DEPARTMENT OF CIVIL ENGINEERING

ESTIMATION AND COSTING

18CV64
EXPERIENTIAL LEARNING
REPORT

MORTGAGE LOAN
CASE STUDIES

SYED ABDULLA FURKHAN

1RV18CV113

Under the guidance of Prof. Anand Kumar BG

Assistant Professor
Department of Civil Engineering RV College of Engineering
In partial fulfilment for the award of degree of
Bachelor of Engineering
CIVIL ENGINEERING
2020-2021
Mortgage Loan: Case Study

DEPARTMENT OF CIVIL ENGINEERING

CERTIFICATE

Certified that the Experiential learning report on ‘MORTGAGE LOAN - CASE STUDIES ’ is
carried out by Syed Abdulla Furkhan (1RV18CV113) who is bonafide student of RV College
of Engineering, Bengaluru, in partial fulfilment for the award of degree of Bachelor of
Engineering in Civil Engineering of the Visvesvaraya Technological University, Belagavi
during the year 2020-2021. It is certified that all corrections/suggestions indicated for the
Internal Assessment have been incorporated in the report deposited in the departmental library.

Signature of Staff in charge Signature of Signature of

Head of the Department Principal
(Prof Anand Kumar BG) (Dr.Radhakrishna) (Dr. K.N.Subramanya)

Marks obtained
/20
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Mortgage Loan: Case Study

A mortgage loan or simply mortgage is a loan used either by purchasers of real property to raise
funds to buy real estate, or alternatively by existing property owners to raise funds for any
purpose while putting a financier on the property being mortgaged. The loan is "secured" on the
borrower's property through a process known as mortgage origination.
In consumer lending, mortgage origination, a specialized subset of loan origination, is the
process by which a lender works with a borrower to complete a mortgage transaction, resulting
in a mortgage loan.
Mortgage borrowers can be individuals mortgaging their home or they can be businesses
mortgaging commercial property. The lender will typically be a financial institution, such as a
bank, credit union or building society, depending on the country concerned, and the loan
arrangements can be made either directly or indirectly through intermediaries. Features of
mortgage loans such as the size of the loan, maturity of the loan, interest rate, method of paying
off the loan, and other characteristics can vary considerably. The lender's rights over the secured
property take priority over the borrower's other creditors, which means that if the borrower
becomes bankrupt or insolvent, the other creditors will only be repaid the debts owed to them
from a sale of the secured property if the mortgage lender is repaid in full first.

Mortgage loan types

There are many types of mortgages used worldwide, but several factors broadly define the
characteristics of the mortgage. All of these may be subject to local regulation and legal
requirements.

 Interest: Interest may be fixed for the life of the loan or variable, and change at certain
pre-defined periods; the interest rate can also, of course, be higher or lower.
 Term: Mortgage loans generally have a maximum term, that is, the number of years after
which an amortizing loan will be repaid. Some mortgage loans may have no amortization, or
require full repayment of any remaining balance at a certain date, or even negative
amortization.
 Payment amount and frequency: The amount paid per period and the frequency of
payments; in some cases, the amount paid per period may change or the borrower may have
the option to increase or decrease the amount paid.
 Prepayment: Some types of mortgages may limit or restrict prepayment of all or a
portion of the loan, or require payment of a penalty to the lender for prepayment.
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Mortgage Loan: Case Study

Types of Mortgage in India

1. Simple Mortgage

The simple mortgage is when a mortgagor binds to pay the mortgage money as per loan
documents or gives the mortgagee, a right to sell the property and apply proceeds towards the
loan of the mortgagor. In a simple mortgage, the possession of the property is not deliverable to
the mortgagee.

2. Mortgage by Conditional Sale

A mortgage by conditional sale is when the mortgagor sells the mortgaged property to the
mortgagee with a condition, with the sale becoming absolute in case of a payment default. In
case of payment of mortgage then the same property is void as per terms.

3. Usufructuary Mortgage

The usufructuary mortgage is when a mortgagor delivers possession of a property to the

mortgagee and authorizes the mortgagee to hold possession of the property until payment of the
debt. Usually, rent or profits from the property while in possession of the mortgagee is applied
in whole or in part towards the debt.

4. English Mortgage

An English mortgage is when a mortgagor binds himself to repay the loan on a certain date and
transfer the property absolutely to the mortgagee, subject to the provision that the mortgagee
will re-transfer the property back to the mortgagee on payment of the loan amount as agreed.

5. Mortgage by Deposit of Title-Deeds

Mortgage by deposit of title deeds is when the mortgagor delivers to the mortgagee, title to
immovable property, with an intent to create security until the payment of the debt.

