Ch 17 finance

Question 1

what is hypothecation

Answer 1

homeowner gets money from lender, retains title to property and gives lender a mortgage as collateral

Question 2

what are the mechanics of mortgage loan transaction

Answer 2

borrower gives lender a note and a mortgage in exchange for loan funds

Question 3

in a deed of trust transaction

Answer 3

trustor conveys title to a trustee in exchange for loan funds from the beneficiary

Question 4

title-theory state?

Answer 4

lender lends money to a homeowner and takes legal title to property as collateral during the payoff period

Question 5

usury?

Answer 5

lender who charges a rate of interest in excess of legal limits

Question 6

discount point?

Answer 6

1 percent of the loan amount

Question 7

balloon vs amortized loan difference?

Answer 7

amortized loan is payed off over the loan period

Question 8

feature of promissory note

Answer 8

it is a negotiable instrument

Question 9

when terms are satisfied?

Answer 9

the mortgagee may be required to execute a release of mortgage document

Question 10

mortgage lender requires?

Answer 10

income, credit, employment data, and appraisal report

Question 11

3 overriding considerations?

Answer 11

ability to re pay, value of the collateral and the profitability of the loan