Chapter 12 - Residential Mortgages 9% Flashcards
Is Florida a lien theory state?
yes
Lien theory calls the borrower to….
retain the ownership of the property during the loan period
A promissory note is a contract between
the lender and borrower
A promissory note is evidence of a personal debt and contains
the names of the parties, rate of interest, the amount of money borrowed, and the loan repayment terms
What does the Defeasance clause provide
protection for the borrower as it requires the lender to acknowledge performance by the borrower.
What is the only legally necessary clause in a mortgage
Defeasance Clause
The defeasance clause holds the lender’s rights in check as long as
the borrower performs as agreed in the note and mortgage
What is required if there is a change in interest rate
a change in rate or any cost must be disclosed prior to closing
what requires lenders to judge every loan applicant on the basis of the applicant’s own credit rating and income
ECOA - Equal credit opportunity act
List the steps in a loan application process
Mortgage Underwriting
Qualifying the Property
Qualifying the Applicant
What is redlining
when a lender refused to loan based on the racial or economic factors of the neighborhood in which the property is located. This is prohibited by federal law
What is required to obtain a FHA loan
borrower must not exceed a housing expense ratio of 31% and total obligation ratio of 43%. >580 credit score
What is the right of a borrower to cure the default before foreclosure rather than lose the property
equity of redemption
How do you calculate total obligation ratio
Monthly piti payment + all debts / monthly gross income
piti = principal, interest, tax, insurance
