Chapter 26

Question 1

Occurs when one party makes a loan to another party.

Answer 1

credit

Question 2

the lender in a credit transaction

Answer 2

creditor

Question 3

the borrower in a credit transaction

Answer 3

debtor

Question 4

Credit that does not require any security (collateral) to protect the payment of the debt.

Answer 4

unsecured credit

Question 5

The creditor in a credit transaction in which the debtor does not give security (collateral) to protect the payment of the debt.

Answer 5

unsecured creditor

Question 6

A situation in which a defendant does not have the money to pay a civil judgment.

Answer 6

judgment proof

Question 7

Security against repayment of a debt that lenders sometimes require; can be a car, a house, or other property. The property is subject to a security interest.

Answer 7

collateral

Question 8

Credit that requires security (collateral) that secures payment of the loan

Answer 8

secured credit

Question 9

A creditor who has a security interest in collateral

Answer 9

secured creditor (secured party)

Question 10

An interest that is created when a party borrows money from a lender and pledges personal property as security for repayment of the loan; An interest in real property that arises if an owner of real property borrows money from a lender and pledges the real property as security for repayment of the loan.

Answer 10

security interest

Question 11

An arrangement where an owner of real property borrows money from a lender and pledges the real property as collateral to secure the repayment of the loan

Answer 11

mortgage

Question 12

The owner-debtor in a mortgage transaction

Answer 12

mortgagor

Question 13

The creditor in a mortgage transaction

Answer 13

mortgagee

Question 14

A written document filed by a lender or trustee with the county recorder’s office, which is proof that a mortgage or note secured by real property has been paid

Answer 14

reconveyance (satisfaction of a mortgage)

Question 15

An instrument that is evidence of a borrower’s debt to the lender

Answer 15

note

Question 16

An instrument that gives a creditor a security interest in the debtor’s real property that is pledged as collateral for a loan.

Answer 16

deed of trust

Question 17

A party who holds legal title to real property where a deed of trust and note are used to obtain credit for the purchase of real property until the amount borrowed has been paid; A party who holds legal title to the trust corpus and manages the trust for the benefit of the beneficiary or beneficiaries

Answer 17

trustee

Question 18

The owner-debtor where a deed of trust and note are used to obtain credit for the purchase of real property.

Answer 18

trustor

Question 19

The lender-creditor of a three-party deed of trust in a real estate financing arrangement; A person or party designated in a will to receive all or a portion of the testator’s property at the time of the testator’s death; A person or party for whose benefit a trust is created; A person or party who is to receive the life insurance proceeds when the insured dies; A party who is designated to be paid funds by an issuing bank of a letter of credit.

Answer 19

beneficiary

Question 20

A statute that requires a mortgage or deed of trust to be recorded in the county recorder’s office of the county in which the real property is located.

Answer 20

recording statute

Question 21

A situation that occurs if a mortgage or deed of trust is not recorded in the county recorder’s office in the county in which the real property is located.

Answer 21

nonrecordation of a mortgage

Question 22

A situation that occurs when a debtor does not make the required payments on a debt

Answer 22

default

Question 23

A legal procedure by which a secured creditor causes the judicial sale of the secured real estate to pay a defaulted loan.

Answer 23

foreclosure sale

Question 24

A power stated in a mortgage or deed that permits foreclosure without court proceedings and sale of the property through an auction

Answer 24

power of sale

Question 25

A judgment of a court that permits a secured lender to recover other property or income from a defaulting debtor if the collateral is insufficient to repay the unpaid loan.

Answer 25

deficiency judgment

Question 26

A statute that prohibits deficiency judgments regarding certain types of mortgages, such as those on residential property.

Answer 26

anti-deficiency statute

Question 27

A right that allows the mortgagor to redeem real property after default and before foreclosure. It requires the mortgagor to pay the full amount of the debt incurred by the mortgagee because of the mortgagor’s default

Answer 27

right of redemption

Question 28

The specified period of time during which a state allows a mortgagor to redeem real property after foreclosure on the property because of default on a loan.

Answer 28

statutory period of redemption

Question 29

A contractor’s, laborer’s, supplier’s, or design professional’s statutory lien that makes the real property to which services or materials have been provided security for the payment of the services and materials.

Answer 29

construction lien (mechanic’s lien)

Question 30

Notice filed by a lienholder with the county recorder’s office in the county in which real property is located stating that a mechanic’s lien has been filed against the property.

Answer 30

notice of lien

Question 31

A written document signed by a contractor, subcontractor, laborer, or material person, waiving his or her statutory lien against real property.

Answer 31

lien release

Question 32

An arrangement in which the owner of real property sells property to a purchaser and extends credit to the purchaser.

Answer 32

land sale contract

Question 33

An arrangement in which a third party promises to be primarily liable with the borrower for the payment of the borrower’s debt.

Answer 33

surety arrangement

Question 34

A party in a surety arrangement who promises to be liable for the payment of another person’s debt. A surety is primarily liable on the debt, thus being equally liable on the debt with the borrower.

