Chapter Fourteen
A building was sold for $115,000. Earnest money in the amount of $15,000 was deposited in escrow, and the buyer obtained a new loan for the balance of the purchase price. The lender charged two discount points on the loan. What was the total amount of cash used by the buyer for this purchase?
$17,000. $115,000 sales price - $15,000 earnest money = $100,000 loan balance; $100,000 × 2% (0.02) discount points = $2,000; $15,000 earnest money + $2,000 discount points = $17,000 cash used by buyer.
Which clause would give a lender the right to have all future installments become due upon default?
Acceleration
In one state, a mortgagee holds a lien on real property offered as collateral for a loan. The mortgagor retains both legal and equitable title to real property. If the borrower defaults on the loan, the lender must go through formal foreclosure proceedings to recover the debt. This state can be BEST characterized as what kind of state?
Lien theory
What document is available to the mortgagor when the mortgage debt is completely repaid?
Satisfaction of mortgage
The mortgagee foreclosed on a property after the borrower defaulted on the loan payments. At the foreclosure sale, however, the house sold for only $129,000. The unpaid balance of the loan at the time of the sale was $140,000. What must the lender do to recover the $11,000 the borrower still owes?
Seek a deficiency judgment
Under a typical land contract, when does the vendor give the deed to the vendee?
When the contract is fulfilled and all payments have been made
All the following clauses in a loan agreement enable the lender to demand that the entire remaining debt be paid immediately EXCEPT
a defeasance clause.
Real estate can be purchased under a land contract, also known as
an installment contract or contract for deed.
A promissory note used as a debt instrument without any related collateral is called
an unsecured note.
A buyer purchased a home under an agreement that made the buyer personally obligated to continue making payments under the seller's existing mortgage. If the buyer defaults and the court sale of the property does not satisfy the debt, the buyer will be liable for making up the difference. The buyer has
assumed the seller's mortgage.
Judicial foreclosure allows the property to be sold by
court order after the mortgagee has given sufficient public notice.
Under a land contract, the vendee receives
equitable title with the right of possession.
In title theory states, the mortgagor retains what is called
equitable title.
The seller agrees to sell the house to the buyer for $100,000. The buyer is unable to qualify for a mortgage loan for this amount, so the seller and the buyer enter into a contract for deed. The interest the buyer has in the property under a contract for deed is
equitable title.
A mortgagor is the one who
gives a mortgage.
In a land contract, the vendee
has possession during the term of the contract.
In mortgage lending, a borrower is required to pledge specific real property as security (collateral) for the loan, a practice called
hypothecation.
Discount points paid to a lender are used to
increase the lender's yield (rate of return) on its investment.
The general types of foreclosure proceedings are
judicial, nonjudicial, and strict foreclosure.
Discount points on a mortgage are computed as a percentage of the
loan amount.
The fee charged by a mortgage broker to arrange a loan is a(n)
loan origination fee.
A promissory note
makes the borrower personally liable 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. Then the buyer signs a note and a mortgage. In this example, the mortgage company is the
mortgagee.
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. Then the buyer signs a note and a mortgage. In this example, the buyer is referred to as the
mortgagor.
Some states allow nonjudicial foreclosure procedures to be used when the security instrument contains a
power-of-sale clause.
The right a mortgagor has to regain the property by paying the debt after a foreclosure sale is called
redemption.
A woman has just made the final payment on her home mortgage to her lender. There will still be a lien on her property until the lender records a(n)
satisfaction of mortgage.
A junior lien may become first in priority if the original lender agrees to execute a
subordination agreement.
An existing mortgage loan can have its lien priority lowered through the use of a
subordination agreement.
In those states that recognize deed of trust loans, the power of sale provision is generally given to the
trustee.
The borrower under a deed of trust is known as the
trustor.
Charging more interest than is legally allowed is known as
usury.
Under a land contract, the buyer is called the
vendee.
Under a land contract, the seller is called the
vendor.
Under an installment contract, the legal title to the property is held by the
vendor.
