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This is a lien or encumbrance on the real property of a debtor.
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Mortgage
The borrower in a mortgage is called ________ and the lender called the ________.
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Mortgagor - Mortgagee
In _______ _______ states the mortgagor actually gives legal title to the mortgagee and retains equitable title. Legal title is returned to the mortgagor only when the debt is paid in full but if the borrower defaults the lender has the right to immediate possession and rents from the mortgaged property.
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Title Theory
In _______ _______ states the mortgagor retains both legal and equitable title. The mortgagee simply has a lien on the property as security for the mortgagee debt.
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Lien Theory
In mortgage lending practice a borrower is require to pledge specific property as security for the loan. This type of pledging is termed ______.
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Hypothecation
This is the borrower’s personal promise to repay a debt according to agreed terms also referred to as the Note or Financing Instrument.
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Promissory Note
A note is a ________ _________ like a check or a bank draft and the payee can transfer the right to receive payment the to a third party. This is called Assignment of Mortgage
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Negotiable Instrument
This is a charge for the use for money.
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Interest
Charging interest in excess of the maximum rate allowed by law is called _______.
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Usury
When a mortgage loan is originated this is charged by most lenders to cover the expenses involved in generating the loan.
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Loan Origination Fee
These are used to increase the lender’s yield on it’s investment.
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Discount Points
A point is ______ of the amount being borrowed not the purchase price.
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1%
To prevent the lender from collecting less interest than anticipated a note may contain a prepayment clause which requires the borrower to pay a ________ ________ against the unearned portion of the interest for any payments made ahead of schedule.
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Prepayment Penalty
Lenders may not charge a prepayment penalties on mortgage loans insured or guaranteed by the ________ _________ or on loans that have been sold to _______ ______ or _________ _______.
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Federal Government, Fannie Mae, or Freddie Mac
In some situations lenders may prefer to use a three-party instrument known as a ______.
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Deed of Trust
In a deed of trust the deed is given as security for the loan to a third party called the ________.
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Trustee
In a deed of trust the trustee holds bare title on behalf of the lender known as the _______.
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Beneficiary
In a deed of trust the beneficiary is the holder of the note which dictates the actions trustee may take if the borrower or _______ defaults under any of the deeds terms.
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Trustor
If a borrower defaults the lender typically has the right to accelerate the maturity of the debt. This means the lender may declare the entire debt due and payable immediately. This is known as an ___________.
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Acceleration Clause
By provisions of the Defiance Clause the lender is required to execute a _______ (also know as a Release or Discharge) when the note has been fully paid.
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Satisfaction
When a real estate loan secured by a deed of trust has been completely repaid the trustee executes and delivers a ______ ______ (sometimes called a deed of reconveyence) to the trustor.
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Release Deed
Many lenders require that borrowers provide a reserve fund to meet future real estate taxes and property insurance premiums. This fund is called and _______ or _______ account
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Impound or Escrow
Once a lender notifies the borrower that the property is in a flood hazard area the borrower has _____ days to purchase insurance or the lender must purchase the insurance on the borrower’s behalf.
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45
When a person purchases real estate that has an outstanding mortgage or deed of trust the buyer may take the property one of two ways:
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Subject To or Assume
When a property is sold ________ the mortgage the buyer is not personally obligated for payment of the entire debt but takes title to the real estate knowing that he or she must make payments on the existing loan.
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Subject To
If a buyer purchases a property and _______ the mortgage the buyer IS personally obligated for the payment of the entire debt.
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Assumes
If buyer assumes the loan and the seller wants to be completely free from the original mortgage loan, the seller, the buyer, and the lender must execute a _______ agreement in writing.
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Novation
To prevent a loan from being assumed a lender may include an __________ ________ which will either declare the entire debt due immediately or permit the buyer to assume the loan at an interest rate acceptable to the lender
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Alienation Clause
Land contract, contract for deed, and installment contract are all also known as ________ ________ and is more commonly with unimproved acreage or farmland sales.
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Owner Financing
This is the legal procedure in which property pledged as security is sold to satisfy the debt.
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Foreclosure
What are the three types of foreclosure?
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Judicial, Nonjudicial, and Strict
In a _______ foreclosure the court establishes a deadline for the balance of the defaulted debt to be paid in full. If the borrower does not pay off the loan the court simply awards the full legal title to the lender. No sale takes place.
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Strict
This type of foreclosure is know as a friendly foreclosure because it is carried out by mutual agreement rather than a law suit.
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Deed in Lieu
Most states give defaulting borrowers a chance to redeem their property through the ______________.
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Equal Rights of Redemption
If the forclosure sale does not produce enough cash to pay the loan the mortgagee may be entitled to a personal judgement against the borrower for the unpaid balance. This judgement is known as a _________ _________.
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Deficiency Judgement
In a land contract the buyer is know as the ______ and the seller the ______.
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Vendee and Vendor
This clause allows a mortgagee to proceed to a foreclosure sale without going to court first.
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Power of Sale Clause
The interest the buyer has in the property under contract for deed is ________ and _________.
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Equitable Title and Possession
Repeat These Cards
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