Ch 6 Colibri

What basically happens in a foreclosure?

Lienors force a property owner to give up title. This may involve either the lienors' forcing the owner to sell and pay off the creditors or taking title directly.

What are the basic differences between the three types of foreclosure?

Judicial foreclosure: sale under court supervision
Nonjudicial foreclosure: sale without court supervision
Strict foreclosure: no sale; immediate transfer to lienholder

What are the differences between the two kinds of right of redemption and the right of reinstatement?

Equitable right of redemption gives the borrower the right to pay off loan amounts and reclaim a foreclosed property up until the completion of the foreclosure sale.

Statutory right of redemption allows the borrower to pay the debt and reclaim the property for a statutory period which may go beyond the completion of the sale (up to a year, in some states).

Statutory right of reinstatement allows the borrower to cure the default and reinstate the loan during a statutory period before the lawsuit is concluded.

What happens to the sale proceeds in a judicial sale?

Proceeds are used to pay 1) costs of the sale; 2) special assessment and ad valorem taxes; 3) first mortgage; 4) other mortgages and liens in order of recording; and 5) remainder to the borrower.

What is the purpose of a deficiency judgment?

It enables a lienor to attach the personal and real property of a lienee when the foreclosure sale has not produced enough funds to pay what the lienor is owed.

What power does a lender have if a mortgagor defaults in a state that allows nonjudicial foreclosure and the mortgage document includes a "power of sale" clause?

The lender can give the borrower notice of the default and a chance to cure it, after which the lender may auction the property.

What happens to the title to a foreclosed property in a strict foreclosure?

It transfers immediately to the lienholder.

What is the function of a deed in lieu of foreclosure?

It avoids foreclosure by transferring legal title to the mortgagee.

The first step in a judicial foreclosure is:

acceleration of the loan.

filing a suit.

obtaining a lis pendens.

obtaining a writ of execution.

acceleration of the loan.

All of the following are common consequences suffered by a mortgagor in a foreclosure procedure EXCEPT

all or most equity is lost.

the mortgagor is embarrassed by public knowledge of the foreclosure.

the borrower's credit is damaged for a long time.

the borrower is not allowed to apply for another mortgage loan for even years.

the borrower is not allowed to apply for another mortgage loan for even years.

Which of the following statements best defines Equitable Right of Redemption?

The legal right of a borrower to seek a reduction in payments on a property mortgage

The legal right of a borrower to redeem property between the time of default and the foreclosure sale

The legal right of a borrower to seek a statutory right of reinstatement

The legal right of a borrower to appeal a deficiency judgment within 7 months of notice

The legal right of a borrower to redeem property between the time of default and the foreclosure sale

Ronald defaulted on his home mortgage payments. The lender obtained a court order to foreclose on the property. At the foreclosure sale, Ronald's house sold for $29,000 and the unpaid balance of his loan is $40,000. What must the lender do to recover the $11,000 Ronald still owes?

Sue for damages

Sue for specific performance

Seek a deficiency judgment

Seek a lis pendens

Seek a deficiency judgment

If a property sold at a court foreclosure does not sell for an amount sufficient to satisfy the outstanding mortgage loan debt, the mortgagee may sue for:

a judgment by default.

a deficiency judgment.

a satisfaction of mortgage.

damages.

a deficiency judgment.

One of the negative features of foreclosure for the mortgagor is:

credit is damaged, making it difficult to purchase another home.

the borrower loses any right to seek another mortgage for seven years.

the borrower loses all equity, even if the sale yields more than the amount owed.

the process happens so quickly that the mortgagor has no time to cure the problem.

credit is damaged, making it difficult to purchase another home.

Foreclosure is:

a court-ordered acceleration of loan payments.

the final step in a bankruptcy filing.

a proceeding to enforce a lien by forcing sale or transfer of a secured property.

a proceeding to take equitable title to a property that was liened as security for a mortgage loan.

a proceeding to enforce a lien by forcing sale or transfer of a secured property.

A property is secured by a mortgage that does not contain a "power of sale" clause. To foreclose, the lien holder will have to:

file a deficiency suit.

file a foreclosure suit.

obtain a deed in lieu of foreclosure.

obtain a writ to extinguish the lien.

file a foreclosure suit.

In a strict foreclosure:

a lender takes title to the liened property directly.

a lender receives the proceeds from the forced sale of the liened property.

the defaulting owner does not have the opportunity to prevent the foreclosure by paying the amounts owed.

a foreclosure suit is optional.

a lender takes title to the liened property directly.

What appraisal methods do tax assessors use to determine the assessed value of a property?

