Index

Symbols

60 Minutes 13, 19
A

accrued interest 14, 17, 21, 22, 29, 30, 35
acquisitions 9
adequate security 11
adjacent and contiguous release clause 41
adjustable rate mortgage (ARM) 17, 18, 20, 27, 28, 35
option ARMs 17
advocacy 49, 50
Aggressive Tax Avoidance For Real Estate Investors 22
air-conditioning 7, 30
altitude 46, 48
American Arbitration Association 20
American Institute of Architects 67
amortization 17, 19, 22, 29, 33, 34, 38, 42, 52, 53
annuities 25
Reverse Annuity Mortgage (RAM) 25
Annuity Mortgage 25
anti-deficiency judgment 14
apartment building loan 67
appliances 7
Applicable Federal Rate (AFR) 17
appraisal clause 4
Appraisal Institute 49, 50
Appraisal of Real Estate, The 50
appraisals 4, 25, 39, 40, 41, 47, 49, 50, 53
appraiser hang-ups 50
arbitration 20, 25, 61
assumable mortgages 3, 63
at-risk rules 12
attorneys fees 15
auction 12
auction, foreclosure 12
B

balance sheet 14, 45
balloon mortgages/payments 6, 7, 14, 15, 16, 18, 20, 21, 22, 23, 24, 28, 30, 31, 32, 33, 38, 48
balloon payment 12
bartering 26
basis 10, 11, 24, 26, 33, 39, 43, 44
below-market financing 3, 16, 17, 23, 30, 32
bi-weekly payment 34
Black Lung Benefits Act Of 1981 26
blank check clause 15
blanket mortgages 40, 41, 48
bona fide debt obligation 12
bonds 16, 28, 34, 39, 48, 67, 68
bond collateral 16
bond leases 67
tax exempt bonds 34
zero coupon bonds 34
breach of contract 12, 13
bridge loans 62, 63
Bruss, Bob 5, 26, 49
building code 7, 9
Burnes, James 24
Business Week 27, 28
buy downs 51, 57
C

Canon, Katie 27
capacity 37, 51, 55, 67, 68
capital gain 26, 39, 44
capital gains tax 17, 44
capitalization (cap) rate 18, 21, 63
carrying costs 27, 38, 62
cash basis 24
cash equivalent value 3
cash flow 7, 8, 9, 12, 14, 20, 21, 22, 23, 24, 26, 29, 30, 38, 39, 44, 62, 63, 66
cash flow guarantee 66
character 37, 55, 67, 68
Chase Econometrics 28
clogging the equity of redemption 23
closing cost 60
co-borrower 68
Code of Federal Regulations (CFR) 63
Coldwell-Banker 18
collateral 11, 16, 37, 38, 48, 49, 51, 55, 67
commercial lease 66
commission 17, 18, 20, 56, 60
commitment letter 15
comparable sales 49
compound interest 22
condemnation 9
condos 58, 60
construction loans 50, 62
consumer lender 30
Consumer Price Index 19, 28
contractors 47, 63, 64, 65
conventional loan 58
convertible loans 24, 25, 27
Cordner v. U.S. 26
co-signers 55, 66, 68
court decision 12
courts, federal 12
“creative” finance 22, 33, 35, 38, 40, 41, 42, 43, 45, 46, 63
credit 7, 9, 10, 17, 28, 31, 33, 37, 39, 40, 42, 55, 57, 59, 61, 62, 63, 64, 67, 68
credit check 17, 40
credit rating 31, 67
line of credit 7, 62, 64
credit-cards 61, 62, 63, 64
credit leased building 67
creditors 61
credit tenant 67
criteria which courts have used to recharacterize debt as equity 13
Crittenden, Alan 29
Crittenden Report 29
Croft, Steve 13
cross-collateralization 50
cross-default clause 50, 51
cumulative losses 12
D

