15. Financing Documents

Charles is selling his property to Seth. Charles is financing part of the transaction for Seth, who will make payments to Charles while Charles retains the property title. What is this an example of

A land contract

Sondra, a buyer, signs all the required mortgage documentation, promising to make all payments to her lender. Unfortunately, Sondra falls on hard times and misses multiple payments, and the bank indicates that it is going to foreclose on her. The foreclosure proceedings are more difficult for the lender because Sondra holds the title to the land. What kind of state does Sondra live in

A lien theory state Right! In a lien theory state, the mortgage becomes a lien on the property, but title remains with the buyer. Foreclosure proceedings in a lien theory state may be more difficult for the lender.

Which of the following is a true statement about the use of a promissory note

A promissory note is a legal instrument that's similar in nature to a contract.

Elaina and Allen just purchased a home using a deed of trust. Which of the following is most likely true about their home loan

A trustee will hold title until the loan is paid.

Craig's loan is secured by a mortgage. Who holds legal title when this security instrument is used

Craig

Which statement best describes an amortized loan

Debt that is paid off by making periodic payments consisting of interest and principal

A trustee is holding title to Cassandra's house until the loan is paid in full. Which type of security instrument was used

Deed of trust

A third party holds legal title to Jackie and Tom's house until their loan is paid off. What type of security instrument was used to secure the real estate transaction

Deed of trust Good. When a deed of trust is used, a third party—such as an attorney or title company—holds the title in trust until the loan is paid off.

Theo is a buyer who's contemplating a land contract. Why might he choose this route over traditional financing

He doesn't qualify for traditional financing.

Which term represents how real property is used as collateral for a loan

Hypothecation

An amortized loan includes a regular payment that includes both principal and ______ to gradually pay off the loan over its entire term.

Interest

What purpose does the promissory note serve

It's a promise the buyer makes to the lender that the note will be repaid in full.

In a title theory state, which of the following is a true statement

It's generally much easier for a lender to foreclose on a property. In a title theory state, the lender holds the legal title to the property (usually through a third-party trustee) until the loan is paid off. This makes it easier for the lender to foreclose.

In title theory states, which of the following is a true statement

It's generally much easier for a lender to foreclose on a property. In a title theory state, the lender holds the legal title to the property (usually through a third-party trustee) until the loan is paid off. This makes it easier for the lender to foreclose.

A ______ is a contractual agreement in which the buyer pays the seller the purchase price over time in a series of installments until the contract has been paid in full.

Land contract

Who or what is the mortgagee

Lender

What information is listed on the promissory note

Loan amount and schedule of repayment

Which of these is NOT an option for a seller under an Arizona agreement for sale when a buyer defaults on the loan

Non-judicial foreclosure

Alyssa's mortgage loan is secured by the note and the mortgage. Which of the following is true if she lives in a lien theory state

She holds title to the property, and the mortgage becomes a lien on the property.

Who or what entity has legal title to a financed property in a lien theory state

The borrower The borrower is the legal owner and has the right to possess and control the property. The lender has the right (after a loan default) to take possession of the property through foreclosure.

Who holds the promissory note when a deed of trust is used as a security instrument

The lender With a deed of trust, the lender receives the promissory note; the trustee holds the deed of trust.

When a mortgage is used as a security instrument, who holds the mortgage and the promissory note

The lender holds the mortgage and the note.

Olivia took out a 15-year loan secured with a deed of trust. She worked two jobs in order to pay the loan back and finally made her last payment this month. What happens now

The lender tells the trustee to release the title to Olivia.

Who holds the promissory note while it's being repaid

The payee The lender is the payee who holds the note while it's being repaid. If the note is transferred, the new owner becomes the payee and note holder.

Which statement describes hypothecation

The process of pledging property as collateral for a loan

Which of the following is a reason a seller might consider selling property through a land contract rather than a traditional sale

The seller may pay less in capital gains taxes by receiving the proceeds from the sale over time rather than in a lump sum.

What is the trustee's role when a deed of trust is used to secure property for a loan

To hold legal title to the property on behalf of the beneficiary until the loan is repaid

How many parties does a mortgage involve

Two: borrower and lender

In which of these scenarios is an Arizona property seller allowed to initiate forfeiture after borrower default

When the transaction uses an agreement for sale. The forfeiture process is used when the seller and buyer enter into an agreement for sale where the seller holds the property title, and the buyer has the right of possession while the loan is repaid.

What differentiates hypothecation property and pledging property

Who possesses the collateral while the loan is being paid Hypothecation property, which is used in real estate, can be possessed and used by the borrower while the borrower pays the loan. This is different from pledged property which the lender may take possession of while the loan is being paid.