Lesson 23: Comprehensive Review for Final Exam

November 30, 2021

Review:

Presentation:

Exam 1 Topics:

How to buy a single family home
- Save for down payment
- Loan pre-approval
- Property search, MLS
- Offer, Negotiation, Under Contract
- Earnest Money
- Inspection
- Appraisal
- Title, Escrow, Closing
Mortgage 101
- Down payment (20%)
- Fixed vs ARM
- Interest rate
- Amortization schedule
- Property Taxes
- Hazard Insurance
- PMI
Comparable Sales Analysis
- Single Family Valuation
- Identify “comps”
- Price per SqFt
- Adjustments to account for key differences
ROI Pro Forma Analysis
Review 1-page property analyses

Exam 2 Topics:

2008 Housing/Mortgage/Financial Crisis
Monetary Policy
Federal Reserve
- Alan Greenspan
- Ben Bernanke
Securitization and Derivatives
- Mortgage backed securities (MBS)
- Collateralized Debt Obligations (CDOs)
- Credit Default Swaps
Subprime Lending
- Low-income borrowers
- Predatory lending
- Loan origination fees/bonuses
Deregulation
- Laissez-faire capitalism, Ayn Rand, Reaganomics
- 1999 Gramm-Leach-Bliley Act – repeals 1933 Glass-Steagall Act
- 2000 Commodity Futures Modernization Act – prevents regulation of most derivatives
- 2004 SEC proposes “voluntary regulation” and lower capital requirements
Mortgage Meltdown
- Skyrocketing default rates
- Dropping property values
- Strategic default
- Neighborhood deterioration
Crisis Culprits
- Banks’ Excessive Leverage
- Subprime Lenders
- Federal Reserve Low Interest Rates
- Rating Agencies
- Secondary Mortgage Market
  - Fannie Mae
  - Freddie Mac
Fiscal Policy
- Tax policy
- Spending policy
- 2017 Tax Reform
Crime but no punishment on Wall Street
- No one went to jail
- Limited effort by Dept of Justice to pursue cases
- Missed opportunity to impose discipline
- Who’s cheating now?
Recession
- Yield Inversion
- Unemployment Rate
- Credit expansion
- Housing Supply/Demand

Topics Since Exam 2:

Justin