Residential Mortgages

Question 1

Lien theory

Answer 1

The borrower retains the title to the property. The lender is protected with a lien on the real property to secure the payment of the mortgage debt

Question 2

Title theory

Answer 2

Title to mortgage property goes to the mortgage/lender or a third party

Question 3

Promissory Note

Answer 3

Legal instrument that represents the evidence of debt

Question 4

Mortgage

Answer 4

An instrument that pledges property as security for a debt. The legal document that represents the lien on the real estate that secures the debt.

Question 5

Hypothecation

Answer 5

Refers to the pledging of the property, as security for payment of a loan, without surrendering possession of the property.

Question 6

Assignment

Answer 6

Ownership of a mortgage is transferred from one company or individual to another.

Question 7

Equity of redemption

Answer 7

allows the mortgagor to prevent foreclosure by paying the mortgagee the principal and interest due, plus any expenses the mortgagee has incurred in attempting to collect debt & initiating foreclosure proceedings.

Question 8

A Receivership Clause

Answer 8

allows the receiver to be appointed to collect income from the property and use the income to make mortgage payments in the event of default.

Question 9

FHA Loans

Answer 9

The Federal Housing Administration “insures” the loan.

Question 10

VA Loans

Answer 10

The Department of Veteran Affairs the authority to partially guarantee mortgage loans made to veteran by private lenders. The guarantee covers top portion of the loan.

Question 11

Maximum VA guarantee

Answer 11

$104,250 or 25% of the loan amount

Question 12

Max VA loan Amount

Answer 12

$417,000 , 25% of loan amount after

Question 13

Loan-Value Ratio

Answer 13

Relationship between amount borrowed and appraised value of a property.