Chapter 26: Credit, Real Property Financing, and Debtors' Rights

Question 1

credit

Answer 1

a situation in which one party makes a loan to another party

Question 2

unsecured credit

Answer 2

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

Question 3

judgment proof

Answer 3

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

Question 4

secured credit

Answer 4

credit that requires security (collateral) to secure payment of the loan

Question 5

security interest

Answer 5

an interest that is created when a party borrows money from a lender and pledges personal property as security for repayment of the loan

Question 6

mortgage

Answer 6

an interest in real property given to a lender as security for the repayment of a loan

Question 7

reconveyance / satisfaction of a mortgage

Answer 7

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

Question 8

note

Answer 8

an instrument that evidences the borrower’s debt to the lender; a debt security with a maturity of five years or less

Question 9

deed of trust

Answer 9

an instrument that gives a creditor a security interest in the debtor’s property that is pledged as collateral

Question 10

beneficiary

Answer 10

the lender-creditor of a three-party deed of trust in a real estate financing arrangement

Question 11

recording statute

Answer 11

a state 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

Question 12

nonrecordation of a mortgage

Answer 12

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

Question 13

default

Answer 13

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

Question 14

foreclosure sale

Answer 14

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

Question 15

power of sale

Answer 15

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

Question 16

deficiency judgment

Answer 16

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

Question 17

anti-deficiency statute

Answer 17

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

Question 18

first purchase money mortgage

Answer 18

a mortgage (or deed of trust and note) taken out to purchase a house

Question 19

right of redemption

Answer 19

the right of a mortgagor to recover real property that is collateral for a mortgage after the debtor’s default and before foreclosure by paying the mortgagee the full amount of the debt plus costs

Question 20

statutory period of redemption

Answer 20

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

Question 21

construction lien / mechanic’s lien

Answer 21

a contractor’s, laborer’s, and material person’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

Question 22

notice of lien

Answer 22

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

Question 23

release of lien / lien release

Answer 23

a written document signed by a contractor, subcontractor, laborer, or material person, waiving their statutory lien against real property

Question 24

surety arrangement

Answer 24

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

Question 25

surety / co-debtor / accommodation party / co-signor

Answer 25

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

Question 26

guaranty arrangement / guaranty contract

Answer 26

an arragement in which a third party promises to be secondarily liable for the payment of another's debt

Question 27

guarantor

Answer 27

a person who agrees to pay a debt if the primary debtor does not. they are secondarily liable on the debt

Question 28

collection remedies

Answer 28

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

Question 29

writ of attachment

Answer 29

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

Question 30

writ of execution

Answer 30

a post judgment court order that permits the seizure of the debtor's property that is in the possession of the debtor

Question 31

writ of garnishment

Answer 31

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

Question 32

garnishor

Answer 32

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

Question 33

garnishee

Answer 33

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

Question 34

title iii of the consumer credit protection act

Answer 34

a title of a federal statute that allows debtors who are subject to a writ of garnishment to retain the greater of (1) 75% of their weekly disposable earnings (after taxes) or (2) an amount equal to 30 hours of work paid at federal minimum wage

Question 35

consumer financial protection

Answer 35

a set of government laws that protect consumer-debtors in credit transactions

Question 36

consumer financial protection bureau (cfpb)

Answer 36

a federal regulatory agency that has broad authority to regulate consumer financial products and services

Question 37

truth-in-lending act (tila)

Answer 37

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

Question 38

consumer credit

Answer 38

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

Question 39

regulation z

Answer 39

a regulation that sets forth detailed rules for compliance with the tila

Question 40

consumer leasing act (cla)

Answer 40

an amendment to the truth-in-lending act (tila) that extends the tila's coverage to lease terms in consumer leases

Question 41

fair credit billing act (fcba)

Answer 41

a federal statute that regulates billing errors involving consumer credit and requires that creditors prompty acknowledge in writing consumer billing complains and investigate billing errors

Question 42

credit card accountability responsibility and disclosure act (credit card act)

Answer 42

a federal statute that requires disclosures to consumers, adds transparency to the creditor-debtor relationship, and eliminates many of the abusive practces of credit card issuers

Question 43

universal default rule

Answer 43

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

Question 44

fair credit reporting act (fcra)

Answer 44

an amendment to the truth-in-lending act (tila) that protects consumers who are subjects of a credit report by setting out guidelines for credit bureaus

Question 45

credit report

Answer 45

information about a person's credit history that can be secured from a credit bureau

Question 46

fair and accurate credit transactions act (facta)

Answer 46

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

Question 47

fair debt collection practices act (fdcpa)

Answer 47

a federal statute that protects consumer debtors from abusive, deceptive, and unfair practices used by debt collectors

Question 48

equal credit opportunity act (ecoa)

Answer 48

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

Question 49

fair credit and charge card disclosure act

Answer 49

an amendment to the truth-in-lending act (tila) that requires disclosure of certain credit terms on credit- and charge-card solicitations and applications