Chapter 12 keywords Flashcards
Acceleration clause
The acceleration clause allows a lender to declared the entire outstanding balance due and payable immediately whenever the default occurs. Without having disability, the lender would have to sue each time to borrow defaulted month after month.
Assumption
The due on sale clause prevents an assumption of the mortgage by an unqualified borrower. Interested in assuming existing loan would have to apply and be approved by the lender.
Blanket mortgage
A blanket mortgage is a single mortgage given by a borrower that pledges two or more parcels as security for a loan when constructing several properties in the same area, builders and developers commonly used a blanket mortgage
A black mortgage typically contains a partial release clause, thereby allowing the borrower to pay a specified amount of release a single lot from the blanket so we can be sold to buy upon completion of construction
Buydown
Discount points are an upfront payment to the lender and exchange for lower mortgage rates referred to as a buy down
Contract for Deed(land contract)
The contract for deed is unknown as a land, contract, installment, sales, contract agreement for deed or conditional sales contract
A contract for is an agreement between a property, owner and potential buyer in which the owner agrees to deliver a deed to the purchaser. After certain conditions have been met. The buyer is given possession and use of the property during the term of the contract for deed the buyer is entitled to possession of the property and is required to keep the property insured and pay the real estate taxes .
Defeasance clause
The defeasance clause provides protection for the borrow, as it requires a lender to acknowledge performance by the borrower. The defeasance clause holds the lender rights and check as long as the borrower performs as agreed in the note and mortgage it’s the only legally necessary clause and a mortgage.
A deed in lieu of foreclosure
A deed in lieu of foreclosure in alternative to a foreclosure sale a mortgagor who is in default, can voluntarily deed a property to lien holder in lieu of payment of a debt. The lien holder may not be willing to accept the title however as they would have to assume liability for any other liens against the property.
Discount points
Discount points are an upfront payment to a lender and exchange for a lower mortgage rate referred to as a buydown. This decreases the monthly mortgage payment for the life of the loan. One discount point is an upfront payment of 1% of the loan amount not the purchase price that is paid at closing.
Due on sale clause
Due on sale clause or alienation clause in a loan, or promissory note, states that the full balance may be called due on sale upon transfer of ownership to the property use to secure the note
This clause prevents a borrow from transferring any interest in the mortgage property without permission of the lender
Equity
Equity is the difference between the current market value of a property and the amount owner still owes on the mortgage
Equity of redemption
Equity over redemption is the right of a borrower to cure the default before foreclosure rather than lose the property the borrower must pay the entire balance of the debt plus any interest in cost that has accrued, since the default equity of redemption exist in Florida up to the moment of foreclosure
Escrow
An escrow or impound account is established to hold money collected by the lender from the borrower to pay hazard insurance and property taxes. When they become due by insurance that the taxes and insurance will be paid on time to escrow account, protects the lender from tax liens and an insured losses that the borrower can’t repay
Estoppel certificate
When a mortgage property is sold, and the mortgage on the property is to remain, the buyer would want to have the seller verify the current loan balance the seller can obtain a stopple certificate, also called an estoppel letter from the lender, which is a letter that verifies the principal balance owed on the loan The seller must request this information since the lender will not provide it to anauthorized parties with permission from the original borrower
Hypothecation
The pledge of property of security for a loan is called hypothecation
Interest
Mortgage interest is the compensation of our pay, a lender for the use of the lenders money to purchase a property. The interest rate is a percentage of the loan that must be paid in addition to the loan amount or principal.
Land development loans
There are two kinds:
. Blanket mortgage: a blanket mortgage is a single mortgage given by a borrower that pledges two or more parcels as security for a loan when construction several properties in the same area, builders and developers commonly use
A blanket mortgage
. Take out commitment.: take out commitment as a type of mortgage, purchase agreement under a takeout commitment. A long-term investor agrees to buy a mortgage from a mortgage banker at a specific date in the future.
Lien theory
Fla is a lien theory. State lien theory allows a borrow to retain the ownership of the property during the loan period the lender records, the mortgage which creates a lien against the property and they’re the lien theory the foreclosure process is more involved than under title theory
Lis pendant
Latin for pending litigation
Loan origination fee
Mortgage lender typically charge a loan origination fee to pay for the administrative cost of processing the loan. The loan origination fee pays the lenders overhead for facilities, salaries, and commissions.
Low origination fees are expressed as points one point is 1% of the amount Bart express in dollars
The loan origination fee is a one time charged up must be paid by the borrower and is an additional cost necessary to obtain. The loan anywhere from one to four points is not uncommon.
Loan servicing
Loan servicing is administration of a loan from the time the money is borrowed until the loan is paid off (satisfied)
Loan servicing includes such things as sending monthly payment statements, collecting payments, maintaining records and balances managing any escrow funds collecting and paying taxes forward and proceeds to the mortgage holder and following up on the delinquencies
Loan to value ratio
The loan to value ratio LTV is the percentage of the properties valued that is represented by the loan the higher the loan to value ratio is the higher. The risk of loss is to the lender, in the event of a foreclosure, the borrower also has a higher risk since increased payments, make the risk of default higher
To calculate the LTV ratio. The loan amount is divided by the lesser of the purchase price or appraise value as shown in the final formula. :
Loan amount/ purchase price or appraised value= LTV ratio
Mortgage
A mortgage accompanies a note and is security for its repayment. A mortgage is the borrower pledge of the mortgage property to secure the repayment of the notes.
Mortgagee
Is the lender and he owns (holds) both the note and mortgage. He receives/takes the mortgage from the mortgagor
The mortgagor
The mortgage or gives the mortgage to mortgage it is the borrower
