Commercial Banks
The largest financial intermediaries directly involved in the financing of real estate. Commercial banks act as lenders for a multitude of loans. While they occasionally provide financing for permanent residential purchases, commercial banks primary real estate activity involves short term loans, particularly construction loans ( typically 6 months to 3 years ) and to a lesser extent home improvement loans. Most large commercial banks have a real estate loan department; their involvement in real estate is through this department. Some of the largest commercial banks are also directly involved in real estate financing through their trust departments, mortgage banking operations, and real estate investment trusts (REITs). All commercial banks are either federally (nationally) chartered or state chartered. National banks are chartered and supervised by the U.S. Comptroller of the Currency. The word "national" appears in their title, and they are members of the Federal Reserve System (FRS). However, only 1/3 of all commercial banks are members of the FRS, even though the member banks control the majority of total bank assets. Nationally chartered banks are also required to maintain membership in the Federal Deposit Insurance Corporation (FDIC). Federally chartered banks can make real estate residential loans up to 90% of the appraised value with a maturity of not more than 30 years. However, any government insured or guaranteed loans are exempt from these limitations. State chartered banks are regulated by various agencies in their particular state, and membership in both the FDRC and the FRS is optional. Banks not members of the FDIC are normally required to maintain membership in a state insurance corporation.
Popular Real Estate Terms
Insulation covered on each side by a material, such as metal. ...
Stipulation in a contract on how property can or cannot be used. For example, a rental agreement may stipulate that an apartment may not be used for retail trade. ...
As one of the principles of contract, the lawful object meaning can be defined as an object or action which is authorized, approved, and not prohibited by law. A contract to be legal ...
Date of the valuation of property, usually contained in a report. ...
Real rate of interest on a loan. It is the coupon rate divided by the net proceeds of the loan. Assume Sharon took out a $1,000,000, on year, 10% discounted loan to buy real estate. The ...
If you’re a renter and you own a pet, you might be familiar with the term pet rent. There has been a lot of discussion about the meaning of pet rent and controversy as it isn’t ...
The allocation method estimates the value of the property’s land by gathering information from comparable properties. The allocation method of estimating site value is ideal, however, ...
Used when determining the worth of an annuity that reinvests the amount of recaptured investment at a risk-free interest rate. ...
An offering of securities, stock and/or debt, directly to investors rather then through the public exchange markets. An advantage of a private placement to a real estate business is that ...
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