Chap 12 Addition Flashcards
Two common types of junior mortgages are
Home Equity Loan
Home Equity Line of Credit
A written contract in which a lender who has secured a loan by a mortgage or deed of trust agrees to subordinate the first lien loan to a new loan
Subordination agreement
Name some Mortgage clauses
Acceleration
Cognovit
Defeasance
Due on sale
Escalation
Insurance
Open End
Prepayment
Clauses are also called
Covenants
This clause allows the lender to declare the entire balance whenever default occurs
Acceleration clause
This clause gives a lender the right to foreclose by requiring thr borrower admits to any future default
Cognotive Clause
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This Clause provides protection for the borrower as it requires the lender to acknowledge performance by the borrower like the borrower is paying lease on time
Defeasance clause
A due on sale clause is also called
Alienation clause
Allows a lender to increase interest rate based on the occurrence of an event such as consistently late payments
Escalation Clause
This clause limits the lenders rights in a foreclosure to the amount received from the sale of the foreclosed property
Exculpatory clause
This clause requires the borrower to maintain the property properly during the term of the loan
Maintenance Clause
Allows borrower to pay off loan early
Prepayment Clause
Allows a borrower to borrow additional funds based on the same mortgage after the loan balance
Open - End Clause
This clause is used in mortgages on income producing real estate
If the investor should default the lender may ask the court to appoint a trustee
Receiverorship Clause
This Clause is found in mortgages that cover more than one parcel of land
Release clause
A loan that gives a borrower a right to cure a loan
Right to Reinstate
Allows a lien recorded earlier to be placed in a secondary position to a new lien
Subordination Clause
The difference between the current market value of a property and the amount the owner still owes
Equity
The compensation a borrower pays a lender for the use of the lenders money to purchase a property
Mortgage Interest
The administration of a loan from the time the money is borrowed to the time it is paid off
Loan Servicing
This account holds money collected by the lender from the borrower to pay hazard insurance and property taxes when they become due
Escrow account
An impound account is also called
Escrow account
Fees that are charged by the lender and paid by the borrower to cover overhead & administrative costs and to provide some amount of profit for the lender
Mortgage Loan Fees
The fee to process a loan is called
Loan origination fee
An upfront payment to the lender in exchange for a lower mortgage rate is called a
Discount point
A discount point is typically how much percentage
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The rate actually received by the lender is called
Effective Yield
The percentage of the properties value that is represented by the loan
Loan to Value Ratio
Methods of purchasing a mortgage d property
Cash Sale
Assumption of the mortgage
Assumption with Novation
Subject to mortgage
Mortgages that do not contain a due on sale clause can be assumed by a buyer without permission of the lender
Assumption of the mortgage
Assumption of the mortgage is also called
Non qualifying mortgages
Mortgages that contain a due on sale clause cannot be sold with an assumption without the knowledge and approval of the lender
Assumption with Novation
Substituting the sellers name with the borrowers name is referred to as
Novation Agreement
Releases sellers name from any further liability for the debt
Novation
When the original borrower remains liable for the balance of the promissory note
Subject to mortgage
An agreement between a property and a potential buyer in which the owner agrees to deliver a deed to the purchaser after certain conditions have been met
Contract for deed
A contract for deed is also called a
Land contract
Installment sales contract
Agreement for deed
Conditional Sales Contract
A single mortgage given by a borrower that pledges two or more parcels as security for a loan
Blanket Mortgage
A long term investor agrees to buy a mortgage from a mortgage banker at a specific date in the future
Take Out Commitment
A letter that verifies the principal balance owed on the loan
Estopell letter
Or estopell certificate
What is used to transfer the rights in a property
Assignment
Failure to perform as agreed in the promissory note is called
A default
A right stop foreclosure is called
Equity of redemption
The right that allows a borrower to redeem from a foreclosure for a period of time after a foreclosure sale
Statutory right of redemption
The 3 foreclosure process
Strict foreclosure
Judical foreclosure
A deed in lieu of foreclosure
A non Judical foreclosure allows a lender to take full possession of property after a default occurs this process is harsh and not allowed in Florida
Strict foreclosure
Requires a Lender to bring suit in court to prove default has occurred the borrower has the right to defend against the suit
Judical foreclosure
A mortgage who is in default can voluntarily deed a property to a lien holder in lieu of payment
A deed in lieu of foreclosure
A transaction in which a seller is confronted with the threat of a forclosure..enters into a settlement agreement with the lender where the lender consents to a sales price lower than outstanding balance
Short sale
