Charters 9 Mortgage And Note

Front 1

what two documents are involved in a mortgage

Back 1

promissory note (a written promise to repay a debt) & mortgage (a document that makes property security for re payment of a debt.)

Front 2

a mortgage and a deed of trust use what documents?

Back 2

promissory note

Front 3

promissory note

Back 3

evidence of a debt & a written promise to pay a debt

Front 4

what are 3 thing included in a promissory note, bond, and/or note?

Back 4

amount of the debt, terms of repayment, interest rate

Front 5

for a note to be valid as evidence of a debt it must include 6 things.

Back 5

1. be in writing; 2. between a borrower and lender with both with contractual capacity; 3. state the borrowers promises to pay a certain amount of money; 4. show the terms of payment; 5. signed by the borrower; 6. delivered and accepted.

Front 6

obligee

Back 6

payee lender

Front 7

obligor

Back 7

makes borrower

Front 8

prepayment privilege

Back 8

borrower is allowed to pay off more then the required amount without a penalty

Front 9

acceleration clause

Back 9

"speed up" the remaining payment is due on the note and the entire lone amount is do upon

default.

Front 10

hypothecation

Back 10

the borrower has the right to possess the land while it (the mortgage) serves as collateral

Front 11

pledging

Back 11

means to give up possession of the property while it service as collateral

Front 12

defeasance clause

Back 12

when the note is paid in full the mortgage and note will be null and void. the wording is " mortgage and the estate created hereby shall cease and be null and void"

Front 13

title theory state it can also be called mortgage deed

Back 13

the lender holds title. not used in Alabama wording includes" the borrower is deeding the property to the lender".

Front 14

lien theory state

Back 14

the legal position that a mortgage creates a charge against property rather then conveying it to the lender. wording includes " gives only a lien right to the lender ( mortgagee), and the borrower (mortgagor) retains title. used in Alabama

Front 15

intermediate theory states

Back 15

mortgage is a lien unless the borrower defaults, at which point it conveys title to the lender.

Front 16

covenant

Back 16

promises

Front 17

what are the 4 covenants that the borrower makes to the lender?

Back 17

taxes (borrower will pay the taxes), removal (mortgagor will not remove or demolish the buildings or improvements) , insurance ( the mortgagor will carry adequate insurance) , and repair (borrower will keep the property in good condition)

Front 18

acceleration clause

Back 18

allows the mortgagee to demand immediate payment if the borrower defaults

Front 19

if the mortgagor breaks any of the mortgage

covenants what can the mortgagee do?

Back 19

the acceleration clause could take effect

Front 20

alienation clause or due on sale clause

Back 20

gives the mortgagee the right to call the entire loan due if the mortgagor sales or conveys the property

Front 21

condemnation clause

Back 21

if the any part of the property is take by the act of eminent domain, the money received is used to reduce the balance on the note

Front 22

what happens when the note is paid in full?

Back 22

the lender returns the promissory note to the mortgagor along with a satisfaction of mortgage

Front 23

satisfaction of mortgage

Back 23

the document states that the promissory note or bond has been paid in full and the accompanying mortgage may be discharged from public records(in the same county of original recording) .

Front 24

marginal release

Back 24

a notation on the recorded mortgage that shows the book and page location of the mortgage release

Front 25

partial release

Back 25

the mortgagee release a portion of the property after part of the loan has been paid

Front 26

subject to

Back 26

the property that is bought subject to the existing loan against it

Front 27

if the mortgage dose not contain a alienation clause (aka a due on sale clause) the seller can due what?

Back 27

pass the benefit of the financing on to the buyer. wording will say "subject to" existing loan.

Front 28

assumption

Back 28

the buyer is obligated to payback the existing loan as a condition of the sale

Front 29

substitute

Back 29

seller is asking the lender to substitute the buyers liability for his

Front 30

novation

Back 30

releases the seller from the personal obligation created in the promissory note.

