Chapter 12 keywords

Question 1

Acceleration clause

Answer 1

The acceleration clause allows a lender to declared the entire outstanding balance due and payable immediately whenever the default occurs. Without having disability, the lender would have to sue each time to borrow defaulted month after month.

Question 2

Assumption

Answer 2

The due on sale clause prevents an assumption of the mortgage by an unqualified borrower. Interested in assuming existing loan would have to apply and be approved by the lender.

Question 3

Blanket mortgage

Answer 3

A blanket mortgage is a single mortgage given by a borrower that pledges two or more parcels as security for a loan when constructing several properties in the same area, builders and developers commonly used a blanket mortgage
A black mortgage typically contains a partial release clause, thereby allowing the borrower to pay a specified amount of release a single lot from the blanket so we can be sold to buy upon completion of construction

Question 4

Buydown

Answer 4

Discount points are an upfront payment to the lender and exchange for lower mortgage rates referred to as a buy down

Question 5

Contract for Deed(land contract)

Answer 5

The contract for deed is unknown as a land, contract, installment, sales, contract agreement for deed or conditional sales contract
A contract for is an agreement between a property, owner and potential buyer in which the owner agrees to deliver a deed to the purchaser. After certain conditions have been met. The buyer is given possession and use of the property during the term of the contract for deed the buyer is entitled to possession of the property and is required to keep the property insured and pay the real estate taxes .

Question 6

Defeasance clause

Answer 6

The defeasance clause provides protection for the borrow, as it requires a lender to acknowledge performance by the borrower. The defeasance clause holds the lender rights and check as long as the borrower performs as agreed in the note and mortgage it’s the only legally necessary clause and a mortgage.

Question 7

A deed in lieu of foreclosure

Answer 7

A deed in lieu of foreclosure in alternative to a foreclosure sale a mortgagor who is in default, can voluntarily deed a property to lien holder in lieu of payment of a debt. The lien holder may not be willing to accept the title however as they would have to assume liability for any other liens against the property.

Question 8

Discount points

Answer 8

Discount points are an upfront payment to a lender and exchange for a lower mortgage rate referred to as a buydown. This decreases the monthly mortgage payment for the life of the loan. One discount point is an upfront payment of 1% of the loan amount not the purchase price that is paid at closing.

Question 9

Due on sale clause

Answer 9

Due on sale clause or alienation clause in a loan, or promissory note, states that the full balance may be called due on sale upon transfer of ownership to the property use to secure the note
This clause prevents a borrow from transferring any interest in the mortgage property without permission of the lender

Question 10

Equity

Answer 10

Equity is the difference between the current market value of a property and the amount owner still owes on the mortgage

Question 11

Equity of redemption

Answer 11

Equity over redemption is the right of a borrower to cure the default before foreclosure rather than lose the property the borrower must pay the entire balance of the debt plus any interest in cost that has accrued, since the default equity of redemption exist in Florida up to the moment of foreclosure

Question 12

Escrow

Answer 12

An escrow or impound account is established to hold money collected by the lender from the borrower to pay hazard insurance and property taxes. When they become due by insurance that the taxes and insurance will be paid on time to escrow account, protects the lender from tax liens and an insured losses that the borrower can’t repay

Question 13

Estoppel certificate

Answer 13

When a mortgage property is sold, and the mortgage on the property is to remain, the buyer would want to have the seller verify the current loan balance the seller can obtain a stopple certificate, also called an estoppel letter from the lender, which is a letter that verifies the principal balance owed on the loan The seller must request this information since the lender will not provide it to anauthorized parties with permission from the original borrower

Question 14

Hypothecation

Answer 14

The pledge of property of security for a loan is called hypothecation

Question 15

Interest

Answer 15

Mortgage interest is the compensation of our pay, a lender for the use of the lenders money to purchase a property. The interest rate is a percentage of the loan that must be paid in addition to the loan amount or principal.

Question 16

Land development loans

Answer 16

There are two kinds:
. Blanket mortgage: a blanket mortgage is a single mortgage given by a borrower that pledges two or more parcels as security for a loan when construction several properties in the same area, builders and developers commonly use
A blanket mortgage
. Take out commitment.: take out commitment as a type of mortgage, purchase agreement under a takeout commitment. A long-term investor agrees to buy a mortgage from a mortgage banker at a specific date in the future.

Question 17

Lien theory

Answer 17

Fla is a lien theory. State lien theory allows a borrow to retain the ownership of the property during the loan period the lender records, the mortgage which creates a lien against the property and they’re the lien theory the foreclosure process is more involved than under title theory

Question 18

Lis pendant

Answer 18

Latin for pending litigation

Question 19

Loan origination fee

Answer 19

Mortgage lender typically charge a loan origination fee to pay for the administrative cost of processing the loan. The loan origination fee pays the lenders overhead for facilities, salaries, and commissions.
Low origination fees are expressed as points one point is 1% of the amount Bart express in dollars
The loan origination fee is a one time charged up must be paid by the borrower and is an additional cost necessary to obtain. The loan anywhere from one to four points is not uncommon.

