Real Estate Contracts and Ownership

Mortgage Companies

Act as correspondents for other lenders, originate and service loans

Loan Commitment

Correlate borrower, loan, and property characteristics

Risk Inherent in Mortgage

Risk Inherent in Mortgage

Construction Loan

Synonymous with interim loan

Proration of Prepaid Taxes

Appears as a credit to the seller on closing statement

Interest Rates on Trust Deed Loans

Determined by demand and supply of money

Disclosures on Graduated Payment Mortgage

Different monthly payments

Insurance

Transfers risk of loss, provides certainty, protects against loss

Consequences of Buying Property 'Subject to' Existing Loan

Seller may incur personal liability, lender may accelerate loan, buyer may lose property to foreclosure

Exemption from Truth-in-Lending Act

Agricultural loan by a bank

Effects of Employment Rate and GNP Rise

Level of personal income rises, new residential developments increase, sales of existing homes remain level or increase

Factors Impacting Real Estate in the Future

Real estate industry, land use controls, popularity of consumerism issues

Equity in Encumbered Property

Increases as payments are made

Warehousing in Real Property Financing

Collecting loans prior to sale

Proration in Real Property Sale Escrow

Rent

Prorated Property Taxes on Closing Statement

Approximately $480

Buyer's Portion of Prorated Property Taxes

Most nearly $230

Fire Insurance Coverage

Insured should neither gain nor lose

Loans Subject to Real Estate Settlement Procedures Act (RESPA)

Lenders with deposits insured by federal government

Delivery of Uniform Settlement Statement

At or before date of settlement

Types of Property that Must Comply with RESPA

One-to-four family residential dwellings

Advertisement Stating Only Annual Percentage Rate

No additional disclosures required

Right to Cancel Notice

Given to borrower if residence is security for loan

Informing Consumers of Credit Terms

Responsibility of the lender

Release of Buyer's Deposit Money by Escrow Agent

Upon receipt of written instructions, arbitrator's award, or court ruling

Principal Payment in Long-Term Loan

Increases while interest payment decreases

Discounting

Refers to loan proceeds disbursed by lender for less than face value of note

Escrow Agent's Authority

Call for funding of buyer's loan

Use of Escrow in Trust Deed Sale

Ensure conditions and terms are met before closing

Release Clause in Mortgage

Allows release of portions of property from mortgage lien upon specified act

Primary Purpose of RESPA

Require disclosures by lenders for loans on one-to-four-unit dwellings

Trust Deed on Multiple Parcels

Regarded as a blanket deed of trust

Loan Negotiated by Real Estate Broker

Broker's loan statement

Business Cycles

Depression, expansion, prosperity, and recession

Capital Turnover in Real Estate Investments

Slower than average commodity

Source of Junior Loans

Private lenders

Impound Requirements for Borrower

Does not include mortgage interest prorations

Escrow Holder's Authority

Accept written instructions to change price and terms

Demand Source for Mortgage Money

Federal National Mortgage Association (FNMA)

Purpose of FNMA

Increase money available for credit financing of housing

Secondary Market for Residential Conventional Mortgages

Federal Home Loan Mortgage Corporation

Purpose of RESPA

Provide opportunity to shop for settlement services

Consequences of Buyer Taking Title 'Subject to' Existing Loan

Loan may be accelerated, sale may not be completed, seller retains personal liability

Balloon Payment

Required payment of entire balance due

Legal Remedy for Default on Mortgage and Note

Foreclosure to enforce payment

Relieving Seller of Primary Liability for Trust Deed and Note

Buyer must assume trust deed and note liability

Subordination Clause in Trust Deed

Allows future loans on property to have priority

Partial Release Clause

Used with blanket mortgage

Finance Charge under Truth-in-Lending Law

Assumption fees

Hedge Against Inflation

Ownership of real property

Impact of Tight Money Policy

Use of second trust deed financing increases

Decline of Mortgage Interest Rates

Mortgage money supply increases

Calling a Loan

Accelerating all sums owing

Factor with Greatest Influence on Mortgage Interest Rates

Condition of the money market

Difference in Closing Statements

Can be different balances

Prorated Property Taxes on Closing Statement

Seller paid three months taxes

Prorated Items in Real Property Sale Escrow

Delinquent interest and principal on unsecured home improvement loan

Liability for Loss on VA Loan After Sale

Greys will be primarily liable

Debit on Buyer's Closing Statement

Interest on assumed loan

Disclosure Statement under Real Estate Settlement Procedures Act (RESPA)

Good faith estimate

Settlement Costs Disclosed under RESPA

Certain financial disclosures, specific disclosures for ARMs, and Truth-In-Lending Act disclosures

Involuntary Alienation of Property

Transfer against owner's will, through operation of law or adverse possession

Bargain and Sale Deed

Implies grantor owns property but carries no warranties

Bequest

Personal property transferred by will

Covenant

Contract, promise, guarantee in a deed or lease

Deed of Trust

Held by third party as security for payment of a note

Devise

Real property transferred in a will

Devisee

Recipient of real property under a will

Executor

Person appointed in a will to carry out provisions

General Warranty Deed

Warrants title against defects before and during ownership

Grantee

Person receiving grant of real property

Granting Clause

States grantor's intent to transfer interest in property

Habendum Clause

Describes type of estate granted in deed

Intestate

Dying without leaving a will

Involuntary Alienation

Transfer against owner's will, through operation of law or adverse possession

Liquidated Damages

Amount determined in advance for breach of contract

Compensatory Damages

Amount determined by court to cover actual loss

Specific Performance

Court order to perform as agreed

Mediation

Third party tries to get parties to agree to a resolution

Arbitration

Third-party arbitrator serves as judge

Assignment

Transfer of interests and rights to others

Rescission

Termination of all obligations under contract