Exam Cram Vocabulary - Finance Flashcards
A promissory with repayment
that is not sufficient to
amortize the loan over its
term; usually contains a
balloon payment at the end
PARTIALLY - AMORTIZED
INSTALLMENT NOTE
A document in which title to
a property is transferred to a
third party trustee as security
for a debt owed by the
trustor (borrower) to the
beneficiary (lender)
TRUST DEED
Holds bare legal title to
property as a neutral third
party where there is a deed
of trust used as secruity for a
loan
TRUSTEE
The interest held by the trustor (borrower)
or vendee
EQUITABLE
TITLE
A promissory note in which
payments of interest only are made
perdiodically during the term of the
note, with the principal payment
due in one lump sum upon maturity;
May also be a note with no
payments on either principle or
interest until the entire sum is due
STRAIGHT
NOTE
A note whose interest rate is
tied to a flexible index
ADJUSTABLE - RATE
MORTGAGE
The lender under a deed of
trust
BENEFICIARY
An agreement between a
property owner and the holder
of a trust deed or mortgage by
which the holder receives, as
security, the right to collect rents
from tenants of the property in the
event of default by the borrower
HINT: AOR
ASSIGNMENT
OF RENTS
A person who has obtained a
negotiable instrument (promissory note, check)
in the ordinary course of business
- before it is due,
- in good faith and for value, and
- without knowledge that it has been previously dishonored
and without notice of any defect or set off at the
time it is negotiated
HOLDER IN
DUE COURSE
A note that is fully repaid at
maturity by peridodic
reduction of the principal;
usually paid in equal
monthly installments
FULLY AMORTIZED
NOTE
The borrower under a deed of trust
HINT: T
TRUSTOR
A clause in a trust deed or
mortgage that gives the
holder the right to sell the
property in the event of
default by the borrower
POWER OF
SALE
Failure to pay a debt or
honor a contract
DEFAULT
Evidence of obligations to
pay money
SECURITY
Something of value given
as security for a debt
COLLATERAL
To give real proeprty as
security for a debt without
giving up possession
HYPOTHECATION
The transfer of property to a
lender as a security for repayment
of a debt.
The lender takes possession
of the property.
PLEDGE
Value remaining in a
property after payment of
all liens; the difference
between the amount that is
owed and the fair market
value
EQUITY
A mortgage on which the
interest rate varies according
to an agreed-upon index, varying upwards and downwards
thus resulting in a change
in the borrower’s monthly
payments
(VlRs or VMRs, Variable Mortgage Rates.) An interest rate in a real estate loan which by the terms of the note varies upward and downward over the term of the loan depending on money market conditions.
VARIABLE RATE
MORTGAGE
(VIR-VARIABLE INTEREST RATE)
(VMR-VARIABLE MORTGAGE RATE)
The right of the debtor,
before a foreclosure sale, to
reclaim property that had
been given up due to
mortgage default;
also known as right of redemption
EQUITY OF
REDEMPTION
Any written instrument that
may be transferred by
endorsement or delivery
NEGOTIABLE
INSTRUMENT
A written promise or order
to pay money; evidence of
a debt
PROMISSORY
NOTE
The use of borrowed money
to purchase proeprty
LEVERAGE
The party to whom a
promissory note is made
payable; the person
holding the note
HOLDER
A loan that allows the
rewriting of a new loan at
the termination of the prior
loan
HINT:
ROLLOVER
MORTGAGE
A loan that enables elderly homeowners
to borrow against the equity
in their homes by receiving monthly
payment, from a lender, that are
needed to help meet living costs;
due upon a specific date or upon the occurence of a specific event, such as the sale of the property or the
death of the borrower.
HINT: RAL
REVERSE
ANNUITY LOAN
A loan in which the borrower
is given a limit up to which
may be borrowed, with each
advance secured by the
same trust deed
HINT:
A mortgage containing a clause which permits the mortgagor to borrow additional money after the loan has been reduced without rewriting the mortgage.
