Financing Flashcards
The ________ regulates the flow of money and the cost of credit to help stabilize the market fluctuation that create inflations or recession. The 12 regional Federal Reserve Banks follow the polices set by a seven-member Board of Governors.
Federal Reserve Bank System
Created in 1932 to provide mortgage insurance on loans made by FHA-approved lenders throughout the United States; part of the Department of Housing and Urban Development; found at www.fha.com
Federal Housing Administration
The ______ is the borrower’s promise to pay the amount borrowed. The promissory note is the evidence of the debt. It establishes the underlying obligation of the loan transaction. In other words, the promissory note is the borrower’s IOU to the lender.
Promissory note
The ______ is used to identify the real estate that deserves as assurance that the loan will be repaid.
Security instrument
The real property will be forfeited to the holder of the security instrument if the underlying debt is not paid.
Hypothecation
- Principal x Rate = Annual Rate
The principal is the unpaid balance of the loan. The rate is the percentage rate of interest paid. - Interest on a loan ordinarily is calculated monthly. To find interest per month, divide the annual by 12.
Example:
$176,000 x .06 = $10,560
$10,560 / 12 = $880 monthly interest.
To find interest for a number of days, find interest by dividing the annual interest by 360 days in the year.
Example:
$176,000 x .06 = $10,560 annual interest
$10,560 / 360 = $29.33 daily interest
$29.33 x 17 = $498.67 interest for 17 days
Principal x Rate = Annual rate
The California Foreclosure Prevention Act has extended the waiting period between filing of the notice of default and filing of the subsequent notice of sale from 90 days to 180 days, effective June 15, 2009, but the Act exempts from the extensions lenders with comprehensive loan modification programs.
Notice of Sale
An _____ ______ is the legal action by which the court orders the sheriff to evict the present occupant.
Unlawful detainer
Purchaser of a foreclosed home must give tenants at least 90 days before starting eviction proceedings. If the tenant has a fixed-term lease that began before the transfer of title at the foreclosure sale, the new owner must honor the lease unless the new owner can prove the an exception intended to prevent fraudulent leases applies.
Mortgage guaranty insurance available to conventional lenders on the high-risk portion of a loan, with payment included in the borrower’s loan installment.
Private Mortgage Insurance (PMI)
Amount of loan divided by purchase or market value of property.
Loan-to-value ratio
Federal law that requires certain disclosures in consumer credit transaction; implemented by Regulation Z that is now subject to the Consumer Financial Protection Bureau.
Truth in Lending Act (TILA)
TRID (TILA-RESPA Integrated Disclosure Rule) applies to
Construction-only loans
RESP (Real Estate Settlement Procedures Act) covers the
Closing Disclosure form
A lender that discriminates against a loan applicant because of race has violated
the Equal Credit Opportunity Act
In a deed of trust, the lender is
the beneficiary
In a deed of trust, the borrower is
the trustor
In a mortgage, the lender is
the mortgagee
Federal savings and loan activities are overseen by
the Office of the Comptroller of the Currency
An agent who has been granted a power of attorney by a principal.
Attorney-in-fact
An agent authorized to act in the capacity of the principal
Power of attorney
An agent authorized to carry out a specific act or acts.
Special power of attorney
An agent authorized to carry out all of the business dealings of the principal
General power of attorney
The Office of Thrift Supervision (OTS)) regulates the savings and loan industry.
The Federal Housing Finance Agency (FHFA) oversees the Federal Home Loan Banks, which lend funds to member institutions.
Investment funds and savings provide the capital needed for the industry to grow and prosper.
A purchaser of a foreclosed home must give tenants at least 90 days before starting eviction proceedings.
California law that prohibits discrimination against persons in one of the identified groups in accommodations and business establishments.
Unruh Civil Rights Act.
The Loan Estimate must also be delivered or placed in the mail no later than the seventh business day before consummation of the transaction.
For loans that require a Loan Estimate and the proceed to closing, creditors must provide a final disclosure that reflects the actual terms of the transaction and is called the _____ _____. The creditor is generally required to ensure that the consumer receives the ______ ______ no later than three business days before consummation of the loan.
Closing Disclosure
The creditor must provide the consumer with good-faith estimates of credit costs and transaction terms on a new form called ________. The creditor is generally required to provide the Loan Estimate within three business days of the receipt of the consumer’s loan application.
Loan Estimate
Form mandate by the TILA-RESPA rule that helps consumers to understand all the costs of the transaction. It must be provided to consumers three business days before closing.
Closing Disclosure
An undertaking or adoption of a debt or an obligation resting primarily on another person.
In a loan assumption
When a grantee takes title to real property “subject to” a mortgage or trust deed, the grantee is not responsible to the holder of the promissory note for the payment of the amount due, and the original maker of the note retains primary responsibility for the underlying debt.
Subject to
