Section 5 - Chapter 15

Question 1

a mortgage is:

Answer 1

a voluntarily lein on real estate

Question 2

the borrower is:

Answer 2

the mortgagor

Question 3

the lender is:

Answer 3

the mortgagee

Question 4

In title-theory states:

Answer 4

mortgagor gives legal title to mortgagee but retains equitable title

Question 5

in lein-theory states:

Answer 5

mortgagor/borrower holds both legal and equitable title

Question 6

defeasance clause:

Answer 6

stipulates that the title must be released back to the borrower when debit is repaid in full

Question 7

acceleration means:

Answer 7

asking for debit to be repaid in full upon borrower defaulting

Question 8

mortgages have how many parts?

Answer 8

2 parts; the debt itself and the security for the debt

Question 9

hypothecation is:

Answer 9

process of giving debtor possession and control while creditor receives underlying equitable right in the property

Question 10

promissory note is:

Answer 10

borrower’s personal promise to repay the debt

Question 11

interest is:

Answer 11

the charge for use of money

Question 12

usury is:

Answer 12

charging interest in excess of the maximum rate allowed by law

Question 13

discount points are:

Answer 13

1% of the loan amount

Question 14

deed of trust:

Answer 14

3-party instrument for a mortgage; conveys naked title (title without right of possession). deed given to trustee, the third party.

Question 15

beneficiary

Answer 15

the lender in a deed of trust situation

Question 16

trustor:

Answer 16

borrower in a deed of trust situation

Question 17

satisfaction of mortgage is:

Answer 17

release of the title to the buyer

Question 18

PITI stands for:

Answer 18

principal, interest, taxes, and insurance; recurring components of a borrower’s monthly loan

Question 19

novation is:

Answer 19

seller becomes free of original loan when house is sold

Question 20

alienation clause is:

Answer 20

when property is sold, lender may declare entire debt due immediately or buyer assume loan at current market interest rates

Question 21

subordination agreements does:

Answer 21

changes priority of mortgage or deed of trust liens

Question 22

under a land contract:

Answer 22

buyer (vendee) agrees to make a down payment and monthly loan payments directly to seller

Question 23

foreclosure:

Answer 23

when property pledges as security is sold to satisfy the debt

Question 24

type of foreclosure:

Answer 24

non-judicial (no court action), judicial (sold by court order), strict (property goes directly to lender)

Question 25

deed in lieu of foreclosure

Answer 25

alternative to foreclosure

Question 26

short sale is:

Answer 26

lender accepts less than the amount owed on the property

Question 27

equitable right of redemption

Answer 27

after default but before foreclosure, payment is made and so get the property back