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Principles of Real Estate > Chapter 16 > Flashcards

Chapter 16 Flashcards

1
Q

Clause in a promissory note that permits the lender to demand payment in full of any unpaid principal and any interest due in the event of default

A

Acceleration Clause

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2
Q

Private financial institutions organized to accept deposits from individuals and businesses and to loan these funds to all types of borrowers

A

Commercial Bank

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3
Q

Traded securities that have commercial mortgages as their collateral and source of cash flow

A

Commercial Mortgage-Backed Securities

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4
Q

The Truth-In-Lending law

A

Consumer Credit Protection Act

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5
Q

Mortgage loans not insured or guaranteed by a government agency but that may carry private mortgage insurance

A

Conventional Loans

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6
Q

Credit institution designed to serve a specific industry or community

A

Credit Union

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7
Q

Calculated by dividing net operating income by debt service (NOI/DS)

A

Debt Coverage Ratio

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8
Q

A process by which a borrower transfers ownership of am mortgaged property to the lender rather than face foreclosure

A

Deed in Lieu of Foreclosure

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9
Q

A security instrument that conveys title to the property pledged as collateral to a trustee until the loan is repaid

A

Deed of Trust

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10
Q

A judgment against a borrower following a foreclosure that permits the lender to recover any shortfall between the sale price and the balance of the loan

A

Deficiency Judgment

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11
Q

A clause in a promissory note that requires the borrower to repay all amounts due immediately upon transferring the property to a new owner

A

Due-on-Sale Clause

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12
Q

Act that prohibits discrimination in mortgage lending

A

Equal Credit Opportunity Act

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13
Q

Law regulating credit reporting agencies

A

Fair Credit Reporting Act

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14
Q

An agency that was created by the federal government in 1934 to act as an insurance company for private mortgage lenders

A

Federal Housing Administration

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15
Q

An agency that was created by the federal government in 1938 to buy mortgages from lenders and to serve as a clearing house for secondary mortgage markets. Also known as Fannie Mae

A

Federal National Mortgage Association

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16
Q

A loan insured against default by the Federal Housing Administration

A

FHA-Insured Loan

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17
Q

Law establishing the federal flood insurance program

A

Flood Disaster Protection Act

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18
Q

The process of seizing control of the collateral for a loan and using the proceeds from its sale to satisfy a defaulted debt

A

Foreclosure

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19
Q

Federal Home Loan Mortgage Corporation

A

Freddie Mac

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20
Q

A government organization as that provides subsidized loans for certain mortgage borrowers. Also known as Ginnie Mae

A

Government National Mortgage Association

21
Q

Organizations such as Fannie Mae and Freddie Mac, which are authorized and supported by the U.S. government to operate a secondary mortgage market for residential loans

A

Government-Sponsored Enterprises

22
Q

The practice of leaving borrowers in possession of their property while repaying a loan with interest

A

Hypothecation

23
Q

A court-ordered sale of the property following default by the mortgagor

A

Judicial Foreclosure

24
Q

A contract that establishes an obligation to transfer title from a seller to a buyer at some future date based on an agreed-upon payment schedule

A

Land Contract

25
Q

A concept adopted by some states that recognizes that the mortgagee must foreclose on the property through a court action to acquire possession in the event of default

A

Lien Theory

26
Q

The process of creating a new loan agreement between a borrower and a lender

A

Loan Origination

27
Q

The ratio obtained by dividing the loan amount by an estimate of property value

A

Loan-to-Value Ratio

28
Q

A contract by which real property is pledged as security for a loan

A

Mortgage

29
Q

Securities issued by mortgage holders to investors who wish to invest indirectly in the mortgage market

A

Mortgage-Backed Securities

30
Q

Firms that borrow money from commercial banks to originate new loans to mortgage borrowers

A

Mortgage Bankers

31
Q

Firms that act as brokers between loan applications and lenders

A

Mortgage Brokers

32
Q

The percentage of a borrower’s gross monthly income that is required to meet housing expenses

A

Mortgage Debt Ratio

33
Q

A situation in which the security instrument grants the lender power of sale should the borrower default

A

Nonjudicial Foreclosure

34
Q

A clause in a promissory note that determines the borrower’s right to prepay any or all of the principal before it is due

A

Prepayment Clause

35
Q

Transactions that occur between a borrower and a lender

A

Primary Mortgage Market

36
Q

Nongovernment insurance that provides protection for the lender against the borrower’s default

A

Private Mortgage Insurance

37
Q

A written promise to pay money owed

A

Promissory Note

38
Q

Law regulating the closing procedures in a real estate loan

A

Real Estate Settlement Procedures Act

39
Q

Firms that receive deposits from savers and loaning those funds to residential borrowers

A

Savings Institutions

40
Q

Transactions involving mortgages that occur between investors

A

Secondary Mortgage Market

41
Q

A loan from which a specific item has been pledged as collateral

A

Secured Loan

42
Q

A situation in which the lender is entitled to immediate ownership of the property should the borrower default

A

Strict Foreclosure

43
Q

A type of loan made to borrowers with less than stellar credit histories or other issues that prevent the borrower from obtaining the most favorable loan terms

A

Subprime Mortgage Loans

44
Q

A concept adopted by some states that recognizes that the mortgagee has the right to immediate possession of mortgaged property in the event of default

A

Title Theory

45
Q

The percentage of a borrower’s gross monthly income required to meet monthly contractual expenses

A

Total Debt Ratio

46
Q

Process of evaluating the risk of a loan applicant and the property being pledged in order to make a decision regarding the loan application

A

Underwriting

47
Q

A loan for which no specific item has been pledged as collateral

A

Unsecured Loan

48
Q

The system of financing mortgages in the United States

A

U.S. Housing Finance System

49
Q

A loan in the which the lender is protected from the borrower’s default by a guarantee of repayment from the Department of Veterans Affairs

A

VA-Guaranteed Loan

Principles of Real Estate (14 decks)

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