Please explain: Mortgages are considered to be a form of real estate investment because: A) the borrower will own the property at the end of the loan term. B) if the borrower defaults on the loan, the lender may end up owning the property. C) the investor receives a constant stream of cash flows. D) mortgages can be traded in the secondary market. All of the following are disadvantages of the cost approach method of estimating the market value for real estate EXCEPT: A) market value of a property may differ significantly from its construction cost. B) estimating the value of the land may be difficult. C) market value and replacement value for a building may not be equal. D) the replacement cost of existing improvements may be difficult to determine. Thanks S
B for the first statement I believe. D for the second (more of a process of elimination)
A and B.
>Mortgages are considered to be a form of real estate investment because: >A) the borrower will own the property at the end of the loan term. For the first one, the answer is A. As we have seen in the past year, all mortgages end in a process called foreclosure. During this process, the holder of the note exercises his right under the mortgage to take possession of the property due to violation of the terms of the mortgage, usually non-payment. The result of this process is that mortgage investors end up owning lots of property. Despite some confusion in the media, sub-prime does not refer to the properties (it’s about the person taking out the loan) and you can get some good properties this way. Espcially if the previous occupants can be persuaded not to trash the place on the way out.
Our company (like many other sub-prime lenders) have lot of Foreclosure avoidance, workout and hardship programs to keep accounts current. We do not want to own property from delinquent customers.
i disagree with joey. Investing in mortgages is not the same as what you think of in terms of a home owner with a mortgage on his house. Two totally different concepts
Uh, it was a joke. Sorry.