Real Estate Chapter 15
A charge of three discount points on a $120,000 loan equals
The answer is $3,600. $120,000 × 0.03 = $3,600.
If a borrower must pay $2,700 for points on a $90,000 loan, how many points is the lender charging for this loan?
The answer is 3. $2,700 ÷ $90,000 = 0.03, or 3 points.
The successful bidder at a foreclosure sale in Illinois immediately receives a
The answer is certificate of sale. The successful bidder at the sale receives a certificate of sale, not a deed. Only after the sale is confirmed by the court will the certificate holder receive a sheriff's deed.
In a land contract, the vendee
The answer is has possession during the term of the contract. Under a land contract, the buyer (called the vendee) agrees to make a down payment and a monthly loan payment that includes interest and principal directly to the seller. The payment also may include real estate tax and insurance reserves. The seller (called the vendor) retains legal title to the property during the contract term, and the buyer is granted equitable title and possession.
Pledging property for a loan without giving up possession of the property itself is called
The answer is hypothecation. In mortgage lending practice, a borrower is required to pledge specific real property as security (collateral) for the loan. The debtor retains the right of possession and control, while the creditor receives an underlying equitable right in the pledged property. This type of pledging is called hypothecation.
Which of these is included in the definition of mortgage contained in the Illinois Mortgage Foreclosure Law?
The answer is installment contracts payable over at least five years, with a 20% down payment. Under the Illinois Mortgage Foreclosure Law, the term mortgage includes installment contracts payable over a period in excess of five years (when the unpaid balance is less than 80% of the purchase price).
Which of these describes the theory of the mortgagor/mortgagee relationship in Illinois?
The answer is intermediate mortgage theory. Illinois does not adhere strictly to either the title or lien theory. As a result, Illinois often is called an intermediate mortgage theory state. Mortgages and deeds of trust in Illinois convey only qualified title to the lender as security for the loan during the existence of the debt.
In Illinois, mortgage foreclosures may be obtained only through a court proceeding. This means Illinois is characterized as a
The answer is judicial foreclosure state. By statute, mortgage foreclosures may be brought about only through a court proceeding. As a result, Illinois is classified as a judicial foreclosure state.
Discount points on a mortgage are computed as a percentage of the
The answer is loan amount. For borrowers, one discount point equals 1% of the loan amount and is charged as prepaid interest at the closing.
A prospective buyer needs to borrow money to buy a house. The buyer applies for and obtains a real estate loan from a mortgage company. The buyer then signs a note and a mortgage. In this example, the mortgage company is the
The answer is mortgagee. The person who borrows money to buy a piece of property voluntarily gives the lender the right to take that property if the borrower fails to repay the loan. The borrower, or mortgagor, pledges the land to the lender, or mortgagee, as security for the debt.
A prospective buyer needs to borrow money to buy a house. The buyer applies for and obtains a real estate loan from a mortgage company. The buyer then signs a note and a mortgage. In this example, the buyer is the
The answer is mortgagor. The person who borrows money to buy a piece of property voluntarily gives the lender the right to take that property if the borrower fails to repay the loan. The borrower, or mortgagor, pledges the land to the lender, or mortgagee, as security for the debt.
What is the Illinois usury ceiling for loans secured by real property?
The answer is none of these. There is no legal limit specifically imposed by Illinois on the rate of interest that a lender may charge a borrower when the loan is secured by real estate.
After a mortgagor makes final payment to the mortgagee, the mortgagee would give the mortgagor a
The answer is satisfaction of mortgage. The lender is required to execute a satisfaction of mortgage (also called a release of mortgage or a mortgage discharge) when the note has been fully paid.
Although the homeowners have located a buyer for their home, the buyer's offer is less than what the homeowners owe. In this situation, if the lender agrees to accept an amount less than owed, the lender has agreed to a
The answer is short sale. A short sale is the process by which a lender accepts less than the amount owed on the property. The lender agrees to accept less because the lender may lose more money by acquiring the property through a foreclosure process and then holding the property until another buyer is found.
According to the Mortgage Escrow Account Act, an individual who has owned his home for 12 years and reduced his mortgage balance to 65% of its original amount may
The answer is terminate his escrow account. The Mortgage Escrow Account Act states that when the principal loan balance has been reduced to 65% of its original amount, borrowers may terminate their escrow account.
A borrower has defaulted on a loan. Which of these BEST describes the rights of the lender in this situation?
The answer is the acceleration clause in the note gives the lender the right to have all future installments due and payable immediately on default. If a borrower defaults, the lender has the right to "accelerate the maturity of the debt." This means the lender may declare the entire debt due and payable immediately.
The borrower under a deed of trust is called the
The answer is trustor. A deed of trust conveys naked title or bare legal title. The conveyance establishes the actions that the trustee may take if the trustor (borrower) defaults under any of the deed of trust terms.
In Illinois, when may a mortgagor in default exercise the right of reinstatement?
The answer is up to 90 days after service of summons. Illinois offers a statutory right of reinstatement applicable when the defaulting mortgagor wishes to cure the default and reinstate the loan as though no acceleration had occurred. The mortgagor has the right to exercise this statutory right for a period of 90 days after service of summons or publication date.
Under a typical land contract, when does the vendor give the deed to the vendee?
The answer is when the contract is fulfilled and all payments have been made. At the end of the loan term, the seller delivers clear title.
In Illinois, when must a release be delivered to a mortgagor or trustor once the mortgage or deed of trust has been fully satisfied?
The answer is within one month after full payment and satisfaction. Any mortgagee, or his assigns or agents, who fails to deliver a release to the mortgagor or the grantor of a deed of trust within one month after full payment and satisfaction will be liable to pay the mortgagor or grantor a $200 penalty.