Mortgages Start to Finish

Question 1

What is hazard insurance?

Answer 1

paid by homeowner to protect condition of property

Question 2

What does a subordination agreement do?

Answer 2

lienholder agrees to take subordinate position to another lienholder

Question 3

What is proper way to record mortgage documents?

Answer 3

record deed then DOT; promissory note doesnt get recorded

Question 4

How may a tenant withhold rent in NC?

Answer 4

a tenant may not do so

Question 5

Give 2 examples of unenforceable lease terms.

Answer 5

LL wont make repairs; excessive late fees

Question 6

Give the 4 grounds for eviction in NC.

Answer 6

holdover; criminal activity at property; breach of lease; withholding rent

Question 7

What is the purpose of the Promissory Note?

Answer 7

a contract between the borrower and the lender for the money owed

Question 8

What is rent abatement?

Answer 8

T convinces judge that living conditions not worth rent paid; judge lowers the rent; only legal way of ‘withholding’ rent

Question 9

Which type of deed will the buyer typically get in a ML transaction?

Answer 9

General Warranty

Question 10

What is the purpose of the Deed of Trust?

Answer 10

creates the lien on a property

Question 11

Define ‘self-help eviction’.

Answer 11

evicting a tenant without a court order

Question 12

Explain ‘retaliatory eviction’.

Answer 12

evicting tenant for engaging in protected activity & uses pretext to justify it

Question 13

Define life estate.

Answer 13

conveyance where person owns home for life, and when she dies it goes to another person

Question 14

Give 2 examples of real property liens.

Answer 14

mortgage loan, unpaid county taxes

Question 15

Name the contract that must be in writing.

Answer 15

conveyance of real property

Question 16

Whom can the realtor represent in a closing?

Answer 16

both buyer and seller, or each individually

Question 17

Which party is responsible for providing valuation of the home?

Answer 17

appraiser

Question 18

What is the Metes and Bounds description of a property?

Answer 18

establishes boundaries of property; created by surveyor as he walks the property

Question 19

What is the purpose of the HUD-1?

Answer 19

breakdown of all money that will change hands in sale of the property

Question 20

What are the documents in the mortgage triangle?

Answer 20

promissory note - deed of trust - deed

Question 21

What is real property?

Answer 21

land plus everything attached to it

Question 22

What is a quit claim deed?

Answer 22

seller is giving title to a buyer without a warranty

Question 23

What are the characteristics of a Liar’s Loan?

Answer 23

few or no underwriting docs

Question 24

Is a fee tail conveyance still allowed in NC?

Answer 24

No

Question 25

What is the legal principle that says certain contracts must be in writing?

Answer 25

statute of frauds

Question 26

Name 2 places where you would look when doing a title search.

Answer 26

register of deeds; clerk of court

Question 27

Name 3 types of deeds.

Answer 27

general warranty, quit claim, special warranty

Question 28

What is PMI, and what does it do?

Answer 28

Private Mortgage Insurance; paid for by borrower; protects lender in case of default

Question 29

Which professionals ensure the boundaries of a property are accurate?

Answer 29

Surveyors

Question 30

What are the characteristics of a housing bubble?

Answer 30

fast generation of money that doesnt exist; bubble pops when borrowers no longer able to make payments

Question 31

What is subprime lending?

Answer 31

lending to subprime borrowers who are at higher credit risk / more likely to default

Question 32

What does an originator do in securitization?

Answer 32

first execution of lending $ to borrowers, sells these loans to sponsors

Question 33

What is the origination of a mortgage loan?

Answer 33

initial lending of funds from lender to borrower, creation of lien on RP the borrower owns

Question 34

What is the servicing of a ML?

Answer 34

day to day tasks related to a loan, like issuing statements or applying payments