EL CAMINO COLLEGE COURSE OUTLINE: RE 14A

I. COURSE DESCRIPTION:

Course Title and Number: Real Estate 14A (RE31)
Descriptive Title: Real Estate Finance
Discipline: Real Estate
Hours Lecture: 3
Course Units: 3
Grading Method: Letter
Associate Degree Credit
Transfer CSU - Effective Date: prior to 7/92.
Recommended Preparation: Real Estate Principles (RE11) OR concurrent enrollment OR California DRE license and Business Mathematics (BUS 15).

Catalog Description:
This course introduces the student to the principles of real estate money and credit, sources of real estate loan funds and loan costs. Students identify methods and use mathematics in financing homes and investment properties.

NOTE: This course is approved by the California Department of Real Estate (DRE) prior to taking the California real estate broker license. This course is approved for one of the two courses required for DRE salesperson license in addition to Real Estate Principles (RE11). This course is approved for 45 hours of continuing education (C/E) credit by DRE for license renewal with 90% attendance. This course is approved by the Office of Real Estate Appraisal (OREA) for 54 hours of C/E credit for appraisal license renewal with closed book final exam.

II. COURSE OBJECTIVES AND METHODS OF EVALUATION

A. Course Objectives:
1. The student will demonstrate knowledge of how to use a financial calculations, including, but not limited to the following examples:
a. Use amortization tables for loan payoff balance, loan payments and discount points using the Realty Bluebook.
b. Use financial calculator to compute data, such as the Hewlett Packard (HP), Texas Instrument (TI), or Real Estate Master.
c. Calculate capitalization rate, points, discounts, yields, qualification ratios and fees.
2. The student will demonstrate how to identify and describe: Features of financial instruments; loan types and their features; the loan alternatives; and, the loan process.
3. The student will demonstrate the ability to: a. Outline the aspects of the secondary money market.
b. Analyze alternatives for a turned-down loan package.
c. Explain institutional and non-institutional lender criteria.

B. Methods of Evaluation:
1. Substantial writing assignments, including: written homework and other papers. This course primarily involves skill demonstrations or problem solving.
2. Computational and non-computational problem-solving demonstrations, including: exam, quizzes and homework problems.
3. Skill demonstrations, including: industry forms completed.
4. Objective examinations, including multiple choice, completion, true/false and fill-in-the-blanks.

III. OUTLINE OF SUBJECT MATTER

Why real estate finance?
Who are the institutional lenders?
Who are the non-institutional lenders?
Alternative mortgage instruments: What are they?
What are conventional loans?
What are government-backed loans?
How do points and discounts operate in the secondary market?
What role does "Qualifying the property" play in loan underwriting?
What role does "Qualifying the borrower" play in underwriting?
How do processing, closing and servicing loans take place?
How do foreclosures and other lending problems fit into real estate finance?
Who are the major players in construction financing?
How can I simplify mathematics of real estate finance?
What are some creative financing approaches?
How does one finance small investment properties?
Realty Blue Book and financial calculations.
Mathematics review and calculator work.

IV. READING AND WRITING ASSIGNMENTS

Three hours of work per week, including class time, are required for each unit of credit.

A. A representative example of an assignment.
The student will calculate the buyer's financial costs for a HUD/RESPA financial disclosure sheet to estimate the buyer's proposed closing costs.

B. Two hours of work outside of class are required for each hour of lecture or equivalent.
Each student will be required to perform the following outside of regular class time:
1. Study.
2. Answer questions.
3. Skill practice.
4. Required reading.
4. Problem solving activity or exercise.

V. COLLEGE LEVEL CRITICAL THINKING ASSIGNMENTS.

1. The student will demonstrate the ability to take a buyer who is turned down for a loan qualification and show how the loan can be resubmitted to a lender with approval by changing the loan package so that the buyer would qualify favorably..
2. The student will demonstrate the ability to take a prospective purchaser and calculate sheets for VA, FHA, and conventional loan ratios to determine the maximum loan amount for which he or she would qualify.

VI. PLANNED INSTRUCTIONAL ACTIVITIES.

This course is taught using lecture and note taking, videotape presentation on loan types and qualifications, weekly reading from textbook and review of fill-in-the-blanks in student study guide, and group dynamics from completion of financial calculation problems in study groups determined by type of calculator (i.e. HP, TI, etc.).

VII. APPROPRIATE TEXT AND MATERIALS

Required:
California Real Estate Finance - Student Study Guide, newest edition, Bond,, California Community Colleges, Real Estate Education Center, Pirate's Bookstore.
California Real Estate Finance, Bond, Gavello, and Young, Prentice Hall Publishing, New Jersey.

Other Required Materials:
Real Estate Project, Grogan, newest edition, El Camino Bookstore.
Realty Blue Book, FINANCIAL TABLES, newest edition, Dearborn Publishing Company, Chicago.
Computer search for loan programs, rates, etc. (such as Internet, homeseekers, MLS or similar).
Real estate Financial Calculator.

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