***Ch 15. Real Estate Finance*** Flashcards
When a person buys a home and the lender requires the borrower to relinquish the title until their debt is paid
Title Theory
The borrower keeps the title to the property while the same time providing the lender with a mortgage (lien) to secure the debt
Lien Theory
Security instrument that the borrower signs to pledge the property as collateral
*pubic record
Mortgage
Provided to the mortgagor to release the mortgage property as security and records it on public record providing constructive notice of release
satisfaction of mortgage
Personal acknowledgement of debt with a promise to repay the debt created
Promissory Note
When the mortgagee agrees to step down in priority to allow another mortgage to take a higher position
Subordination
Outlines the mortgagors rights to repay some or all of the existing debt ahead of time
Prepayment Clause
A mortgage clause that permits the lender to require immediate repayment of the entire balance of the loan in the event of default is known as
Acceleration Clause
Once the acceleration of an entire debt has been demanded, how many days does the mortgagor have to pay the debt in full, before foreclosure can begin?
30 days
The ability to recover from default by brining current payments due
-bank decides drop foreclosure
Right reinstate
Prevents owners from selling mortgaged property without the lenders permission to prevent unauthorized transfers of title, is contained on most mortgages, and prevents mortgage assumption
- triggers an acceleration clause
Due on sale clause
A borrowers down payment, and the market value of a property minus the value existing mortgages
Equity
the percentage of the loan (mortgage) as it relates to the value of the property
Loan to value ratio
price individuals pay to borrow money
Interest
collecting and processing payments on behalf of the mortgagee
-the local lender will take out a small fee and send it to the investor
Loan servicing
A depository account in a bank, trust company, title company, or attorney, credit union, or savings association with in Florida where funds are placed and held in trust until disposition is authorized
Escrow account
prepaid interest charged by the lender at the time of closing; equal to 1 % of the loan amount
Discount point
A commission paid to lenders for originating a loan also known as mortgage brokerage fee
Loan origination fee
A written statement by a mortgagee verifying the balance due on the mortgage
Estoppel Certificate
When a person buys a property and takes over the payments of an existing debt and does not sign a note or take personal liability
subject to mortgage
When a person buys a property and takes over the payments of an existing debt and is required to qualify for the loan and sign a promissory note
Assumption of mortgage
Substitution of a new contract of an existing contract between the same of different parties
Novation
The amount of money borrowed for an amount of time
* not public record
Note
A new mortgage that includes the unpaid principal balance of an existing debt
*due on sale clause prevents this from being used
Wraparound mortgage
the sale property with seller financing that has a slight twist at closing, at closing the seller retains legal title with a promise to transfer legal title to the buyer at a later date. also known as a land contract
( vulnerable buyer)
Contract for deed
First step in filing a foreclosure lawsuit. Public note of the suit commencing
Lis Pendens
When is a mortgagors right to a property, or equity of redemption, completely extinguished during a foreclosure
once a certificate of title is issued
when the mortgagor has the right to redeem the property by paying the debt in full prior to the foreclosure sale
Equity of redemption
Occurs when a person defaults and instead of going through the foreclosure process, they simply give title to the lender
*a non-judicial proceeding
Deed in lieu of foreclosure
is a judicial process whereby the lender sues in court requesting a summary judgment to have the property sold by the courts to pay an outstanding debt.
Foreclosure
