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GA Real Estate Terms > Chapter 14 > Flashcards

Chapter 14 Flashcards

1
Q

Acceleration clause

A

Mortgage loan provision which permits the lender to demand the entire loan balance be immediately paid in full in the event of default

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2
Q

Adjustable rate mortgage

A

Mortgage loan which allows the lender to periodically adjust the interest rate, upper down, to reflect changes in the market rates. Changes are tied to an index, such as treasury bill rate, which measures market reactions in economic pressures on interest rates.

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3
Q

Alienation clause

A

Mortgage loan provision which allows the lender to demand the entire loan balance due if the property is sold, or the lender can allow the loan to be assumed by a credit worthy buyer and with an interest rate increase. Also known as due-on-sale clause.

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4
Q

All Inclusive Mortgage

A

Also called Wraparound Morgage

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5
Q

Amortized Loan

A

Fully Amortized Mortgage

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6
Q

Annual percentage rate

A

The total annual cost of credit, including interest, loan discount, and all other finance charges for obtaining the loan, expressed as a percent.

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7
Q

Assume and agree to pay

A

When a purchaser assumes and agrees to pay an existing loan, he or she becomes primarily liable for repayment. Should he or she default and not have sufficient assets to satisfy a deficiency judgment, the seller is still secondarily liable to the lender. If the seller is required to pay off any deficiency, he or she may in turn sue the purchaser for the amount paid to the lender

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8
Q

Balloon payment

A

A lump sum pay off of the unpaid balance of a loan, usually at the end of the loan term

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9
Q

Blanket mortgage

A

A mortgage loan arrangement where several parcels of the land are pledged as a security; used primarily with subdivision financing

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10
Q

Budget mortgage

A

Mortgage loan in which monthly payments include not only principal and interest but also 1/12 of the annual cost of taxes and insurance

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11
Q

Certificate of eligibility

A

The VA’s official statement regarding in the amount of entitlement available to a particular veteran

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12
Q

Certificate of no defense

A

Also called estoppel certificate

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13
Q

Certificate of reasonable value (CRV)

A

An official VA appraisal of the specific property

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14
Q

Certificate of sale

A

Issue to the successful bidder at a foreclosure sale if the state provides a statutory period of redemption to the defaulting owner. If the property is not redeemed within the time allowed by law, a sheriffs deed is issued to the new owner

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15
Q

Chattel Mortgage

A

Also called security agreement

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16
Q

Closed mortgage

A

One which does not allow the borrower to pay off the loan before maturity

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17
Q

Closing costs

A

Prorated charges by the lender including costs of making the loan in a service charge can be paid by buyer or seller

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18
Q

Collateral

A

Property pledged to a lender as security for loan

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19
Q

Conditional commitment

A

An official FHA appraisal of a specific property. Referred to as cost of acquisition. It is used to determine the amount of loan the FHA will insure.

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20
Q

Construction loan

A

A short term in term loan to finance the cost of labor and materials necessary to complete construction of a building or other project

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21
Q

Conventional loan

A

One that is neither insured nor guaranteed by the government

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22
Q

Credit report

A

A written report detailing the credit history of a prospective borrower, used by a lender to help determine credit worthiness

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23
Q

Deed in lieu of foreclosure

A

A deed given to a lender by defaulting borrower who wishes to avoid foreclosure proceedings. The lender may or may not accept the deed

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24
Q

Deed to secure debt

A

Also called security deed

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25
Q

Defeasance Clause

A

A mortgage provision which allows the borrower to defeat the mortgage by repaying the loan according to the terms of the note. When the debt is paid, this provision causes the mortgage to become null and void, allowing the borrower to regain full rights of ownership.

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26
Q

Deficiency judgment

A

A judgment ordered by the court against the borrower when the proceeds from a foreclosure sale are insufficient to satisfy the debt. The defaulting borrowers other assets may be sold to satisfy the judgment

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27
Q

Demand deposits

A

A banks deposits which are available to depositor with no advance withdrawal notice required

28
Q

Discount points

A

The percentage of a loan which determines the amount paid to the lender to increase the yield. One discount point is equal to 1% of the loan amount …also called loan discount

29
Q

Discount rate

A

The rate of interest the Federal Reserve System charges member banks to borrow money. By controlling the discount rate, the Federal Reserve controls the money available for credit.

30
Q

Disintermediation

A

Occurs when withdrawals exceed deposits from savings and loan associations or other similar institutions because alternative investments offer a more attractive return

31
Q

Due-on-sale clause

A

Also called alienation clause

32
Q

Entitlement

A

The amount of loan guarantee that a veteran is eligible to receive for a VA loan

33
Q

Equity

A

The difference between the value of a property and the outstanding loan balances

34
Q

Equity of redemption

A

The borrowers right to redeem property at any time after default but before foreclosure sale, by paying off the debt to the lenders satisfaction

35
Q

Escalator clause

A

Mortgage loan provision which allows the lender to increase the interest rate in the event of the fault or because of the changes in some standard index, such as the index of US Treasury bills to which the rate is tied

36
Q

Estoppel certificate

A

The borrowers written acknowledgment of the loan balance. Execution of this document prevents the borrower from later asserting that the amount owed is less than was stated

37
Q

Exculpatory clause

A

Mortgage loan provision in which the lender waives the right to seek a deficiency judgment against the borrower. The borrowers personal liability on the note is eliminated, leaving the property itself as the lenders sole security for the debt.

