Chapter 17 Flashcards
Acceleration Clause
A clause in a mortgage or agreement of sale stating that upon default of a payment due, immediate and full payment of the balance of the obligation becomes due and payable.
Agreement of Sale
A written agreement in which the buyer agrees to buy certain realty and the seller agrees to sell upon terms and conditions set forth therein. Title remains with the seller until terms and conditions are fulfilled; buyer has equitable title; there are two closings.
Amortization
The gradual paying off of a debt on an installment basis.
Assumption of mortgage
Taking of title to property by assuming liability for payment of an existing note secured by a mortgage.
Balloon payment
The final installment payment on a note that is greater than the preceding installment payments and pays the note in full.
Beneficiary
A person who received and benefits from the gifts or acts of another; one who receives the proceeds from a will, insurance policy, or trust; the lender in a deed of trust.
Blanket mortgage
One mortgage covering two or more specific parcels of realty.
Budget mortgage
A mortgage with payment that covers principal and interest, plus taxes, fire insurance, lease rent, etc.
Certificate of No Defense
Estoppel Certificate
An instrument executed by the mortgagor and attesting to its validity; estoppel certificate.
Conventional mortgage
A mortgage that is not FHA insured or VA guaranteed
Defeasance Clause
The clause in a mortgage that gives the mortgagor the right to redeem his property upon payment of his obligation to the mortgagee, and declares the instrument null and void upon payment of debt when due; also found in leases.
Due on Sale
A mortgage clause permitting acceleration of the loan if the mortgagor attempts to transfer title or interest to the secured property.
Equitable title
Title of a purchaser unde a contract of sale, or agreement of sale.
Escalation Clause
A clause in a contract permitting an adjustment of certain payments up or down to cover certain contingencies; mostly found in agreements of sale, mortgages and leases.
Federal Housing Administration (FHA)
An agency of the Federal Government that insures certain real estate loans.
To improve housing standards.
They don’t loan the $, they just insure it.
-owner occupied
-no prepayment penalty
-fixed 30 years
Graduated mortgage
One where monthly payments start low and increase later. An FHA245 is one of these.
Hula Mae
The Hawaii Housing Authority issued tax-exempt revenue bonds to fund a mortgage loan program, offering first-time homebuyers interest rates below conventional rates by way of the Housing and Loan Mortgage Act.
Hypothecate
To place property as security; to mortgage.
Mortgage
An instrument in writing which, when recorded, creates a lien upon property pledged as security for the repayment of a debt or obligation.
Mortgagee
The party who lends money and accepts a mortgage to secure the payment of the debt.
Mortgagor
The party who borrows money and gives a mortgage on the property as security for his obligation to repay the debt.
Open-End Mortgage
A mortgage containing a clause which permits the mortgagor to borrow additional money up to the original amount of the loan after the loan has been reduced, without rewriting the mortgage. Not to confuse with open mortgage, which is any mortgage with no payment penalty.
Package Mortgage
A mortgage commonly used in subdivision developments whereby chattels such as appliances are “packaged” into the mortgage along with the real property.
Discount Points
A few based on a percentage of a loan, changed by a lender, as a service charge, or as an amount needed to produce the same yield on a VA loan that the lender would receive in the conventional mortgage market; each point charged represents 1 percent of the loan amount and increases the interest rate by 1/8 of one percent.
Prepayment Clause
The clause in a mortgage or note stating the penalty, if any, for payment before it actually becomes due.
Purchase Money Mortgage
A mortgage on property given by a buyer, either to the seller or to a third party in order to secure a portion of the purchase price.
Reduction Certificate
A certificate showing the unpaid balance of a mortgage, the interest, and the maturity date. Used when a prospective purchaser is going to assume a mortgage or take title subject to an existing mortgage. It is given by the mortgagee to the assignee.
Reverse Annuity Mortgage
A mortgage whereby the lender makes a monthly payment to the mortgagor, thereby giving him extra money for living expenses, but reducing his equity.
For older people.
Second mortgage
One that is recorded after a first mortgage, this second in priority.
Trust Deed
A deed given by borrower to trustee to be held pending fulfillment of an obligation.
Trustee
One who holds property in trust for another to secure the performance of an obligation.
Usury
Charging a rate of interest on a loan greater than that permitted by law. It is presently 12% on personal loans.
Veterans Administration (VA)
Also DVA. An agency of the Federal Government, whose activities include guaranteed repayment of certain loans in the event of default.
Adjustable Rate Mortgage (ARM)
Reflects the economic conditions. Set interest rate for the first year, then adjusts.
Alienation Clause (Due-on-Sale)
Acceleration of the entire balance when the owner transfers his interest in property.
Often with Agreement of Sale
Assignment of Mortgage
Selling his mortgage to some investor in the secondary mortgage market. Goes to an assignee who takes the place of the mortgagee.
Assignee has the right to require an estoppel certificate (certificate of no defense) where the mortgagor declares that he actually owes the mortgagee.
Construction loan mortgage
Money at various stages of construction.
Employees’ Retirement System Mortgage (ERS)
For state and county employees. Must be conventional loan (no FHA or VA), principal residence single family home.
Repayment penalty.
May be sold on agreement of sale.
Growing Equity Mortgage (Graduated Mortgage)
Can gradually increase payments.
Lien Theory
Hawaii. Two parties. Lender makes the loan while borrower gives the lender a mortgage and promissory note. Borrower retains legal title while mortgagee just has a lien.
Title Theory
Third party. Title is conveyed to a trustee until note is paid in full. Instrument is called a trust deed similar to a mortgage.