Daddy Mac 27
debt-carrying capacity 51, 68
debt coverage ratio 66
debt discharge 12
debt v. equity, characterized 13
declining neighborhoods 58
deductible for tax purposes 12
deduction 12
deed in lieu 14
default 14, 61
defeasance 16, 47
deferred maintenance 8
deficiency judgment 11, 14
Department of Housing and Urban Development (HUD) 56, 57, 58, 59, 60, 63, 64
HUD 223(f) 56, 57, 58
HUD Title I 58, 59, 63, 64, 65
list of various HUD programs 58
deposit institutions 44
Depository Institutions Deregulation and Monetary Control Act of 1980 44
depreciation 12, 24, 26, 27, 42, 44
depreciation basis 44
dialog of the deaf. 13
discharge debt 12
discounted mortgage 4
discount purchase 31
distressed property 3
doctrine of substance over form 24, 45
do-it-yourself 63, 65
Dorzback v. Collison 24
down payment 7, 22, 26, 34, 39, 42, 43, 44, 65
due-on-encumbrance clause 10
due-on-sale 3, 10, 24, 47, 58, 62
Dun and Bradstreet 67
Dupree + Scott 7, 43
Dwyer, author 13
E

earn-out second trust deeds 18, 19
earthquake insurance 16
economic significance 12
eleventh hour demands 15, 16
equitable mortgage 45
equitable title 42
equity 11, 14, 16, 18, 21, 22, 23, 24, 25, 26, 27, 28, 29, 38, 43, 44, 48, 49, 51, 58, 64
equity partner 14
shared equity financing 26, 27
escrow 5, 40
Estate of Franklin court case 12
excess loan proceeds 64, 65
excess loans over basis 10, 33, 43
exchanges 22, 23, 26, 39, 42, 44, 50
exercise of the option 12
expenditure 19
F

fair market value 12
Family Backed Mortgage Association (FBMA) 27
Farley Realty Corp. 24
Farmers Home Administration (FmHA) 60
Federal Home Loan Bank Board (FHLBB) 3
Federal Home Loan Mortgage Corporation (FHLMC/Freddie Mac) 1, 5, 6, 9, 27, 49, 50, 52, 57
Federal Housing Administration (FHA) 4, 29, 55, 56, 57, 58, 59, 60, 64, 65
Federal Income Taxation of Real Estate 24
Federal National Mortgage Association (FNMA/Fannie Mae) 1, 4, 5, 6, 9, 27, 51, 52, 53
fees 2, 10, 15, 31, 32, 33, 34, 35, 39, 40, 53, 55, 56, 61, 65, 66, 68
FHA loan limit 57
FHA program 56
FHLBB 3
fire insurance 6
fixed-rate mortgages 4, 27, 28, 58, 64
fixers 8
flipping 62
forebearance of money 12
foreclosure 6, 9, 10, 12, 14, 15, 37, 38, 40, 41, 43, 45, 50
foreclosure auction 12
form pleadings. 13
Fort Worth, TX 9
forty year loan 58
fraud 64, 65
free and clear ownership 21, 29, 33, 34
Friery, Linda 3
Friery v. Sutter Buttes Savings Bank 3
front end fee 65
G

Garner, James 19
Glubetich, David 33
Gluskin v. Atlantic S. & L 46
gold clauses 29
gold coins technique 26
Golden States Lanes v Fox 45
Gough, Robert 27, 28
government insured loans 56, 57, 58
graduated payment mortgage (GPM) 18, 21, 29, 35
ground leases 42
growing equity mortgage (GEM) 28, 29
guarantee 12, 14
gurus 63, 64
H

Hambeuchen court case 13
Handy v Gordon 46
Harney, Ken 25
heating 7
holdbacks 50
holding period 23, 26, 29
honeymoon 8
hot money 62
Housing and Community Development Act of 1980 44
Housing & Development Reporter, Current Developments 56, 58, 59, 60
How I Turned $1,000 into $1,000,000 in Real Estate in My Spare Time 64
How to do a Delayed Exchange 26
How To Make A Fortune in Real Estate: The Land Game 43
Hunt court case, 80 TC 62 10
I

“if” loans 18, 19, 20, 21, 23, 28, 35, 66
image problem 13
impound accounts 4, 5, 6
improvement loans 20, 63, 64, 65
improvements 8, 46, 47, 50, 59, 64, 65
income pattern 21, 23, 29, 30, 35, 38, 39
income property 1, 17, 18, 40, 49, 52, 58, 60
inflation 9, 29
inheritance 23, 31
institutional financing 8, 21, 52
institutional lenders 1, 4, 5, 6, 30, 35, 45, 48, 52
insurable interest 25
insurance 4, 5, 6, 10, 16, 25, 39, 46, 52, 55, 57, 58, 62, 65, 66, 67
earthquake insurance 16
hazard insurance 5, 6
zoning insurance 6
interest deduction 12
interest on interest 22, 24
interest-only loans 17, 20, 21, 22, 28, 29, 30, 31, 38
Internal Revenue Code 12
Internal Revenue Code (IRC) 26, 34, 39, 42, 65
Internal Revenue Service (IRS) 10, 17, 19, 24, 26, 42, 47, 65
invisible balloon payments 6, 7, 24
invisible hand 53
IRC (Internal Revenue Code) 12
J

