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121 Cards in this Set
- Front
- Back
Evidence of a debt. It states loan amount, interest rate, term and method of payment.
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Promissory Note
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What items are on a Promissory Note?
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1 Loan amount
2 Interest rate 3 Term and method of payment |
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Name the 6 types of Promissory Notes.
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1 Fully amortized Loan
2 Partially amortized loan 3 Graduated payment Plan (GPM) 4 Straight (Term) Loan 5 Growing Equity Loan 6 Adjustable Rate Mortgage (ARM) |
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What are the 2 names for an adjustable rate mortgage?
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ARM and Variable Rate Loan
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These are the 3 principals of what type of loan?
1 Fixed monthly paymnet 2 Payment is applied 1st to the interest due and the remainder to the principal balance. 3 Final monthly payment fully extinguishes the loan |
Fully Amortized Loan
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These are the 3 principals of what type of loan?
1 Fixed monthly payments. 2 Final monthly payment does not fully extinguish the loan. 3 Finaly payment is a balloon payment. |
Partially Amortized Loan
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What is this, where the final payment that is substantially larger than the previous installment payments and repays the debt in full.
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Balloon payment
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What type of loan is where the lower payments in the early years and catch-up payments in later years.
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Graduated Paymnet Plan (GPM)
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What type of loan is the? Where the payments are interest only; no payment o fprincipal until the end of the term.
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Straight (Term) Loan
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What type of loan is a construction loan?
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Straight (Term) Loan
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What type of loan is one with increased payments each year at the predetermined rate and the increase is applied to the reductino of the principal balance.
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Growing Equity Loan
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What type is loan is on where the interest rate can be raised or lowered?
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ARM
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What does ARM stand for?
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Adjustable Rate Morgtgage
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What determines the interest rate of an ARM loan?
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The interest rate index indicator.
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Most of these loans have ceilings or caps on how much the interest can increase during any one adjustment period or over th elife of the loan.
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ARM
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Instruments used to pledge property as security for a debt.
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Hypothecation Instruments
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In hypothecation instruments, the type of instruments used are ______ and __________.
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Mortgages, deeds of trust.
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With a mortgage another name for the borrower is?
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Mortgagor
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In a mortgage, what is another name for the lender?
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Mortgagee
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Mortgage conveys a lien on the property to the lender.
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Lien Theory
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Mortgage conveys bare title to the lender.
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Title Theory
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With a deed of trust another name for the borrower is?
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Trustor
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In a deed of trust what is another name for the trustee?
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Lender's agent
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With a deed of trust, what is another name for the Lender?
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Beneficiary
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In a deed of trust, the trustee receives ______ title on behalf of the _____.
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bare
lender |
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In a deed of trust, the borrower retains _____ title.
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legal
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What 5 things are the duty of the borrower?
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1 payment of the debt
2 payment of the real estate taxes 3 insure the property 4 maintain the property 5 make no major changes w/o lender approval |
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Requires the lender to release the property and borrower from the loan encumbrance when the loan is fully paid and a release deed is issued to the seller.
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defeasance clause
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allows subsequent loans to step ahead in priority.
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subordination clause
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States wheter a borrower may pay the balance of the loan early and if a penalty will be charged for doing so.
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prepayment clause
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the loan balance must be paid if the property is sold. The loan is not assumable without the lender's permission.
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Alienation Clause (Due on Sale)
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The lender may declare the balance of the loan due and owing immediately if the borrower defaults.
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Acceleration Clause
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What are the parties to a mortgage?
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Borrower
Lender |
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What are the parties to a deed of trust?
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Borrower
Trustee Lender |
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What is it when the lender's attorney files suit and the sheriff sells the property on the courthouse steps to the highest bidder?
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Foreclosure procedure on a mortgage
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What is it when the trustee advertises and then sells the property on the courthouse steps to the highest bidder?
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Foreclosure procedure on a deed of trust
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The right of the defaulted borrower to redeem the property after the foreclosure sale.
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Redemption
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When the sale proceeds in foreclosure are less than the balance due; the lender can get a _________ judgement lien
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Deficiency
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When the lender accepts legal title to the property instead of foreclosing
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Deed in Lieu of Foreclosure
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Provides for the continuation of leases in the event of foreclosure on leased property.
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Non-disturbance Clause
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3 types of loan assignment
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1 Buying subject to the seller's loan
2 Buying assuming the seller's loan 3 Novation |
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The buyer only takes over the loan payments; she/he does not assume liability for the loan balance.
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Buying "Subject To" the Serller's Loan
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The buyer takes over the loan payments and becomes liable for the loan balance along with the seller.
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Buying "Assuming" the seller's loan
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Lender releases the original borrower (seller) from the loan liability.
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Novation
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A loan which is neither insured nor guaranteed by the federal govt or any of its agencies
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Conventional Loan
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Insures lenders on conventional loans in case of borrower default. Required for high ratio loans, usually above 80% LTV
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PMI private mortgage insurance
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is the largest insurer of conventional loans
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Mortgage Guarantee Insurance Corp (MGIC)
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What type of loan is from a private lender and insured by the Federal Housing Authority?
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FHA insured loan
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what loan is regulated by the Dept of Housing and Urban Development (HUD)?
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FHA insured loan
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A FHA 203b loan is for?
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a dewelling with 1-4 family units
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A FHA 245 loan is what?
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a loan that is a graduated payment mortgage.
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What else does FHA also insure?
