Mastering Real Estate Principles ch 20 Flashcards
Mastering Real Estate Principles
A clause in the mortgage that allows the lender to demand immediate payment of the loan balance if the borrower breaks the terms of the note or mortgage.
Acceleration Clause
The clause in a mortgage that allow the lender to make the entire loan balance due if title to the property is transferred. Also referred to as a due on sale clause.
Alienation Clause
An agreement among three parties for the purpose of securing a real estate loan. Parties to the trust are the trustor (borrower), The trustee (usually a title company or bank), and a beneficiary (the mortgagee). Used in many states in place of a mortgage.
Deed of Trust
Stipulated that the mortgage lien is void when the loan is repaid.
Defeasance Clause
The property’s value minus any loans against it.
Equity
Pledging property as security for a loan without giving up possession.
Hypothecation
or Modified lien theory states. In these states, title remains with the mortgagor, but the mortgagee may take title to the property if the mortgagor defaults.
Intermediary Theory
A loan that is subordinate to a prior mortgage.
Junior Mortgage
The mortgage creates only a lien on the property and title remains with the mortgagor. If the mortgagor defaults, the lender may foreclose on the lien.
Lien Theory
A contract between a borrower and a lender that provides security for the loan by creating a lien on the property.
Mortgage
The lender or obligee who receives a pledge from a borrower to repay a loan.
Mortgagee
The borrower or obligor who give the lender a pledge to repay the loan.
Mortgagor
A mortgage clause that determines the borrower’s rights and duties if the loan is prepaid.
Prepayment Clause
A contract agreement between a borrower and a lender whereby the borrower commits to pay the lender the loan amount following specific terms. The note is a negotiable instrument, allowing the lender to sell the note to investors.
Essential elements of a note:
Must be in writing.
Obligor and obligee must have contractual capacity.
Must have a promise to pay a definite amount by obligor.
Must have definite terms of payment.
Must be signed by the borrower
Must be delivered by borrower and accepted by lender
Promissory Note
A deed given by a trustee when a loan is repaid. Also called a trustee’s deed of conveyance.
Release Deed
A document issued by a lender verifying that a loan has been repaid.
Satisfaction of Mortgage
The first mortgage.
Senior Mortgage
A written agreement between lien holders to change priority of their respective liens.
Subordination Agreement
State in which the mortgage conveys actual title to the mortgagee. On default by the mortgagor, the mortgagee may take possession of the property.
Title Theory
