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Real Estate (NJ) > (Ch. 14) Vocab (Mortgages And Financing) > Flashcards

(Ch. 14) Vocab (Mortgages And Financing) Flashcards

1
Q

A federal agency which provides special assistance for federally aided housing programs; active in the secondary money market for government subsided housing programs; “Ginnie Mae” (14-182)

A

Government National Mortgage Assn. (GNMA)

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2
Q

Loaning money to consumers in the hope and expectation they will default and the lender will be able to take the collateral.

A

Predatory Lending

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3
Q

A clause in a mortgage or installment contract stating that upon default of payment due, immediate and full payment of the balance of the obligation becomes due and payable. (14-170)

A

Acceleration Clause

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4
Q

Mortgage repaid before it becomes due

A

Prepayment

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5
Q

The interest rate changes periodically based on an index.

A

Adjustable Rate Mortgage

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6
Q

Payments begin at a lower level than with a standard, fixed rate mortgage of the same amount. Then, the payments level off, usually after five, seven or ten years at a fixed payment which will be higher than the standard fixed rate loan.

A

Graduated Payment Mortgage (GPM)

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7
Q

Financial market where loans are made directly from the lender to the buyer.

A

Primary Mortgage Market

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8
Q

Type of acceleration clause that makes all future payments due when property is sold.

A

Alienation Clause

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9
Q

The employer of an agent or broker. Also, sum of the money owed as a debt upon which interest is calculated.

A

Principal

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10
Q

The gradual paying off of a debt on an installment basis

A

Amortization

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11
Q

Insurance that mortgage lenders require from most homebuyers who take out a mortgage loan in an amount in excess of 80% of a homes appraised value.

A

Private Mortgage Insurance

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12
Q

To pledge property as security for a loan without giving possession of the property to the lender

A

Hypothecate

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13
Q

Buyer personally obligates himself to payment of the entire outstanding debt and becomes a consigner on the seller’s note.

A

Assignment of Mortgage

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14
Q

The primary financing obligation and makes the mortgagor personally liable for the debt.

A

Promissory Note

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15
Q

Rate of interest determined by the IRS to be appropriate when the interest rate set in a transaction is considered to have been set artificially low or when no interest rate has been stated.

A

Imputed Interest

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16
Q

Buyer personally obligated himself to payment of the entire outstanding debt

A

Assumption of Mortgage

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17
Q

Given by a purchaser to a seller in lieu of purchase money.

A

Purchase Money Mortgage

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18
Q

The major source of mortgage money for residential loans; savings and loan, federal and state banks and life insurance companies

A

Institutional Lender

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19
Q

Mortgage whose payout is longer than the term for which the loan was granted.

A

Balloon Mortgage (Partial Amortized)

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20
Q

Unlawful practice by which a lender or an insurance company refuses to approve the loan applications or grant insurance in certain geographical areas

A

Redlining

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21
Q

Any mortgage that is subordinate to another

A

Junior Mortgage

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22
Q

Creates a lien on two or more parcels of property that are pledged as security for a debt.

A

Blanket Mortgage

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23
Q

Allows the developer to sell an individual parcel or unit over time and deliver free and clear title to a purchaser without satisfying the entire blanket mortgage.

A

Release Clause

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24
Q

Financing agreement often providing for a relatively small down payment, with the balance of the purchase price generally payable in monthly installments of principal and interest to the seller (vendor)

A

Land Contract

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25
Q

Short term, financing of real estate and is available for any type of real property. Used to purchase residential property when a property owner has signed a contract for purchase of one property in anticipation of selling another currently held property.

A

Bridge Loan

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26
Q

Upon full payment mortgage is given to the mortgagor, stating that the obligation to the mortgagee has been fulfilled

A

Release of Mortgage

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27
Q

The ratio between the amount borrowed and the sale price or appraised value of the property, whichever is LOWER

A

Loan-to-Value Ratio

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28
Q

The homeowner continues to live in the property and borrows each month from a lender until a ceiling amount or loan to value ratio is reached. The loan balance increases each month by the amount borrowed plus interest on the entire debt.

