Ch.12 Residential Mortgages Flashcards
Security Interest of a lender
Mortgage
Promise to repay the mortgage by the mortgagor
Note
Process of securing loan by pledging property without giving up ownership of the property
Hypothecation
Lien held by Mortgagee (lender) against the property owned by Mortgagor (borrower)
Lien theory
Regard the mortgage document as a conveyance of ownership from the mortgagor to the mortgagee
Title Theory (Deed of Trust State)
Another word for Deed of Trust State
Title Theory
Parts of Title Theory/Deed of Trust State
- Equitable Title
- Nake Title
- Deed of Reconveyance
Borrower keeps possessory right to home and holds equitable title
Equitable Title
Third Party Trustee holds ____ to the property (can sell property w/o court action)
Naked Title
Issued upon full payment of loan
Deed of Reconveyance
Mortgagor is the ___________
Borrower
Mortgagee is the ___________
Lender
Trustor is the ___________
Borrower
Trustee is the ___________
Lender
Essentials of a Mortgage
- Promise to Pay
- Taxes & Insurance
- Covenant of Good Repair
If borrower defaults they can call entire balance due (must have this to foreclose)
Acceleration Clause
Most collect for taxes to protect the property
PITI – Principle, Interest, Taxes, Insurance
Escrow (Taxes/Insurance)
Satisfaction piece to be issued when mortgage is paid in full
Defeasance Clause
Allows lender to inspect property
Protection of Lenders Rights
Borrowers right to reinstate after bank issues default for not making payments
-Called : Equity Redemption
Borrowers Right to Reinstate after Acceleration
Full balance may be called upon sale/transfer of ownership of property
Due on Sale Clause
Lender declare first rights on proceeds from municipality taking proceeds if condemned
Condemnation
Contract for Deed is also called _______
Installment Land Contract
In a contract for deed/installment land contract who takes title
Seller until buyer makes final payment
the contain alienation clause that prohibits transfer of interest from one party to another without written authorization of lender.
Alienation clause (due on sale)
Requires court of law to foreclose the property. The legal time period prior to the sale for owner to recover by paying charges & fees
Judicial Foreclosure
In foreclosure who is priority of payment
- County – Advertising, legal fees, etc
- Property Taxes
- First Mortgage/Deed of Trust
- All other Mortgages
If the property doesn’t pay for all liens, court can order all assets to be sold to help pay
Deficiency Judgement
Borrower gives all rights and claims to the lender in settlement of debt.
Deed in Lieu of Foreclosure
