Key Terms (Ch. 4) 9% Flashcards Preview

Ch.6 (Practice Of Real Estate & Disclosures) > Key Terms (Ch. 4) 9% > Flashcards

Flashcards in Key Terms (Ch. 4) 9% Deck (46)
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1
Q

Acceleration

A

A demand for immediate payment of all amounts remaining unpaid on a loan or extension of credit by a mortgage lender or carryback seller.

2
Q

ARM

A

Adjustable Rate Mortgage; A variable interest rate note, often starting out with an introductory teaser rate, only to reset at a much higher rate in a few months or years based on a particular index.

3
Q

Amortization

A

The reduction in principal-liquidation-of a mortgage obligation on an installment basis.

4
Q

APR

A

Annual Percentage Rate; The relative cost of credit as determined in accordance with Regulation Z of the board of governors of the federal reserve system for implementing the federal truth in lending act.

5
Q

Assignment

A

A transfer to another of rights held by a person. A transfer to another of a person’s rights under a contract such as a mortgage, lease, purchase agreement or option.

6
Q

Assumption

A

A promise to pay the debt of another, typically a mortgage, given by a buyer of property.

7
Q

Balloon Payment

A

Any final payment on a note which is greater than twice the amount of any one of the six regularly scheduled payments immediately preceding the date of the final/ balloon payment.

8
Q

Blanket Mortgage

A

A mortgage which is secured by two or more parcels of real property.

9
Q

CalHFA

A

California Housing Finance Agency; An independent CA state agency that makes low rate housing loans through the sale of taxable and tax exempt bonds.

10
Q

CalVet

A

A program administered by the state department of veterans affairs for the direct financing of farm and home purchases by eligible california veterans of the armed forces.

11
Q

Debt-to-income ratio

A

Percentage of monthly gross income that goes towards paying debt.

12
Q

Deed-in-lieu of foreclosure

A

A deed to real property accepted by a lender from a defaulting borrower to avoid the necessity of foreclosure proceedings by the lender.

13
Q

Deficiency Judgment

A

A judgment awarded by a court in a judicial foreclosure when the value of mortgage property on the borrower’s default is insufficient to pay off the mortgage debt.

14
Q

Deflation

A

A fall in the pricing of goods or property.

15
Q

Due-on-clause

A

A trust deed provision used by lenders to call the loan immediately due and payable, a right triggered by the owners transfer of any interest in the real estate.

16
Q

FNMA

A

Federal National Mortgage Association; AKA Fannie Mae, is an agency whose primary function is to buy, own and sell mortgages in the Secondary market.

17
Q

Federal Reserve

A

Federal banking system of US, primarily accomplished through the setting of short term interest rates

18
Q

Graduated Payment Mortgage

A

Mortgage providing for installment payments to be periodically increased by predetermined amounts to accelerate the payoff of principal

19
Q

HELOC

A

Home equity line of credit; a mortgage loan enabling a homeowner to borrow against their home’s equity, as though the equity was an ATM

20
Q

Hypothecate

A

To pledge a thing as security without the necessity of giving up possession of it. To mortgage a property.

21
Q

Impound Account

A

A money reserve of a mortgage borrower’s funds held by a lender or carryback seller to pay for annual property obligations owed by the owner to others.

22
Q

Inflation

A

Price change in consumer good and services, a figure which is reported as a percentage change over one year ago.

23
Q

Loan Brokerage

A

The business of originating mortgages for lenders or selling existing mortgages to investors.

24
Q

MIP

A

Mortgage Insurance Premium; Cost for default insurance incurred by a borrower on an FHA-insured mortgage set as a percent of the mortgage amount paid up front

25
Q

Negative Amortization

A

When monthly installment payments are insufficient to pay the interest accruing on the principle balance, requiring the unpaid interest to be added to principal.

26
Q

NOD

A

Notice of default; Filed to begin the nonjudicial foreclosure process. (after 3 or more months of non payment)

27
Q

Open-ended Mortgage

A

Mortgage containing a clause permitting the mortgagor to borrow additional money after the loan has been reduced without rewriting the mortgage

28
Q

Points

A

Fee charged by a mortgage lender as prepaid interest which in turn reduces the note rate on the mortgage ( point = 1% of amount of mortgage)

29
Q

PMI

A

Private Mortgage Insurance; Default mortgage insurance coverage provided by private insurers for conventional loans with loan-to-value ratios higher than 80%.

30
Q

RESPA

A

Real Estate Settlement Procedures Act; prohibits broker from giving or accepting refferal fees if the broker or their agent is already acting as a transaction agent in a sale.

31
Q

Redemption

A

A property owner of junior leinholder’s right to clear title to property to a trust deed lien prior to the completion of the trustee’s sale.

32
Q

Reinstatement

A

A property owner’s right to reinstate a mortgage and cure any default prior to 5 business days before the trustee’s sale by paying delinquent amounts on note, trust deed, and foreclosure charges.

33
Q

Release Clause

A

Upon the payment of a specific sum of money to the holder of a blanket mortgage, the mortgage lien on parcel is reconveyed.

34
Q

Sale and Leaseback

A

An arrangement allowing an owner of property they occupy to sell the property and retain occupancy by agreeing to lease the property from the buyer as part of the purchase agreement negotiated. (seller receives cash while buyer is assured a tenant and a fixed return on their investment)

35
Q

Seasoned Loan

A

Loan on which the borrower has consistently made payments when due for an extended period of time.

36
Q

Secondary Mortgage Market

A

A market for the sale of bonds secured by a pool of mortgages.

37
Q

Seller Financing

A

A note and trust deed executed by a buyer of real estate in favor of the seller for the unpaid portion of the sales price on closing.

38
Q

Short Sale

A

A sale of encumbered property in which the mortgage lender accepts the net proceeds at closing in full satisfaction of a greater amount of mortgage debt.

39
Q

SAM

A

Shared Appreciation Mortgage; A split rate note calling for the property owner to periodically pay interim interest at a fixed rate

40
Q

Straight Note

A

Note calling for the entire amount of its principal to be paid together with accrued interest in a single lump sum hen the principle is due.

41
Q

Subordinate

A

To make subject to or inferior by use of a subordination agreement.

42
Q

Subprime Mortgage

A

Mortgage made to a borrower based on loose underwriting standards and resulting in a high risk or default.

43
Q

Trust Deed

A

Security device which attaches a money obligation as an encumbrance on a marketable interest in real estate

44
Q

TILA

A

Truth-in-Lending Act; Designed to protect buyers applying for a consumer mortgage with a lender which requires lender to make upfront disclosure of mortgage rates and charges.

45
Q

Usury

A

A limit on the lender’s interest rate yield on nonexempt real estate loans

46
Q

Warehousing

A

Mortgages held by loan brokers until they are bundled with other mortgages and sold on the secondary mortgage markets.