Business Ethics Question. All students must answer   You are a mortgage lender making loans to first time home buyers. Your compensation and future promotions are partly based on the volume of loans you produce, but also on your reputation as an “upstanding” member of the company and the business community.  You have a loan product, your “Easy Own” loan, that can give you some advantage in generating loan volume. Specifically, you are able to offer a deferred interest ARM (adjustable rate mortgage) where payments are fixed during the first five years at a low rate – 100 basis points below the current adjustable rate. The compounded value of the reduced interest is added to the loan balance, resulting after five years in a six percent increase in the loan balance over the original amount, and as much as a 30 percent increase in the subsequent monthly payment based on the then market adjustable rate for the remaining 25 years on the loan.   You are able to qualify borrowers if their initial payment is no more than 28 percent of their current gross monthly income, so long as the borrower’s income is trending upward. The trouble is that most borrowers are overly optimistic about future income increases, and you know from experience that about a third of borrowers on this program will have some financial difficulty, and miss payments in a few years unless, at the time of loan application, they have a record of rising income.   But you know it is largely up to you to judge this record. You can be very “hardline” in requiring the record of income increases, or you can be very permissive (and borrowers will be able to qualify for about fifteen percent larger loans, and will be very happy), and your loan production will be higher.   What are the pros and cons in deciding whether to be a lenient lender?  Who is harmed either way?

Abigail Ziegler entered into a Purchase Agreement with Gekko Ltd. to buy Gordon Tower in Washington, D.C.. The Tower was built in 2007 by Seaborn Bailey Construction Services using state of the art materials and technology. An issue of concern is that the Tower was built adjacent to a former chemical processing plant. As part of its  _____________________, Ziegler had her engineers investigate the soil quality under and around the Tower.

You are appraising the fee simple estate of the subject.  You discover the sale of a leased fee estate of a comparable property.  The contract rent for the comparable sale is $15,000 per year below market rental rates.  There are seven more years remaining on the lease.  Given a discount rate of 9%, what is the adjustment to the comparable sale for property rights conveyed?

Which of the following is the owner/developer’s job?

In a market value appraisal assignment, the appraiser found that prices were increasing at about 3% per year compounded annually. The appraiser found several comparable sales but they were not very recent transactions. She decided to make an adjustment to compensate for price increases in this market. What type of adjustment is this?

Of the following, the LEAST important consideration in a market study for a hotel is likely to be:

Class: Real Estate Market and Transaction Analysis   The northeast corner of SW 13th Street and SW 16th Avenue (the southeast corner of the Shands hospital complex at UF) has room for an emergency medical treatment facility – often called a “Doc-in-a-box.”  Outline how you would go about constructing and reporting a market analysis for the potential of such a facility at that site.

Which of the following is NOT a valid bid selection method?

In refining one’s focus on the market for a particular prospective use at a particular site, which of these questions is the LEAST useful to ask?

The best description of a promissory note is: