Chapter 9 - Real Estate Finance

Question 1

an instrument used to transfer title back from a trustee to the equitable owner of Real Estate

Answer 1

reconveyance deed

Question 2

a second trust deed for which the monthly payment includes the amount of monthly payment on the existing First Trust deed

Answer 2

wraparound trust deed

Question 3

federal law granting women Financial Independence and preventing lenders from considering such negative credit aspects as the possibility of a woman having children and dropping out of the labor market

Answer 3

Equal Credit Opportunity

Question 4

a mortgage or deed of trust for which the payments increase over the term of the loan. The payments may increase as the buyers earnings increase

Answer 4

graduated payment mortgage

Question 5

the amount for which the borrower is personally liable for a note and mortgage if the Foreclosure sale does not bring enough to cover the debt

Answer 5

deficiency judgment

Question 6

a penalty under a note, mortgage, or deed of trust imposed when the loan is paid before it is due

Answer 6

prepayment penalty

Question 7

the total cost of financing expressed as one simple annual percentage rate. This rate must be clearly expressed on any loan agreement.

Answer 7

annual percentage rate

Question 8

a promise in writing to pay a specified amount during a limited time, or on demand, to a named person

Answer 8

promissory note

Question 9

clause used in a deed of trust that gives the lender the right to demand payment in full upon the happening of a certain event

Answer 9

acceleration clause

Question 10

title held by one who does not have legal title, such as a vendee under a land contract or technically a trustor under a deed of trust

Answer 10

Equitable Title

Question 11

a sale at auction by a trustee under a deed of trust, pursuant to foreclosure proceedings

Answer 11

trustee’s sale

Question 12

a type of land that is subordinate to a prior lien

Answer 12

Junior lien or second trust deed

Question 13

an instrument used in place of a mortgage in most western states that is based on the Spanish legal tradition. Property is transferred to a trustee by the borrower in favor of the lender and reconveyed upon payment in full

Answer 13

trust deed

Question 14

a type of acceleration Clause, calling for a debt under a mortgage or deed of trust, to be due in its entirety upon transfer of ownership

Answer 14

alienation clause

Question 15

the use of financing to allow a small amount of cash to purchase and control a large property investment

Answer 15

Leverage

Question 16

a period of time past the due date for a payment during which a payment may be made and not considered delinquent

Answer 16

Grace period

Question 17

purchaser or buyer, especially on a land contract

Answer 17

vendee

Question 18

a non-amortized note for which the principal is due in a lump sum upon maturity

Answer 18

straight note

Question 19

charging an illegal rate or amount of interest on a loan

Answer 19

usury

Question 20

payment of debt in regular, periodic installments of principal and interest, as opposed to interest-only payments

Answer 20

amortization

Question 21

the seller of property under a land contract

Answer 21

vendor

Question 22

the kind of title held by the trustee under a deed of trust

Answer 22

naked legal title

Question 23

an installment contract for the sale of land. The seller has legal title until Paid in Full. The buyer has Equitable Title during the contract term

Answer 23

land contract

Question 24

if financing charge equal to 1% of the amount of the loan

Answer 24

point

Question 25

money charged for the use of money

Answer 25

interest

Question 26

a failure to perform the financial obligation to pay under a loan

Answer 26

default

Question 27

a holder of a check or know who takes the note in good faith, or in the Assumption it is valid.

Answer 27

holder in due course

Question 28

the borrower under a deed of trust

Answer 28

trustor

Question 29

in a deed of trust, the person who acts as an intermediary between the trustor and the beneficiary

Answer 29

trustee

Question 30

A lender for whose benefit a trust is created in those states were trustees are commonly used instead of mortgages

Answer 30

beneficiary

Question 31

the ownership interest in Real Property, it is the market value minus any unpaid loan amount

Answer 31

equity

Question 32

agreement by the buyer to take over the financial responsibility for Real Property under the existing note and Trust deed

Answer 32

assumption

Question 33

an agreement by which a lender substitutes a junior loan position for a senior loan position

Answer 33

subordination clause

Question 34

a schedule of monthly payments that varies according to interest rates and number of monthly payments

Answer 34

amortization chart

Question 35

mortgage loans on which the interest rate is periodically adjusted to more closely coincide with current rates

Answer 35

adjustable rate mortgage

Question 36

Regulation Z under the Federal Reserve regulations that requires a credit purchaser be advised, in writing, of all costs connected with the credit portion of their purchase

Answer 36

truth in Lending Act

Question 37

the principle of using real property as security for a debt while the borrower retains possession

Answer 37

hypothecation

Question 38

a recorded form requiring the trustee to notify other creditors in the event of a default on the deed of trust to a property

Answer 38

request for notice of default

Question 39

a limited amount of time during which the trustor has the right to pay all past due payments and charges due on a loan to bring it current

Answer 39

reinstatement period

Question 40

part of the truth in lending law that allows a borrower to resend a loan transaction until midnight of the third business day, on business loans and second trust deed secured by a borrower’s residence

Answer 40

right to cancel

Question 41

the original loan taken out when purchasing a property not a refinance or Junior loan

Answer 41

purchase money instrument