Lesson 3 Part 1 - Ways to Obtain Realty

Question 1

Ways to Obtain Realty….

1. Cash

Answer 1

Given Deed on closing - should always obtain CLTA

Question 2

Ways to Obtain Realty

2. Mortgage

Answer 2

Non-negotiable security instrument on realty

Question 3

Lien Theory

Answer 3

• Used in MidWest, East and Southern states

- Law considers that a mortgage creates a lien against real property pledged in the mortgage to secure payment of a debt

Question 4

Note

Answer 4

• Negotiable instrument on realty

- Typically FHA, VA or CONV conforming or non- conforming loans

Question 5

Mortgagor

Answer 5

• Becomes borrower/payer, the one getting a loan on their realty from a lender

Question 6

Mortgagee

Answer 6

Becomes payee, the one giving a loan on the borrowers realty

Question 7

Mortgage Clauses -

Acceleration

Answer 7

In the even of realty default, whole amount of principal and interested may be declared due and payable.

Question 8

Mortgage Clauses -

Alienation

Answer 8

• Balance of realty debt becomes immediately due and payable if property is sold of transferred

Question 9

Mortgage Clauses -

Foreclosure

Answer 9

“Legal” procedure whereby realty used as security for debt is sold to satisfy debt.

Question 10

Mortgage Clauses -

Prepayment

Answer 10

Terms upon which mortgagor may pay entire or stated amount of mortgage principal at some time prior to due date with or without penalty.

Question 11

Mortgage Clauses -

Insurance

Answer 11

Indemnification on your realty against loss from a specific hazard or peril

Question 12

Mortgage Clauses -

Impound

Answer 12

Establishing an account for purpose of paying annual tax and insurance bills.

Question 13

Mortgage Clauses -

Defeasance Clause

Answer 13

States when payments are completed, mortgagee removes lien bt a satisfaction piece.

Question 14

Mortgage Clauses -

Foreclosure (Court Action)

Answer 14

Allows the mortgagee to foreclose with a sheriff’s deed.

Question 15

Mortgage Clauses -

Equitable Right of Redemption

Answer 15

A definite period in which mortgagor can make up late payments on their realty.

Question 16

Mortgage Clauses -

Statutory Redemption Period

Answer 16

Original mortgagor may reclaim realty if full back payments are made within so many days after foreclosure( differs by state)

Question 17

Deed of Trust / Trust Deed

Answer 17

Security instrument on realty

Question 18

Title Theory

Answer 18

• Used in Far West States

- Law considers that a trust deed conveys title of realty to a trustee until the note is paid off

Question 19

Trustor

Answer 19

Becomes “borrower and payer”, the one getting the loan on realty

Question 20

Beneficiary

Answer 20

Becomes “payee”, the one giving a loan on realty

Question 21

Trustee

Answer 21

Impartial holder of title on a trust deed (title only)

Question 22

Trustee’s Deed

Answer 22

A deed issued after a foreclosure

Question 23

Deed of Reconveyance

Answer 23

• A deed issued by the trustee
• States loan is paid in full
• Gives all rights and privileges back to trustor

Question 24

Equitable Right of Redemption

Answer 24

Period in which trustor can make up late payments on note

Question 25

Acceleration

Answer 25

- Default | - In the event of default, whole amount of principal and interest may be declared to be due and payable at once

Question 26

Alienation

Answer 26

- Due on Sale | - Balance of debt becomes immediately due and payable if property is sold without permission of the note holder.

Question 27

Foreclosure

Answer 27

- Non judicial | - Legal procedure whereby property used as security for debt, is sold to satisfy debt in the event of default

Question 28

Prepayment

Answer 28

- Terms upon which mortgagor may pay entire or stated amount of mortgage principal at some time prior to due date.

Question 29

Insurance

Answer 29

- Indemnification against loss from specific hazard or peril

Question 30

Impound

Answer 30

Establishing account for purpose of paying annual tax and insurance bills without having to come up with lump sum.

Question 31

Vendor / OWC

Answer 31

- Seller finance - Real Estate purchased without a lender originated loan or cash - Terms synonymous and are the security instrument - Land Contract, Installment Contract, Contract for Deed

Question 32

OWC - Note or PMA

Answer 32

- Purchase Money Agreement - Negotiable instrument on realty - Owner carries loan, no lender

Question 33

Vendor

Answer 33

- MUST be the seller | * * Retains Legal Title only

Question 34

Vendee

Answer 34

- MUST be the buyer | * ** Has Equitable Title and the bundle of rights

Question 35

Defeasance Clause in a PMA

Answer 35

- Notification clause in PMA - States when payments are completed, vendor removes lien - Removed by a satisfaction piece - If vendee defaults, vendor asks for foreclosure through court

Question 36

Devise

Answer 36

- Giving of realty in valid will

Question 37

Devisor

Answer 37

* Died with will | - The deceased person giving realty in a vaild will