Assessors use any of the standard appraisal methods—sales comparison, cost, income—to assess properties, depending on the type of property. Agricultural land valuation is based on land productivity. The assessor uses whatever approach provides the best estimate of market value, which may then be modified according to formulas to arrive at an assessed value.

What are some circumstances that typically trigger a reassessment of a property?

Improvements to the property in general. Specifically, basement finishing, garage additions, and swimming pool construction.

What is a "homestead exemption?"

A portion of a property's value that is exempted from taxation because the property, or part of it, is owned and occupied as a family residence.

Name some of the primary uses of legal descriptions.

public recording, creating deeds and leases, mortgage documents, other legal documents.

Give a simple description of the metes and bounds method of description.

Starting at a point of beginning, it traces an enclosed space by following measured lines around an area and returning to the point of beginning.

What are the main elements of the rectangular survey system?

Longitudes, latitudes, township grids, ranges, tiers, sections, fractions of sections.

In the rectangular survey method, why is it necessary to have guide meridians, standard parallels, and quadrangles?

Because of the curvature of the earth, a rectangle drawn on the earth's surface using longitudinal lines as sides will be narrower on the side farther from the equator than on the side nearer the equator; thus, townships would become smaller and smaller as one moved farther north of the equator. The guide meridians, standard parallels, and quadrangles limit this variance caused by the earth being round.

Why is it necessary for a complete legal description to include the county and state?

Principal meridians and base parallels extend through more than one county and state; naming the county and state in the description provides extra protection against misreading a description as applying to two different properties.

Name the components of a description using the recorded plat method.

Lot number, block identifier, subdivision name, section location, township, county, state.

Explain how a datum or benchmark is used to describe the elevation of a property in a legal description.

A datum or benchmark has an established elevation. A property description will state that the property is a number of feet above or below the datum or benchmark.

What does a footing do?

Supports the entire weight of a structure

What is a sill plate, and what does it do?

A still plate is a wooden support member that is laid on top of and bolted to the foundation wall. The sill plate serves as the base for the wall framing.

What are the three types of frame construction?

Platform
Balloon
Post and beam

What is the most common type of heating system in North America, and how does it work?

A forced air heating system is most common. It draws room air through ductwork and a filter into a furnace, where the air is heated. The warmed air is then blown back to rooms through ductwork

What are the two types of heat pumps available?

Air source and ground source

Name three types of pipes used in plumbing systems.

Cast iron, copper, and PVC

What is the difference between voltage and amperage?

Voltage is a measure of how much pressure the electrons in a circuit are under. Amperage is the measure of number of electrons moving through the circuit

List at least three goals of land use control.

Why do communities care about growth trends?

Too much growth of the wrong type or in the wrong place can overwhelm services and infrastructure.

Name four common types of zones.

commercial agricultural planned unit development (PUD)
public
industrial
residential

Give examples of a legal and an illegal nonconforming use.

Legal: A motel is situated in a residential area that no longer allows commercial activity. The zoning board rules that the motel may continue to operate until it is sold, destroyed or used for any other commercial purpose.

Illegal: That same motel is sold, and the new owner continues to operate the property as a motel.

What conditions are necessary for a special exception to a zoning regulation?

The requested use must be beneficial or essential to the public welfare and may not materially impair other uses in the zone.

What do subdivision regulations usually cover?

Location, grading, surfacing, alignment, and widths of streets and highways Sewer and water main installation
Setback lines for structures
Public utility easements
Areas reserved for public use, such as parks and schools 
Minimum dimensions of property lots

What is the policy of concurrency?

The policy requires subdivision developers, at the same time as they are developing their projects, to make improvements that will minimize the negative impact of the project on municipal infrastructure.

What does eminent domain allow a government to do?

Eminent domain allows a government entity to purchase a fee, leasehold, or easement interest in privately owned real property for the public good and for public use, regardless of the owner's desire to sell or otherwise transfer any interest. In exchange for the interest, the government must pay the owner "just compensation."

What do deed restrictions do?

Deed restrictions place limits on how the property may be used.

What is the Doctrine of Laches?

This doctrine states that if a property owner is lax in protecting their rights, the property owner may lose those rights.

Why is radon difficult to discover?

Radon is an odorless, colorless, tasteless gas, so it's impossible to sense the presence of radon without testing for it.

Name the four exposure pathways.

Air, soil, drinking water, and food.

How can a real estate professional help their clients deal with environmental issues?

Be knowledgeable, ask the right questions, call the experts, and disclose early and often.

How many phases are in an environmental audit?

There are four total phases.