Vocabulary: Chapter 17: Real Estate Financing Principals Flashcards Preview

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Flashcards in Vocabulary: Chapter 17: Real Estate Financing Principals Deck (31)
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1

Acceleration clause

Clause in mortgage, or deed of trust that can be enforced to make the entire debt due immediately if the borrower defaults on an installment payment or other covenant

2

Alienation clause

Clause in mortgage, or deed of trust that states that the balance of the secured debt becomes immediately due and payable at the lenders option if the property is sold by the borrower, in effect, this clause prevents the borrower from assigning the debt without the lenders' approval

3

Assume

A buyer is personally obligated for the payment of the entire debt of a seller; that is, the buyer assumes the debt. The original seller is not liable for the debt if the property is foreclosed on

4

Beneficiary

(1) The person for whom a trust operates or in whose behalf the income from a trust estate is drawn
(2) A lender in a deed of trust loan transaction

5

Deed in lieu of foreclosure

A deed given by the mortgagor (owner) to the mortgagee (bank) when the mortgagor (owner) is in default under the terms of the mortgage, This is a way for the mortgagor (owner) to avoid foreclosure

6

Deed of trust

(TRUST DEED) 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 (the lender)

7

Defeasance clause

Clause used in leases and mortgages that cancels a specified right upon the occurrence of a certain condition, such as cancellation of a mortgage upon repayment of the loan

8

Deficiency judgment

A personal judgment levied against the borrower when a foreclosure sale does not produce sufficient funds to pay the mortgage debt in full

9

Discount points

unit of measurement used for vairous loan charges; 1 point= 1% of loan amount

10

Equitable right of Redemption

Right of a defaulted property owner to recover the property prior to its sale by paying the appropriate fees and charges

11

Foreclosure

A legal procedure whereby property used as security for debt is sold to satisfy the debt in the event of default in payment of the mortgage note or default of other terms in the mortgage document

12

Hypothecation

To pledge property as security for an obligation or loan without giving up possession of it

13

Interest

A charge made by a lender for the use of money

14

Lien Theory

Some states interpret mortgage as being purely a lien or real property. The mortgagee thus has no right of possession but must foreclose the lien and sell the property if the mortgagor defaults

15

loan origination fee

A fee charged to the borrower by the lender for making a mortgage loan. The fee is usually computed as a % of the loan amount

16

Mortgage

A conditional transfer or pledge of real estate as security for the payment of a debt. Also, the document creating a mortgage lien

17

Mortgagee

A lender in a mortgage loan transaction

18

Mortgagor

A borrower in a mortgage loan transaction

19

Negotiable instrument

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

20

Note

A financing instrument that states the terms of the underlying obligation, is signed by its maker, and is negotiable (transferable to a third party)

21

Novation

Substituting a new obligation (NOVA=NEW) for an old one or substituting new parties to an existing obligation

22

Owner Financing

The seller is the primary lender securing his or her interest with the use of a deed, note, and mortgage, deed of trust, or contract for deed. The buyer takes possession of the property, but the seller retains legal title until paid in full

23

Prepayment penalty

A charge imposed on a borrower who pays off the loan principal

24

Promissory Note

A financing instrument that states the terms of the underlying obligation, is signed by its maker, and is negotiable (transferable to a third party)

25

Release deed

A document, known as a deed of re conveyance, that transfers all rights given a trustee under a deed of trust loan back to the grantor after the loan has been fully repaid

26

Satisfaction

Release or discharge of when a note has been fully paid. This document returns tho the borrower all interest in the real estate originally conveyed to the lender. Entering this release in the public record shows that the debt has been removed from the property

27

Statutory right of "Redemption"

The right of a defaulted property owner to recover the property after its sale by paying the appropriate fees and charges

28

"Subject to"

A clause in ta contract specifying exceptions or contingencies of a purchase

29

Title Theory

Some states interpret mortgage to mean that the lender is the owner of mortgaged land. Upon full payment of the mortgage debt, the borrower becomes the landowner

30

Trustor

A borrower in a deed of trust loan transaction; one who places property in a trust