Key Terms Flashcards
(111 cards)
1
Q
A mortgage is a(n) ___ on real estate.
A
Voluntary lien
2
Q
A conditional transfer or pledge of real estate as security for the payment of debt.
A
Mortgage
3
Q
The borrower in a mortgage loan
A
Mortgagor
4
Q
The lender in a mortgage loan
A
Mortgagee
5
Q
In a mortgage, the ___ pledges ___ to the ___ as a security for the debt.
A
Mortgagor pledges land to the mortgagee
6
Q
To pledge property as security for an obligation or loan without giving up possession of it
A
Hypothecation
7
Q
The borrower’s personal promise to repay a debt according to agreed terms.
A
Promissory note
8
Q
The ___ is also called a note or financing instrument
A
Promissory note
9
Q
The ___ exposes all the borrower’s assets to claims by secured creditors
A
Promissory note
10
Q
A financing instrument that states the terms of the underlying obligation is signed by its maker and is negotiable (transferable to a third party)
A
Promissory note
11
Q
A(n) ___ generally states the amount of the debt, the time and method of payment, and the rate of interest.
A
Promissory note
12
Q
A promissory note generally states what 4 things?
A
1) amount of the debt
2) time of payment
3) method of payment
4) interest rate
13
Q
A note used as a debt instrument without any related collateral
A
Unsecured note
14
Q
___ are used by banks and other lenders to extend short term personal loans
A
Unsecured notes
15
Q
A written promise or order to pay a specific sum of money that may be transferred by endorsement or delivery. The transferee then has the original payee’s right to payment.
A
Negotiable instrument
16
Q
A note is a(n) ___ like a check or bank draft
A
Negotiable instrument
17
Q
The lender who holds the note
A
Payee
18
Q
The ___ may transfer the right to receive payment to a third party by signing over or delivering the instrument to the third party.
A
Payee
19
Q
The payee may transfer the right to receive payment to a third party by ___ or ___ the ___ to the third party.
A
signing over or delivering the instrument
20
Q
A charge made by a lender for the use of money
A
Interest
21
Q
Payment made at the beginning of each period
A
Payment in advance
22
Q
Payment made at the end of a period
A
Payment in arrears
23
Q
Charging interest in excess of the maximum rate allowed by law
A
Usury
24
Q
Charging interest at a higher rate than the maximum rate established by state law
A
Usury
25
The processing of a mortgage application
Loan origination
26
When a mortgage loan is originated, a(n) ___ fee is charged by most lenders to cover the expenses involved in generating the loan.
Loan origination fee
27
A fee charged to the borrower by the lender for making a mortgage loan.
Loan origination fee
28
The loan origination fee is usually computed as a percentage of the __.
Loan amount
29
A unit of measurement used for various loan charges; one point = 1% of the amount of the loan.
Discount Point
30
One discount point = ___% of the amount of the loan
1
31
If the borrower repays the loan before the end of the term, the lender collects less than the anticipated interest. For this reason, some mortgage notes contain a(n) ___, which requires the borrower pays a prepayment penalty against the unearned portion of the interest for any payments made ahead of schedule.
Prepayment clause
32
If the borrower repays the loan before the end of the term, the lender collects less than the anticipated interest. For this reason, some mortgage notes contain a prepayment clause, which requires the borrower pays a(n) ___ against the unearned portion of the interest for any payments made ahead of schedule.
Prepayment penalty
33
A charge imposed on a borrower who pays off the loan principal early.
Prepayment penalty
34
Penalty that compensates the lender for interest and other charges that would otherwise be lost due to a borrower paying off a loan's principal early
Prepayment penalty
35
An instrument used to create a mortgage lien by which the borrower conveys title to a trustee, who holds it as security for the benefit of the note holder (lender)
Deed of trust
36
A deed of trust is also called a(n) ___.
Trust deed
37
In a deed of trust, who is the note holder that benefits?
The lender
38
A(n) ___ conveys naked title or bare legal title without the right of possession.
Deed of trust
39
A deed of trust conveys naked title or bare legal title without the right of ___.
Possession
40
In a deed of trust, the trustee holds title on behalf of the lender who is called the ___.
Beneficiary
41
A lender in a deed of trust loan transaction
Beneficiary
42
A beneficiary is also called a(n) ___.
Legatee
43
In a deed of trust, the borrower is called the ___.
Trustor
44
The clause in a mortgage or deed of trust that can be enforced to make the entire debt due immediately if the borrower defaults on an installment plan or other covenant
Acceleration Clause
45
Clause typically included in a mortgage or deed of trust that assists the lender in foreclosure
Acceleration clause
46
By the provisions of the ___ in most mortgage documents, the lender is required to execute a satisfaction of mortgage when the note has been fully paid.
Defeasance clause
47
By the provisions of the defeasance clause in most mortgage documents, the lender is required to execute a(n) ___ when the note has been fully paid.
satisfaction of mortgage
48
Is also called a release of mortgage
satisfaction of mortgage
49
Is also called a mortgage discharge
satisfaction of mortgage
50
A document acknowledging the payment of a mortgage debt
satisfaction of mortgage
51
The satisfaction of mortgage document returns all interest in real estate to the ___.
Borrower
52
A document that transfers all rights given to a trustee under a deed of trust loan back to the grantor after the loan has been fully repaid
Release deed
53
Also called a deed of reconveyance
Release deed
54
The release deed conveys the same ___ and ___ that the trustee was given under the deed of trust
Rights and powers
55
Some lenders include a(n) ___ to prevent a future purchaser of property from being able to assume a loan if the original interest rate is low.
