(Ch. 14) Vocab (Mortgages And Financing)

Question 1

A federal agency which provides special assistance for federally aided housing programs; active in the secondary money market for government subsided housing programs; “Ginnie Mae” (14-182)

Answer 1

Government National Mortgage Assn. (GNMA)

Question 2

Loaning money to consumers in the hope and expectation they will default and the lender will be able to take the collateral.

Answer 2

Predatory Lending

Question 3

A clause in a mortgage or installment contract stating that upon default of payment due, immediate and full payment of the balance of the obligation becomes due and payable. (14-170)

Answer 3

Acceleration Clause

Question 4

Mortgage repaid before it becomes due

Answer 4

Prepayment

Question 5

The interest rate changes periodically based on an index.

Answer 5

Adjustable Rate Mortgage

Question 6

Payments begin at a lower level than with a standard, fixed rate mortgage of the same amount. Then, the payments level off, usually after five, seven or ten years at a fixed payment which will be higher than the standard fixed rate loan.

Answer 6

Graduated Payment Mortgage (GPM)

Question 7

Financial market where loans are made directly from the lender to the buyer.

Answer 7

Primary Mortgage Market

Question 8

Type of acceleration clause that makes all future payments due when property is sold.

Answer 8

Alienation Clause

Question 9

The employer of an agent or broker. Also, sum of the money owed as a debt upon which interest is calculated.

Answer 9

Principal

Question 10

The gradual paying off of a debt on an installment basis

Answer 10

Amortization

Question 11

Insurance that mortgage lenders require from most homebuyers who take out a mortgage loan in an amount in excess of 80% of a homes appraised value.

Answer 11

Private Mortgage Insurance

Question 12

To pledge property as security for a loan without giving possession of the property to the lender

Answer 12

Hypothecate

Question 13

Buyer personally obligates himself to payment of the entire outstanding debt and becomes a consigner on the seller’s note.

Answer 13

Assignment of Mortgage

Question 14

The primary financing obligation and makes the mortgagor personally liable for the debt.

Answer 14

Promissory Note

Question 15

Rate of interest determined by the IRS to be appropriate when the interest rate set in a transaction is considered to have been set artificially low or when no interest rate has been stated.

Answer 15

Imputed Interest

Question 16

Buyer personally obligated himself to payment of the entire outstanding debt

Answer 16

Assumption of Mortgage

Question 17

Given by a purchaser to a seller in lieu of purchase money.

Answer 17

Purchase Money Mortgage

Question 18

The major source of mortgage money for residential loans; savings and loan, federal and state banks and life insurance companies

Answer 18

Institutional Lender

Question 19

Mortgage whose payout is longer than the term for which the loan was granted.

Answer 19

Balloon Mortgage (Partial Amortized)

Question 20

Unlawful practice by which a lender or an insurance company refuses to approve the loan applications or grant insurance in certain geographical areas

Answer 20

Redlining

Question 21

Any mortgage that is subordinate to another

Answer 21

Junior Mortgage

Question 22

Creates a lien on two or more parcels of property that are pledged as security for a debt.

Answer 22

Blanket Mortgage

Question 23

Allows the developer to sell an individual parcel or unit over time and deliver free and clear title to a purchaser without satisfying the entire blanket mortgage.

Answer 23

Release Clause

Question 24

Financing agreement often providing for a relatively small down payment, with the balance of the purchase price generally payable in monthly installments of principal and interest to the seller (vendor)

Answer 24

Land Contract

Question 25

Short term, financing of real estate and is available for any type of real property. Used to purchase residential property when a property owner has signed a contract for purchase of one property in anticipation of selling another currently held property.

Answer 25

Bridge Loan

Question 26

Upon full payment mortgage is given to the mortgagor, stating that the obligation to the mortgagee has been fulfilled

Answer 26

Release of Mortgage

Question 27

The ratio between the amount borrowed and the sale price or appraised value of the property, whichever is LOWER

Answer 27

Loan-to-Value Ratio

Question 28

The homeowner continues to live in the property and borrows each month from a lender until a ceiling amount or loan to value ratio is reached. The loan balance increases each month by the amount borrowed plus interest on the entire debt.

