Chapter 15 Flashcards
Whats a mortgage?
An estate in land; a document evidencing a debt owed by the borrower (mortgagor) to the lender (mortgagee). Registration of the mortgage in the land title office transfers the mortgagor’s interest in land to the mortgagee as security for the repayment of the debt and creates an enforceable security interest in the land
What is a lender called?
MORTGAGEE
What does a lender receive from a borrower
Receives mortgage as security for the loan
What is a BORROWER called?
MORTGAGOR
What does a borrower grant to a lender?
grants mortgage as security for loan
Who is a guarantor?
one who becomes contingently or secondarily liable for another’s debt or performance
What is a vendor take back mortgage?
a mortgage taken back by the vendor from the purchaser to facilitate a sale - vendor becomes the mortgagee and the purchaser becomes the mortgager
Wha is reverse annuity mortgage
An innovative loan arrangement in which the lender makes periodic payments to the borrower during the loan term. At the end of the term, the borrower will have to repay the balance owing by refinancing or selling the property
What is prepayment?
where a borrower seeks to pay a substantial amount or the entire amount owing on the mortgage prior to the expiration of the mortgage term
What does “assign” mean?
to transfer over to another (e.g., “I assign all right, title and interest in Blackacre to my wife, Elaine”)
what is a assumable mortgage?
a mortgage that allows a buyer to assume or take over the responsibilities and liabilities under the mortgage from the seller (original borrower)
What is foreclosure?
a legal action taken by a mortgagee to
realize on its security, by reason of the default on the mortgage
What is order nisi?
a final order of the court in the foreclosure process which may not be challenged except by way of appeal
agreement for sale
a contract by which the owner of land (seller) agrees to sell land to another (buyer) who agrees to buy it. The buyer’s interest is registered in the land title office as a charge against the seller’s certificate of title. The contract provides that the purchase price will be paid by instalments
present equitable mortgage
An agreement to grant a mortgage in the future
What are Express terms and Implied terms?
Express terms are those that are stated outright in the contract /Implied terms are those that are not specifically stated in the contract but may be implied by statute or case law
What does the phrase “there shall be no clog on the equity of redemption” mean?
a borrower cannot be prevented by the terms of the mortgage from eventually redeeming his or her property free from the conditions contained in the mortgage.
What is a covenantor
primary debtor and is responsible for the loan as though they themselves were the borrower. This means that a covenantor is responsible for the obligations both alone and together with the borrower. Furthermore, the lender may collect from the covenantor before the lender exhausts all available remedies against the borrower.
What is a guarantor?
A guarantor, however, is a secondary debtor and will only be responsible for repaying the borrower’s loan after the lender has exhausted every available remedy against the primary debtor. Therefore, it is easier for lenders to enforce loans against a covenantor than a guarantor.
Interim Blanket Mortgage
commonly used in condominium developments or subdivisions. In order to initially raise money for the project, a mortgage is placed on the whole development. However, the developer/ borrower will want to release this mortgage from the individual strata lots or subdivision lots as they are purchased. Therefore, the blanket mortgage will contain a clause which permits the mortgage to be released from each individual lot as it is purchased, but keeps the security over the rest of the project
What is Bridge financing?
Bridge financing, as the name suggests, is a type of interim financing whereby a borrower will receive a loan and grant a mortgage to a lender for a short period of time while long-term financing is being pursued. Bridge financing can be used where a borrower has purchased property but has not sold his or her existing property and financing to purchase the new property is required. Another situation where bridge financing is used is when a borrower needs immediate financing while a financial institution is considering the borrow- er’s credit worthiness and arranging security for long-term financing.
if a document requires interest to be paid but the rate is not set out, then the rate allowed by law
5%
What are Blended payments?
payments which do not separate the interest portion from the principal portion.
what is interest at a criminal rate?
an effective annual rate of over sixty percent.
