Foreclosure Flashcards
________ is an agreement whereby an individual puts up collateral to secure the debt of another
A: Hypothecation
B: Liens
C: Loan Agreement
D: Both B & C
A: Hypothecation
Foreclosure
the action of taking possession of a property that is mortgaged when the current owner fails to make their mortgage payment
Hypothecation is……..
- Hypothecation means offering an asset as a collateral security to the lender whereby the ownership lies with a lender and the possession is enjoyed by the borrower.
- In a case of default by the borrower, the lender can exercise his ownership rights to seize the asset
- Is the act of pledging an property as an collateral as a debt
Judicial Foreclosure
- Judicial foreclosure refers to foreclosure cases that go through the court system.
- Foreclosure occurs when a home is sold to pay off an unpaid debt.
- Many states require foreclosures to be judicial or to be processed through the state court system
- Some states foreclosures can be either non-judicial or judicial.
Non-Judicial Foreclosure
- What is Non-Judicial Foreclosure
- Non-judicial foreclosures happen when a mortgage agreement has a “power of sale” clause that gives the
lender the right to foreclose on a property by itself. - Without that clause, the lender has to take the borrower to court in order to foreclose.
- Many states require judicial foreclosures
Mortgage
Parties:
*Mortgagor (the person who is Borrowing the money) *Mortgagee (Lender or the bank involved)
Trust Deed
- Trust Deed would be foreclosed non-judicially
- Trust deeds has three parties (trustor, trustee, beneficiary)
Deed of Trust
The Three Parties involved:
*Trustor (Borrower)
*Trustee
*Beneficiary (Lender)
______is a term used to describe a class of property owned by a lender, it is usually a bank or it can be a government agency
A: LE0 - Lender Estate Owned
B: REO - Real Estate Owned
C: Both A & B
D: None Of The Above
B: REO - Real Estate Owned
Lien Priority is………
- The general rule in property law is that liens have priority in the order that they are filed in the county records office.
- This is referred to as the first in time, first in right rule. * Based on this concept, a recorded interest has priority over later recorded interest
- “The priority that lien carries on title”
HOA/Super Lien
- Super lien refers to that quantity of a homeowners’ association lien that is given higher priority than even the first- mortgage holder
- The super lien places the interest of the HOA in front of the first mortgage.
REO
- Real estate owned or REO is a term used in the United States to describe a class of property owned by a lender-typically a bank, government agency, or government loan insurer-after an unsuccessful sale at a foreclosure auction.
Things that survive foreclosure
- Property taxes
- IRS Lien (federal tax lien)
- Federal Judgement
Lien Theory
- Utah is a lien theory state
- Utah adapted trust deed act in 1961
- The bank does not own the house
- If you fail to make the payment, then the bank can foreclose on your house
- The bank has a lien on your house if you have a mortgage
- Once you have fulfilled all your payments, the bank records a deed of reconveyance which releases the lien.
Pledging an asset as collateral for loan is also referred to as:
A: Novation
B: Hypothecation
C: Assumption
D: Pledge
B: Hypothecation
Under a deed of trust, the lender can also be referred to as:
A: Vendee
B: Vendor
C: Trustee
D: Beneficiary
D: Beneficiary
Under a deed of trust, the buyer can also be referred to as the:
A: Vendee
B: Trustor
C: Trustee
D: Beneficiary
B: Trustor
In a mortgage, the clause that states that in the event of buyer default, the lender has the right to call the note due and payable is called the:
A: Subordination Clause
B: Acceleration Clause
C: Escalation Clause
D: Defeasance Clause
B: Acceleration Clause
In order to avoid foreclosure, if a homeowner deeds their interest to the lender voluntarily, it is called:
A: Deed In Lieu Of Foreclosure
B: Redemption
C: Non-Judicial Foreclosure
D: Judicial Foreclosure
A: Deed In Lieu Of Foreclosure
In Utah, when the borrower holds title to real property even if they have a lien against the property, this is called:
A: Title Theory
B: Mortgage Theory
C: Lien Theory
D: Redemption Theory
C: Lien Theory
Tim has had a notice of default filed against their home for failure to pay his mortgage. Tim is in
A: Default
B: Bankruptcy
C: Deed In Lieu
D: Non Judicial Foreclosure
A: Default
Buyer default begins with
A: 1 Missed Payment
B: 2 Consecutive Payments
C: 3 Consecutive Payments
D: 4 Consecutive Payments
A: 1 Missed Payment
Foreclosure proceedings begin with:
A: Buyer Default
B: Redemption
C: Deed In Lieu
D: Sherriff’s Sale
A: Buyer Default