Alienation clause
56
Also called a resale clause
Alienation clause
57
Also called a due-on-sale clause
Alienation clause
58
Also called a call clause
Alienation clause
59
The clause in a mortgage or deed of trust that states that the balance of the secured debt becomes immediately due and payable at the lender's option if the property is sold by the borrower.
Alienation clause
60
Clause that prevents the borrower from assigning debt without the lender's approval
Alienation clause
61
A(n) ___ provides that when property is sold, the lender may either declare the entire debt due immediately or permit the buyer to assume the loan at the current market interest rate.
Alienation clause
62
Also called an impound account
Escrow account
63
Also called a trust account
Escrow account
64
Trust account established by a sponsoring broker under the provisions of the license law for the purpose of holding funds on behalf of the sponsoring broker's principal or some other person until the consummation or termination of a transaction
Escrow account
65
If a seller wants to be completely free of the original mortgage loan, the sellers, buyers, and lender must execute a(n) ___ in writing.
Novation agreement
66
Substituting a new obligation for an old one
Novation
67
Substituting new parties to an existing obligation
Novation
68
The ___ makes the buyer solely responsible for any default on a loan, and frees the seller of any liability for the loan.
Novation
69
___ gives constructive notice to the world of the borrower's obligations.
Recording
70
___ establishes the lien's priority
Recording
71
A mortgage on land that has no prior mortgage lien is a(n) ___.
First mortgage
72
If an owner executes another loan for additional funds on a land or property that already has an existing mortgage, the new loan becomes a(n) ___ when recorded
Second mortgage
73
Also called a junior lien
Second mortgage
74
The priority of mortgage or trust deed liens may be changed by a(n) ___.
Subordination agreement
75
Agreement in which the first lender subordinates its lien to that of the second lender.
Subordination agreement
76
Also called a contract for deed
Land contract
77
Also called an installment contract
Land contract
78
A contract for the sale of real estate whereby the purchase price is paid in periodic installments by the purchaser, who is in possession of the property even though title is retained by the seller until all payments are received in full.
Land contract
79
In a land contract, the ___ is also called the vendor.
Seller
80
In a land contract, the ___ retains legal title to the property during the term of the contract.
Seller
81
In a land contract, the buyer is granted ___ and ___.
Equitable title
Possession
82
At the end of the loan term for a land contract, in the event where the seller fails to deliver clear title, the buyer would file a(n) ___.
Vendee's lien
83
In a land contract, the ___ is the vendee.
Buyer
84
A land contract usually permits the seller to evict the buyer in the event of ___.
Default
85
Any lending practice that imposes unfair or abusive loan terms on a borrower
Predatory lending
86
Any lending practice that through deception, coercion, exploitation, or unscrupulous actions convinces a borrower to accept unfair terms on a loan amount that a borrower doesn't need, doesn't want, or can't afford
Predatory lending
87
___ loans are often made to individuals with bad credit history
Subprime
88
The interest held by a vendee under contract for a deed or an installment contract
Equitable title
89
The equitable right to obtain absolute ownership to property when legal title is held in another's name
Equitable title
90
Some states interpret a mortgage to mean that the lender is the owner of mortgaged land. On full payment of the mortgage debt, the borrower becomes the land owner
Title theory
91
Some states interpret a mortgage as being purely a lien on real property. The mortgagee has no right of possession but must foreclose the lien and sell the property if the mortgagor defaults
Lien theory
92
Theory based on the principals of title theory states but still requiring the mortgagee to formally foreclose to obtain legal title
Intermediate mortgage theory
93
Clause that stipulates that such title must be fully conveyed, or released back, to the mortgagor at the time the debt is repaid in full
Defeasance clause
94
A clause used in leases and mortgages that cancels a specified right upon the occurrence of a certain condition, such as cancellation of a mortgage on repayment of the mortgage loan
Defeasance Clause
95
A legal procedure in which property pledged as security for a loan is sold to satisfy the debt
Foreclosure
96
Type of foreclosure that allows the property to be sold by court order after the lender has given sufficient public notice to the defaulting borrower
Judicial Foreclosure
97
A way for a lender to acquire mortgaged property as an alternative to judicial foreclosure
Strict Foreclosure
98
In ___ foreclosure, the court establishes a deadline by which the balance must be paid in full. If the borrower does not pay by that date, the court awards full legal title to the lender.
Strict
99
A deed given by the mortgagor to the mortgagee when the mortgagor is in default under the terms of the mortgage. This is a way for the mortgagor to avoid foreclosure
Deed in Lieu of Foreclosure
100
___ is sometimes called friendly foreclosure
Deed in Lieu of Foreclosure
101
The right of a defaulted property owner to recover the property before its sale by paying the appropriate fees and charges
Equitable Right of Redemption
102
Allows the borrower to pay the lender the amount in default plus costs and thereby extinguish the debt
Equitable right of redemption
103
In IL, a specialized quitclaim deed issued to the purchaser of a foreclosed home
Sheriff's deed
104
In IL, the ___ deed exercises the new owner's equitable right of redemption after purchasing a foreclosed home
Sheriff's deed
105
In IL, an option available when the defaulting mortgagor wishes to cure the default and reinstate the loan as if no acceleration had occured
Statutory Right of Reinstatement
106
Occurs when a default is not cured by redemption or reinstatement and a decree of foreclosure is entered
Sheriff's sale
107
The document generally given to the purchaser of delinquent property taxes at a foreclosure sale
Certificate of sale
108
A personal judgement levied against the borrower when a foreclosure sale does not produce sufficient funds to pay the mortgage debt in full
Deficiency judgment
109
The process by which a lender accepts less than the amount owed on the property
Short sale
110
A deed in lieu of foreclosure is sometimes known as a(n) ___ because it is carried out by mutual agreement, rather than by lawsuit.
friendly foreclosure
111
