NCh7 Mortgage Clauses

Question 1

What provision in a written mortgage, or note, states that in the event of a default, the WHOLE AMOUNT of the principle becomes PAYABLE?

Answer 1

Acceleration clause

Question 2

What is the “due on sale”clause that states that the balance of the secured debt becomes due if the PROPERTY is SOLD by the mortgagee WITHOUT the mortgagee’s APPROVAL?

Answer 2

Alienation clause

Question 3

What is a clause that states that the lien is DEFEATED when the debt is repaid?

Answer 3

Defeasance clause

Question 4

What is the clause that allows the lender to RAISE the existing RATE, typically found in an ARM?

Answer 4

Escalation clause

Question 5

What is the clause that provides a privilege where the borrower can PAY the entire amount or a stated amount PRIOR to the due date on the note, according to the terms in the clause?

Answer 5

Prepayment clause

Question 6

What is a clause that allows the lender to move or take a LOWER lien POSITION, typically found in a second mortgage, home mortgage or home equity loan?

Answer 6

Subordination clause

Question 7

What is the clause that allows a new borrower to TAKE OVER payments on existing loan under specified terms and conditions?

Answer 7

Assumption clause

Question 8

What is the clause that allows the new buyer to take over payments and liability, often called a loan novation, that CANNOT negatively IMPACT a sellers credit rating ?

Answer 8

Straight assumption

Question 9

What is the clause that allows a buyer to take over payments but it’s not liable for the loan where the original borrower remains liable and CAN potentially negatively IMPACT the seller’s CREDIT rating

Answer 9

Assumption “ subject to”

Question 10

What is excessive selling/lending activity to generate fees and commissions called?

Answer 10

Churning