OPEN END
LOAN
A method of financing in which a
new loan is placed in a secondary position;
the new loan includes both
the unpaid principal balance of the first loan and whatever
sums are loaned by the lender;
sometimes call an All Inclusive Trust Deed (AITD)
WRAP-AROUND
LOAN
A loan that is secured by
several properties
BLANKET
LOAN
A cash loan made against
the equity in the borrower’s
home
HOMEOWNER
EQUITY LOAN
A purchase money deed of
trust subordinate to, but
still including, the original
loan
ALL INCLUSIVE
TRUST DEED (AITD)
A buyer takes over the
exiting loan and agrees to
be liable for the repayment
of the loan
ASSUMPTION
CLAUSE
A buyer takes over the
exisitng loan payments
but assumes no personal
liability for the loan
SUBJECT TO
CLAUSE
The buyer under a contract
- of sale (land contract)*
- HINT: Picture buyer at vending machine on empty land*
VENDEE
The seller under a contract
- of sale (land contract)*
- HINT: picture seller as a vending machine on empty land*
VENDOR
A contract for the sale of
real property in which the
seller gives up possession of
the property but retains title
until the total of the purchase
price is paid off
CONTRACT FOR
DEED
A legal procedure by which
mortgaged property, in which
there has been default on
the part of the borrower, is
sold to satisfy the debt
FORECLOSURE
Conveys title to property from
a trustee back to the
borrower (trustor) upon
payment in full of the debt
secured by the trust deed
RECONVEYANCE
DEED
Title that is complete and
perfect in regard to the right
of ownership; can be held by
a trustee
LEGAL
TITLE
Notice given, and published,
that a trustee’s sale will be
held to sell a property
to satisfy a debt
NOTICE OF
TRUSTEE’S SALE
Bring current and restore
REINSTATE
A notice to a defaulting
party that there has been a
nonpayment of debt
NOTICE OF
DEFAULT
A judgment against a
borrower for the balance of
a debt owed when the
security for the loan is not
sufficient enough to pay a
debt
DEFICIENCY
JUDGMENT
A deed given to a buyer of
real property at a trustee’s
sale
TRUSTEE’S
DEED
The forced sale of real
property, by a lender, to
satisfy a debt
TRUSTEE’S
SALE
Foreclosure by court action
JUDICIAL
FORECLOSURE
The borrower under a
mortgage
MORTGAGOR
A legal document used as
security for a debt
MORTGAGE
A sale during which
property is sold to satisy a debt
FORECLOSURE
SALE
The lender under a mortgage
MORTGAGEE
A notice that is sent, upon
request, to any parties
interest in a trust deed
informing them of a
default
REQUEST FOR
NOTICE
The evidence of a debt that
is recorded after a first
trust deed; a junior trust
deed
SECOND TRUST
DEED
Any trust deed that is
recorded after a first trust
deed, and whose priority
is less than the first trust
deed
JUNIOR TRUST
DEED
A loan in which the monthly
payment that is graduated by
a certain percentage each
year for a specific number
of years and then levels off
for the remaining term of
the loan
GRADUATED
PAYMENT ADJUSTABLE
MORTGAGE (GPAM)
The charge for the use of
money
INTEREST
The evidence of a debt
given in exchange for cash
HARD MONEY
LOAN
A trust deed created as
evidence of a debt at the
time of the sale of real
property
PURCHASE
MONEY LOAN
Related to an adjustable-rate
loan; the lender may
alter the interest rate of a
loan based on an agreed
index
VARIABLE
INTEREST RATE
The act of charging a rate
of interest in excess of that
permitted by law
USURY
The relationship of the total
finance charge to the total
amount to be financed as
required under the Trust in
Lending Act
ANNUAL
PERCENTAGE RATE
(APR)
An agreement upon time
after the payment of a debt is
past due during which a party
can perform without being
considered in default; usually
10 to 15 days
GRACE PERIOD
The original amount
borrowed
PRINCIPAL
A clause in a promissory note
that allows a borrower to pay
a loan off early without
penalty
OR MORE
CLAUSE
An organization that obtains
funds through deposits and
then lends those funds to earn
a return; savings and loan
associations, commercial
banks, credit unions, and
mutual savings banks
HINT: FI
FINANCIAL
INTERMEDIARIES
A process by which financial
institutions, that had formerly
been restrained in their
lending activities by the law,
are allowed to compete
freely for the profits in the
marketplace
DEREGULATION
Abbreviation for principal,
interest, tax, and insurance
as commonly found in an
all-inclusive mortgage
payment
PITI
A statement that informs the
buyer of all charges and
expenses related to a
particular loan
MORTGAGE LOAN
DISCLOSURE
STATEMENT
The process of transferring
capital from those who
invest funds to those who
wish to borrow
INTERMEDIATION
A written notice filed with the
county recorder by a creditor who
has extended credit for the
purchase of personal property;
establishes the creditor’s interest
in the personal property, which is
security for the debt
HINT: FS
FINANCING
STATEMENT
The interest of a creditor (lender)
in the property of a debtor (borrower).
SECURITY INTEREST
The device commonly used to
secure a loan on personal
property
SECURITY
AGREEMENT
A way investors with a small
amount of capital can pool
their resources to buy
real estate
REAL ESTATE
INVESTMENT
TRUST (REIT)
A contract for the sale of
real property in which the seller
gives up possession but
retains the title until the
purchase price is paid in full;
also known as a contract of sale or land contract
AGREEMENT OF
SALE
A contract for the sale of real
property in which the seller
gives up possession but retains
the title until the purchase price
is paid in full; also known as a
contract of sale*** or ***agreement of sale
LAND
CONTRACT
A short-term loan used to
enable the purchaser of a
new property to buy that
property on the strength of
the equity from the property
the purchaser is now selling
SWING LOAN
A clause in the loan document
that allows the lender to call
the entire loan due upon the
sale of the proeprty; a type of
acceleration clause
A clause in a contract giving the lender certain rights in the event of a sale or other transfer of mortgaged property.
ALIENATION
CLAUSE
A clause in the loan document
describing certain events that
would cause the entire loan to
be due
ACCELERATION
CLAUSE
Under an installment loan,
a final payment that is
substantially larger than the
other payments and repays
the debt in full
BALLOON
PAYMENT
A provision found in many
blanket loans enabling the
borrower to obtain a partial
release of specific parcels
from the loan
RELEASE
CLAUSE
A clause in a trust deed that
allows a lender to collect a
certain percentage of a loan
as penalty for an early
payoff
PREPAYMENT
CLAUSE
A clause in which the holder
of a trust deed, permits a
subsequent loan to take
priorty
SUBORDINATION
CLAUSE
A federal law designed to
protect persons in military
service from loss of property
when their ability to make the
payment has been affected by
their entering military service
SOLDIERS’ AND SAILORS’
RELIEF ACT
A federal law that requires
lenders to assure that credit is
available with fairness,
impartiality, and without
discrimination
EQUAL CREDIT
OPPORTUNITY ACT
A federal law that requires
borrowers to be informed
about the cost of borrowing
money
TRUTH IN
LENDING ACT
(REGULATION Z)
