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.
