Ch 6 Instruments Of Real Estate Finance

Question 1

A claim, lien, charge or liability attached to and binding real property is an

Answer 1

Encumbrance

Question 2

A lien is

Answer 2

A right given by law to certain creditors to have debts paid out of the property

Question 3

The borrower is known as

Answer 3

The mortgagor

Question 4

The lender is known as

Answer 4

The mortgagee

Question 5

The promissory note is also known as

Answer 5

Real estate lien note

Question 6

The borrowers unconditional promise to repay the amount borrowed

Answer 6

Promissory note

Question 7

The legal procedure we’re by the secure property may be sold to satisfy the unpaid promissory note

Answer 7

Foreclosure

Question 8

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

Answer 8

True

Question 9

In the event of a shortage, the lender may sue the borrower for

Answer 9

Deficiency judgment

Question 10

Contract for deed is also known

Answer 10

A land contract

Question 11

When does the contract for deed become fully executed?

Answer 11

When the final loan payment is made the seller (vendor) delivers the deed to the buyer (Vender)

Question 12

What instrument is used to generate funds for the borrower?

Answer 12

Subordinate instruments

Question 13

True or false: in a second mortgage it is primary and the first mortgage is secondary

Answer 13

False, the second mortgage is subordinate to the primary mortgage

Question 14

What may be used in a subordinate Finance instrument to help reduce the liability

Answer 14

A clause

Question 15

What are the two different types of clauses?

Answer 15

Lifting clause and cross defaulting clause

Question 16

What clause gives the borrower, the ability to replace the primary instrument with another, without affecting the subordinate instruments position

Answer 16

Lifting clause

Question 17

What clause states that in the event of a borrower default on the primary instrument the secondary instrument automatically defaults

Answer 17

Cross defaulting clause

Question 18

The clause, in which a holder of a mortgage permits a subsequent mortgage to take priority is?

Answer 18

Subordination clause

Question 19

What is the act of yielding?

Answer 19

Subordination

Question 20

An easement for ingress and egress is known as

Answer 20

Encumbrance

Question 21

What lien is freely given, and usually as a collateral for a loan?

Answer 21

Voluntary lien

Question 22

Under a ____ the final payment, is made to the seller title transfers to the buyer

Answer 22

Contract for deed