29.2 mortgages

mortgagee

The creditor who loans money for the purchase of property in exchange for an interest in that property as security for the loan

Mortgage

A contract between two parties that gives the creditor interest in, or a lien, on real property as security for the loan used to purchase the property.

Mortgagor

The creditor who borrows money for the purchase of property in exchange for an interest in that property as security for the loan

Four of the common factors that determine the interest rate on a mortgage are:

a. income

b. gender

c. credit history

d. credit score

e. physical condition of the property

f. outstanding debts

g. national origin

h. religion

a. income

c. credit history

d. credit score

f. outstanding debts

The payments on a fixed-rate mortgage _____

remain the same

Mortgage lenders typically require a statement that the borrower will obtain insurance to cover personal property that he or she plans to keep in the home.

a. True

b. false

b. false

short sale

The disposition of the mortgaged property for less than the balance due on the mortgage, resulting in a loss to the creditor

Foreclosure

A legal process by which the lender repossesses and disposes of property that has a secured loan.

Forbearance

a postponement of part or all of the loan payments for a time, usually when the debtor has short-term financial problems

Redemption

The right of the borrower to keep the property by paying off the entire balance of the mortgage after proceedings to take the property have been started by the creditor

Workout

A contract that outlines the rights and responsibilities of the parties when they are resolving a default.

Which of the following typically is not a possible method of avoiding foreclosure?

a. Forbearance

b. A workout agreement

c. A short sale

d. Moving away

d. Moving away

In order to get approval from the lender for a short sale, a borrower typically must show a hardship. Select four examples of appropriate hardships.

a. loss of job

b. child ran away from home

c. declining value of the home

d. death of a distant relative

e. divorce

f. death of a household member

g. promotion at work

a. loss of job

c. declining value of the home

e. divorce

f.death of household member

The rationale behind the right of redemption is that:

a. it is only fair for the borrower to have a chance to regain possession after default.

b. it is only fair for the creditor to be able to resell the house quickly after foreclosure.

c. the creditor and the debtor must have a meeting of the minds

a. it is only fair for the borrower to have a chance to regain possession after default.

The ________ right of redemption allows the defaulting buyer an opportunity to regain title and possession after default but before a judicial foreclosure, where the _______ right of redemption allows a borrower to repurchase the property after a judicial foreclosure.

equitable, statutory