A

Reverse Annuity Mortgage (RAM)

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29
Q

The grant of an interest in real or personal property with a provision for the release of that property upon repayment of the debt in full.

A

Mortgage

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30
Q

A mortgage which is not FHA insured or VA guarantee

A

Conventional Mortgage

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31
Q

An instrument used when a lien is paid off and satisfied on the records

A

Satisfaction Piece

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32
Q

Uses its own borrowed funds, using a credit line established at a warehouse bank to borrow the loan amount on a short term loan basis for settlement.

A

Mortgage Banker

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33
Q

Subordinate to a first mortgage and, in the event of foreclosure, the mortgage would not be paid until the first mortgage has been paid in full

A

Second Mortgage

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34
Q

Bringing the lender and borrower together for a fee and does not advance it’s own funds to close the loan but facilitates it through an institutional lender

A

Mortgage Broker

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35
Q

Provides that the rights of the mortgagee will come to an end, if and when the debt is repaid in full.

A

Defeasance Clause

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36
Q

Paid by the borrower to the FHA on insured loans. Can be paid in cash at closing or added to the loan amount

A

Mortgage Insurance Premium (MIP)

37
Q

If the bank that lends a home buyer money to buy a house, then sells the mortgage after it has been originated.

A

Secondary Mortgage Market

38
Q

Personal judgement against the mortgagor for any deficiency between the foreclosure sale price and amount of the mortgage debt.

A

Deficiency Judgment

39
Q

Lender agrees to allow a subsequently acquired mortgage to have legal priority.

A

Subordination Clause

40
Q

Lenders will not make the loan unless they are compensated for the difference in the form of a one-time, up front fee

A

Discount Points

41
Q

Interest rate in excess of the legally permitted rate.

A

Usury

42
Q

The lender who receives the mortgage

A

Mortgagee

43
Q

A clause in a conventional mortgage calling for payment of the entire principal balance in full in the event a transfer of title to the mortgaged property takes place

A

Due-on-Sale Clause

44
Q

A loan guaranteed by the US Department of veteran affairs under the serviceman’s rejustable act of 1944 in later

A

VA Guaranteed Mortgage

45
Q

Private corporation that provides a secondary mortgage market for federal savings associations. It buys conventional, VA, and FHA mortgages, pools them and uses them as security to sell bonds PCs in the open market.

A

Federal Home Loan Mortgage

46
Q

A vehicle used to carry a business, with its owners having liability only to the extent of their stock ownership; considered being in individual or a separate entity.

A

Corporation

47
Q

Held by the seller of the property tied with the amount owed on the seller’s first mortgage.

A

Wraparound Mortgage

48
Q

Third-party agreement under which one party is released from an obligation and another party is substituted

A

Novation

49
Q

Written to provide for additional monies to be loaned in the future for such things as additions, alterations or improvements to the property without rewriting the mortgage.

A

Open End Mortgage

50
Q

Real property estate loan secure by real property and personal property.

A

Package Mortgage

51
Q

Provide insurance protection to private lenders who provide mortgage financing to homebuyers.

A

FHA Insured Loan

52
Q

Specified in the loan agreement and generally reflects the lender’s cost of funds.

A

Index

53
Q

Part of the competitive pricing of mortgages and represents the lenders’ cost of doing business and profit.

A

Margin

54
Q

Limits both the adjustment at the adjustment period and the total adjustment over the lifetime of the loan.

A

Rate caps

55
Q

Sets the maximum amounts for payments and protects the mortgagor against the possibility for individual payments that he or she cannot afford.

A

Payment Cap

56
Q

Index rises while the payment is fixed.

A

Negative amortization

57
Q

The agreement with the lender maybe a clause that allows the borrower to convert the ARM to a fixed rate mortgage at designated times.

