Financing

Question 0

Alienation Clause

Answer 0

A form of the acceleration clause

States that the entire loan is due and payable upon sale, transfer, assigned or otherwise alieniated

Question 1

Acceleration Clause

Answer 1

The lender has the right to ask
for full payment upon occurrence
of a specific event

To make the whole payment
due at once

Found in a “grant deed”

Question 2

When do we use alienation clause

Answer 2

At the occurrence of acceleration

Question 3

Alienation benefits

Answer 3

The lender

Question 4

Subordination clause

Answer 4

Part of a trust deed or mortgage

Current claim has priority over other claims (liens)

Question 5

Negative amortization

Answer 5

Interest rate charges are higher than monthly payment

Monthly payment doesn’t cover interest so unpaid interest is added to loan balance

Question 6

ARM (adjustable rate mortgages)

Also known as variable rate morgage or floating rate morgage

Answer 6

Interest rate fluctuates periodically

First years stick to a certain rate and the rest of the years adjust accordingly to the markets

Question 7

Impound accounts (reserve)

Answer 7

Payments collected in advance to cover recurring costs like property taxes or fire insurance

Question 8

Assignment of rent clause

Answer 8

Allows a lender to collect rents and apply it to payments in case of default

Question 9

Nominal vs Effective Interest Rate

Answer 9

Nominal is the rate stated on the note

Effective is the rate the lender receives

Nominal = Note and Effective = Lender

Question 10

Fixed Interest Rate

Answer 10

The payment is always the same for the life of the loan

Question 11

Redemption Period

Answer 11

Legally time period for buying back the sold property after a juridical sale

Last 1 year

Question 12

Trust Deed or Deed Of Trust

Answer 12

Security device or instruments that serves as a collateral for the promissory note

Question 13

Trustee

Answer 13

Disinterested 3rd party that holds the naked title

Question 14

Trustor

Answer 14

Beneficiary

Question 15

During the 1 year period on

the redemption

Answer 15

The right of possession stays w the

borrower (mortgagor)

Question 16

Certificate of sale

Answer 16

Given to successful bidder on the judicial sale

Question 17

Sheriff’s deed

Answer 17

Given when redemption period
ends and mortgagor (borrower)
didn’t redeem the property

Question 18

Equitable title

Answer 18

Held by the Trustor while paying a
note
It shows ownership of all rights

Question 19

Legal/Naked Title

Answer 19

Held by the trustee while terms

are fulfilled

Question 20

Full reconveyance

Answer 20

Proof that a promissory note

has been paid in full

Question 21

Reinstatement period

Answer 21

3 months

Time for trustor to make past due payments

Question 22

2nd trust deed (junior loan)

Answer 22

Used to cover gap between loan

and price

Question 23

Vendor

Answer 23

Seller

Vendee

Question 24

Regulation Z Truth in Lend Act

Answer 24

Residential only 1-4 units Lender MUST tell buyer how much They are paying for credit

Question 25

APR Annual Percentage Rate

Answer 25

Relationship between total of Finance charges and the total Amount financed expressed as A percentage

Question 26

Right to cancel | 3 days Rescission Period

Answer 26

Only on business loans or a secondary | Loan

Question 27

Inflation

Answer 27

The result of too much money | Chasing too few goods

Question 28

Deflation

Answer 28

Prices of real estate, goods and | Services go down

Question 29

Buyer's Market

Answer 29

When prices of RE are down terms are easy And there are more sales and rents of RE Deals

Question 30

Seller's Market

Answer 30

Prices of RE are up and there is less RE | listed for sale or rent

Question 31

GNP Gross National Period

Answer 31

Value of good and services produced by | An economy during a period of time

Question 32

Refinancing

Answer 32

The process to obtain a new loan to | Pay off the old loan

Question 33

Loan To Value

Answer 33

Expresses the value of a loan to the value Of the property Value of mortgage lien to total appraised value of the property Percent of appraised value the lender will loan

Question 34

The lower the LTV

Answer 34

The higher the down payment | The more equity required

Question 35

In LTV between % of price or appraised | Value

Answer 35

The lender will approve the lowest one

Question 36

RESPA | Real Estate Settlement Procedures Act

Answer 36

Requires lenders to make a special disclosures to borrowers without a cost For the loans involving transfers of residential estates

Question 37

Savings Banks

Answer 37

Make more real estate loans them | any other financial institutions

Question 38

FDIC | FEDERAL Deposit Insurance Corporations

Answer 38

Gov insurance depositor's accounts for | Up to $250,000

Question 39

2nd trust deed (junior loan)

Answer 39

Used to cover gap between loan | and price

Question 40

Vendor

Answer 40

Seller | Vender

Question 41

Regulation Z Truth in Lend Act

Answer 41

Residential only 1-4 units Lender MUST tell buyer how much They are paying for credit

Question 42

MMI

Answer 42

Mutual mortgage insurance required with FHA loans it protects the lender in case of default

Question 43

FHA loans

Answer 43

Insures loans made by approved lenders | Not a direct lender

Question 44

FDIC | Federal deposit insurance Corporation

Answer 44

Insurers individual accounts up to 100k max