Chpt 14, Real Estate Financing

Question 1

The lender in a mortgage loan

Answer 1

Mortgagee

Question 2

The act of signing a loan instrument

Answer 2

Executing

Question 3

A borrowers personal pledge to repay a debt according to agreed upon terms

Answer 3

Promissory note

Question 4

The pledge of a property as security for payment of a loan without actually surrendering the property itself

Answer 4

Hypothecation

Question 5

A financing instrument that conveys bare legal title on behalf of a beneficiary, but no right of possession

Answer 5

Deed of trust

Question 6

A charge for the use of money

Answer 6

Interest

Question 7

The act of charging interest in excess of the maximum legal rate

Answer 7

Usury

Question 8

A charge imposed by lenders to adjust for the difference between a loans interest rate and the yield an investor demands

Answer 8

Discount points

Question 9

The part of a financing agreement that gives the lender the right to declare the entire debt due and payable immediately on default

Answer 9

Acceleration clause

Question 10

Percentage of the loan amount charged to borrower for the costs of generating a loan

Answer 10

Loan origination fee

Question 11

The part of a financing agreement that requires the lender to execute a satisfaction or release when the note has been paid in full

Answer 11

Defeasance clause

Question 12

A provision in a financing agreement that permits the lender to declare the entire debt due immediately in the event the property is sold

Answer 12

Alienation clause

Question 13

A devise by which one lender agrees to change the priority of its loan relative to another lender

Answer 13

Subordination agreement

Question 14

A legal procedure in which property pledged as security is taken from the borrower to satisfy the debt

Answer 14

Foreclosure

Question 15

A document by property is transferred to the lender by mutual agreement rather than by mutual agreement rather than by lawsuit

Answer 15

Deed in lieu of foreclosure

Question 16

A borrower’s option of reinstating a defaulted debt prior to the foreclosure sale by paying the amount due

Answer 16

Equitable right of redemption

Question 17

A right established by state law that permits a defaulted borrower to recover property within a limited time after a foreclosure sale

Answer 17

Statutory right of redemption

Question 18

A procedure for obtaining the unpaid balance of a debt where the foreclosure sale does not generate sufficient funds

Answer 18

Deficiency judgement

Question 19

Idea that a mortgage is purely a lien in real property

Answer 19

Lien theory

Question 20

Concept that the borrower actually gives legal title to the lender (or other party) and retains equitable title

Answer 20

Title theory

Question 21

A borrowers legal status on a deed of trust

Answer 21

Trustor

Question 22

Fee that a borrower pays on any payment made ahead of schedule (if allowed)

Answer 22

Prepayment penalty

Question 23

The lenders legal status on a deed of trust

Answer 23

Beneficiary

Question 24

On a deed of trust, a third party who holds the deed as security for the loan

Answer 24

Trustee

Question 25

The borrower in a mortgage loan clause

Answer 25

Mortgagor