Finance Flashcards
Discount Points
The percentage of a loan which determines the amount paid to the lender to increase the return(Interest)
Acceleration Clause
Mortgage loans provision which permits the lender to demand the entire loan upfront
Adjustable rate mortgage
mortgage loan which allows the lender to periodically adjust the interest rate up or down
Alienation Clause/Due on Sale
Mortgage loans provisions which allows the lender to demand the entire loan balance due if the property s sold
Balloon pay off
a lump sum pay off of the unpaid balance or loan
Blanket Mortgage
arrangement where several parcels of land are pledged as secuirty
Budget Mortgage
mortgage loan in which loan with monthly include not only principal and interest but also 1/12th of the annual cost
Certificate of Eligibility
The VA’s official statement regarding the Certfied amount of entitlement available to a particular veteran
Certificate of Sale
issued to successful bidder at foreclosure sale (statutory period)
Closed mortgage
does not allow the borrower to pay off the loan before maturity
Closing cost
prorated charge by the lender including costs of making the loan and service charge
Collateral
property pledged to a lender as security loan
Conventional Loan
loan that is neither insured nor guaranteed by the goverement
Credit report
written report detailing the credit history
Deed in lei of foreclosing
deed given to a lender by a defaulting burrower who wishes to avoid forclosing
Defeasance clause
mortgage provision which allows the borrower to defeat the mortgage by repaying the terms of the note
Deficiency Judgment
judgement ordered by the court against the borrower when proceeds from foreclosure sale are not enough to satisfy the debt
Demand Deposits
banks deposits which are available to the depositor with no advance with =drawl notice required
Discount Rate
rate of the Federal Reserve System charges member banks to borrow money
Disinter mediation
occurs when withdrawals exceeds deposits from saving and loans association
Entitlement
The amount of the loan guarantee that a veteran is elgible
Equity
difference between the value of a property and outstanding loan
Equity of Redemption
borrower’s right to redeem property at any time after default but before a foreclosure sale
Estoppel Certificate
borrowers written acknowledgement of the loan balance
Exculpatory Clause
mortgage loan provision in which the lender waives the right to seek a deficiency judgement against the borrower
Fannie Mae
agency which buys loans from lenders to assure them of a continuing flow of funds
Farmers Home Administration (FMHA)
Federal agency under the US Department of agriculture that makes credit available to farmers
Federal Reserve System
Agency responsible for regulating and monitoring the lending practices of commercial banks
FHA loan
loan fully insured by FHA
FHA Mortgage Insurance(MIP)
mortgage insurance that protects the lender against loss in case of defaul
Firm Commitment
commitment to insure that a loan will be avaialable for a given buyer
First Mortgage/Subordination Clause
one that has the earliest recording date in most instances
Foreclosure by Power of Sale/Non judicial foreclosure
legal procedure whereby the lender is authorize by the loan agreement to sell the mortgage property upon default and apply the proceeds to the debt
Fully Amortized Mortgage
Long term repayment plan which provides for equal payments of principle and interest
Good Faith Estimate
estimate of all charges against the borrower at closing
Holder in Due Course
One,who a good faith and without notice or defect
Impounds
Monthly payments of taxes and insurance collected by the lender to assure payment of these items when they become due
Interest
amount paid or accrued in return for the use of money
Kickback
practice of accepting fees for referral without providing actual service
Land Contract
also known as a installment contract buyer makes small down payment and takes possession
Lien Theory
mortgage only creates a lien rather than conveying title to the lendor
Loan Discount
Prepaid interest paid by the borrower in seeking a loan designed to increase the lenders return
Loan servicing
lenders admin duties after a loan is placed
Lock in Clause
provision which prevents the loan from being paid off early
Loan transfer fee
charge for changing the lenders records when a buyer takes over the sellers existing loan
Mortgage Correspondent
one who places a mortgage loans by using funds belonging to an investor
Mortgage Clause
in lien theory provision gives the lender a lien in the property pledged as securty
Mortgagor
Borrower
National Banks
Commercial banks which are charted by Federal system
Naked Title
Rights granted to a trustee by a trust deed
Negative Amortization
a increase in the principle loan balance due to an insufficient amount of monthly payment to cover the accrued interest
Negotiable insrument
written promise to pay certain sum of money which may be transferred by endorsement or delivery
Notice of Lis Pendens
recorded notice which indicates that a lawsuit is
Open Mortgage
mortgage loan which allows the borrower pay off all or part without penalty
Open-end Mortgage
Entitles the borrower to receive future advances up to a certain limit
