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75 Cards in this Set
- Front
- Back
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Pledge |
Promissory note Promise to repay debt (Mortgage note) |
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Debenture |
Long-term not not secured by property |
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Straight note |
Interest only, pays principle in lump sum on due date |
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Installment note |
Payments include BOTH principal and interest. |
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Fully amortized loan |
Equal payments Principal and interest. Whatever principal is left, must be payed in balloon payment at end of loan due date. |
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Balloon payment |
Any payment greater than double monthly payment. > 2x monthly payment |
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Mortgage |
Mortgagor=barrower Martgagee= lender |
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Deed of trust |
Trustor= barrower Beneficiary= bank Trustee= bank Vice President (holds the security) |
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In a Deed of Trust, who is the beneficiary and what do they hold? |
Beneficiary = bank They hold= promissory note |
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In a Deed of Trust, who’s is the trustee and what do they hold? |
Trustee= bank Vice President Hold= the security(deed of trust) for debt |
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Duties of borrower in a mortgage or Deed of Trust: 5 |
1) payment of debt in accordance with terms of note 2) payment of all real estate taxes of the property 3) insurance 4) property in good repair at all times 4) lender authorization prior to making any major alterations to the property. |
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Acceleration Clause |
If borrower defaults on loan(misses payment) the lender can call entire balance due and payable immediately. |
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Alienation Clause |
The mortgage or beneficiary declares entire balance of loan due and payable when property is transferred. |
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Satisfaction Piece |
Borrower has paid the entire balance, lender is required to execute a satisfaction of mortgage or a release deed of trust. |
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Satisfaction of mortgage |
Certificate issued by mortgagee when mortgage is paid in full. |
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Deed of reconveyance |
(Deed of release) Document used to transfer legal title from trustee back to borrower (trustor) after debt paid off to lender(beneficiary) |
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Prepayment penalty clause |
Allows lender to charge extra interest if the loan is paid off before normal completion date. |
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Subordination Clause |
A subsequent mortgage or deed of trust takes priority. |
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Subrogation |
Substitution of a 3rd person in place of a creditor to whose rights the 3rd person succeeds in relation to the debt. |
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Assumption |
When buyer takes over original payment, the original loan, and original interest rate of the seller’s existing loan. |
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Subject to |
Buyer not liable but will pay payments. Loan still in seller’s name. |
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Novation |
A 2nd contract to assume liability for the debt for the purchaser and relieve the liability of the seller. |
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A monthly loan payment consists of 2 |
1) principal 2) interest |
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Principal |
Amount borrowed from lender |
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Interest |
Amount lender charges in order to borrow money. |
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If escrowed: Taxes |
Amount due to gov’t for privilege of private ownership of real property. |
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If escrowed: Insurance |
Amount paid to the insurance company in case of damage to the property. |
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Where must a mortgage or Deed of Trust must be recorded: |
Where the property is located |
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Junior mortgage |
2nd mortgage or deed of trust |
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Foreclosure |
Property pledged as security in mortgage or deed of trust is SOLD to satisfy the debt. |
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Order of payment in foreclosure : 3 |
1st) cost of sale- advertising, attorney, trustee fees. 2nd) special assessment taxes 3rd) 1st mortgage(order of recording) 4th) whatever is recorded next. |
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Judicial foreclosure |
Mortgage through courts |
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Judicial foreclosure |
Mortgage through courts |
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Non-judicial foreclosure |
Deed of trust, does Not need to go through courts. |
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Equitable right of redemption |
Gives borrower the right to clear up the debt prior to foreclosure. |
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Statutory right of redemption |
Gives borrower a certain amount of time after foreclosure to clear debt. |
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Deficiency judgment |
If amount of foreclosure not able to cover debt= general lien that applies to all of borrower’s assets |
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Deed in lieu of foreclosure |
If foreclosure doesn’t cover debt= lender will become the owner of the property instead of going through formal foreclosure process. |
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Usury |
Illegal interest charged(excess of rate set by law) |
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Prepaid interest |
$ amount of interest and points paid by borrower at closing. |
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Points |
One time fee paid at closing to increase yield to the investor. |
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Leverage |
Principal of using other people’s $ to make investments |
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Equity |
Value in a property held by the owner in excess on any liens against it. |
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Factor |
Cost per thousand that is required to create the principal and interest payment necessary to pay off the loan. |
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Straight term loan |
(Interest only) only the interest is paid off. Principal due at end of loan. |
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Straight term loan |
(Interest only) only the interest is paid off. Principal due at end of loan. |
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Balloon loan |
(Partially amortized loan) Interest and principal equally payed until final payment. |
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Fully amortized loan |
Pays both principal and interest. End of loan, nothing more owed. |
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Budget mortgage |
Loan payments include: principal, interest, taxes and insurance. |
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ARM loan |
Adjustable Rate Mortgage Interest rate fluctuates (often ties to index) |
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Margin |
Index+premium Used in ARMs |
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Adjusted period |
How often a loan rate can be changed |
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Graduated Payment plan |
Lower payment 1st year, then payments increase |
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RAM |
Reverse Annuity Mortgage Senior homeowner receives monthly payments based on accumulated equity rather than a lump sum. |
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Part purchase $ |
Mortgage given as part of buyer’s cash for purchase of real property and delivered at same time that the real property is transferred. |
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Part purchase $ |
Mortgage given as part of buyer’s cash for purchase of real property and delivered at same time that the real property is transferred. |
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Package mortgage |
Loan on real estate plus fixtures and appliances |
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Part purchase $ |
Mortgage given as part of buyer’s cash for purchase of real property and delivered at same time that the real property is transferred. |
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Package mortgage |
Loan on real estate plus fixtures and appliances |
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Blanket mortgage |
Loan on several pieces of land |
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Open-end Mortgage/Deed of Trust |
Loan that is expandable by increments up to a maximum dollar amount. |
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Wraparound |
Additional financing from 2nd lender |
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Buydown |
The payment is subsidized at the beginning |
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Construction loan 2 |
1) lender commits the full amount of the loan to the borrower, but makes partial progress payments. 2) high interest rate to builders. |
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Construction loan 2 |
1) lender commits the full amount of the loan to the borrower, but makes partial progress payments. 2) high interest rate to builders. |
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Takeout loan |
Long term permanent financing for large construction projects. |
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Sale-Leaseback |
Owner sells their improved property and at same time signs a long-term lease. |
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Participation mortgage |
Lender participated in the income of the mortgaged property beyond fixed return. |
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Bridge loan |
Short-term interim loan for buyer, usually 6 months to 1yr |
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Contract for deed |
Seller financing in which the buyer does not receive legal title until the final payment is made |
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Vendor |
Seller of realty, seller under contract of deed |
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Vendor |
Seller of realty, seller under contract of deed |
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Vendee |
Purchaser of realty, buyer under contract of deed |
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Loan assumption |
Act of acquiring title to property that has existing mortgage and agreeing to be personally liable for terms and conditions of the mortgage, including payments. |
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“Subject to Mortgage” |
A grantee (buyer) taking title to property “subject to” a mortgage not personally liable to the lender(mortgagee) for payment of mortgage note. |
