Advanced Finance Flashcards
Partial release
Allows individual lots to be excused from the collateral in exchange for agreed-upon balloon payment. Used in a blanket loan to allow for lease of lobstering, subdivision, construction.
Defeasance clause
Klaus creates the responsibility of the lender to re-convey the borrower all interest in the property after the borrower has made the last payment 
Alienation clause
Also called due on sale or non-assumption clause. Alienation is the legal separation of title to the property from the owner. 
Open ended mortgage
Heloc or construction loan 
Purchaser money mortgage
He purchase money mortgage is borrowed money for the purpose of purchasing the property the money was borrowed for
Not a refinace or equity 
Wraparound mortgage
Financing on top of financing. The existing financing is left in place with the original borrower, remaining responsible to make loan payments. This can be made with an all inclusive, trust, deed or a uniform real estate contract. This violates the due on sale clause. 
Nonrecourse loan
Alone, in which the borrower is not held personally liable on the note, it’s a wonderful closed and not recover from the foreclosure the entire debt of this loan lender would not be allowed to obtain a deficiency judgment
Unsecured loan
No collateral the only protection is the borrowers determination to keep their commitment 
A chattel mortgage
A loan secured by personal property. Example would be a car or boat loan
Package mortgage
The loan is secured by both real and personal property, such as in a furnished condominium 
Blanket mortgage
One loan secured by two or more parcels of real property. An example would be a construction loan on a subdivision.
Interest only loan
Also known as a straight loan, required payments are of interest, only leaving the principal balance to be paid at the end
 Partially amortized, also known as balloon
These payments include both principle and interest by the payments, not pay off the loan balance before the loan is due. The final payment pays the balance of the loan in one sum, known as the balloon payment.
Commercial- amortized over 40 but balloon of 5 
Negative amortization
Occurs when the required payments are insufficient to cover the interest charge of the loan any unpaid interest, becomes part of the loan balance, the loan balance increases with each payment
Graduated mortgage
The borrowers qualify at a lower interest rate. The expectation is that their payments increase sold her income. It is not an adjustable rate mortgage mortgage. It does have negative amortization.