A

Conversion

58
Q

A borrower who gives the mortgage

A

Mortgagor

59
Q

Transfer of a mortgage to a third party

A

Assignment

60
Q

Receiver of a mortgage transfer

A

Assignee

61
Q

Difference between the value of a property and anything owed on it.

A

Equity

62
Q

Buyer agrees to take over the seller’s remaining mortgage payments, after having him paid him the equity in the property.

A

“Subject to” the Mortgage

63
Q

To determine whether borrowers will qualify for the amount they have applied for.

A

Qualifying ratios

64
Q

Housing expenses (PITI) should not exceed approximately 28% of monthly gross income.

A

Housing ratio

65
Q

PITI combined with other long-term debt, expenses should not exceed 36% of monthly gross

A

The total debt ratio

66
Q

Contractual promise by the lender to the buyer promising to provide the funds necessary complete settlement

A

Commitment

67
Q

To advise borrowers of the true cost of borrowing by listing loan costs and disclosing the annual percentage rate of the loan

A

Regulation Z statement

68
Q

Same rate of interest for the entire term of the loan

A

Fixed rate mortgage

69
Q

Loans that are not insured or guaranteed by any agency of the federal government, although they may be insured by private mortgage companies.

A

Conventional Loans

70
Q

Enables the buyer to withdraw from the agreement without any penalty (such as forfeiture of earnest money deposits) in the event the FHA appraisal is lower than the price the buyer agreed to pay.

A

Amendatory clause

71
Q

Certificate which will show the appraised value of the property for loan purposes.

A

Certificate of Reasonable Value

72
Q

One that provides for the gradual paying off of a debt by periodic installments.

A

Amortized Mortgage

73
Q

Requires the borrower to pay a constant amount, usually monthly. The amount of each payment is first credited to the interest due, and then the balance is applied to reduce the principal of the loan.

A

Fully amortized loan

74
Q

Short or medium term loan requiring the payment of interest only during its term. The total amount of the principal is repayable at the end of the term.

A

Straight Mortgage

75
Q

Form of residential financing in which the lender offers the borrower a reduced rate of interest in return for a share of the increase in value over a specified term.

A

Shared Appreciation Mortgage (SAM)

76
Q

Home builder pays cash to a lender, who in turn makes a loan to the buyer of the builder’s property at a below-market interest rate.

A

Buy Down

77
Q

Provides money for the development of a real estate project.

A

Construction Loan

77
Q

The difference between the two rates in a wraparound mortgage

A

Arbitrage

77
Q

Privately owned corporation that specializes in buying mortgage loans, mostly from mortgage bankers.

A

Federal Nation Mortgage Association (FNMA)

77
Q

Federal agency that that operates as part of the HUD to make loans available in areas of higher risk.

A

Government National Mortgage Association (GNMA)

78
Q

Institutions such as insurance companies, pension funds, Fannie Mae, Ginnie Mae, Freddie Mac or individuals who purchase already existing mortgages.

A

Secondary lending

79
Q

Facilitate and process all preliminary details necessary to the creation of a mortgage

A

Originating

80
Q

Handle all details of administrating the loan after it has been originated until it is satisfied,

A

Servicing

81
Q

Real estate mutual funds that allow small investors to invest in large commercial real estate projects.

A

Real Estate Investment Trust (REITs)

82
Q

When the contract becomes binding, the buyer thus has an equitable interest in the real estate.

A

Equitable title

83
Q

Third person whose instructions are to deliver the deed to the buyer after the contract price has been met.

A

Escrow agent

84
Q

Under this type of financing the owner of an industrial or commercial property who wants capital to use in his business sells the property to an investor and in turn leases it back for a long term

A

Sale-Leaseback

85
Q

Lessee (tenant) required to pay all real estate taxes, property insurance, repairs and so forth, so that the entire rental paid is net to the landlord

A

Net lease

Real Estate (NJ) (30 decks)

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