38
Q

Fannie Mae

A

An agency which buys loans from lenders, to assure them of a continuing flow of funds. It is owned by its stockholders.

39
Q

Farmer’s Home Administration (FMHA)

A

The Federal Agency under the U.S. Department of Agriculture that makes credit available to farmers and rural communities with smaller populations.

40
Q

Federal Equal Credit Opportunity Act

A

Federal law which prohibits discrimination against credit applicants on the basis of race, color, religion, sex, national origin, marital status, or age.

41
Q

Federal Reserve System

A

Agency responsible for regulating and monitoring the lending practices of federally chartered commercial banks. The federal reserve controls the supply of money made available for credit by regulating the discount rate charged member banks for the money they borrow. It also influences credit activity by regulating the amount of funds that these banks must keep on reserve.

42
Q

FHA Insured Loan

A

Alone fully insured by the Federal Housing Administration

43
Q

FHA Mortgage Insurance Premium (MIP)

A

FHA mortgage insurance protects the lender against loss in the event of default

44
Q

Firm commitment

A

A commitment to ensure that alone will be available for a given buyer

45
Q

First mortgage

A

One that has the earliest recording date in the most instances. Also called subordination clause

46
Q

Flexible payment mortgage

A

Also called graduated payment mortgage

47
Q

Foreclosure

A

A legal procedure whereby mortgaged property is either sold to a third-party or transferred to the lender in order to satisfy the debt

48
Q

For closure by advertisement

A

Also called foreclosure by power of sale

49
Q

For closure by power of sale

A

A legal procedure whereby the lender is authorized by the loan agreement to sell the mortgage property upon the fault and to applied the proceeds to the debt. The sale must be advertised according to state requirements and an auction sale must be held. 

50
Q

Freddie Mac

A

Federal Home Loan Mortgage Corporation (FHLMC) a secondary mortgage market company, similar to RNMA, reporting to its own Board of Directors.

51
Q

Fully amortized mortgage

A

A long-term prepayment plan which provides for equal monthly payments of principal and interest. Each months interest is figured on the loan balance and a fixed rate. As the loan matures, the amount of interest decreases each month by the amount paid on the principal increases also called amortized mortgage or constant mortgage plan.

52
Q

Impounds

A

Monthly payments of taxes and insurance collected by the lender to assure payment of these items when they become due

53
Q

Holder in due course

A

One who, in good face and without notice of defect, pays valuable consideration to receive a note before it is due

54
Q

Granting clause in a mortgage

A

In title theory states, this provision makes the mortgage and outright conveyance of title to the lender

55
Q

Ginny Mae

A

Government National Mortgage Association (GNMA) was established in order to buy special assistance mortgages carrying below market interest rates. GNMA is a government agency under HUD and deals only in VA and FHA mortgages. Also called pass through securities

56
Q

Good faith estimate

A

A RESPA required estimate of all settlement charges to be assessed against the borrower at closing. The lender must provide this estimate at the time of loan application or within three business days.

57
Q

Graduated payment mortgage (GPM)

A

A mortgage loan which provides for reduced payments in the first 5 to 10 years in exchange for higher than usual payments which then remain fixed for the balance of the loan term.

58
Q

Installment land contract

A

Also called land contract

59
Q

Interest

A

The amount paid or accrued in return for the use of money

60
Q

Jointly and severally liable

A

Where more than one person signs a note, they are not liable for their proportionate share, but each is responsible for the entire debt

61
Q

Judicial Foreclosure

A

Legal proceeding where a lender files a lawsuit against a defaulting borrower in order to force the sale of property held as collateral

62
Q

Junior mortgage

A

Any mortgage recorded after the first mortgage

63
Q

Kickbacks

A

The practice of accepting fees for referrals without providing an actual service

64
Q

Lien Theory

A

The legal position adopted by some states, holding that a mortgage only creates a lien rather than conveying title to the lender

65
Q

Loan discount

A

Prepaid interest, paid by a borrower in seeking a loan, designed to increase the lender’s yield or profit

66
Q

Loan transfer fee

A

A charge for changing the lenders records when a buyer takes over the sellers existing loan

67
Q

Loan servicing

A

The lenders administrative duties after a loan is placed for instance, mailing out bills, keeping records of loan payments, maintaining, escrow accounts, making payments for taxes and insurance, and sending out delinquent notices

GA Real Estate Terms (11 decks)

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