Answer 28

Reverse Annuity Mortgage (RAM)

Question 29

The grant of an interest in real or personal property with a provision for the release of that property upon repayment of the debt in full.

Answer 29

Mortgage

Question 30

A mortgage which is not FHA insured or VA guarantee

Answer 30

Conventional Mortgage

Question 31

An instrument used when a lien is paid off and satisfied on the records

Answer 31

Satisfaction Piece

Question 32

Uses its own borrowed funds, using a credit line established at a warehouse bank to borrow the loan amount on a short term loan basis for settlement.

Answer 32

Mortgage Banker

Question 33

Subordinate to a first mortgage and, in the event of foreclosure, the mortgage would not be paid until the first mortgage has been paid in full

Answer 33

Second Mortgage

Question 34

Bringing the lender and borrower together for a fee and does not advance it's own funds to close the loan but facilitates it through an institutional lender

Answer 34

Mortgage Broker

Question 35

Provides that the rights of the mortgagee will come to an end, if and when the debt is repaid in full.

Answer 35

Defeasance Clause

Question 36

Paid by the borrower to the FHA on insured loans. Can be paid in cash at closing or added to the loan amount

Answer 36

Mortgage Insurance Premium (MIP)

Question 37

If the bank that lends a home buyer money to buy a house, then sells the mortgage after it has been originated.

Answer 37

Secondary Mortgage Market

Question 38

Personal judgement against the mortgagor for any deficiency between the foreclosure sale price and amount of the mortgage debt.

Answer 38

Deficiency Judgment

Question 39

Lender agrees to allow a subsequently acquired mortgage to have legal priority.

Answer 39

Subordination Clause

Question 40

Lenders will not make the loan unless they are compensated for the difference in the form of a one-time, up front fee

Answer 40

Discount Points

Question 41

Interest rate in excess of the legally permitted rate.

Answer 41

Usury

Question 42

The lender who receives the mortgage

Answer 42

Mortgagee

Question 43

A clause in a conventional mortgage calling for payment of the entire principal balance in full in the event a transfer of title to the mortgaged property takes place

Answer 43

Due-on-Sale Clause

Question 44

A loan guaranteed by the US Department of veteran affairs under the serviceman's rejustable act of 1944 in later

Answer 44

VA Guaranteed Mortgage

Question 45

Private corporation that provides a secondary mortgage market for federal savings associations. It buys conventional, VA, and FHA mortgages, pools them and uses them as security to sell bonds PCs in the open market.

Answer 45

Federal Home Loan Mortgage

Question 46

A vehicle used to carry a business, with its owners having liability only to the extent of their stock ownership; considered being in individual or a separate entity.

Answer 46

Corporation

Question 47

Held by the seller of the property tied with the amount owed on the seller's first mortgage.

Answer 47

Wraparound Mortgage

Question 48

Third-party agreement under which one party is released from an obligation and another party is substituted

Answer 48

Novation

Question 49

Written to provide for additional monies to be loaned in the future for such things as additions, alterations or improvements to the property without rewriting the mortgage.

Answer 49

Open End Mortgage

Question 50

Real property estate loan secure by real property and personal property.

Answer 50

Package Mortgage

Question 51

Provide insurance protection to private lenders who provide mortgage financing to homebuyers.

Answer 51

FHA Insured Loan

Question 52

Specified in the loan agreement and generally reflects the lender's cost of funds.

Answer 52

Index

Question 53

Part of the competitive pricing of mortgages and represents the lenders' cost of doing business and profit.

Answer 53

Margin

Question 54

Limits both the adjustment at the adjustment period and the total adjustment over the lifetime of the loan.

Answer 54

Rate caps

Question 55

Sets the maximum amounts for payments and protects the mortgagor against the possibility for individual payments that he or she cannot afford.

Answer 55

Payment Cap

Question 56

Index rises while the payment is fixed.

Answer 56

Negative amortization

Question 57

The agreement with the lender maybe a clause that allows the borrower to convert the ARM to a fixed rate mortgage at designated times.

