Mastering Real Estate Principles ch 21

Question 1

Occurs when someone other than the original borrower becomes primarily liable for the loan.

Answer 1

Assumption of Mortgage

Question 2

Given to the winner at a foreclosure sale. It entitles the winner to a deed after the redemption period is over.

Answer 2

Certificate of Sale

Question 3

Banks that are either federally or state chartered and that make mortgages, construction, and home improvement loans.

Answer 3

Commercial Banks

Question 4

Loans that follow the established guidelines of the secondary mortgage market.

Answer 4

Conforming Loans

Question 5

Associations that maintain savings accounts for their members while providing primarily home improvement and home equity real estate loans.

Answer 5

Credit Unions

Question 6

A type of nonjudicial foreclosure in which the lender accepts title to the property from the borrower in exchange for ending the debt

Answer 6

Deed in Lieu Of Foreclosure

Question 7

A Judgement against the debtor’s person assets if the sale of real estate is not sufficient to satisfy the loan.

Answer 7

Deficiency Judgment

Question 8

Interest points charged by a lender to raise the yield on a loan. One point is equal to 1 percent of the loan amount.

Answer 8

Discount Points

Question 9

The rapid outflow of funds from savings institutions.

Answer 9

Disintermediation

Question 10

A borrower’s right to redeem property before a foreclosure sale.

Answer 10

Equitable Right of Redemption

Question 11

And account maintained with a lender to hold money to pay real estate taxes and insurance. Also used by brokers to buyers’ earnest money that comes into the brokers’ possession during real estate transactions.

Answer 11

Escrow Account

Question 12

Formerly know as the …… Operates in the secondary mortgage market. It handles FHA, VA and conventional loans and is the larger mortgage purchaser.

Answer 12

Fannie Mae (FNMA)

Question 13

A government agency that works closely with thrifts to provide a secondary market for their loans. Also known as …

Answer 13

Freddie Mac (FHLMC)
Federal Home Loan Mortgage Corp

Question 14

The process of liquidating a borrower’s assets to satisfy a debt.

Answer 14

Foreclosure

Question 15

A wholly owned government corporation that provides a secondary market for VA and FHA loans also known as…..

Answer 15

Ginny Mae (GNMA)
Government National Mortgage Assoc.

Question 16

Foreclosure procedures that use the courts. These procedures include judicial sale and strict foreclosure.

Answer 16

Judicial Foreclosure

Question 17

A notice in the public records of a lawsuit involving a particular property that may result in a claim against the property

Answer 17

Lis pendens

Question 18

The relationship between the amount of a loan and the appraised value of the property. The ratio is expressed as a percent of the appraised value.

Answer 18

Loan-to-Value ratio

Question 19

Originates loans and packages them to investors, who may use their own money or may borrowed from other lenders. They also service loans.

Answer 19

Mortgage Banking Company

Question 20

The process of selling tax-exempt bonds by municipalities to raise money for the low-rate loans to first -time buyers.

Answer 20

Mortgage Bond Financing

Question 21

One who arranges a loan between a lender (mortgagee) and a borrower (mortgagor) for fee.

Answer 21

Mortgage Broker

Question 22

Similar to savings banks, they use most of they funds for residential real estate loans.

Answer 22

Mutual Savings Bank

Question 23

Foreclosure procedures used by lenders that do not involve the courts. common types are power of sale clauses and deed in lieu of foreclosure.

Answer 23

Nonjudicial foreclosure

Question 24

Acronym describing principal, Interest, taxes, and insurance the moms common components of a mortgage payment.

Answer 24

PITI

Question 25

Points are interest, usually payable at closing. A point is 1 percent of the loan amount.

Answer 25

Points

Question 26

Lenders who hold loans they originate rather than selling them to investors.

Answer 26

Portfolio Lenders

Question 27

Insurance written by a private company that protects a mortgage lender against loss if a borrower defaults. The insurance is usually used when the loan-to-value ration exceeds 80%. PMI insures the top 20 %to 25% of the loan, and borrowers are charged a fee at closing as well as an annual fee.

Answer 27

Private Mortgage Insurance (PMI)

Question 28

Private conduits are also active in the secondary market. These organizations purchase and pool mortgages from loan originators for sale in the secondary market. Some specialize in areas not serviced by Fannie Mae,GNMA, or HLMC, such as jumbo loans (loans with limits set by Fannie May, GNMA and FHLMC) Private mortgage packagers include Sears and GE

Answer 28

Private Mortgage Packagers

Question 29

Allows small investors to participate in real estate investments. Investors transfer title to real estate to a trustee, who manages the property for the benefit and profit of the investors. Funds from the issuance of investment trust certificates to investors are used to purchase real estate investments for the benefit of the investors.

Answer 29

REIT (Real Estate Investment Trust)

Question 30

Also known as thrifts. Lenders that have traditionally been and important source of loans for residential property. their role has greatly diminished in the recent year

Answer 30

Savings Banks

Question 31

A market where existing mortgages are bought and sold. Mortgages are originated in the primary mortgage market

Answer 31

Secondary Mortgage Market

Question 32

The borrower's right to redeem property after the foreclosure sale.

Answer 32

Statutory Right of Redemption

Question 33

A foreclosure procedure in which the court awards the lender title and all equity to the property.

Answer 33

Strict Foreclosure

Question 34

An arrangement in which the buyer assumes the seller's mortgage and makes payment but is not personally liable for the debt.

Answer 34

Subject-to Mortgage