CH 10, 11, and 12 Flashcards
What does Kansas primarily use instead of deeds of trust?
Mortgages
Most surrounding states recognize deeds of trust, except Oklahoma.
What is the power of sale in the context of a deed of trust?
If the borrower defaults, the trustee has the right to foreclosure and sell the property and convey ownership to the purchaser.
What is a Reconveyance or Release Deed?
A document used to reconvey title from the trustee back to the property owner once the debt has been paid.
List three advantages of the deed of trust.
- The lender can take possession of the property if the borrower defaults
- The foreclosure process is less expensive and complex
- Title is already in the name of the trustee
What are term loans?
Loans requiring only interest payments until the last day of its life.
What is the loan-to-value (LTV) ratio?
Percentage reflecting what a lender will lend divided by sales price or market value.
Define equity in the context of loans.
Market value minus the debt against it.
What is a conventional loan?
Loans not involving government participation.
What is the minimum down payment required for an FHA loan?
3.5%
FHA loans allow for a maximum LTV of 96.5%.
What does private mortgage insurance (PMI) cover?
Insures lenders of conventional loans with a small down payment against foreclosure losses.
What is the Truth-in-Lending Act also known as?
Regulation Z
What are the four disclosures required to be prominently displayed in loan estimates?
- Loan terms
- Projected payments
- Annual percentage rate
- Cost of closing
Fill in the blank: A borrower has a limited right to _______ with certain terms.
rescission
What does the Fair Credit Reporting Act allow individuals to do?
Inspect their file with the credit bureaus and correct any errors.
What are the ATR rules under the Consumer Financial Protection Bureau?
- Lender must determine each borrower’s ability to repay
- Examine employment history, income, assets, credit history, debts
- Debt-to-income should be less than 43%
What is predatory lending?
When consumers lack the knowledge to evaluate lending practices and are preyed upon by unscrupulous lenders.
What is the difference between judicial and nonjudicial foreclosure?
- Judicial: involves court action
- Nonjudicial: uses a deed of trust with a power of sale
What is a deed in lieu of foreclosure?
A ‘friendly foreclosure’ where the borrower voluntarily transfers the property to the lender.
What does a short sale refer to?
Pre-foreclosure where the borrower sells the property for less than the amount owed.
