Deed of Trust

What clause helps the lender move quickly to foreclosure

Acceleration Clause

Deficiency Clause

Allows the lender seek additional judgement against a borrower who defaults in the liquidation foreclosure sale and fails to extinguish the debt.

Trustee

Bank Officer

To whom is the house deeded to when purchased?

Buyer

Imputed Interest

Charged even if periodic payments are not made

Usury

Charging an interest rate higher than allowed by law.

Defeasance Clause

Clause in a mortgage saying that when the debt has been paid in satisfaction that the mortgagee gives the mortgagor a note that the lien has been paid in full.

APR

Effective interest rate or the effective yield the lender makes giving a loan

Escalation Clause

Increases the interest rate

PMI

Insures lenders against foreclosure losses.

Recording of the mortgage creates what?

Lien

Amortization

Liquidation of a debt by installment payments consisting of principal and interest.

Primary responsibilities of the secondary market

Maintain an active market for morgages by allowing certain investors to purchase pre-existing mortgages.

Seasoned Mortgage

Mortgage that has maturity or has been in existence for a few years

Duties of the Trustee

Release the lien aft debt satisfied or foreclose if default.

Construction Loans

Short term or interim loan

Alienation Clause

The note becomes due when the property sells.

A Defeasance Clause is not used in Texas and is a two party mortgage document. Not part of the deed of trust

True

Borrower

Trustor

Illegal Interest is also called

Usury

If the trustee dies, can the property still be immediately distributed?

Yes

Foreclosure

legal process instituted by mortgagee or lien creditor when after a debtor's default

Deed of Trust has how many parties and who are they?

3 Parties - Lender (beneficiary), Borrower (Trustor), Trustee (bank officer that is appointed.

What clause prevents a buyer from assuming a mortgage on an existing loan.

Alienation Clause

Power of sale clause

Allows the lender to not have to not have to go to court if the loan is defaulted on

PrePayment Clause

Allows the purchaser to prepay a portion of the loan without penalty

Lender

Beneficiary

Compound Interest

Computed on principal and interest

Simple Interest

Computed on principal only

Who exchanges mortgage backed securities for pools or blocks of mortgages?

FNMA - Fannie Mae

T or F - PMI covers the top 20-25% of the loan and is NOT used with conventional loans

False

Texas is NOT a lien theory state

False

The APR is not comprised of all the fees the lender makes in addition to the interest rate

False

Name the 3 Giants in the secondary mortgage market

Fannie Mae (FNMA), Govt National Mortgage Association (GNMA), Freddie Mac (Fed Home Loan Mortgage Corporation - FHLMC)

Interest

Fee lenders charge for the use of their money

Who holds a lien on a house

Mortgagee

Lien Theory

Mortgagor holds interest in the title while mortgagee holds the lien

What does Due on Sale Mean

No assuming loans/alienation clause

Deed of Trust allows for what kind of foreclosure

Non-Judicial

Default

Non-performance of a duty arising under a contract or loan

Leverage

Obtaining Maximum financing with minimum cash

Fees included in APR

Origination fees, discount fees, points and closing costs

What is the difference in the Deed of trust mortgage in Texas and the two party mortgage used in other states

Power of Sale and Deficiency Judgement

Non-Judicial Foreclosure

Proceeding through the power of sale clause contained in the deed of trust allowing the trustee to satisfy the debt without going through court proceedings

Judicial Foreclosure

Proceeding where lender must file a suite in a court of law to obtain a judgement ordering foreclosure of the lien

Acceleration Clause

Provision in a mortgage or note that in the event of default the entire amt becomes due and payable immediately.

Deed of Trust

Specific type of mortgage document used in Texas.