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Chapters 8-13**

Terms in this set (126)

"As Is"
said of property offered for sale in its present condition with no guaranty or warranty of quality provided by the seller
Counteroffer
an offer made in response to an offer
Default
failure to perform a legal duty, such as failure to carry out the terms of a contract
Earnest Money Deposit
money that accompanies an offer to purchase as evidence of good faith
Equitable Title
the right to demand that title be conveyed upon payment of the purchase price
Installment Contract
a method of selling and financing property whereby the seller retains title but the buyer takes possession while making the payments
Lease-Option
allows the tenant to by the property at a present price and terms for a given period of time
Right of First Refusal
the right to match or better an offer before the property is sold to someone else
Tax-Deferred Exchange
a sale of real property in exchange for another parcel of real estate to affect a nontaxable gain
"Time is of the Essence"
a phrase that means that the time limits of a contract must be faithfully observed or the contract is voidable
Liquidated Damages
an amount of money specified in a contract as compensation to be paid if the contract is not satisfactorily completed
Acceleration Clause
allows the lender to demand immediate payment of an entire loan if the borrower defaults
Beneficiary
one for whose benefit a trust is created; the lender in a deed of trust arrangement
Deed of Trust
a document that conveys title to a neutral third party trustee as a security for a debt
Deficiency Judgment
a judgment against a borrower if the foreclosure sale does not bring enough to pay the balance owed
Foreclosure
the procedure by which a person's property can be taken and sold to satisfy an unpaid debt
Junior Mortgage
any mortgage on a property that is subordinate to the first mortgage in priority
Mortgage
a document that makes property security for the repayment of a debt
Mortgagee
the party giving the mortgage; the lender
Mortgagor
the party who receiving the mortgage; the borrower
Power of Sale
allows a mortgagee to conduct a foreclosure sale without first going to court
Subordination
voluntary acceptance of a lower mortgage priority than one would otherwise be entitled to
Trustee
one who holds property in trust for another
Trustor
one who creates a trust; the borrower in a deed of trusts arrangement
Hypothecation
leaving the borrower in possession of the pledge party
Defeasance Clause
a mortgage clause that states the mortgage is defeated if the accompanying note is repaid on time
Title Theory
the legal position that a mortgage conveys title to the lender
Intermediate Theory
the legal position that a mortgage is a lien until default, at which time title passed to the lender
Equitable Mortgage
a written agreement that is considered to be a mortgage in its intent even though it may not follow the usual mortgage wording
Deed as Security
a deed given to secure a loan and treated as a mortgage
Chattel Mortgage
a pledge of personal property to secure a note
To be valid as evidence of a debt, a note must
(1) be in writing, (2) be between a borrower and a lender who both have contractual capacity, (3) state the borrower's promise to pay a certain sum of money, (4) show the terms of payment, (5) be signed by the borrower, and (6) be voluntarily delivered by the borrower and accepted by the lender
Prepayment Privilege
allows the borrower to repay early without penalty
Release of Lien
a certificate from the lender stating that the loan has been repaid
Alienation Clause
aka due-on-sale clause; gives the lender the right to call the entire loan balance due if the mortgaged property is sold or otherwise conveyed by the borrower
Partial Release
when the borrower wants the lender to release a portion of the mortgaged property from the mortgage after part of the loan has been repaid.
Subject to the Existing Loan
he buyer of an already mortgage property makes the payments but does not take personal responsibility for the loan
Assume the Loan
the buyer obligates himself to repay an existing loan as a condition of sale
Estoppel Certificate
aka mortgagee's information letter; prepared by the lender to show how much of the loan remains to be paid
Financing Statement
a recorded document designed to protect the rights of a chattel lienholder
Delinquent
aka nonperforming; when a borrower is behind on payments
Judicial Foreclosure
foreclosure by lawsuit
When a deed of trust is recorded, bare title is conveyed by the...
Borrower to the trustee
When a deed of trust is foreclosed, title is conveyed by the...
trustee to the purchaser at foreclosure
Which clause would be found in a deed of trust but not in a mortgage?
a Power of Sale Clause
If the trustee should die or be dissolved before the debt secured by a deed of trust is paid off, a successor may be named by the...
beneficiary
Comparing a deed of trust to a mortgage, the following would be unique to the deed of trust...
Power of Sale
The period of equitable redemption given to a borrower
begins when the load goes into default and ends when the property is sold at foreclosure
When the amount received from a foreclosure sale is insufficient to pay off the mortgage loan and the other expenses of the sale, the lender may sometimes secure
a deficiency judgment
The period of time set by state law, during which the mortgagor may redeem the property, is know as the period of...
statutory redemption
A borrow who feels mistreated by a power of sale foreclosure can...
appeal the issue to the courts
By voluntarily giving the lender a deed in lieu of foreclosure, a delinquent borrower might avoid...
foreclosure proceedings and possible deficiency judgments
A document that for all intents and purposes is a mortgage, although not labeled one, would most likely be a...
deed as security
The borrower under a deed of trust is the...
grantor
The lender under a deed of trust is the...
beneficiary
Evidence of the amount and terms of a borrower's debt to a lender is provided by means of a...
promissory note
A promissory note that fails to state that it is to be secured by a mortgage or deed of trust is...
a personal obligation of the borrower and an unsecured obligation of the borrower
Should a borrower fail to make payments when due, the lender may demand immediate payment of the entire balance under the terms of the...
acceleration clause
At the time of origination, a mortgage creates a lien of the mortgaged property in states that subscribe to the...
lien theory
The clauses that gives the lender the right to call in the note if the mortgaged property is sold or otherwise conveyed by the borrower is known as the...
due on sale clause or alienation clause
Who may be held responsible for mortgage loan repayment when a loan is assumed as part of a real estate sale?
