Study guide chapter 12

Question 1

Promissory Note:

Answer 1

A legal instrument that specifies the amount of the mortgage loan, the interest rate, loan term, and repayment schedule. It is the evidence of debt and
the promise of repayment. (pg 208)

Question 1

Lien theory state-

Answer 1

A state where the mortgagor (buyer) holds title of the property. Florida is a Lien theory state (pg 208-209)

Question 2

Letter of Satisfaction (Satisfaction of Mortgage):

Answer 2

A document generated by the lender when a mortgage loan is paid off. The le er is sent by lender within 60 days of final payment and the document must be recorded in public records to off-set the mortgage lien. (pg 209)

Question 3

Exculpatory Clause:

Answer 3

A clause in a mortgage that limits the lender’s rights in a foreclosure to the amount received from the sales proceeds and prohibits the lender from seeking a deficiency judgement. (pg 211)

Question 4

Escalator Clause:

Answer 4

The clause found in a mortgage that allows the lender to increase the interest rate based on an occurrence of an event (pg 211)

Question 5

Equity of Redemption:

Answer 5

The right exercised by the mortgagor to redeem a property by paying the amount owed to the lender prior to foreclosure sale. (pg 218)

Question 6

Foreclosure sales proceeds/Surplus foreclosure funds:

Answer 6

Money overage left after all liens are paid after a foreclosure sale. The overage amount must be paid to the
mortgagor. (pg 219)