Answer 34

surety

Question 35

A party who signs an instrument and lends his or her name (and credit) to another party to the instrument

Answer 35

accommodation party

Question 36

Liability of a surety (co-debtor, co-signor) where the surety has co-signed another’s person’s debt and promises to be liable for paying the debt.

Answer 36

primarily liable

Question 37

An arrangement in which a third party promises to be secondarily liable for the payment of another’s debt

Answer 37

guaranty arrangement

Question 38

A person who agrees to pay a debt if the primary debtor does not; a third person who agrees to be liable in a guaranty arrangement. The guarantor is secondarily liable on the debt.

Answer 38

guarantor

Question 39

Liability of a guarantor in which the guarantor agrees to pay the principal debtor’s debt if the principal fails to pay the debt when it is due.

Answer 39

secondarily liable

Question 40

Procedures that can be used by plaintiffs to recover damages against defendants

Answer 40

collection remedies

Question 41

A prejudgment court order that permits the seizure of a debtor’s property while the lawsuit is pending; A situation in which a creditor has an enforceable security interest against a debtor and can satisfy the debt out of the designated collateral.

Answer 41

attachment

Question 42

A prejudgment court order that permits the seizure of a debtor’s property while a lawsuit is pending

Answer 42

writ of attachment

Question 43

A post-judgment court order that permits the seizure of the debtor’s property that is in the possession of the debtor.

Answer 43

execution

Question 44

A postjudgment court order that permits the seizure of the debtor’s property that is in the possession of the debtor.

Answer 44

writ of execution

Question 45

A post judgment court order that permits the seizure of a debtor’s property that is in the possession of third parties

Answer 45

garnishment

Question 46

The creditor in a garnishment situation whose property in the hands of a third party is being garnished

Answer 46

garnishor

Question 47

The third party in a garnishment situation who possesses property of the debtor who is subject to garnishment.

Answer 47

garnishee

Question 48

A postjudgment court order that permits the seizure of a debtor’s property that is in the possession of third parties

Answer 48

writ of garnishment

Question 49

A federal law that permits debtors who are subject to a writ of garnishment to retain a specified percentage or amount of their earnings.

Answer 49

Title III of the Consumer Credit Protection Act

Question 50

A federal administrative agency that is responsible for enforcing federal consumer financial protection statutes.

Answer 50

Consumer Financial Protection Bureau (CFPB)

Question 51

A federal statute that requires creditors to make certain disclosures to debtors in consumer transactions and real estate loans on the debtor’s principal dwelling.

Answer 51

Truth-in-Lending Act (TILA)

Question 52

Credit that is extended to natural persons for personal, family, or household purposes

Answer 52

consumer credit

Question 53

A regulation that sets forth detailed rules for compliance with the TILA.

Answer 53

Regulation Z

Question 54

The annual interest rate that a debtor will pay on a debt, which includes in its calculation many of the fees charged by the lender.

Answer 54

annual percentage rate (APR)

Question 55

A federal statute that extends the TILA’s coverage to lease terms in consumer leases.

Answer 55

Consumer Leasing act (CLA)

Question 56

A federal statute requiring that creditors promptly acknowledge in writing consumer billing complaints and investigate billing errors and that affords consumer-debtors other protection during billing disputes

Answer 56

Fair Credit Billing Act (FCBA)

Question 57

A federal statute that requires disclosures to consumers concerning credit card terms, adds transparency to the creditor-debtor relationship, and eliminates many of the abusive practices of credit card issuers

Answer 57

Credit Card Accountability Responsibility and Disclosure Act (Credit CARD Act)

Question 58

A rule that permits all credit card companies with whom a card holder has a credit card to raise the interest on their card if the card holder is late in making a payment to any credit card company

Answer 58

universal default rule

Question 59

A federal statute that protects a consumer who is the subject of a credit report by setting rules for credit bureaus to follow and permitting consumers to obtain information from credit reporting businesses.

Answer 59

Fair Credit Reporting Act (FCRA)

Question 60

Information about a person’s credit history that can be secured from a credit reporting agency

Answer 60

credit report

Question 61

A federal statute that gives consumers the right to obtain one free credit report each year from credit reporting agencies, permits consumers to purchase their credit score, and allows consumers to place fraud alerts in their credit files.

Answer 61

Fair and Accurate Credit Transactions Act (FACTA)

Question 62

A federal act that protects consumer-debtors from abusive, deceptive, and unfair practices used by debt collectors.

Answer 62

Fair Debt Collection Practices Act (FDCPA)

Question 63

A federal statute that prohibits discrimination in the extension of credit based on sex, marital status, race, color, national origin, religion, age, or receipt of income from public assistance programs.

Answer 63

Equal Credit Opportunity Act (ECOA)

Question 64

An amendment to the TILA that requires disclosure of certain credit terms on credit card and charge card solicitations and applications.

Answer 64

Fair Credit and Charge Card Disclosure Act