the purchaser or the seller
When a loan is assume, the...
seller can be relieved of liability by novation and the buyer should verify the loan balance with the lender
Amortized Loan
a loan requiring periodic payments that include both interest and partial repayment of principal
Balloon Loan
any loan in which the final payment is larger than the proceeding payments
Conventional Loans
real estate loans that are not insured by the FHA or guaranteed by the VA
Equity
the market value of a property less the debt against it
FHA
Federal Housing Administration
Impound or Reserve Account
an account into which the lender places monthly tax and insurance payments
Loan Origination Fee
the expenses a lender incurs in processing a mortgage loan
Loan to Value Ratio
a percentage reflecting what a lender will lend divided by the sale price or market value of the property...whichever is less
Maturity
the end of the life of a loan
PITI Payment
a loan payment that combines principal, interest, taxes, and insurance
PMI
private mortgage insurance--a private mortgage insurance source to insure lenders against foreclosure loss
Point
1% of the loan
Principal
the balance owing on a loan
UFMIP
Up-Front Mortgage Insurance Premium--a one-time charge by the FHA for insuring a loan
VA
department of veterans affairs
Term Loan
a loan that requires only interest payments until the last day of it's life, at which the full amount borrowed is due
Budget Mortgage
in addition to collecting the monthly principal and interest payment, the lender also collects 1/12th of the estimated cost of the annual property taxes and hazard insurance on the mortgaged property
Balloon Payment
the final payment of a "balloon loan"; this payment is larger than the payments
Partially Amortized Loan
when the repayment schedule of a loan calls for a series of amortized payments followed by a balloon payment
Discount Points
points charged to t raise the lender's monetary return on a loan
Effective Yield
a return on investment calculation that considers the price paid, the time held, and the interest rate
Simple Assumption
the property is sold and the loan is assumed by the buyer without notification to the FHA or its agents
Formal Assumption
the property is not conveyed to a new buyer until the new buyer's creditworthiness has been approved by the FHA or its agents
Certificate of Reasonable Value
aka CRV; reflects the estimated value of the property as determined by the VA staff appraiser
A loan wherein the principal is all repaid in one lump sum payment at the end of the loan's life is know as a...
term loan
The last day of a loan's life is know as the...
maturity date
To determine the amount of loan payments by using the amortization table, you must know the following...
frequency of payments, interest rates, and amount of the loan
Amortization tables can be used by real estate agents to determine...
frequency of payment, interest rate, maturity, and the amount of the loan
A major negative of balloon loan financing is that the borrower may have difficulty...
meeting the final payment when it becomes due and refinancing when the final payment comes due
To know what portion of a 30-year, fully amortized loan would by paid off by the fourth year of the loan's life, one would consult a...
loan balance table
The FHA has been influential in bringing about acceptable of...
long-term amortization of loans and standardized construction techniquies
APR
annual percentage rate as calculated by the federal Truth in Lending Act by combining the interest rate with other costs of the loan
Credit Report
a report reflecting the creditworthiness of a borrower by showing past credit history
Fair Credit Reporting Act
federal law giving an individual the right to inspect his or her file with the credit bureau and correct any errors
Finance Charge
the total amount the credit will coast of the life of the loan
Liquid Asset
ass that is in case or readily convertible to cash
Redlining
a lender's refusal to make loans in certain neighborhoods
Regulation Z
federal regulations that implement the enforcement of the Truth in Lending Act
Truth in Lending Act
a federal law that requires certain disclosures when extending or advertising credit
Alienation Clause
aka due on sale clause; requires immediate repayment of the loan if ownership transfers
Automated Underwriting Systems
computerized systems for loan approval communication between a loan originator and the investor
Computerized Loan Origination
originating loans through the use of a networked computer system
Disintermediation
the result created when lenders are required to pay high rates of interest for deposits while receiving long-term income from low-interest-rate mortgage loans
Fannie Mae
a real estate industry nickname for the Federal National Mortgage Association
Federal National Mortgage Association
a company organized initially by the Federal government to by FHA loans
Freddie Mac
a real estate industry nickname for the Federal Home Loan Mortgage Corportation
Mortgage Broker
one who brings together borrowers and lenders
Mortgage Company
a firm that makes mortgage loans and then sells them to investors
Participation Certificates
a certificate representing an undivided interest in a Freddie Mac pool
Primary Market
the market in which lenders originate loans and make funds available to borrowers
Secondary Mortgage Market
a market in which mortgage loans can be sold to investors
Usury
charging an interest rate that is in excess of legal rate
Adjustable Rate Mortgage (ARM)
a mortgage on which the interest rate rises and falls with changes in prevailing interest rates
Affordable Housing Loan
loans targeted to first-time home buyers or low to medium income borrowers
Asset Blanket Mortgage
a mortgage secured by two or more properties
Construction Loan
short-term loan for new construction or remodeling to an existing structure
Equity Sharing
an arrangement whereby a part providing financing gets a portion of the ownership
Graduated Payment Mortgage
a mortgage with an interest rate and maturity that are fixed, but the monthly payment gradually raises, because the initially monthly payments are insufficient to fully amortize the loan
Negative Amortization
accrual of interest on a loan balance sot hat, as loan payments are made, the loan balance rises
Option
a right for a given period of time, to buy, sell, or lease property a specified price at terms
Package Mortgage
a mortgage that secures personal property in addition to real property
Reverse Mortgage
a mortgage wherein the lender pays the homeowner instead of the homeowner paying the lender
Seller Financing
a note accepted by a seller instead of cash
Wraparound Mortgage
a mortgage that encompasses any existing mortgages and is subordinate to them
THIS SET IS OFTEN IN FOLDERS WITH...