Real estate Jeff Evans test 2

Acceleration Clause

Used to permit the lrnder to demand the balance be paid in full immediately

Alienation Clause (Due on Sale Clause)

Gives the lender the right to call the entire loan balance due if the mortgaged property is sold or otherwise conveyed (alienated) by the borrower

Deed of Trust

A three party arrangement consisting of the borrower(trust or) the lender (the beneficiary) and a neutral third party (a trustee)

Debt Priorities

1. first mortgage/senior mortgage

2. second mortgage/junior mortgage

3. subordination

4. chattel liens

5. foreclosure/power of sale

Deed of Trust Document

The purpose of a deed of trust is to provide security for the promissory note in the place of a mortgage.

The deed of trust immediately grants and conveys qualified "title" to the trustee

- it is understood that the "quality and quantity" of title a trustee receives is only that which is necessary to "protect or secure the note"

- the "naked (or bare) title" lies dormant until loan is repaid or default occurs

Permits the borrower (trustor):

- to continue to possess/inhabit the property, and

- enjoy the use of the property, and

- even to sell the property as long as the promissory note is not in default.

Reconveyance Deed

Document used to reconvey title from trustee back to owner once the debt is paid.

Budget Mortgage (PITI)

In addition to collecting the monthly principle and interest (PI like an amortized loan) the lender collects 1/12 of the estimated cost of the annual property taxes and hazard insurance on the mortgaged property (referred to as ESCRO TI) therefore each pmt includes principal, interest, taxes and insurance

Balloon Loan

any loan in which the final payment is larger than the preceding payments

Amortized Loan PI

Regular equal pmts for the life of the loan includes interest and principal repayment

Budget Mortgage (PITI) short

Paying a portion of taxes and insurance w principle and interest PITI

Exempt Transactions

Business, commercial, and agricultural purposes

$25000+ and secured by personal property

In house bank loans

Redlining

Intentionally refusing to make loans on certain properties or to individuals that live in certain areas

Credit Report

Provides lender w an independent means of checking the applicants credit history

Credit scoring

method used today to evaluate credit risk

Fair Credit Reporting Act

Fed law

Gives an individual the right to inspect his or her credit file w the credit bureaus and correct any errors

secondary market

Provides a way for lenders to bundle and sell/resell loans to other lenders/investors/individuals

Conforming Loan

A loan that meets the lending limits and other criteria established by Fannie Mae or Freddie Mac.

Jumbo loan limit

Usury

State legislation imposed an interest rate ceiling on loans/credit transactions

arm

Interest rate rises and falls w changes in prevailing int rates

ARM PROMISSORY NOTE: Lenders margin added to an index

Blanket Mortgage

A mortgage which covers more than one piece of real estate. Often used by a developer in the financing of undeveloped lots. Contains a partial release clause.

Construction Loan

A short-term, interim loan for financing the cost of construction. The lender makes payments to the builder at periodic intervals as the work progresses.

Tax Exclusion

2 of the last 5 years

walk through

Final inspection of a property just prior to closing

Vacated

No damage

Escrow

Use of a neutral third party who acts on behalf of both buyer and seller to carry out the instructions of the sales contract and lending instructions.

Title companies

Package Loan

A loan secured by real property plus personal property

Taxes and returns go into

Escro??

Does va require down payments

No

Residential loan

30 days

Right of Redemption

The legal ability to buy back one's property back within the time specified in each state after a judicial sale by paying the debt, interest and certain costs. Within a month or a year