chapter12 Flashcards
title theory
Borrower takes possession not title
Third Party holds deed
When debt is satisfied title is return by reconveyance deed
lien theory
borrower takes possession and title
lender hold lien
satisfaction of mortgage
promissory note
promise to pay debt
must be signed by mortgagor (borrower)
State details of loan
Satisfaction of Mortgage
Mortgagor receives Letter of Satisfaction within 60 days
Acceleration Clause
Allows lenders to advance the due date
Defeasance Clause
requires lenders to acknowledge borrowers performance
only legally required clause
Defeasance Clause
requires lenders to acknowledge borrowers performance
only legally required clause
due on sale
transfer of ownership
entire balance due
loan assumption requires lender approval
Escalator Clause
Change of use in property
allows lender to increase rate
exculpatory clause
foreclosure
no deficiency judgement
called nonrecourse loan
prepayment clause
states conditions in which a mortgage may be paid early
allows lenders to charge a fee for paying loan early
Receivership Clause
Court appoints trustee
collects rent
maintains property
default of income producing real estate
Right to Reinstate
Borrower in default
Before foreclosure
Catch up everything in arrears (accrued interest, late payment charges
Subordination Clause
a recorded lien takes a secondary position to a lien recorded at a later date
Discount points
Prepaid interest to lenders
Borrowers pay 1% of the loan amount for each discount point
Increases yield by 1/8
one discount point is an upfront payment of 1% of the loan amount