Journal of Real Estate Taxation 24
judgment, deficiency 11
junior leins 3, 10, 15, 42, 45, 46, 47, 48
K

Kaufman, Henry 28
kickers 23, 24
L

land contracts 10, 32, 37, 40, 42, 43, 44
Language of Real Estate, The 11, 43
LaSala v. American Savings and Loan 10
late penalties 1, 61
Law of Real Estate Finance, The 13
Lawyers Title News 24
leaseback 27, 44, 45
lease-options 10, 40
legal and equitable title 42
lessee 45
leverage 7, 16, 20, 22, 23, 26, 29, 33, 39, 41, 42, 45, 49, 60, 67
liens 3, 24, 43, 45, 47, 53
liens, junior 12
life estate 25
limited partnership 10, 11, 67
litigation 7, 15, 19, 20, 32
loan commitment 50
loan constant 20, 21, 29, 38, 62, 63
loan, nonrecourse 11
loan-to-value ratio (LTV) 5, 13, 17, 21, 23, 31, 46, 47, 48, 51, 52, 53, 57, 58, 59, 63, 66, 67
long-term assets 3, 10, 26, 62, 67, 68
M

Madison, author 13
MAI (Member Appraisal Institute) 53
maintenance 6, 7, 8
manufactured/mobile homes 58, 60, 66
margin [call] 61
master metered 30
matching maturities 62
materials cost 63
McDougal court case 26
Mennonite Board of Missions v. Adams 15
“money back” deal 34
Moody’s bond rating 16
moral obligation 13, 14
mortality table 25
mortgage broker 56
mortgage insurance 52, 55, 58, 65, 66
mortgage loan 67
Multifamily Accelerated Processing (MAP) 57
multifamily mortgage programs 64
N

National Association of Realtors® 17, 40, 43, 60
National Housing Act 63
negative amortization 17, 22, 29
negative cash flow 12, 14
negative equity 13
net worth 11, 14, 45
Nickerson, William 63, 64
Ninth Circuit Court of Appeals said 12
non-cash payments 26
non-mortgaged property 14
non-owner-occupants 47, 51, 52, 57
nonrecourse 12
nonrecourse loan 10, 11, 12, 13, 14
nonresidential 64
nothing down deals 14, 31, 42
O

operating expenses 14, 26
option ARMs 17
option price 45
option, put 12
option to renew 42
orphan diseases 56
overbuilt markets 19, 20, 30
overhead 64, 65
owner-occupants 26, 47, 51, 52, 57, 63, 65, 66
ownership period 8
P

partnerships 10, 11, 24, 26, 67
payment pattern objectives 21
payment pattern/schedule 1, 16, 18, 21, 23, 26, 29, 30, 34, 35, 37, 38, 39, 48, 59
People-to-People financing 17
performance of the other party 12
personal liability 10, 11, 12, 14, 52
personally liable 11, 12, 13
personal property 37, 38, 39, 48
pleadings in court 13
points 16, 39, 48, 52, 57, 65, 66
prepayment 1, 2, 3, 4, 6, 9, 16, 31, 32, 33, 34, 35, 39, 41, 51, 57, 58
prepayment bonus 3, 4, 16, 31, 32, 35
prepayment penalty 1, 2, 3, 6, 9, 16, 33, 34, 39, 41, 51, 57, 58
presidential elections 27
Price Level Adjusted Mortgage (PLAM) 29
principal payments 22, 24
principle residence 52
private mortgage insurance (PMI) 55, 65, 66
profit 14, 23, 30, 62, 63, 64, 65
property taxes 5, 18, 30
property value 21, 53
proportional release clause 41
proposal and contract 65
Proposition 13 18, 19, 20
protective clauses 1
psychology 33
public corporations 44, 45
purchase agreement 20, 43
purchase money debt 12, 14
put option 12, 13
Q