Answer 57

Conversion

Question 58

A borrower who gives the mortgage

Answer 58

Mortgagor

Question 59

Transfer of a mortgage to a third party

Answer 59

Assignment

Question 60

Receiver of a mortgage transfer

Answer 60

Assignee

Question 61

Difference between the value of a property and anything owed on it.

Answer 61

Equity

Question 62

Buyer agrees to take over the seller's remaining mortgage payments, after having him paid him the equity in the property.

Answer 62

"Subject to" the Mortgage

Question 63

To determine whether borrowers will qualify for the amount they have applied for.

Answer 63

Qualifying ratios

Question 64

Housing expenses (PITI) should not exceed approximately 28% of monthly gross income.

Answer 64

Housing ratio

Question 65

PITI combined with other long-term debt, expenses should not exceed 36% of monthly gross

Answer 65

The total debt ratio

Question 66

Contractual promise by the lender to the buyer promising to provide the funds necessary complete settlement

Answer 66

Commitment

Question 67

To advise borrowers of the true cost of borrowing by listing loan costs and disclosing the annual percentage rate of the loan

Answer 67

Regulation Z statement

Question 68

Same rate of interest for the entire term of the loan

Answer 68

Fixed rate mortgage

Question 69

Loans that are not insured or guaranteed by any agency of the federal government, although they may be insured by private mortgage companies.

Answer 69

Conventional Loans

Question 70

Enables the buyer to withdraw from the agreement without any penalty (such as forfeiture of earnest money deposits) in the event the FHA appraisal is lower than the price the buyer agreed to pay.

Answer 70

Amendatory clause

Question 71

Certificate which will show the appraised value of the property for loan purposes.

Answer 71

Certificate of Reasonable Value

Question 72

One that provides for the gradual paying off of a debt by periodic installments.

Answer 72

Amortized Mortgage

Question 73

Requires the borrower to pay a constant amount, usually monthly. The amount of each payment is first credited to the interest due, and then the balance is applied to reduce the principal of the loan.

Answer 73

Fully amortized loan

Question 74

Short or medium term loan requiring the payment of interest only during its term. The total amount of the principal is repayable at the end of the term.

Answer 74

Straight Mortgage

Question 75

Form of residential financing in which the lender offers the borrower a reduced rate of interest in return for a share of the increase in value over a specified term.

Answer 75

Shared Appreciation Mortgage (SAM)

Question 76

Home builder pays cash to a lender, who in turn makes a loan to the buyer of the builder's property at a below-market interest rate.

Answer 76

Buy Down

Question 77

Provides money for the development of a real estate project.

Answer 77

Construction Loan

Question 77

The difference between the two rates in a wraparound mortgage

Answer 77

Arbitrage

Question 77

Privately owned corporation that specializes in buying mortgage loans, mostly from mortgage bankers.

Answer 77

Federal Nation Mortgage Association (FNMA)

Question 77

Federal agency that that operates as part of the HUD to make loans available in areas of higher risk.

Answer 77

Government National Mortgage Association (GNMA)

Question 78

Institutions such as insurance companies, pension funds, Fannie Mae, Ginnie Mae, Freddie Mac or individuals who purchase already existing mortgages.

Answer 78

Secondary lending

Question 79

Facilitate and process all preliminary details necessary to the creation of a mortgage

Answer 79

Originating

Question 80

Handle all details of administrating the loan after it has been originated until it is satisfied,

Answer 80

Servicing

Question 81

Real estate mutual funds that allow small investors to invest in large commercial real estate projects.

Answer 81

Real Estate Investment Trust (REITs)

Question 82

When the contract becomes binding, the buyer thus has an equitable interest in the real estate.

Answer 82

Equitable title

Question 83

Third person whose instructions are to deliver the deed to the buyer after the contract price has been met.

Answer 83

Escrow agent

Question 84

Under this type of financing the owner of an industrial or commercial property who wants capital to use in his business sells the property to an investor and in turn leases it back for a long term

Answer 84

Sale-Leaseback

Question 85

Lessee (tenant) required to pay all real estate taxes, property insurance, repairs and so forth, so that the entire rental paid is net to the landlord

Answer 85

Net lease