Question 20

Loan servicing

Answer 20

Loan servicing is administration of a loan from the time the money is borrowed until the loan is paid off (satisfied)
Loan servicing includes such things as sending monthly payment statements, collecting payments, maintaining records and balances managing any escrow funds collecting and paying taxes forward and proceeds to the mortgage holder and following up on the delinquencies

Question 21

Loan to value ratio

Answer 21

The loan to value ratio LTV is the percentage of the properties valued that is represented by the loan the higher the loan to value ratio is the higher. The risk of loss is to the lender, in the event of a foreclosure, the borrower also has a higher risk since increased payments, make the risk of default higher
To calculate the LTV ratio. The loan amount is divided by the lesser of the purchase price or appraise value as shown in the final formula. :
Loan amount/ purchase price or appraised value= LTV ratio

Question 22

Mortgage

Answer 22

A mortgage accompanies a note and is security for its repayment. A mortgage is the borrower pledge of the mortgage property to secure the repayment of the notes.

Question 23

Mortgagee

Answer 23

Is the lender and he owns (holds) both the note and mortgage. He receives/takes the mortgage from the mortgagor

Question 24

The mortgagor

Answer 24

The mortgage or gives the mortgage to mortgage it is the borrower

Question 25

Note

Answer 25

The note is evidence of a personal deck, and contains the names of the parties. The rate of interest amount of money borrowed, and the loan repairment terms. The note is a contract between the lender and the borrower.

Question 26

Novation agreement

Answer 26

One of the methods of purchasing mortgage property is assumption with novation, When the lender removes the sellers name from the loan and substitutes the name of the new buyer/borrower substitute in the sellers name with the borrowers name is referred to as novation agreement novation releases the seller from any further liability for the

Question 27

Partial release clause

Answer 27

A blanket mortgage typically contains a partial release clause, thereby, allowing the borrower to pay a specified amount to release a single lot from the blankets so it can be sold to a buyer upon completion of construction

Question 28

PITI payments

Answer 28

Many lenders required to pay a portion of the annual insurance, premium and real estate taxes each month along with the principal and interest due for the period. This type of monthly payment is referred to as a PITI payment which stands for principal interest, taxes, and insurance.

Question 29

Prepayment clause

Answer 29

A prepayment clause allows a borrower to pay off a loan early, thereby avoiding the interest that would otherwise have to be paid in Florida. A borrower has the right to prepay a loan, whether this rate is expressed and the mortgage or not. One interest rates are high lenders, or prefer their loan not be paid ahead of schedule during these times some loans may include a prepayment penalty clause within the prepayment clause.

Question 30

Prepayment penalty clause

Answer 30

A prepayment, penalty clause requires a borrower to pay a certain amount of the lender for the privilege of pre-paying the debt

Question 31

Receivership clause

Answer 31

A receivership 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 referred to as a receiver to manage the property during the foreclosure process, collect the rents and maintain the property.

Question 32

Write to reinstate clause

Answer 32

Right to reinstate is a long class that gives a borrower the right to cure a loan that is in default by paying loan payments that are in arrears along with accrued and trust. Payment charges and legal costs for incured by the lender before the foreclosure is finalized

Question 33

Satisfaction of mortgage

Answer 33

When a loan has been paid in full, and a lien theory, state, the mortgagor should receive a letter of satisfaction from the mortgagee within 60 days of the loan payoff. This letter states that the loan terms have been fully satisfied. It should be recorded in the public records to offset the lien that was created when the original mortgage was recorded.

Question 34

Short sales

Answer 34

A short sale transaction is a cell transaction in which a seller confronted with a threat of a foreclosure, enters into a settlement agreement with the lender where the lender consents to a sales price for the property that is below the outstanding loan balance. In other words the sale proceeds fall short of the amount owed to the lender.

Question 35

Subject to the mortgage

Answer 35

If a mortgage property is sold subject to the mortgage, the new owner acquires ownership without assuming personal responsibility for the balance of the promissory notes. The existing mortgage continues to use the property as security for the.

Question 36

Subordination agreement

Answer 36

A subordination agreement is a written contract in which lender who has secured a loan by a mortgage or deed of trust. Agrees with the property owner to support innate the first loan to a new loan, given a new loan priority, and any foreclosure or payoff.

Question 37

Take out commitment

Answer 37

A takeout commitment is a type of mortgage purchase agreement under a takeout commitment long-term investor agrees to buy a mortgage from a mortgage banker at a specific date in the future the investor is referred to as a takeout lender, and is usually an insurance company or other financial institution that commitment is an agreement to provide long-term financing into place and interim short term loan

Question 38

Title theory

Answer 38

Title theory is the oldest form of mortgage in which originated under English common law, and the system to borrow was required to temporarily convey owner of the property to the lender for the duration of the loan. If the borrower defaulted on the lender in the loan. The lender took possession of the property