RE Law Final Flashcards
Study
Name 8 things needed in a TITLE ABSTRACT -
Mortgages, Discharges, Deeds, Owner name(s), Property Description, Exceptions & Encumbrances
Name 2 things the lender gives at the closing
1) The Note - the promisary obligation to re-pay debt.
2) The Mortgage - The security against the note (collateral)
What was the holding in the Ibanez Case and what was the premise of the case?
Affirmed - The SJC found that the foreclosure sales were invalid because the banks were unable to provide an assignation of ownership of the mortgages prior to the foreclosure sale. They did not determine to whom or how the property would be transferred or how the title would be cleared - just that the foreclosures were not legal according to existing MA law.
How many years do you have to go back on a title search? Refi? What is an exception?
50 years on a standard title search - 2 owners on a Re-Fi and the exception is if you find a Title Policy you only have to go as far as that policy.
What is Title Theory?
Same as the deed - Property reverts to the borrower when paid off - Mass uses Title Theory
What is Lien Theory?
Borrower is only giving the lender a lien on their property and not the deed/ title - The borrower gets the title while paying down the mortgage.
What is the Accelleration Clause?
Clause in financing that states that if the borrower defaults, the lender can accelerate the entire loan and make it due immediately with penalties and interest.
According to REBA how many days do you have to record a discharged mortgage?
45 days - $500 late fine and $75 dollars to file late.
What is a Partial Release in regard to a mortgage?
Usually seen in developments like condos & subdivisions with jumbo mortgages; as the parcels or units are sold the mortgage gets PARTIALLY released.
What is an Assignment?
When the mortgage and note gets assigned to another lender.
Name 3 kinds of mortgages
Conventional - Uninsured direct from the lender - Simpler application process with no restrictions - typically lender will loan 80% of appraised value and borrower gives 20% downpayment
Balloon Mortgage - Make small payments for ltd amount of time and the remaining balance comes due in a large “balloon” payment.
FHA / VA Loans - HUD / FHA insures the loans but the note is through approved lenders like banks and credit unions - Not as simple to apply with many more restrictions such as loan limits and the mortgage can be assumed by another person.
What is a till?
The total amount paid over the entirety of the loan.
What is RESPA?
Real Estate Settlement Procedures Act - It complements the Truth in Lending Act and prevents kick backs & insures full disclosure.
Name 3 remedies in lieu of foreclosure?
- Loan Modifications - Reinstatement of loan
- Deed in Lieu of Foreclosure- Voluntary conveyance in exchange for reduction in expenses & litigation
- Short Sale -lender agrees to accept less than what is owed on the property (Arms length transaction) No relations
What does a foreclosure do?
Cuts off the mortgagor from equitable redemption.
Who has the authority & gives permission to foreclose?
Judiciary - Superior Court (land Court)
What document is prepared for the lender PRIOR to closing?
The Title Commitment- It is only valid for 6 mos or until the closing - It will disclose all items on the title and exceptions.
What document is prepared for the lender AFTER the closing?
Title Policy - Includes a payoff letter regarding discharge & consequences - The recorded time is the date and time of the Title Policy - Lenders Policy is mandatory / Owners policy is optional. e
What is PMI?
Private Mortgage Insurance - It is an additional insurance you have to pay if you put less than 20% down on your note and continue to pay until the 20% is paid down.
What is REO?
Real Estate Owned - It is held by the Foreclosing Lender.
What are two kinds of Certificates a Veteran applies for in the mortgage process?
Certificate of ELIGIBILITY - It states the MAX available loan guaranty entitlement.
Certificate of REASONABLE VALUE - It sets forth the current mkt value of the propty based on VA approved appraisal & establishes the max allowable loan on that property.
What are the 3 dates important in a HUD settlement?
Settlement Date = Closing Date
Dispursment Date is 3 days later in a ReFi.
What is it called when a lender takes their fees & escrow out of the note amount up front?
‘Net Fund”
What is POC?
Paid Outside of Closing
What are the traditional quarterly property tax paying months? How many months do lenders like to have at closing?
Feb May Aug Nov
Lenders usually want 3 months up front and a 2 month cushion - there is usually an abatement involved as the property tax bill is already paid by the previous owner.
Who is responsible for the cost of the Excise stamp in Mass?
The Seller - rate is $65 per $1000
What is another term for Homeowners Insurance?
Hazard Insurance
What is a Good Faith Estimate?
A document prepared by the lender for the Borrower to prepare them for the costs they may have at Closing and the loan terms if approved.
