Everyone wins in the Cash for Keys program (Troeh, 2009). The Cash for Keys program gives homeowners who are struggling to make their mortgage payments the opportunity to receive a lump sum of cash in exchange for vacating their properties by an agreed upon date with the lender. The homeowner agrees to leave the property in move in condition so that the lender may quickly take back the property and lost it for sale. The homeowner is released from all responsibility of the property and the bank saves thousands of dollars in legal fees. Cash for Keys was created to aid both homeowners and lenders in the mortgage crisis. The mortgage crisis is the result of an insufficiently regulated market (Brock, 2008). Low lending standards were a significant component of the mortgage crisis (Brock, 2008). Lenders made millions of loans to people to buy homes that they could not afford (Brock, 2008). It is estimated that these lending practices have cost lenders tens of billions of dollars (Brock, 2008). The inflationary housing boom meant that people who could not afford their homes were able to refinance or sell (Brock, 2008). Homeownership was a goal that former president George Bush encouraged to citizens by stating “We want everybody in America to own their own home” (Brock, 2008). An earlier policy to help homeowners was the Making Home Affordable Program. This program was President Obama’s administration’s strategy to help homeowners avoid foreclosure while stabilizing the country’s housing market and improving the nation’s economy (MakingHomeAffordable.gov). This program was implemented on April 1, 2009 and its objective was to lower monthly mortgage payments (MakingHomeAffordable.gov). The program required that the lender who originated the loan must refinance the loan (MakingHomeAffordable.gov). Not all homeowners were eligible for this program. A Short Sale was another program which aimed to help struggling homeowners with mortgages they could no longer afford. Short sales were a timely process which involved the listing of the property for sale (Elias). Potential buyers could offer a price for the property which was often significantly less than what the homeowner owed to the lender (Elias). A short sale was an attempt to avoid foreclosure or bankruptcy for the homeowner (Elias). Lenders could sue the homeowner for the difference between the loan and the selling price of the property (Elias). There was a tax consequence to short sales – lenders reported the difference to the Internal Revenue Service as taxable income and homeowners were required to pay income tax (Elias). This new problem led to the creation of the Mortgage Forgiveness Debt Relief Act of 2007 which changed how the difference was reported to the Internal Revenue Service (Elias). Short sales have tripled since 2008 to an estimated annual volume of 400.000 based on a data sample of single family residence short sale transactions (Dymi, 2010). Over half of all short sale transactions have been in four states hardest hit by the mortgage crisis: California, Florida, Texas and Arizona (Dymi, 2010). The Cash for Keys program offered hope for those who struggled with attempts to modify loans, list properties as short sales or dealt with harassing collections procedures (Harmon, 2011). The Cash for Keys program offered a bail out to the Homeowner instead of the banks (Harmon, 2011). It offered the homeowner the option to walk away from the home (Elias). The Cash for Keys program offers homeowners cash as an incentive to leave their homes in a timely manner (Brathwaite, 2011). The homeowner agrees to maintain the property and leave it in broom swept condition and also agrees to removing debris from the interior of the home as well as from the exterior (California Department of Real Estate). The homeowner also agrees to leaving all light fixtures, appliances and landscaping intact (California Department of…
Finder is a list of formulas in the CSC text listed by chapter.
GDP = C + I + G + (X – M)
C= personal consumption
G= government spending on goods and services
CPI Current Period – CPI Previous Period
CPI Previous Period
Present Value (PV)
Future value of principal
(1 + discount rate)number of compounding periods
Preview of Session 5 (2/20/13)
Beth Harrelson, CCIM
Q 10 Professional Mortgage
of North Carolina, LLC
Let’s take a 10-minute break
Discussion Board – please post
Get some fresh air!
Appraisal: Part One
Chapter 7 key concepts
Real estate value: market vs. investors
Stock price vs. appraisal
Standardized appraisal process
Identify the problem >>> final value estimate
Three approaches to value
Sales comparison approach
Income approach – Chapter…
payback period, and profitability index. They will then determine which method will work best to help them make good decisions on choosing new investments for their company. Once they choose their method they can then use it to determine the future cash flows, the profitability, how it may or may not affect other projects the company chooses in the future as well as how risky the project may be. Lastly, a breakdown of how often each method is used and preferred by companies is provided at the end…
second page of the “Speed Keys” you can get to it by clicking the Down Arrow on the right hand side of the Speed Keys section.
The ITM transactions are Speed Key “W” you can access it by clicking on ITM Transaction
All ITM transactions are done from this screen:
Enter the amount of cash in on the Cash In line in the box under the Amount column
Enter the Savings/Checking Deposit account number in the appropriate box under the Account column and renter the cash amount in the Amount column…
the importance of cash
Be able to explain the reasons why ‘profit’ does not equal ‘cash generated’
Be able to prepare and interpret a cash flow statement
Be aware of why cash flow reporting was introduced
Understand the key issues regarding cash and working capital management
Melville CHAPTER 16
W&A CHAPTER 10
What are cash and cash equivalents?
Cash is defined as notes and coins in hand and deposits in
banks and similar institutions
Cash equivalents are…
is processed just as if it were a credit card purchase. (GOpai)
2. Electronic Cash and Electronic Wallets
Electronic cash is the debit Point of Sale (POS) – system that can be used to conduct paperless transactions. Paperless transaction is a term used to describe financial exchanges that do not involve the physical exchange of currency. Instead, monetary value is electronically credited and debited. Often called e-cash or digital money, this financial instrument is commonly used to conduct distant…
The key terms that coincide with the capital budgeting process are also defined. Risk analysis based on NPV (Net Present Value) is performed on the salvage values before and after sales tax values along with the various ranges in sales.
NPV, NPV Profile, NPV, IRR, multiple IRRs, ranking conflict of NPV vs. IRR, payback period, profitability index, discount rate, cost of capital concept, cash flow analysis, cash flow timeline, conventional cash flow stream, non-conventional cash flow…
analyses provide valuable information that help to
shape forecast assumptions.
Forecasts of future performance should be
comprehensive, including all condensed financial
The starting point for forecasts should be the time
series behavior of key measures such as sales
growth, earnings, and ROE (and its components).
A projection of future performance of the firm
Strategic Analysis –
strategy and competitive performance. Can it be
Growth of the company in the long and…
Entrepreneurial Finance Part 2
Tool to forecast and manage cash flows
Helps you to determine what you need in terms of cash and manage it
**10 marks on final exam**
Receipts: What you have/ expect to have coming in
Disbursements: What you have/ expect to have going out
You should always compare expected cash amount to minimum cash balance
To create a cushion if something comes up
Ending cash balance = beginning cash balance of next month
from sales, paying suppliers, salaries and wages.
Help the managers to manage the business more efficiently by preparing regular financial information e.g. monthly management accounts showing sales, costs and profits against budgets, forecasting cash flows, cost investigations.
Provide other stakeholders with legal/vital information (financial accounts: trading account, profit and loss, and balance sheet).
Shareholders – how their investment is doing.
Suppliers – can they give the business…