***Ch 15. Real Estate Finance***

Question 1

When a person buys a home and the lender requires the borrower to relinquish the title until their debt is paid

Answer 1

Title Theory

Question 2

The borrower keeps the title to the property while the same time providing the lender with a mortgage (lien) to secure the debt

Answer 2

Lien Theory

Question 3

Security instrument that the borrower signs to pledge the property as collateral

*pubic record

Answer 3

Mortgage

Question 4

Provided to the mortgagor to release the mortgage property as security and records it on public record providing constructive notice of release

Answer 4

satisfaction of mortgage

Question 5

Personal acknowledgement of debt with a promise to repay the debt created

Answer 5

Promissory Note

Question 6

When the mortgagee agrees to step down in priority to allow another mortgage to take a higher position

Answer 6

Subordination

Question 7

Outlines the mortgagors rights to repay some or all of the existing debt ahead of time

Answer 7

Prepayment Clause

Question 8

A mortgage clause that permits the lender to require immediate repayment of the entire balance of the loan in the event of default is known as

Answer 8

Acceleration Clause

Question 9

Once the acceleration of an entire debt has been demanded, how many days does the mortgagor have to pay the debt in full, before foreclosure can begin?

Answer 9

30 days

Question 10

The ability to recover from default by brining current payments due

-bank decides drop foreclosure

Answer 10

Right reinstate

Question 11

Prevents owners from selling mortgaged property without the lenders permission to prevent unauthorized transfers of title, is contained on most mortgages, and prevents mortgage assumption

• triggers an acceleration clause

Answer 11

Due on sale clause

Question 12

A borrowers down payment, and the market value of a property minus the value existing mortgages

Answer 12

Equity

Question 13

the percentage of the loan (mortgage) as it relates to the value of the property

Answer 13

Loan to value ratio

Question 14

price individuals pay to borrow money

Answer 14

Interest

Question 15

collecting and processing payments on behalf of the mortgagee

-the local lender will take out a small fee and send it to the investor

Answer 15

Loan servicing

Question 16

A depository account in a bank, trust company, title company, or attorney, credit union, or savings association with in Florida where funds are placed and held in trust until disposition is authorized

Answer 16

Escrow account

Question 17

prepaid interest charged by the lender at the time of closing; equal to 1 % of the loan amount

Answer 17

Discount point

Question 18

A commission paid to lenders for originating a loan also known as mortgage brokerage fee

Answer 18

Loan origination fee

Question 19

A written statement by a mortgagee verifying the balance due on the mortgage

Answer 19

Estoppel Certificate

Question 20

When a person buys a property and takes over the payments of an existing debt and does not sign a note or take personal liability

Answer 20

subject to mortgage

Question 21

When a person buys a property and takes over the payments of an existing debt and is required to qualify for the loan and sign a promissory note

Answer 21

Assumption of mortgage

Question 22

Substitution of a new contract of an existing contract between the same of different parties

Answer 22

Novation

Question 23

The amount of money borrowed for an amount of time

* not public record

Answer 23

Note

Question 24

A new mortgage that includes the unpaid principal balance of an existing debt

*due on sale clause prevents this from being used

Answer 24

Wraparound mortgage

Question 25

the sale property with seller financing that has a slight twist at closing, at closing the seller retains legal title with a promise to transfer legal title to the buyer at a later date. also known as a land contract ( vulnerable buyer)

Answer 25

Contract for deed

Question 26

First step in filing a foreclosure lawsuit. Public note of the suit commencing

Answer 26

Lis Pendens

Question 27

When is a mortgagors right to a property, or equity of redemption, completely extinguished during a foreclosure

Answer 27

once a certificate of title is issued

Question 28

when the mortgagor has the right to redeem the property by paying the debt in full prior to the foreclosure sale

Answer 28

Equity of redemption

Question 29

Occurs when a person defaults and instead of going through the foreclosure process, they simply give title to the lender *a non-judicial proceeding

Answer 29

Deed in lieu of foreclosure

Question 30

is a judicial process whereby the lender sues in court requesting a summary judgment to have the property sold by the courts to pay an outstanding debt.

Answer 30

Foreclosure