Unit 12 Key Terms Flashcards
acceleration clause
Stipulation in a mortgage that the entire unpaid balance of the debt may become due and payable if a default of expressed conditions should occur.
assignment of mortgage
A legal instrument stating that the mortgagee assigns (transfers) the mortgage and promissory note to the purchaser.
assumption
The buyer of real property that is already mortgaged assumes liability for the mortgage payments of the original loan.
blanket mortgage
One debt instrument covering two or more parcels.
buydown
A financing technique in which points are paid to the lender by the seller or the builder that lowers (buys down) the effective interest rate paid by the buyer/borrower, thus reducing the amount of the monthly payment for a set period of time.
contract for deed (land contract)
A financing technique wherein the seller agrees to deliver the deed at some future date and the buyer takes possession while paying the agreed amount. Also called an installment sale contract or agreement for deed.
deed in lieu of foreclosure
A friendly foreclosure (nonjudicial procedure) in which the mortgagor gives title to the mortgagee.
default
Failure to comply with the terms of an agreement or to meet an obligation when due.
defeasance clause
A provision in a mortgage that specifies the terms and conditions to be met in order to avoid default and thereby defeat the mortgage.
discount points
A method for increasing a lender’s yield. Se also mortgage discount points.
due-on-sale clause
A provision in a conventional mortgage that entitles the lender to require the entire loan balance to be paid in full if the property is sold.
equity
The market value of a property less and debt against it; in a business entity, assets minus liabilities equals capital (owner’s equity); a system of legal rules administered by a court of chancery.
equity of redemption
The right of a mortgagor, before a foreclosure sale, to reclaim forfeited property by paying the entire indebtedness.
escrow
An impound account required by most lenders that require borrowers to pay in advance monthly installments for property taxes and hazard insurance. The monthly escrow payment is one-twelfth of the estimated annual expense for property taxes and the hazard insurance premium
estoppel certificate
A written statement that bars the signer from making a claim inconsistent with the instrument (commonly used with a mortgage assumption).
first mortgage
A mortgage on a property that is superior in right to any other mortgage.
foreclosure
A legal procedure whereby property used as security for a debt is sold to satisfy the debt owing to default in payment of the mortgage note or default of other terms in the mortgage document.
hypothecation
To pledge real or personal property as security for a debt or obligation without giving up possession of the property.
interest
The price paid for the use of borrowed money; estate.
land development loan
Financing instrument for the installation of on- and offsite improvements to the land, including sewers, streets, and utilities.
lien theory
Legal concept that regards a mortgage as a just claim on specific property pledged as a security for a mortgage debt.
lis pendens
A pending legal action.
loan origination fee
A charge by a lender for taking a mortgage in exchange for a loan.
loan servicing
An additional source of income for lenders. Servicing fees typically rage from 3/8 to 3/4 of 1% of the unpaid balance of loans serviced.
loan-to-value ration (LTV)
Relationship between amount borrowed and appraised value (or sale price) of a property.
mortgage
A written agreement that pledges property as security for payment of a debt.
mortgagee
A lender who holds a mortgage on specific property as security for the money loaned to the borrower.
mortgagor
A borrower who gives a mortgage on the borrower’s property in order to obtain a load from a lender.
note
Legal evidence of a debt that must accompany a mortgage in Florida; a legally executed pledge to pay a stipulated sum of money. see also promissory note.
novation agreement
A written agreement making the buyer solely responsible for the assumed mortgage amount with the lender.
partial release clause
Stipulates the conditions under which the mortgagee will grant freeing building lots from a mortgage lien upon payment of a certain amount of money.
PITI
Principal, interest, taxes, and insurance payment on a mortgage loan.
prepayment clause
A provision in a mortgage that allows the mortgagor to pay the mortgage debt ahead of schedule without penalty.
prepayment penalty
The amount set by the creditor that the debtor is charged for retiring the debt early.
receivership clause
A provision in a mortgage, related to income-producing property, that is designed to require that income derived be used to make mortgage payments in the event the mortgagor (borrower) defaults.
right to reinstate
A mortgage clause based on the equity of redemption. The mortgagor’s right to reinstate the original repayment terms in the note after the mortgagee has initiated the acceleration clause.
satisfaction of mortgage
A certificate issued by the lender when the debt obligation is paid in full.
short sale
A sale of secured real property that produces less money than is owed the lender. The lender releases its mortgage so that the property can be sold free and clear to the new purchaser.
subject to
A buyer makes regular periodic payments on the mortgage but does not assume responsibility for the mortgage.
subordination agreement
A written agreement between holders of liens on a property that changes the priority of mortgage, judgement, or other liens under certain circumstances.
takeout commitment
A written commitment from a financial institution certifying that permanent financing will be provided when the project is completed.
