Finance Flashcards
Reinstate
Bring current and restore
Usury
The act of charging a rate of interest in excess of that permitted by law
Deed of Trust
A security instrument 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)
Mortgagee
The lender under a mortgage
Fully Amortizing Note
A promissory note that is fully repaid at maturity by periodic reduction of the principal; usually paid in equal monthly installments
Trustee’s Sale
The forced sale of real property, by a lender, to satisfy a debt
Adjustable-Rate Mortgage
A note whose interest rate is tied to a flexible index
Assumption Clause
A buyer takes over the existing loan and agrees to be liable for the repayment of the loan
Mortgage Loan Originator (MLO)
A natural person who takes a residential mortgage loan application or negotiates terms of a residential mortgage loan for compensation
Closed-End Loan
Loan in which the borrower receives all loan proceeds in one lump sum at the time of closing. These loans are secured with collateral, i.e., auto and home loans.
Power of Sale
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
Equity
Value remaining in a property after payment of all liens; the difference between the amount that is owed and the fair market value
Third Party Originator (TPO)
Person who takes mortgage applications from borrowers, but does not underwrite or fund loans
Contract for Deed
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
Pledge
The transfer of property to a lender as a security for re-payment of a debt. The lender takes possession of the property.
Subordination Clause
A clause in which the holder of a trust deed permits a subsequent loan to take priority
Homeowner Equity Loan
A cash loan made against the equity in the borrower’s home
Purchase Money Loan
A trust deed created as evidence of a debt at the time of the sale of real property
Junior or 2nd Lien Loan
Any deed of trust or mortgage that is recorded after a first deed of trust or mortgage, and whose priority is less than the first lien
Deregulation
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
Default
Failure to pay a debt or honor a contract
Notice of Trustee’s Sale
Notice given, and published, that a trustee’s sale will be held to sell a property to satisfy a debt
Subject to Clause
A buyer takes over the existing loan payments but assumes no personal liability for the loan
Reconveyance Deed
Conveys title to property from a trustee back to the borrower (trustor) upon payment in full of the debt secured by the trust deed
Servicemembers Civil Relief Act
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
Real Estate Investment Trust (REIT)
A way investors with a small amount of capital can pool their resources to buy real estate
Release Clause
A provision found in many blanket loans enabling the borrower to obtain a partial release of specific parcels from the loan
Equitable Title
The interest held by the trustor or vendee
Grace Period
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
Swing Loan
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
Deficiency Judgement
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
Loan Estimate
Disclosure statement created by the Consumer Financial Protection Bureau to provide borrowers with good-faith estimates of credit costs and transaction terms
Open End Loan
A loan in which the borrower is given a pre-approved limit up to which may be borrowed, such as a credit card, with each advance secured by the same contract
Rollover Mortgage
A loan that allows the rewriting of a new loan at the termination of the prior loan
Holder
The party to whom a promissory note is made payable; the person holding the note
Judicial Foreclosure
Foreclosure by court action
Straight Note
A promissory note in which payments of interest only are made periodically 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 principal or interest until the entire sum is due
Notice of Default
A notice to a defaulting party that there has been a nonpayment of debt
Trustee
Holds bare legal title to property as a neutral third party where there is a deed of trust used as a security for a loan
Graduated Payment Adjustable Mortgage
A loan with low initial monthly payments which gradually increase over a specified timeframe
Balloon Payment
Under an installment loan, a final payment that is substantially larger than the other payments and repays the debt in full
Request for Notice
A notice that is sent, upon request, to any parties interested in a mortgage or deed of trust informing them of a default
Annual Percentage Rate (APR)
The relationship of the total finance charge to the total amount to be financed as required under the Truth in Lending Act
Partially Amortizing Note
A promissory with repayment that is not sufficient to amortize the loan over its term; usually contains a balloon payment at the end
Hard Money Loan
The evidence of a debt given in exchange for cash
Collateral
Something of value given as security for a debt
Legal Title
Title that is complete and perfect in regard to the right of ownership; can be held by a trustee
Equal Credit Opportunity Act
A federal law that requires lenders to assure that credit is available with fairness, impartiality, and without discrimination
Index
A publically published number used as the basis for adjusting interest rates of adjustable-rate mortgages (ARMS)
Financial Intermediaries
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
Promissory Note
A written promise or order to pay money; evidence of a debt
Beneficiary
The lender under a deed of trust
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 land contract
Trustee’s Deed
A deed given to a buyer of real property at a trustee’s sale
Hypothecation
To give real property as security for a debt without giving up possession
Leverage
The use of borrowed money to purchase property
Principal
The original amount borrowed
Alienation Clause
A clause in the loan document that allows the lender to call the entire loan due upon the sale of the property; a type of acceleration clause
Security Agreement
The device commonly used to secure a loan on personal property
Foreclosure Sale
A sale during which property is sold to satisfy a debt
Negotiable Instrument
Any written instrument that may be transferred by endorsement or delivery
Payment Clause
A clause in a trust deed that allows a lender to collect a certain percentage of a loan as a penalty for an early payoff
Interest
The charge for the use of money
Holder in Due Course
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, without knowledge that it has been previously dishonored and without notice of any defect or setoff at the time it is negotiated
PITI
Abbreviation for principal, interest, tax, and insurance
Land Contract
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
Margin
A fixed percentage rate that is added to an index to determine the fully indexed interest rate of an adjustable rate mortgage (ARM)
Mortgage
A legal document used as security for a debt
Financing Statement
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
Trustor
The borrower under a deed of trust
Equity of Redemption
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
Vendee
The buyer under a contract of sale (land contract)
Vendor
The seller under a contract of sale (land contract)
Security Interest
The interest of a creditor (lender) in the property of a debtor (borrower)
Or More Clause
A clause in a promissory note that allows a borrower to pay a loan off early without penalty
Assignment of Rents
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
Blanket Loan
A loan that is secured by several properties
Security Instrument
Evidence of obligations to pay money, such as a deed of trust or mortgage
Intermediation
The process of transferring capital from those who invest funds to those who wish to borrow
Reverse Annuity Loan
A loan that enables elderly homeowners to borrow against the equity in their homes by receiving monthly payments, from a lender, that are needed to help meet living costs; due upon a specific date or upon the occurrence of a specific event, such as the sale of the property or the death of the borrower
Acceleration Clause
A clause in the loan document describing certain events that would cause the entire loan to be due
Mortgagor
The borrower under a mortgage
Foreclosure
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
Truth in Lending Act (Regulation Z)
A federal law that requires borrowers to be informed about the cost of borrowing money
