RE Finance Unit 11: Processing Real Estate Loans

Question 1

Abstract

Answer 1

A condensed history of the title to a property, consisting of a summary of the original grant and all subsequent conveyances and encumbrances relating to the particular parcel of real estate.

Question 2

Actual Notices

Answer 2

In a real estate transaction a presumption of knowledge (e.g., tenants in possession of housing being sold).

Question 3

ALTA Policy

Answer 3

American Land Title Association title insurance policy; the most comprehensive form.

Question 4

Annual Percentage Rate (APR)

Answer 4

The effective interest rate.

Question 5

Assignment

Answer 5

The transfer of an interest in a bond, mortgage, lease, or other instrument, in writing, by the assignor to the assignee.

Question 6

California Land Title Association (CCLTA)

Answer 6

Issues title insurance policies for California properties.

Question 7

Chain of Title

Answer 7

History of recordings against a specific property.

Question 8

Closing Statements

Answer 8

Final arrangements to transfer title of property, as well as allocate charges and credits.

Question 9

Cloud

Answer 9

A claim or encumbrance that affects the ownership of a property and can potentially discourage future parties from purchasing it. These claims or encumbrances can arise from easements or mortgages on the land, or they can arise from a defect in a deed or a lien that may yield title to a third party.

Question 10

Constructive Notice

Answer 10

In a real estate transaction, matters of public record.

Question 11

Disclosures

Answer 11

Information pertinent to a property’s value required to be imparted to buyers and borrowers in California.

Question 12

Escrow Funds

Answer 12

Monies collected for property taxes and insurance premiums.

Question 13

Good-Faith Estimate

Answer 13

An estimate of total costs for securing a real estate loan. Given to borrowers prior to closing.

Question 14

Hazard Insurance

Answer 14

Insurance covering physical damage to property.

Question 15

Hazardous Waste

Answer 15

Toxic waste materials jeopardizing the value of real estate.

Question 16

Impound Funds

Answer 16

Fund set up by a lender to collect and hold monthly payments from the borrower for taxes and hazard insurance until they are due.

Question 17

Mortgagee’s Title Insurance

Answer 17

An insurance policy protecting the lender for the amount of the loan in the event of a future title dispute.

Question 18

Origination Fee

Answer 18

Fee charged by a lender or other agent for processing a loan application.

Question 19

Owner’s Title Insurance

Answer 19

An insurance policy protecting the buyer for the amount of the purchase price in the event of a future title dispute.

Question 20

Points

Answer 20

Amount of discount on a mortgage loan stated as a percentage; one point equals 1% of the face amount of the loan; a discount of one point raises the net yield on the loan by one-eighth of 1%.

Question 21

Preliminary Report

Answer 21

A report prepared prior to issuing a policy of title insurance that shows the ownership of a specific parcel of land, together with the liens and encumbrances thereon which will not be covered under a subsequent title insurance policy.

Question 22

Proration

Answer 22

At a real estate sale and/or loan closing, the allocation of charges and credits to the appropriate parties.

Question 23

Suit to Quiet Title

Answer 23

A technique to clear any clouds from a property’s title.

Question 24

Survey

Answer 24

An engineer’s description of a property’s boundaries.