Finance - General Flashcards
How many instruments/documents does every real estate loan have?
What are they?
2
1) Promissory Note
2) Security Instrument (Deed of Trust or Mortgage)
How many instruments/documents does every real estate loan have?
What are they?
2
1) Promissory Note
2) Security Instrument (Deed of Trust or Mortgage)
What is the Promissory Note?
What 3 things is it?
1) It is evidence of ___
2) It is an unconditional ___
3) It is ___, meaning it may be endorsed or sold to a new holder
It actually borrows the money
1) It is evidence of the debt
2) It is an unconditional promise to pay
3) It is negotiable, meaning it may be endorsed or sold to a new holder
What is a Security Instrument?
What are the 2 types?
A conditional conveyance of property to secure or ensure payment of the debt (collateral)
1) Deed of Trust
2) Mortgage
What does a Deed of Trust (in Colorado) or Mortgage do?
Secures the Promissory Note by pledging the land as actual security for the loan
What is Hypothecation?
What is Pawning?
Hypothecation is pledging property as security for a loan without requiring the borrower to give up possession
Pawning is the opposite of Hypothecation. The borrower turns over the property to the lender until the loan is repaid
What is a signature loan made only with a Promissory Note and no collateral called?
A Debenture
