Chapter 12 - Learning Objectives & Key Terms Flashcards
Acceleration Clause
A condition in a real estate finance instrument giving the lender the power to declare all sums owing the lender immediately due and payable upon the happening of an event, such as sale of the property, or a delinquency in the repayment of the note.
Assumption
The taking of a title to property by a grantee wherein the grantee assumes liability for payment of an existing note secured by a mortgage or deed of trust against a property, becoming a co-guarantor for the payment of a mortgage or deed of trust note
Blanket Mortgage
A type of loan used to fund the purchase of more than one piece of real property. A blanket mortgage is often used for subdivision financing
Buydown
Obtaining a lower interest rate by paying additional points to the lender.
Contract For Deed (Land Contract)
Where the buyer takes possession while paying the agreed amount in installments and the seller hands over the deed at some future date when agreed full payment has been made
Defeasance Clause
The clause in a mortgage that gives the mortgagor the right to redeem the mortgagor’s property upon the payment of the mortgagor’s obligations to the mortgagee.
Deed In Lieu Of Foreclosure
A deed to real property accepted by a lender from a defaulting borrower to avoid the necessity of foreclosure proceedings by the lender.
Discount Points
The amount of money the borrower or seller must pay the lender to get a mortgage at a stated interest rate.
Due on Sale Clause
A clause found in most mortgage loans that requires the mortgagor to pay off the entire mortgage debt when the property is sold
Equity
The remaining interest or value after all liens and other charges on the property have been paid.
Equity of Redemption
The right of the borrower, through Florida Law, to reclaim the property before a foreclosure sale by paying the full debt plus interest and costs.
Escrow
An account into which borrowers pay installments in advance to cover property tax and insurance.
Estoppel Certificate
The legal instrument from the mortgagor detailing the exact unpaid balance of a mortgage, the current rate of interest and the date to which interest has been paid.
Hypothecation
The pledge of a thing as security without the necessity of giving up delivery of title or possession.
Interest
The charge in dollars for the use of money for a period of time. In a sense, the “rent” paid for the use of money.
Lien Theory
Where the lender creates a lien on the borrower’s property rather than having the title to the property.
Lis Pendens
A recorded notice of a pending action involving title or possession of real property.
Land Development Loans
Commercial mortgages to finance the purchase of bare land, its development and the construction of a residential subdivision.
Loan Origination Fee
A charge by a lender when a loan is taken in exchange for a mortgage.
Loan Servicing
Fees charged by lenders for services such as loan payment collection and recordkeeping for mortgages.
Loan-to-Value Ratio
The percentage of a property’s value that a lender can or may loan to a borrower.
Mortgage
An instrument recognized by law by which property is hypothecated to secure the payment of a debt or obligation.
Mortgagee
One to whom a mortgagor gives a mortgage to secure a loan or performance of an obligation; a lender or creditor.
Mortgagor
One who gives a mortgage on his or her property to secure a loan or assure performance of an obligation; a borrower.
Note
A document signed by the borrower which states the amount of the loan, the interest rate, the frequency and method of repayment, and the borrower’s obligation to repay.
Novation
The substitution or exchange of a new obligation or contract for an old one by the mutual agreement of the parties.
Partial Release Clause
A provision whereby upon receipt of a certain sum the mortgagee agrees to release certain parcels from the lien of a blanket mortgage.
PITI
An acronym for Principal, Interest, Taxes and Insurance.
Prepayment Clause
A provision in a mortgage that allows the mortgage debt to be paid off ahead of time without penalty.
Prepayment Penalty
The charge payable to a lender if the borrower pays off the outstanding principal balance of the loan prior to its maturity.
Receivership Clause
A provision in a mortgage requiring income derived from income-producing property to be used to make mortgage payments in the event the borrower defaults.
Right to Reinstate
Also called Equity of Redemption or Equitable Redemption: the right of the borrower, through Florida Law, to reclaim the property before a foreclosure sale by paying the full debt plus interest and costs.
Satisfaction of Mortgage
The discharge of a mortgage from the records upon payment of the debt.
Short Sale
A seller’s attempt to sell real estate where the liens are greater than the value of the property
A seller’s attempt to sell real estate where the liens are greater than the value of the property
Where a condition or legal requirement needs to be met or obeyed.
Subordination Agreement
An agreement by the holder of an encumbrance against real property to permit that claim to take an inferior position to other encumbrances against the property.
Take-out Commitment
A written commitment from a financial institution certifying that upon completion of a project permanent financing will be provided.
Title Theory
A legal concept where the title to a mortgaged property is held by the lender or a third party until the loan is repaid in full.
