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40 Cards in this Set
- Front
- Back
lien theory
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The borrower retains title to the property. The lender is protected with a lien on the real property to secure the payment of the mortgage debt.
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title theory
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transfers title to the lender or escrow agent until the loan is paid off
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Promissory Note
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The note is the legal instrument that serves as evidence of a debt. A note is a promise to repay that makes the borrower personally liable for the obligation.
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mortgage
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an instrument that pledges the property as security (collateral) for a debt. It is the legal document that represents the lien on the real estate that secures the debt.
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Hypothecation
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refers to the pledging of property as security for repayment of a loan without surrendering possession of the property.
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mortgagor
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borrower (debtor)
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mortgagee
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lender (creditor)
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Satisfaction of Mortgage
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mortgagor pays the debt in full
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note requires that the lender be liable for paying the borrower according to the agreed-upon terms of the loan? TRUE OR FALSE?
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FALSE
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In lien theory states, the lender retains title to the property?
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FALSE
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prepayment clause
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allows the borrower to pay off part or all of the debt, without penalty or other fees, before maturity
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acceleration clause
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authorizes the mortgagee to accelerate or advance the due date of the entire unpaid balance if the mortgagor fails to fulfill any promises stated in the mortgage instrument.
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due-on-sale clause
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allows the mortgagee to call due the outstanding loan balance plus accrued interest
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defeasance clause
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defeats the conveyance of legal title and returns the legal title to the borrower-mortgagor.
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Which clause is included in a mortgage to prevent a subsequent buyer from assuming an existing mortgage loan?
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due-on-sale clause
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junior mortgage
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A second mortgage
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first mortgage
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The first mortgage loan to be executed and recorded
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subordination agreement
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The holder of the first mortgage can voluntarily take a lower priority
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Right to reinstate
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Mortgagor's right to reinstate the original repayment terms in the note after lender initiated acceleration clause
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loan-to-value ratio (LTV)
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is the relationship between the amount borrowed and the appraised value (or purchase price) of a property
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equity
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in property is the monetary interest the owner has in property over and above the mortgage indebtedness
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Interest
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is the cost for the use of borrowed funds.
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PITI
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The monthly principal, interest, taxes, and insurance payment
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Discount points
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are an added loan fee often charged by lenders to increase the yield on a lower-than-market-interest loan and to make the loan more competitive with higher-interest loans.
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Subject to the mortgage
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The buyer takes title to the property knowing that the seller is still legally responsible for the note even though the buyer will be making the mortgage payments
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Assumption of an existing mortgage
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the buyer is agreeing to assume the seller's debt
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contract for deed (land contract)
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The buyer (vendee) makes a small down payment, and the seller (vendor) finances the rest of the purchase price.
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buydown
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is a way to temporarily lower the interest rate on a mortgage
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blanket mortgage
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pledges a number of parcels, usually building lots as security for the loan
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partial release clause
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provides for the release of an individual parcel from the blanket mortgage upon payment of a specified amount.
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Equity of redemption
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allows the mortgagor to prevent foreclosure from occurring by paying the mortgagee the principal and interest due plus any expenses the mortgagee has incurred in attempting to collect the debt and initiating foreclosure proceedings.
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short sale
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the net proceeds at closing will not satisfy the payoff amount of mortgages and other liens on the property
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receivership clause
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allows a receiver to be appointed to collect income from the property and use the income to make mortgage payments in the event of default.
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deed in lieu of foreclosure
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is a voluntary action when the mortgagor transfers title to the mortgagee to avoid a foreclosure proceeding
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What will be the effect if the Federal Reserve Board decides to purchase government securities in the open market?
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The money supply will increase and interest rates will decrease
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Prior to deregulation of the banking industry in the 1980s, which institutions were dominant in providing funds for the purchase of single-family residences?
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Saving associations
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Which clause in a mortgage requires the lender to acknowledge performance by the borrower?
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Defeasance
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When financing the purchase of real estate, what is the role of the mortgagor?
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The mortgagor gives a mortgage to a mortgagee
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Which of the following list of actions contain ways that a contract could be terminated?
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Breach, Performance, or Lapse of time
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Complete the statement. An option contract is a unilateral contract, binding upon the:
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optionor
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