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38 Cards in this Set
- Front
- Back
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Promissory note OR Bond
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Promise to pay
creates a debt creates a personal obligation on the borrower |
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Mortgage OR Trust deed
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Security for debt
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In a deed of trust vs. mortgage, which one must you go to court to foreclose
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the mortgage. in a deed of trust it is held by a neutral 3rd party
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Redemption
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buy back
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2 types of redemption
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equitable - before foreclosure sale
statutory - after foreclosure sale |
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What if a property does not sell for the amount still owed on it in a foreclosure
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deficiency judgment
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Deed in lieu of foreclosure
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borrower gives deed back to lender
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What are the characteristics of a note
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negotiable - can be bought and sold
payments - made in arrears debt service - principle and interest required to pay debt reduction certificate - like a "payoff letter" |
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Different types of interest payment plans
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Straight note - interest only has a balloon payment
Partially amortized note - pay principle and interest and there is a balloon payment Fully amortized note - pay principle and interest until the loan is gone |
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Graduated payment note
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payments start low, gradually get higher, then level out
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Adjustable rate mortgage
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Interest rate is based on the index
margin is the amount paid over the index |
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Acceleration clause (in a mortgage)
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Whole balance becomes due upon default
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Alienation clause
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remaining balance becomes due when property is sold
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Subordination clause
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Changes the priority of the mortgages on a property
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Defeasance clause
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when paid in full, security (the mortgage) is cancelled
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Terms in a mortgage
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Escalator clause - lender can raise or lower interest rate
Hypothecate - borrower retains possession pledging - lender retains possession |
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What goes in an escrow account
(money to be paid to someone else) |
Taxes and Insurance
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2 ways a buyer can take over a seller's loan
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Subject to - takes over payments but seller is subject to lender
Assumption - takes over payments and both parties are liable to lender |
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Purchase money mortgage
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owner financing
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blanket mortgage
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multiple properties under one mortgage
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package mortgage
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includes both real and personal property
common in agriculture |
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Reverse Annuity Mortgage
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mortgagee pays mortgagor monthly.
Can't be foreclosed Paid off by the death of the owner or the sale of the property |
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VA loan requirements
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need a certificate of eligibility
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what is the purpose of discount points
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to increase the effective yield of the note
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What price are discount points based on
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the LOAN, not the sales price
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Contract for deed
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also called installment contract or land contract
Financing without a lender Title is not transferred until contract is complete, instead buyer obtains equitable title |
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Equitable title
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right to purchase property under the terms of the contract
allows forced sale |
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Leaseback
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generally commercial and both the lessee and the lessor have advantages
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Where does a buyer go to get a home loan?
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1. savings and loan - residential "mutual savings banks"
2. commercial banks - business loans 3. insurance companies 4. mortgage bankers - middle man |
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warehousing a mortgage
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primary mortgage lender holds and collects packages of mortgages and sells them
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What organizations make up the secondary mortgage market
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1. Federal National Mortgage Association (FNMA - Fannie Mae) largest
2. Government national mortgage association (GNMA - Ginnie Mae) government mainly buy FHA and VA loands 3. Federal home loan mortgage corporation (FHLMC - Freddie Mac) |
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What is the primary purpose of the secondary mortgage market
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to buy notes from primary lenders
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Usury laws
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law that sets maximum interest rates
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Truth in Lending or Regulation Z
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purpose is to disclose the cost of the loan to the borrower
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Right of rescission
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3 day right to back out of a SECONDARY loan
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You must spell out all of the terms of the loan in advertising IF....
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you indicate a number in any way.
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Real Estate Settlement Procedures Act
(RESPA) |
Purpose is to inform borrowers of TOTAL CLOSING COSTS
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5 Items required by respa
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1.Buyer's guide to settlement costs
2. Good faith estimate of settlement costs 3. Uniform Settlement statement - HUD form1 4. Limits on prepaids 5. Prohibition of kickbacks - agents can get paid a fee for a service, not a referral |
