Promissory note Chapter 15

Question 1

what is a promissory note?

Answer 1

referred to as the note or financing instrument, is the borrowers personal promise to repay debt according to agreed terms. the mortgagor one or more promissory notes to total the amount of the debt

Question 2

what is note?

Answer 2

is negotiable instrument like check or bank draft. the lender who hold the note is referred to as the payee and may transfer to receive payment to a third party

Question 3

How do you transfer a note?

Answer 3

1. by singing the instrument over to the third party

2. be delivering the instrument the third party

Question 4

what is interest?

Answer 4

is charge for the use of money

Question 5

what is payment in advance?

Answer 5

payment made at the beginning of each period

Question 6

what is payment in arrears?

Answer 6

when payments are made at the period

Question 7

what is usury?

Answer 7

is charging interest in excess of the max rate allowed by law

Question 8

Is there a limit IL on the amount interest?

Answer 8

there is no legal limit specifically imposed by IL on the rate interest

Question 9

what is loan origination fee?

Answer 9

the processing of mortgage application is know as loan origination, when the mortgage loan is originated.

Question 10

what is loan origination fee?

Answer 10

is charge by most lenders to cover the expenses involved in generating the loan. A loan origination fee is not prepaid interest; rather, it is charge that must be paid to the lender. while a loan origination fee serves a different purpose from discount point both increase the lender’s yield. therefore, the fed treats the fee like discount points

Question 11

what is discount points?

Answer 11

the interest rate that a lender charges the borrower for a loan might be less than the yield an investor demands. to make up the difference, the lender charges the borrower discount points

Question 12

what are the factors the determines number of discount points?

Answer 12

1. the difference between the interest rate and equipped investor yield
2. how long the lender expect it will take the borrower to pay off the loan

Question 13

what is prepayment?

Answer 13

the mortgage loans are pay installments over long period of time. if person pay more then monthly payment.

Question 14

what is prepayment clause?

Answer 14

the clause requires that borrower pay a prepayment penalty against the unearned portion of the interest for any payment made ahead of schedule.

Question 15

what is deed of trust?

Answer 15

lender may prefer to use a three party instrument, it conveys naked tile or bare legal title, that is- title without the right right of possession. the deed is given as security for the loan to a third part or beneficiary. the beneficiary

Question 16

How is deed of trust handled in IL?

Answer 16

a deed of trust is treated like mortgage and is subject to the same rule including foreclosing
In IL the truster (borrower) in a deed of trust holds the title to the real estate

Question 17

what are the duties of the mortgagor or trusttor ?

Answer 17

1. payment of the dept in accordance with the term of the note
2. payment of all rest estates taxes on the property given as security
3. maintain of the petty in good repair at all time
4. maintenance of adequate insurance to protect the lender if the property is destroyed or damage by fire, windstorm or other hazard
5. receipt of lender authorization before making any major alteration on the property

Question 18

what happens if you fail to meets the duties of the mortgagor or trusttor ?

Answer 18

failure to meet of these obligation can result in borrower’s default. the loan document may, however, provide for grace period (such as 30 days) during which the borrower can meet the obligation and cure the default. if the borrower does not do the lender has the right to foreclose and collect on the note

Question 19

what is provision for default?

Answer 19

the mortgage includes to assist the lender in foreclosure. if a borrower defaults the lender has the right to “accelerate the maturity the dept” this means may declare the entire dept due and payable immediately. without a accretion the lender would have sue for every late payment

Question 20

what is assignment of the mortgage?

Answer 20

with out charging the provision of a contract, note may be sold to a third party. the original mortgage. the assignee become the new owner of the dept and security instrument. when the dept is paid in full, assignee is required to execute the satisfaction (or release) of the security instrument

Question 21

what is release of the mortgage lien?

Answer 21

when all loan payments have been made and note has been paid in full, the borrow will want the public record to show that dept has been land and that the lender is divested of all right convey under the mortgage, by provision the defeasance clause in most mortgage document, the lender is required to execute a satisfaction of mortgage

Question 22

what is satisfaction of mortgage?

Answer 22

this document return to the borrower all interest in the real estate originally convey to the lender
entering this release in the public record show that the mortgage lien has been removed front the property

Question 23

what happen if the lender fails to deliver a release to the mortgagor in IL?

Answer 23

the grantor of the deed of trust within one month after full payment and satisfaction will be liable to pay the mortgagor or grantor 200

Question 24

what should be in bold release document?

Answer 24

for the protection of thew owner, this release shall be filed with the recorder of registrar of title in whose office the mortgage or deed of trust was filed with the recorder or the registrar of titles in whose office the mortgage

Question 25

what does PITI stand for?

Answer 25

Principal, Interest, Taxes, Insurance

Question 26

what is assignment of rent?

Answer 26

if property involved includes rental units, borrower may provide for rents to be assigned to lender in the even of borrower’s default. this assignment may be included in the mortgage or deed of trust, or it may be separate document

Question 27

what is novation?

Answer 27

make the buyer solely responsible for any default on the loan

Question 28

what should novation be in?

Answer 28

this agreement must be in writing

Question 29

what is priority of a mortgage?

Answer 29

priority of the mortgage and otter liens normally is determined by the or in which they were recorded
first mortgage or deed of trust
second mortgage and ect

Question 30

what is land contract?

Answer 30

the buyer agree to make a down payment and a monthly loan payment that included interest and principal directly tot he seller. the payment also may include real estate tax and insurance reserves

Question 31

In IL, Is there statutory right redemption?

Answer 31

No statutory

Question 32

what happen when mortgagor default in land contract?

Answer 32

a mortgage in default who wishes to exercise the equitable right of redemption to avoid loss of the mortgage real estate may do so for period of 7 months after the date of service on the mortgagor or after publication date, whichever is later.

Question 33

how can you short time under the land contract?

Answer 33

this time period can currently be shortened to as little as 30 days after a judgment is entered if the property has been abandoned or is vacant. when a property is redeemed in this way the foreclosure sale down not occur. otherwise, foreclosure sales as soon as possible after the equitable right of redemption expires

Question 34

what does mortgage generally has a right to what?

Answer 34

they can remain possession of the property for the service of the summons not the entry of a judgement of foreclosure. After judgement and through 30th day after confirmation of the sale, the mortgage can still retain possession but he may be required to the rent to the holder of the certificate of sale. thirty one days after judgment, the mortgagor must have vacated the property or be subject to eviction, the owner of the certificate of sale receives a sheriff’s deed and gains the right to possession

Question 35

If IL doesn’t have statutory rights, what does IL have?

Answer 35

it does offer a statutory right of reinstatement. this option applicable when defaulting mortgagor wishes to cure the default and restate the loan as if no acceleration had occurred. the mortgagor has the right to exercise this statutory tight for a period of 90 days after service of summons or publication date. at the lender’s discretion, expressed through an attorney, the right of reinstatement may be extended to run as long as the equitable right of redemption