6. Anomalous Mortgage

Any mortgage which is not a simple mortgage or mortgage by conditional sale or usufructuary
mortgage or English mortgage or a mortgage by deposit of title deeds can be an anomalous
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mortgage.
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Mortgage Loan: Case Study

7. Validity of Property Mortgage

Any mortgage other than a mortgage by deposit of title deeds is valid only if the mortgage is
entered by way of a registered instrument that is signed by the mortgagor and attested by at least
two witnesses.
Repaying the mortgage
Mortgage Loan. Total Payment = Loan Principal + Expenses (Taxes & fees) + Total interests.
Fixed Interest Rates & Loan Term
In addition to the two standard means of setting the cost of a mortgage loan (fixed at a set
interest rate for the term, or variable relative to market interest rates), there are variations in how
that cost is paid, and how the loan itself is repaid. Repayment depends on locality, tax laws and
prevailing culture. There are also various mortgage repayment structures to suit different types
of borrower.
1. Principal and interest
2. Interest only
3. Interest-only lifetime mortgage
4. Reverse mortgages
5. Interest and partial principal
6. Foreclosure and non-recourse lending.

Property Mortgage Laws in India

The Transfer of Property Act, 1882 deals with the mortgage of immovable property in India. The
mortgage is the transfer of an interest in immovable property for the purpose of securing a loan
or the performance of an engagement. Hence, though mortgage does not transfer the property to
a third-party, it creates an interest in the immovable property..
Transfer of Property Act
The Transfer of Property Act deals with the mortgage of immovable property in India. A
property mortgage is a transfer of an interest in a specific immovable property for securing the
payment of money advanced in the form of a loan, an existing or future debt, or the performance
of an engagement which may give rise to a pecuniary liability.
Mortgagor – Mortgagee
Mortgagor: In a property mortgage transaction, the mortgagor is the person who borrows the
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money in lieu of creating a mortgage on the property, as an assurance to pay the debt.
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Mortgage Loan: Case Study

Mortgagee: Mortgagee in a mortgage transaction is the person lending money. Typically a bank
or financial institution.

Mortgage Loan Process Outline

1. Loan Packaging & Lender’s Disclosures (1-2 days)
2. Loan Setup (2-3 days)
3. Appraisal Process (1 week)
4. Processing / Credit Approval (2-3 days)
5. Initial Underwriting Approval (2-3 days)
6. Sign the Initial Closing Disclosure (CD) (Immediate)
7. Final Underwriting Approval (1-2 days)
8. Docs to Title / Final CD Issued (1-2 days)
9. Closing & Funding (TBD)
10. After Closing
Four Paperwork Stages
A lender will request paperwork from you at four different instances through the home loan
process.
1. The first request is already completed – it was done when you got pre-approved. The next
three requests are forthcoming and are noted below with red text in the “Mortgage Process
Outline”.
2. The loan packaging step is largest effort required from you when staring the mortgage loan
process. Document requests are drastically reduced after this stage; however, the urgency will be
intensified the closer we get to closing.
3. The processing step involves the Loan Processor reviewing your file along with third party
documents (like the appraisal, title work, your verification of employment, etc.). They may
request additional information should it be needed before submitting the loan to underwriting for
the conditional approval.
4. The fourth and final step where we request paperwork comes when your file is underwritten.
Underwriters meticulously reviews files to ensure they meet all guidelines. It’s normal for
additional information or documentation to be requested. These “conditions” are typically quick
and easy requests.
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Mortgage Loan: Case Study

Case Study: Low down Payment and Specific Monthly Budget- Moreira team
Mortgage
The Client
The client was relocating to a new city and was looking for a home big enough for his family
that was within his monthly budget.

Loan Type – Condo Purchase

Program – Conventional Home Possible 3%
Sales Price – $199,220
Rate – 4.875%
Required Down Payment – 3% ($5,977)
Payment – $1,808

Client Requirement
The client relocated from California to metro Atlanta and needed to purchase a
condo big enough for his growing family. The client was adamant about putting
down as little as possible, but needed to maintain a payment within his budget. The
other main requirement was being able to purchase something at the high end of
his budget. He wanted to make sure the home would be in the right area for future
resale or rental opportunity.
Loan Challenges
The main challenge here was to find a program that would allow for a
conventional loan since it was a condo, low-down payment and reduced mortgage
insurance. Staying under a specific amount for a monthly mortgage budget was
key for this client.
The Challenge
Needed a conventional program that would allow a low down payment.
Reduced mortgage insurance a plus to keep payment low.
Must stay under a certain amount per month on mortgage payment.
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Solution
Mortgage Loan: Case Study

The company researched all 26 lenders and banks that they work with and found a
perfect program that checked all the boxes. The program was the Freddie Mac 3%
Home Possible program for first time home buyers. It offered a low-down
payment, reduced mortgage insurance and offers competitive rates, especially on a
condo purchase.
The Results
The company were able to secure financing for an amazing condo, in the right zip
code, for just the right price. The company were able to get the client approved fast
and had their loan closed within 28 days.
They found a loan program that catered to a low down payment as well as flexible
guidelines to help the client get the home they wanted.
Client was able to purchase their new condo in less than a month.
The monthly payment ended up being exactly what they expected.

***Thank You***

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