Chpt 14, Real Estate Financing Flashcards
The lender in a mortgage loan
Mortgagee
The act of signing a loan instrument
Executing
A borrowers personal pledge to repay a debt according to agreed upon terms
Promissory note
The pledge of a property as security for payment of a loan without actually surrendering the property itself
Hypothecation
A financing instrument that conveys bare legal title on behalf of a beneficiary, but no right of possession
Deed of trust
A charge for the use of money
Interest
The act of charging interest in excess of the maximum legal rate
Usury
A charge imposed by lenders to adjust for the difference between a loans interest rate and the yield an investor demands
Discount points
The part of a financing agreement that gives the lender the right to declare the entire debt due and payable immediately on default
Acceleration clause
Percentage of the loan amount charged to borrower for the costs of generating a loan
Loan origination fee
The part of a financing agreement that requires the lender to execute a satisfaction or release when the note has been paid in full
Defeasance clause
A provision in a financing agreement that permits the lender to declare the entire debt due immediately in the event the property is sold
Alienation clause
A devise by which one lender agrees to change the priority of its loan relative to another lender
Subordination agreement
A legal procedure in which property pledged as security is taken from the borrower to satisfy the debt
Foreclosure
A document by property is transferred to the lender by mutual agreement rather than by mutual agreement rather than by lawsuit
Deed in lieu of foreclosure
A borrower’s option of reinstating a defaulted debt prior to the foreclosure sale by paying the amount due
Equitable right of redemption
A right established by state law that permits a defaulted borrower to recover property within a limited time after a foreclosure sale
Statutory right of redemption
A procedure for obtaining the unpaid balance of a debt where the foreclosure sale does not generate sufficient funds
Deficiency judgement
Idea that a mortgage is purely a lien in real property
Lien theory
Concept that the borrower actually gives legal title to the lender (or other party) and retains equitable title
Title theory
A borrowers legal status on a deed of trust
Trustor
Fee that a borrower pays on any payment made ahead of schedule (if allowed)
Prepayment penalty
The lenders legal status on a deed of trust
Beneficiary
On a deed of trust, a third party who holds the deed as security for the loan
Trustee
The borrower in a mortgage loan clause
Mortgagor
