Ch 6 Instruments Of Real Estate Finance Flashcards
A claim, lien, charge or liability attached to and binding real property is an
Encumbrance
A lien is
A right given by law to certain creditors to have debts paid out of the property
The borrower is known as
The mortgagor
The lender is known as
The mortgagee
The promissory note is also known as
Real estate lien note
The borrowers unconditional promise to repay the amount borrowed
Promissory note
The legal procedure we’re by the secure property may be sold to satisfy the unpaid promissory note
Foreclosure
True or false: if the property fails to sell at the auction ownership will transfer to the lender any excess money that is left over from the for sale is give them back to the debtor
True
In the event of a shortage, the lender may sue the borrower for
Deficiency judgment
Contract for deed is also known
A land contract
When does the contract for deed become fully executed?
When the final loan payment is made the seller (vendor) delivers the deed to the buyer (Vender)
What instrument is used to generate funds for the borrower?
Subordinate instruments
True or false: in a second mortgage it is primary and the first mortgage is secondary
False, the second mortgage is subordinate to the primary mortgage
What may be used in a subordinate Finance instrument to help reduce the liability
A clause
What are the two different types of clauses?
Lifting clause and cross defaulting clause
What clause gives the borrower, the ability to replace the primary instrument with another, without affecting the subordinate instruments position
Lifting clause
What clause states that in the event of a borrower default on the primary instrument the secondary instrument automatically defaults
Cross defaulting clause
The clause, in which a holder of a mortgage permits a subsequent mortgage to take priority is?
Subordination clause
What is the act of yielding?
Subordination
An easement for ingress and egress is known as
Encumbrance
What lien is freely given, and usually as a collateral for a loan?
Voluntary lien
Under a ____ the final payment, is made to the seller title transfers to the buyer
Contract for deed
