Chapter 12 Flashcards
In which theory of mortgage lending does the borrower not retain ownership during the loan period?
Title theory
In which theory of mortgage lending DOES the borrower retain ownership during the loan period?
Lien theory
What are the two instruments in financing a property?
- A mortgage 2. A promissory note, (the note)
Who are the two parties in a mortgage?
- The mortgagor 2. The mortgagee
Who is the mortgagor?
The buyer/borrower
Who is the mortgagee?
The lender
Which clause in a mortgage authorizes the lender to advance the due date of the entire unpaid balance if the mortgagor fails to fulfill any promises stated in the mortgage instrument? (If the buyer defaults)
The acceleration clause
Which clause in a mortgage allows the mortgagee the right to demand the outstanding loan balance plus accrued interest if the property or any interest in the property is sold or transferred without the lender’s prior written consent?
The due-on-sale clause
What is the formula for equity?
Current market value –mortgage debt = equity
What is the formula for loan to value?
Loan divided by value = loan to value ratio
How much does one discount point bought by the buyer increase the lender’s yield?
1/8 of a percent
What kind of clause comes with a blanket mortgage?
A release clause