Owner’s Rent Clause
mortgage provision which obligates a defaulting borrowers to pay rent while remaining in possesion
Package Mortgage
a financing arrangement where the borrower pledges both real and personal property as security
Partial Release Clause
provision in a blank age mortgage which obligates the lender to release release each parcel held as security upon payment
Participation Loan
Financing arrangement in which the lender is made a partner as a condition of obtaining a loan
Pledge
transfer of property to be held by the lender as secuirty
Pledged account Mortage(PAM)
mortgage loan that requires the borrower to make gradual payments and at the same same time provide the lender with full monthly payments
Power of Sale Clause
mortgage provision which enables the lender to foreclose without filing a lawsuit
Prepayment Clause
allows the borrower to pay off part or all of the loan without penalty at anytime before it becomes due
Prepayment Penalty
charge for paying off part or all of a loan before it becomes due
Primary Mortgage Market
where individual home buyers go to obtain mortgage loan finacing
Promissory Note
borrowers written promise to repay a loan
Property Manager
one who is giving the responsibility of maintaining preserving and enhancing an owner’s property and a the same time generating the highest possible net
Purchase Money Mortgage
financing arrangement where the purchaser gives the seller a note secured by a mortgage as part payment of the purchases price
Real Estate Settlement Procedures Act(RESPA)
Federal Law which requires lenders to inform potential home buyers about various costs involved in arranging mortgage financing
Reciever
a court appointed official responsible for managing a property during the period beginning after default
Receiver Clause
permits a court to appoint a receiver to manage income producing property during a period of default
Redlining
unlawful practice of a lender refusing to make a loan solely on the basis of the particular neighborhood involved
Regulation Z
truth lending act-regulations provided lenders and those who help arrange credit for borrowers specific guidelines to follow in disclosing to borrowers their exact cost of credits
Release of Liability
lender’s written statement releasing the originals borrower from further personal liability on the note
Request for Conveyance
lender’s official request of the trustee to execute and deliver a re conveyance deed to the trust or as a result of paying off the loan
Sale Lease back
Financing arrangement which enables a business property owner to sell property with an agreement to lease it back on a long term
Satisfaction of Mortgage
written statement which cancels the debt and terminates all rights in the property held for collateral
Secondary Mortgage Market
market where loans are bought from local lenders in order to provide them with a constant supply cash to originate more loans to homebuyer
Security Agreement
instrument which gives a lender a security interest in personal property pledged as collateral for a loan
Security deed
conveys title to lender until the debt is satisfied
Shared Appreciation Mortgage (SAM)
financing arrangement in which the borrower receives a below market interest rate by allowing the lender to share in the property’s future appreciative in value
Statutory rights of Redemption
delinquent borrowers rights to redeem property by paying off debt within a specified time frame
Straight term mortgage
borrower makes periodic payment of interest only for a term for the loan plus a balloon payment
Strict Foreclosure
enables the lender to take title from a defaulting borrower without a foreclosure sale
Subject to
method of taking over a sellers existing loan without assuming any personal liability for the payment
Swing Loan
short term loan allowing the purchaser to purchase a new property based on the strength of the equity from the property purchaser is sellng
Take out Commitment
lender’s commitment to a contractor that permanent financing will be available to pay of a construction loan
Thrift Institution
Saving and loan Association and Saving Banks
Title theory
legal position adopted by some states holding that the mortgage conveys tittle to the lender.
Trust Deed/Deed of trust
deed used in some states in lieu of mortgage. Title is held by a trustee on the behalf of lender
Trustee
a neutral third party who holds title on the behalf of a lender until debt is paid
Trustor
Borrower who executes a trust deed
Truth in lending law
Federal Law which requires a lender to disclose the exact cot of credit o certain loans so the borrower can compare costs from other credit sources before committing to take the loan
Uniform Settlement Statemment
reprinted form on which RESPA requires the lender of certain loans to itemize all settlement charges
Usury
legal limit of interest imposed by state laws, does not apple to VA and FHA loans
Warehousing
loan correspondents practice holding mortgage in his or name until they can be assembled into a package of loans and sold to an investor
Wraparound Mortgage
a junior mortgage which includes the amount of any existing loans plus the balance of the sellers equity after deducting the buyers down payment
