Jennifer Park is a real estate salesperson in New York helping a first-time buyer understand the difference between co-op and condo financing. Which statement about the security for these loans is accurate?
Correct Answer
A) Co-op loans are secured by shares and proprietary lease; condo loans are secured by mortgages on real property
Co-op loans are secured by the borrower's shares in the cooperative corporation and the proprietary lease (personal property), while condo loans are traditional mortgages secured by the real property (the individual unit and common area interest).
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Related Topics & Key Terms
Key Terms:
Related Concepts
RESPA is a federal law that requires lenders to provide borrowers with information about settlement costs, prohibits kickbacks and referral fees, and limits escrow account deposits. It applies to federally related mortgage loans.
The secondary mortgage market is where existing mortgage loans are bought and sold between lenders, investors, and government-sponsored enterprises (GSEs) like Fannie Mae, Freddie Mac, and Ginnie Mae.
TILA is a federal law that requires lenders to disclose the true cost of credit to borrowers, including the annual percentage rate (APR), total finance charges, and loan terms. It is implemented by Regulation Z.
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