quick sale value 37, 38
R

Rainier Bancorp 57
Raphan v. U.S. 11
rapid amortization mortgages 33, 34
rate of return 8, 9, 16, 21, 22, 23, 24, 26, 29, 30, 32, 33, 34, 47, 48
raw land 49
Real Estate Turnaround Formulas 33
real property 37, 38, 61
recharacterize debt as equity 13
recourse loans 10
recovery period 42
Reed’s Rule of Real Estate Finance 27, 33, 42
refinancing 2, 10, 16, 23, 24, 28, 29, 31, 44, 45, 47, 48, 51, 57, 58, 60, 61, 67
rehabilitation/renovation 46, 58, 59, 62, 64, 67
release clause 40, 41, 48
remainder estate 25
rental property 20, 28, 52, 62, 63, 64
rent control 58
repairs 6, 7
repayment schedule 29
replacement costs 5, 8
resale value 48
reserve for replacements 8
return on investment (ROI) 21
return receipt letters 9, 16
Reverse Annuity Mortgage 25
right of first refusal 31
risk 3, 11, 14, 19, 24, 25, 33, 46, 48, 51, 53, 55, 62, 63, 67
risk preference 11
RM (appraiser certification) 53
Robinson, Gerald 24
rollover/renegotiable rate mortgage (RRM) 27, 28, 35
Rule of 78s 39, 40
S

sale leaseback 44
Salomon Brothers 28
San Francisco Chronicle 15
Scott, Mike ii, 7
seasonal income/payment 30
secondary financing 53
second mortgage 9, 15, 16, 19, 21, 33, 45, 46, 47, 48, 53
section 465 of IRC 12
secured loan 37
security, adequate 11
security instruments 37, 40, 48
self-amortizing loans 17, 20, 21, 28, 29, 34
self-amortizing mortgage 17, 34
seller ego problem 4
seller financing 1, 3, 4, 17, 18, 21, 29, 30, 31, 32, 35, 43, 45, 57
seller wraparound 30
senior loan 46
shared appreciation mortgage (SAM) 23, 24, 26
short-term capital gain 39
short-term money 29, 32, 38, 39, 61, 62, 63
simple interest 22
simultaneous exchange 22
single-family ii, 40, 49, 57, 59, 60, 64
skipping payments 30
small claims court 5, 53
Smith, Adam 53
split funding 22, 23
Standard & Poors bond rating 16
standby loan commitment 50
Stanfill, John 18
Stevens Brothers & Miller-Hutchinson Co 24
stock market 12
Stockwell v Lindeman 46
Stonecrest court case, 24 TC 659 10
stop-loss agreement 14
subdivisions 40
subject to 2, 3, 14, 15, 32, 45, 52, 53, 55, 59, 60
sublease 32
subordination clause 45, 46, 47
substitution of collateral 48
sunset clauses 51, 52, 53, 67
T

tax 4, 5, 10, 15, 17, 18, 19, 22, 23, 24, 26, 27, 29, 30, 33, 34, 39, 40, 42, 43, 44, 62, 63, 64, 68
property tax 19, 27
tax deductible 22, 24, 26, 27, 34, 42, 44, 64, 65
taxable income 44, 62
tax exempt bond 34
“tax-free” money 64
Tax Reform Act of 1984 34
teaser rates 17
tenants 6, 7, 10, 25, 26, 42, 43, 44, 55, 66, 67, 68
Three Cs of Appraisals 49
Three C’s of Credit 37
title commitment 45
title company 9, 16, 45, 46, 48
title insuror 46
title report 45
transaction cost 38, 40, 58, 60
transferrable mortgage 58
trust deeds 1, 18, 19, 32, 37, 39, 40, 43, 44
U

uncapped adjustable 28
unconscionability 24
United States Department of Agriculture (USDA) Rural Development 60
Housing and Community Facilities Programs 60
unsubordinated ground lease 42
U.S. League of Savings Institutions 28
usury 1, 24, 33, 44
utilities 30
V

vacancy rates 19, 20
vacation homes 49
value lender 37
Van Kampen Merritt, Inc 67
Veterans Affairs (VA) 29, 55, 56, 57, 58, 59, 60, 64, 65
W

walkaway situation 13
Wall Street Journal 13, 14, 17, 27, 28, 44
Wharton Econometrics 28
Whitney, Russ 64, 65
Winnikoff, Albert 43
workers compensation 30
worst-case scenario 7, 27, 28, 62
wraparound mortgages 9, 10, 18, 30, 32, 33, 43
written notice 6, 9, 14
www4.law.cornell.edu/uscode/12/1703.html 63
www.appraisalinstitute.org 50
www.dsaa.com 7
www.freddiemac.com/sell/forms/ 49
www.hud.gov 59
www.HUD.gov/offices/hsg/sfh/title/title-i.cfm 63
www.rurdev.usda.gov 60
www.ugcorp.com 66
www.west.thomson.com 56
Z

zero coupon bond 34
zoning laws 6