Mortgages Flashcards
Unit 13, Page 255
What contracts you sign for mortgage obligation?
-Mortgage
-Promissory note
What does the mortgage do?
Pledges the property up as collateral for the loan. It is the security instrument.
What does promissory note do?
It makes the buyer personally liable to pay the entire amount loan. It is the financing instrument.
What makes the buyer personally liable to pay the entire amount loan?
Promissory note
Mortgagor
Borrower
Morgagee
Lender
What is the term used to describe the pledging of property as security for payment of a loan without surrendering possession of the property?
Hypothecation
What is a trustee?
An impartial third party who holds ownership of a property until it is paid off.
What is noted in the promissory note?
-Amount of the debt
-Time and method of payment
-Rate of interest, if any
What is noted in the mortgage document?
-Lender and borrower
-Accurate legal description of the property
-Obligations of the borrower
-Rights of the lender
What is the mortgagor?
Borrower
What is the mortgagee?
Lender
What are the duties of the mortgagor?
-Pay the debt in accordance with the note
-Pay real estate taxes
-Maintain insurance
(First 3 are PITI payments)
-Obtain lender’s authorization before making major alterations on the property.
-Maintain the property in good repair
-Until the mortgage has been in place for 30 days, obtaining lender’s authorization before placing a second mortgage against the property.
Failure of the mortgagor to meet any of their obligations.
Default
Default
Failure of the mortgagor to meet any of their obligations.
What does the acceleration clause do?
It allows the lender to accelerate the maturity of the debt, making the entire debt due immediately.