11 - RE Financing Flashcards
Hypothecation
pledging real property as collateral without giving up possession
Promissory Note - who signs and is it recorded?
Only Borrower must sign, does not need to be recorded
Lien State vs. Title State
Lien utilize mortgage & judicial process to foreclosure
Title (NC) utilize trust deeds & non-judicial process to foreclosure
“Subject to” assumption
Seller maintains liability for the debt
Mortgagor
Borrower, gives the mortgage to bank/lender (mortgagee)
Discount Point
1 point = 1% of UPB = 1/8% in interest
Contract for Deed / Land Installment Contract / Land Contract
Buyer (vendee) makes payments to the seller (vendor) and seller retains title; conveyance of legal title at a future date, usually with completion of last payment
Statutory Right of Redemption
Grantor (trustor/borrower) has a right to regain the property at any time prior to sale by paying the full debt. AKA equity right of redemption. also, there is a 10 day statutory right of redemption after the sale
Deed of Reconveyance
Defeasance clause in a deed of trust that requires the trustee to execute this as payoff document
Term loan
aka straight loan or an interest only loan; most construction loans are term or IO loans
Trustor
Bank
Trustee
PArties to a deed of trust (trust deed)
Trustor = Borrower
Bank = Beneficiary
Trustee = neutral third party who holds power of sale
Exculpatory (Escape) Clause
In both FHA and VA loans, borrower has a right to withdraw from the transaction without penalty if property does not appraise
Open-end mortgage / HELOC
Borrower increases outstanding UPB up to a predetermined sum set by the lender
Truth in Lending Act (aka TILA or Regulation Z)
requires disclosure of the true costs of obtaining credit; applies to loans on 1-4 family resi properties, but not commercial loans, cash transactions or the purchase of vacant land
Purchase Money Mortgage/Deed of Trust
seller financing, not permitted a deficiency judgement in NC
