Real Estate Finance

Question 1

Defeasance Clause

Answer 1

upon satisfaction defeats conveyance to lendor

Question 2

Acceleration Clause

Answer 2

Upon default, maturity date of loan accelerates

Question 3

Due- on- Sale Clause

Answer 3

upon sale or transfer of any interest loan is due and payable

Question 4

Exculpatory Clause

Answer 4

Lender agrees not to hold borrower personally liable for debt

Question 5

Open end clause

Answer 5

borrow additional funds and secured by the same mortgage

Question 6

prepayment clause

Answer 6

right to repay without a penalty; FHA and VA prepay with out penalty

Question 7

Lien Theory of Mortgage

Answer 7

Mortgagor holds legal and equitable title (fl is a lien theory state)

Question 8

Title Theory

Answer 8

Lender holds legal title to secure debt; Mortgagor holds equitable title

Question 9

FHA

Answer 9

FHA insures loans by private (conventional) lenders

mortgage payment - PITI+MIP

Question 10

VA

Answer 10

Partially guaranteed by Veteran Affairs
No max loan (4x veterans eligibility)
Max guarantee $104,250

Question 11

Conventional Loans (Mortgage)

Answer 11

Any loan not FHA insured or VA guaranteed

Question 12

Sale ‘Subject to’ Mortgage

Answer 12

Buyer has no liability; seller fully liable

Question 13

Buyer ‘Assumes’ Mortgage

Answer 13

buyer is responsible for all debt

Question 14

Novation

Answer 14

substitution of new debtor for existing debtor; first debtor (seller) released from liability

Question 15

Regulation Z

Answer 15

Requires that borrowers be clearly shown the cost of credit in both dollars and percentages (APR)

Enforced by FTC