Ch.12 Residential Mortgages

Question 1

Security Interest of a lender

Answer 1

Mortgage

Question 2

Promise to repay the mortgage by the mortgagor

Answer 2

Note

Question 3

Process of securing loan by pledging property without giving up ownership of the property

Answer 3

Hypothecation

Question 4

Lien held by Mortgagee (lender) against the property owned by Mortgagor (borrower)

Answer 4

Lien theory

Question 5

Regard the mortgage document as a conveyance of ownership from the mortgagor to the mortgagee

Answer 5

Title Theory (Deed of Trust State)

Question 6

Another word for Deed of Trust State

Answer 6

Title Theory

Question 7

Parts of Title Theory/Deed of Trust State

Answer 7

1. Equitable Title
2. Nake Title
3. Deed of Reconveyance

Question 8

Borrower keeps possessory right to home and holds equitable title

Answer 8

Equitable Title

Question 9

Third Party Trustee holds ____ to the property (can sell property w/o court action)

Answer 9

Naked Title

Question 10

Issued upon full payment of loan

Answer 10

Deed of Reconveyance

Question 11

Mortgagor is the ___________

Answer 11

Borrower

Question 12

Mortgagee is the ___________

Answer 12

Lender

Question 13

Trustor is the ___________

Answer 13

Borrower

Question 14

Trustee is the ___________

Answer 14

Lender

Question 15

Essentials of a Mortgage

Answer 15

1. Promise to Pay
2. Taxes & Insurance
3. Covenant of Good Repair

Question 16

If borrower defaults they can call entire balance due (must have this to foreclose)

Answer 16

Acceleration Clause

Question 17

Most collect for taxes to protect the property

PITI – Principle, Interest, Taxes, Insurance

Answer 17

Escrow (Taxes/Insurance)

Question 18

Satisfaction piece to be issued when mortgage is paid in full

Answer 18

Defeasance Clause

Question 19

Allows lender to inspect property

Answer 19

Protection of Lenders Rights

Question 20

Borrowers right to reinstate after bank issues default for not making payments
-Called : Equity Redemption

Answer 20

Borrowers Right to Reinstate after Acceleration

Question 21

Full balance may be called upon sale/transfer of ownership of property

Answer 21

Due on Sale Clause

Question 22

Lender declare first rights on proceeds from municipality taking proceeds if condemned

Answer 22

Condemnation

Question 23

Contract for Deed is also called _______

Answer 23

Installment Land Contract

Question 24

In a contract for deed/installment land contract who takes title

Answer 24

Seller until buyer makes final payment

Question 25

the contain alienation clause that prohibits transfer of interest from one party to another without written authorization of lender.

Answer 25

Alienation clause (due on sale)

Question 26

Requires court of law to foreclose the property. The legal time period prior to the sale for owner to recover by paying charges & fees

Answer 26

Judicial Foreclosure

Question 27

In foreclosure who is priority of payment

Answer 27

1. County – Advertising, legal fees, etc
2. Property Taxes
3. First Mortgage/Deed of Trust
4. All other Mortgages

Question 28

If the property doesn’t pay for all liens, court can order all assets to be sold to help pay

Answer 28

Deficiency Judgement

Question 29

Borrower gives all rights and claims to the lender in settlement of debt.

Answer 29

Deed in Lieu of Foreclosure