Ch.12 RE Finance

Question 1

Generally, a mortgage (or ________ is obtained by pledging property as collateral and promising to repay the loan with a schedule of payments to the mortgagee

Answer 1

deed of trust

Question 2

A mortgage is an ________ upon a property.

Answer 2

encumbrance

Question 3

In a _________ state, the borrower keeps legal title to the property during the period of the loan and the lender places a lien against the property.

Answer 3

Lien Theory

Question 4

What type of State is Florida

Answer 4

Lien Theory

Question 5

There are two types of security instruments for a real estate loan:

Answer 5

1. Mortgage

2. Note

Question 6

____________ is an alternate term used when one pledges to secure a loan with something of value. The property that the buyer is purchasing is hypothecated to secure the mortgage

Answer 6

Hypothecation

Question 7

A ________ is issued upon full payment of the loan to return title to the trustor

Answer 7

Deed of Reconveyance

Question 8

With a Deed of Trust , a third party trustee is involved and holds __________ to the property

Answer 8

Naked Title

Question 9

In a _______, the borrower gives title through a deed of trust to the lender, who is referred to as the beneficiary during the time of the loan. The borrower keeps a possessory right to the home and holds an Equitable Title.

Answer 9

Title Theory

Question 10

Title Theory State is also known as _________

Answer 10

Deed of Trust State

Question 11

Essential Elements of a Mortgage

Answer 11

1. Promise to Pay
2. Taxes & Insurance
3. Covenant of Good Repair

Question 12

Clauses in a mortgage

Answer 12

1. Acceleration Clause
2. Funding for Taxes/Insurance (Escrow)
3. Prepayment Penalty
4. Late Payment Fees
5. Defeasance Clause
   6 Protection of the Lenders Rights
6. Mortgage Insurance
7. Borrowers right to Reinstate after Accleration
8. Due on Sale
9. Condemnation
10. Hazardous Substances