loan. • The seller remains liable to the existing mortgage lender unless the lender agrees to release the seller from further liability. www.mzafinance.net

  11. In a mortgage assumption transaction, the buyer generally pays the seller cash as compensation for the equity already invested in the property. • The buyer then assumes ownership of the mortgage and must make mortgage payments for the original monthly amount at the previously fixed rate of interest. www.mzafinance.net

  12. Types of Mortgage Assumption • Simple Mortgage Assumption • It involves a transfer transaction between the seller and buyer without the consultation of a lender. • In this type of transfer, the seller virtually always retains all liability, even if the buyer possesses the property but stops paying off the mortgage. • Assumption of a Mortgage by Novation • It involves consultation with a lender who must review and approve the intended buyer, at which time the seller will surrender responsibility from repaying the loan and will not be held liable for any late or missed payments. www.mzafinance.net

  13. Transfer of Mortgage to a New Owner • In order to transfer a mortgage, one must first determine whether the mortgage underwriting permits this transaction. • If allowed, the lender must verify that the new holder of the mortgage possesses a solid credit history and adequate income to make loan payments on time; a lender will not transfer a mortgage to someone who is less qualified or able to pay off the loan than the current holder. www.mzafinance.net

  14. While transferring a mortgage under typical circumstances can be quite difficult, certain laws in place allow mortgage assumption under mitigating circumstances, regardless of mortgage type. • In cases of death or divorce, borrowers may find mortgage assumption a viable option. www.mzafinance.net

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