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home improvement loans
loans on co-ops condo's low income homes |
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On a FHA loan, what determines the interest rate?
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The lender
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What is MIP?
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Mortgage Insurance Premium
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FHA insures _____% of the 1st ______ and ____% of the balance.
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97
$25,000 95 |
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On a FHA loan can the borrower borrow the downpayment if it is not secured by the property being purchased?
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yes
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What minimum standards does the FHA set, with regard to what?
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design, construction and neighborhood
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Can a lender be non FHA approved?
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no
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FHA loans are assumable, but under what condition?
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the buyer must qualify
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Are there prepayment penalities on a FHA loan?
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no
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T or F an FHA approved appraisal is required.
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true
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A loan from a private lender. For 1st mortgage and home improvement. Gauranteed by the Dept of Verteran's Affairs.
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VA Gauranteed Loan
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The VA may make direct loans, if what?
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there are no approved lenders in the area
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VA gaurantees ___% of the loan amount with a max guarantee of $______.
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40
$36,000 |
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Does a VA loan required a downpayment?
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no
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The veteran may obtain a loan of ___% of the _____ of the sales price or appraised value.
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100
lesser |
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A veteran must obtain what to be eligible?
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a certificate of eligibilty from the VA
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T or F an unremarried spouse of a deceased veteran has eligiblity
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true
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T or F eligibility may be restored by paying off the loan or a veteran with eligibility assuming the loan.
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true
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With a VA loan who sets the interest rate?
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the lender
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Does a VA loan have a prepayment penalty?
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no
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Under what condition can a VA loan be assumable by either the veteran or a non-veteran?
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The buyer must qualify
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can VA loans be a owner occupied 1-4 family dwelling?
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yes
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Has priority over other mortgages on the same property
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First mortgage
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Has priority after the 1st mortgage
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Second mortgage
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another name for a 2nd mortgage
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junior mortgage
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One loan collateralized by 2 or more properties.
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Blanket mortgage
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usually contains a release clause requiring the lender to release each property from the mortgage when it is sold
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Blanket mortgage
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after paying the loan down, the loan remains open for a set amount for future borrowing
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open-end mortgage
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a loan collateralized by both real and personal property
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package mortgage
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the lender makes a loan at reduced interest rate for a part of the appreciation in value over a stipulated period of time
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Shared Appreciation Mortgage
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a development loan where the lender receives interest plus a share of the profits or income from the property
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Participation Loan
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the lender makes a monthly loan to the borrower
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Reverse Annuity Mortgage
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When the 2nd mortgage includes the 1st mortgage
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Wrap-Around Mortgage
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Generally a seller financed second mortgage
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Purchase Money Mortgage
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Seller finances the buyer but retains legal title; buyer receives equitable title
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Land Sales Contract
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A short term loan to a builder or home owner to finance construction
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Construction loan
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Long term loan that provides money to the builder to pay off the construction loan
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Take-Out Loan
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The owner sells the property and then leases it back from the buyer
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Sale-Leaseback
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Getting a new loan to pay off the existing laon(s).
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Refinancing
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1% of the loan amount
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1 point
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interest in advance, paid in lump sum at the closing of the loan; increases the yield to the investor
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discount points
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who pays the discount points?
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the borrower unless negotiated otherwise
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What is used to compensate the lender for short-term fluctuations in interest rates?
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points
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What are used to buy down the interest rate over the life of the loan?
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points
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what are used to discount loans in the secondary market?
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points
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fee paid to the lender for underwriting the loan; is usually a percnetage of the loan amount.
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origination fee
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What are some expenses the lender incurs in making the loan that will be charged back to the borrower?
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credit report
appraisal fee |
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T or F a loan must be secured with adequate collateral
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true
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Makes loans to buyers and then sells the loans in the secondary market. Receive the origination fee and service fee.
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Mortgage company (bankers)
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Make few long term real estate loans, usually make short term loans
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commercial banks
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banks owned by the depositors which usually loan only to the depositors
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mutual savings banks
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make loans on large cmomercial projects
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life insurance companies
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make home loans to its members
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credit unions
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makes loans in rural area (______ max population) to qualified persons
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Rural Housing Develompent
20,000 |
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bring the borrower and lender together; do not loan money directly
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mortgage broker
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Where lenders sell loans to investors
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Secondary Mortgage Market
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Fannie Mae
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Federal National Mortgage Assoc
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Ginnie Mae
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Govt National Mortgage Assoc
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Freddie Mac
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Federal Home Loan Mortgage Company
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Lenders storing loans and then selling them as a package to investors in the secondary market
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Warehousing
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a legal instrument executed by a mortgagor setting forth the exact unpaid balance of a mortgage loan, interest rate and date to which interest has been paid
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Estoppel Certificate
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Another name for Estoppel Certificate
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Certificate of no defense
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a federally subsidized flood insurance program requiring real estate owners with a federally related loan to have flood insurance if the property is located in a flood plain
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Federal Flood Insurance Program
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Buys FHA, VA, Conventional and 2nd mortgages from lenders
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Fannie Mae
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Fannie Mae is a stockholder owned company
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true
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a govt agency (a division of HUD) that provides money to lenders for a wide range of speical projects
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Ginnie Mae
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_____ & _____ act in tandem for high risk loans
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Fannie Mae & Ginnie Mae
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Freddie Mac is a govt owned corp
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true
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buys FHA, VA and convention loans
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Freddie Mac
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What does pension funds, insurance companies, real estate investment trust all have in common?
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All buy real estate loans from lenders
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