Unit 7-Mortgages, Deeds of Trust, Lending Flashcards
This chart shows and calculates payments for a specific loan amount at a range of interest rates and loan terms.
Loan Payment chart
This chart takes the loan amount and divides by 1000 to get a loan factor to help figure out a payment.
Loan Factors(Amortization) chart
In the following equation, Interest = Rate x Principle…..the loan is the ________.
Principle
In title theory states, the borrower(mortgagor), gives legal title to the lender(mortgagee) and retains __________ title.
Equitable–legal title is returned upon full payment of debt, lender owns property until fully paid
In a lien theory state, the borrower holds ________ and _______ title, lender simply has a lien on property as security for the mortgage debt.
Legal and Equitable–mortgage or deed of trust is just collateral for the loan
States using deeds of trust also use ________ foreclosure or power of sale.
Non-judicial
A ___________ is more of I.O.U., and is a legal instrument that evidences the debt that is secured by the mortgage or deed of trust.
Promissory note–held by lender until loan is repaid…not recorded
The promissory not (IS/IS NOT) a contract
IS NOT–lender does not sign, it has promise of borrower to repay, terms, borrower signature
This gives the lender the ability to demand immediate payment of entire balance of loan if borrower defaults.
Acceleration clause–most real estate notes are transferable and may be sold too
Mortgage or deeds of trust are ________ instruments.
Security–they pledge(hypothecate) property as a security for a debt
This is a 3 party security instrument.
Deed of trust
In a deed of trust, the borrower is the ________.
Trustor–the lender is the beneficiary, the Trustee is the public official holding title
Interest on most loans is ________, not compounded.
Simple
This clause states that when debt is paid the lien must be removed.
Defeasance clause–Mortgagee provides a “satisfaction”, trustee provides the “deed of reconveyance”
The due on sale clause is also called the ________.
Alienation clause–provides that when property is sold, lender may demand immediate repayment of entire debt.
This clause requires lender consent for the assumption of the loan.
Due-on-sale clause
Nonpayment of taxes, principal and interest, insurance lapses, and waste are reasons for loan ________ and ______.
acceleration and foreclosure
When figuring LTV or mortgage ratio, it is determined by the sales price or appraised value, whichever is ______.
Lower
Market Value today - Total Debt Today = _______.
Equity
Leverage is using borrowed money to finance investment. The higher the LTV, the ________ the leverage.
Higher
One point of this is 1% of the loan amount, a lender usually charges them to increase their yield.
Discount points–paid at closing
A charge by the lender to process and an issue a loan is _________.
Origination fee
This is charging an interest rate in excess of what is permitted by law.
Usury
This procedure whereby title to property used as a security for a debt is taken by a creditor/lender and sold to satisfy the debt is called _________.
Foreclosure
The right to stop a foreclosure by a borrower paying missed payments, before the foreclosure sale.
Equitable Redemption period
Property is sold to the public, highest bidder, at a ________ .
Foreclosure sale
The sale date starts the _______ ________ period for the borrower, where they can still get property back if bring full principle, interest, and fees to redeem.
Statutory Redemption
To avoid foreclosure, a borrower may give over the deed to lender with a _____________.
Deed in Lieu of Foreclosure
When someone is selling a property and market value is not enough to satisfy the debt it is called a __________.
short sale
A term loan is also called a ________ loan.
Straight–Interest only payments until maturity or end of term, then a Balloon of entire principle at end
A fully amortized loan is also called a _______ loan.
Fixed rate
This loan is subject to change based on a set economic indicator or index.
ARM–Index + Margin = New Rate
This mortgage has payments that include debt service plus taxes and insurance, PITI.
Budget Mortgage
This mortgage has real property and personal property included.
Package Mortgage
This type of loan that covers more than one parcel of land, developer may use.
Blanket Mortgage–partial release clause allows parcels released from lien as balance is paid down
This mortgage has financing made available in increments as improvements are completed.
Construction mortgage–adjustable rate/short terms
This is when the mortgagee pays the mortgagor monthly payments of principle with each disbursement.
Reverse Mortgage
This has a 3 day right of rescission and is covered under the truth in lending act, owner is borrowing against equity.
Home Equity Loan–HELOC allows for further advances at a later date
In this type of loan the a higher than prime rate is charged because the borrower/property used as security is higher risk than prime.
Subprime–often include an ARM, these were packaged with prime loans and sold on the secondary market
The umbrella term for unfair or illegal lending practices.
Predatory lending–usually in subprime market, targeting elderly, minorities, non-english speakers
Making loans with no ability to repay, urging people to refinance too often, etc. are examples of _________.
Predatory lending
This is also known as a land contract or installment contract.
Contract for Deed
A seller-carry/seller carryback is also called a __________-
Purchase money mortgage–uses a promissory note and deed of trust or mortgage; title transfers to buyer, seller takes back a lien at closing
This loan is beneficial to the seller because they hold title and may benefit if buyer defaults on payments because they own a lien still.
Seller carryback…Purchase Money Mortgage
Releasing a lien once it is paid is known as ___________.
Defeasance
Contract that gives a buyer the right to occupy the property now and receive a deed after payment in full of the purchase price is a ___________.
Contract for Deed
Clause appearing in both promissory note and the deed of trust that allows the lender to call the balance due and payable in full upon default is known as the ________.
Acceleration clause–allows them to “call the note”
Form of financing where seller retains title but the buyer has the right of possession is ____________
a Contract for Deed
A term loan is also called a _________ loan.
straight–interest only with balloon pmt
Acceleration clause is used when the borrower is in ______, from waste for example.
Default–cant call note arbitrarily
