Chapter 4: Financing Flashcards
The priority of a trust deed is determined by:
The time and date of recording.
What does hypothecate mean?
To pledge a thing as security without the necessity of giving up possession to it. To mortgage a property.
Who generally benefit the most by a subordination clause in a trust deed?
The borrower (trustor) benefits the most from a subordination clause since this makes it easier to obtain an additional loan on their property. For example, the buyer of vacant land can obtain a construction loan more easily if the loan against the land will be subordinated to the construction loan.
Total foreclosure time under a trustee’s sale on a trust deed is minimally:
Four months. A trustee’s sale includes a three month redemption period followed by three weeks of advertising the sale for a total just short of four months if the sale is processed without any delay.
What is the significance of an assignment of rents clause in a trust deed and who does it most benefit?
An assignment of rents clause allows the lender to collect the rents on an income-producing property when the borrower defaults on the underlying loan. Therefore, it most benefits the beneficiary (lender).
In the context of mortgage finance, a beneficiary statement is made by:
The lender to state the current balance required to apy off a real estate loan.
A CalVET buyer finances the property with a:
Contract of sale
If a lender accepts a deed-in-lieu of foreclosure, does the lender take ownership of the property free and clear of all liens, or do they assume any junior liens?
When the holder of a first trust deed accepts a deed-in-lieu, they become responsible for all liens junior to their position.
What is the purpose of a release clause in a trust deed?
When several properties are securing one loan, known as a blanket mortgage, a release clause allows individual properties to be withdrawn from the obligation (upon partial payment).
The statutory right to rescind a purchase contracts runs for how long?
The statutory right to rescind certain contracts runs for a three day period starting from the date the contract is entered into.
Most junior loans are originated by:
private sources )more often, the seller of the property who extends carryback financing to the buyer.
A note payable for “interest only” is called a:
Straight note
When the buyer takes title to the property subject to the existing loan, “subject to” most nearly means:
As opposed to assuming a loan, the buyer will not be personally liable for the loan / seller remains liable for the debt
The loan program that requires payment of mortgage insurance premiums (MIPs) and will make loan payments for up to six months if the borrower becomes involuntarily unemployed is called:
California Housing Finance Agency (CalHFA)
What is an open-ended mortgage?
A mortgage containing a clause permitting the mortgagor to borrow additional money after the loan has been reduced without rewriting the mortgage (i.e. home equity line of credit).