title theory
Stipulation in a mortgage that the entire unpaid balance of the debt may become due and payable if a default of expressed conditions should occur.
acceleration clause
A legal instrument stating that the mortgagee assigns (transfers) the mortgage and promissory note to the purchaser.
assignment of mortgage
The buyer of real property that is already mortgaged assumes liability for the mortgage payments of the original loan.
assumption
One debt instrument covering two or more parcels.
blanket mortgage
A financing technique in which points are paid to the lender by the seller or the builder that lowers (buys down) the effective interest rate paid by the buyer/borrower, thus reducing the amount of the monthly payment for a set period of time.
buydown
A financing technique wherein the seller agrees to deliver the deed at some future date and the buyer takes possession while paying the agreed amount. Also called an installment sale contract or agreement for deed.
contract for deed (land contract)
A friendly foreclosure (nonjudicial procedure) in which the mortgagor gives title to the mortgagee.
deed in lieu of foreclosure
Failure to comply with the terms of an agreement or to meet an obligation when due.
default
A provision in a mortgage that specifies the terms and conditions to be met in order to avoid default and thereby defeat the mortgage.
defeasance clause
A method for increasing a lender’s yield. Se also mortgage discount points.
discount points
A provision in a conventional mortgage that entitles the lender to require the entire loan balance to be paid in full if the property is sold.
due-on-sale clause
The market value of a property less and debt against it; in a business entity, assets minus liabilities equals capital (owner’s equity); a system of legal rules administered by a court of chancery.
equity
The right of a mortgagor, before a foreclosure sale, to reclaim forfeited property by paying the entire indebtedness.
equity of redemption
An impound account required by most lenders that require borrowers to pay in advance monthly installments for property taxes and hazard insurance. The monthly escrow payment is one-twelfth of the estimated annual expense for property taxes and the hazard insurance premium
escrow
A written statement that bars the signer from making a claim inconsistent with the instrument (commonly used with a mortgage assumption).
estoppel certificate
A mortgage on a property that is superior in right to any other mortgage.
first mortgage
A legal procedure whereby property used as security for a debt is sold to satisfy the debt owing to default in payment of the mortgage note or default of other terms in the mortgage document.
foreclosure
To pledge real or personal property as security for a debt or obligation without giving up possession of the property.
hypothecation
The price paid for the use of borrowed money; estate.
interest
Financing instrument for the installation of on- and offsite improvements to the land, including sewers, streets, and utilities.
land development loan
Legal concept that regards a mortgage as a just claim on specific property pledged as a security for a mortgage debt.
lien theory
A pending legal action.
lis pendens
A charge by a lender for taking a mortgage in exchange for a loan.
loan origination fee
An additional source of income for lenders. Servicing fees typically rage from 3/8 to 3/4 of 1% of the unpaid balance of loans serviced.
loan servicing
Relationship between amount borrowed and appraised value (or sale price) of a property.
loan-to-value ration (LTV)
A written agreement that pledges property as security for payment of a debt.
mortgage
A lender who holds a mortgage on specific property as security for the money loaned to the borrower.
mortgagee
A borrower who gives a mortgage on the borrower’s property in order to obtain a load from a lender.
mortgagor
Legal evidence of a debt that must accompany a mortgage in Florida; a legally executed pledge to pay a stipulated sum of money. see also promissory note.
note
A written agreement making the buyer solely responsible for the assumed mortgage amount with the lender.
novation agreement
Stipulates the conditions under which the mortgagee will grant freeing building lots from a mortgage lien upon payment of a certain amount of money.
partial release clause
Principal, interest, taxes, and insurance payment on a mortgage loan.
PITI
A provision in a mortgage that allows the mortgagor to pay the mortgage debt ahead of schedule without penalty.
prepayment clause
The amount set by the creditor that the debtor is charged for retiring the debt early.
prepayment penalty
A provision in a mortgage, related to income-producing property, that is designed to require that income derived be used to make mortgage payments in the event the mortgagor (borrower) defaults.
receivership clause
A mortgage clause based on the equity of redemption. The mortgagor’s right to reinstate the original repayment terms in the note after the mortgagee has initiated the acceleration clause.
right to reinstate
A certificate issued by the lender when the debt obligation is paid in full.
satisfaction of mortgage
A sale of secured real property that produces less money than is owed the lender. The lender releases its mortgage so that the property can be sold free and clear to the new purchaser.
short sale
A buyer makes regular periodic payments on the mortgage but does not assume responsibility for the mortgage.
subject to
A written agreement between holders of liens on a property that changes the priority of mortgage, judgement, or other liens under certain circumstances.
subordination agreement
A written commitment from a financial institution certifying that permanent financing will be provided when the project is completed.
takeout commitment
title theory