Front 31

certification of reduction

Back 31

is a prepare by the lender to show how much of the loan remains to be paid

Front 32

estoppel certification

Back 32

the borrower is asking to verify the amount still owed and the rate of interest

Front 33

what is the most common use of estoppel certification

Back 33

when the holder of a loan sells the loan to another investor

Front 34

subordination

Back 34

allows the junior loan to move up in priority

Front 35

foreclose

Back 35

cut off

Front 36

delinquent loan

Back 36

running behind on payments

Front 37

surplus money act

Back 37

a claim filed by the junior mortgage holder at a foreclosure sale

Front 38

privilege to redeem the property anytime

between the first sign of delinquency and the moment of foreclosure is the borrowers

Back 38

equity of redemption

Front 39

deficiency judgment

Back 39

judgment against a borrower if the foreclosure sale dose not bring enough to pay the balance owed. this includes and junior mortgage.

Front 40

referee deed in foreclosure or sheriff's deed

Back 40

a deed issued as the result of a court ordered foreclosure sale

Front 41

statutory redemption you get a certification of sale

Back 41

the right of a borrower after a foreclosure sale to reclaim the property by repayment of default loan.

Front 42

strict foreclosure steps are?

Back 42

final notice of default with court, court hearing and final date for payment is set, if no payment court awards title to lender, you have statuary of redemption rights, (the lender acquires absolute title without the need of a foreclosure sale)

Front 43

power of sale also sale by advertisement

Back 43

final notice of default with court, set date for sale, sell to the highest bidder, advertise the sale, have statuary of redemption rights, lender's or trustees deed to highest bidder, (allowing a mortgage to conduct a foreclosure sales without first going to court)

Front 44

note of default

Back 44

public notice that a borrower is in default

Front 45

deed in lieu of foreclosure also called a friendly foreclosure

Back 45

voluntarily deeding the property to the lender; this may also cut off a junior mortgage

Front 46

deed of trust

Back 46

a document that conveys legal title to a neutral third party(trustee) as security for a debt

Front 47

equitable mortgage

Back 47

a line of credit made against the equity in a person's home.

Front 48

if the existing property does not contain a due on sale clause and has a lower rate of interest the property owner can do what?

Back 48

pass the benefit of that financing along to the buyer; the buyer purchases the property "subject to" existing loan.

Front 49

when using assumption can the borrower come after bother parties if the loan is defaulted?

Back 49

yes because the sellers(first owner) is on the original loan; but the seller can file a suit against the buyer for the money

Front 50

is a judicial foreclosure without a judicial sale and usually a statutory redemption period (after the foreclosure sale)

Back 50

the lender files a lawsuit requiring that the borrowerr be given a time to exercise the equitable right of redemption

Front 51

conventional mortgage

Back 51

not insured by or guaranteed by the government. they are not assumable

Front 52

conventional uninsured mortgage

Back 52

borrower has 20% down, and then the lender accepts the credit worthiness of the borrower and the property as security for the loan,

Front 53

conventional insured mortgage

Back 53

borrower has less then 20% down and lender requires PMI Private Mortgage Insurance

Front 54

unconventional mortgage

Back 54

loan is baked by the government such as a FHA loan that is insured by the government, and a VA loan that is guaranteed by the government.

Front 55

PMI Private Mortgage Insurance

Back 55

if they have less then 20% down they may have to purchase PMI. PMI can be a one time payment or it can be a percentage added to the monthly payment. when the loan is paid down to 80% of the total value, the PMI payment will drop off.

Front 56

if the property is foreclosed on for less then the mortgage balance what does PMI do?

Back 56

PMI Private Mortgage Insurance pays the lender up to the amount of the insurance, typically the top 20 or25 percent of the loan.

Front 57

the lender will hire BPO to take pictures of the property, why?

Back 57

to make sure the mortgagor is following the covenants of good repair and preservation and maintenance. if someone is living I the house the BPO can not go on the land.

Front 58

what two foreclosure are used in Alabama

Back 58

Power of sale and deed in lieu of foreclosure