R/E Finance: Unit 11 - Deeds of Trust & Mortgages

rider

A _______ is an addition or amendment separate from but attached to the original document.

defeasance clause

A ________ cancels the mortgage upon repayment of the debt in full. The title to the property transfers back to the mortgagor and the lender's interest in the property terminates.

deficiency judgment

A ________ is a personal judgment against a borrower for the balance of a debt owed when the security for the loan is insufficient to repay the debt. If the proceeds of the foreclosure sale are insufficient to satisfy the debt, the lender may get a __________against the borrower that will be effective for 10 years.

modified lien theory state

A________ is one in which the mortgage is a lien unless the borrower defaults. In this case, the title is automatically transferred to the lender. In any case, the borrower enjoys possession of the property during the full term of the mortgage no matter who holds title.

trustor, deed of trust, lender

After being signed by the ______, the ______ (not the note) is recorded in the county where the property is located. The recorded deed of trust and the note are sent to the ______ to hold for the life of the loan.

security interest, right of possession

Although the lender retains a _____ in the property, the borrower retains _______ as long as payments are made according to the loan agreement.

promissory note , security instrument.

At the same time the ________ is signed, the borrower is required to execute the _________.

Security Deed

Borrower: Grantor Grantee: Grantee Trustee: None

Mortgage

Borrower: Mortgagor Lender: Mortgagee Trustee: None

Deed of Trust

Borrower: Trustor lender: Beneficiary Trustee: Trustee

Identical terms and clauses in Security Instruments

Date of its execution Name(s) of borrower(s) Name of lender Reference to the promissory note including amount of loan Description of property securing loan

security instrument

If a note is unenforceable, the presence of a _________will not make it valid.

security instrument

If the borrower defaults, the _________allows the lender to foreclose on the loan.

note

If there is a conflict between the terms of a note and the security instrument, the provisions of the _______prevail.

lien theory

In a ________ state, title to real property is vested in the borrower. The borrower gives only a lien right to the lender during the term of the loan.

title theory

In a ________ state, title to real property is vested in the lender. the mortgage states that title reverts to the borrower once the loan is paid.

deficiency judgment

In most cases, when a loan is secured by a deed of trust and the lender forecloses under a power of sale (trustee's sale), no _________ is available.

equitable title

In the deed of trust, the trustor (borrower) holds _________ while paying off the loan.

lEnder

Mortgagee, Trustee, Grantee

bORrower

Mortgagor, Grantor, Trustor

security instrument

The _______ includes the date of its execution and the names of the lender and borrower. It identifies the promissory note and the amount of the debt for which it provides security. It also provides a description of the property to be used as security for the loan.

deed of trust

The _________ does not have to be recorded to be valid. It legally secures the loan whether it is recorded or not.

deed of trust

The parties in a _________ are the borrower (trustor), the lender (beneficiary), and a neutral third party (trustee)

not

The principal advantage of the trust deed over the mortgage is that the trust deed's power of sale is _____ typically outlawed by time while a mortgage remains subject to the statute of limitations.

do not end

The rights of the lender (beneficiary) under a deed of trust _________when the statute of limitations has run out on the note. The trustee is given both bare legal title and power of sale in the deed of trust. The power of sale in a deed of trust never expires.

covenant of seisin

The______ is the borrower's promise that he or she has the right to grant and convey the property and that the property is unencumbered except for encumbrances of record.

lien theory and title theory.

There are two theories of how title follows a mortgaged property—

security instruments

Typical riders to _________ include the Adjustable Rate Rider, Balloon Rider, Condominium Rider, and Biweekly Payment Rider.

statutory redemption period

Under a deed of trust with a power of sale, there is no _________ after the trustee's sale. The sale is final.

equity of redemption

Under a mortgage, the right of a mortgagor who is in default on the loan to recover the property BEFORE a foreclosure sale is called _______ . A mortgagor may not waive this right.

deed of trust

When a promissory note is secured by a _______ , three parties are involved: the borrower (trustor), the lender (beneficiary), and a neutral third party (trustee).

Mortgages and deeds of trust ,security deed

________ are the most common types of security instruments used in real estate finance, whereas Georgia uses a _________.

Once recorded,

_________, a deed of trust becomes a lien, which is a claim on the property of another for the payment of a debt. The deed of trust does not have to be recorded to be valid. It acts as the security for the loan whether it is recorded or not.

An acceleration or due on sale clause

gives the lender the right to demand full payment of the loan secured by the security instrument if the borrower transfers the property without the lender's permission.

security instrument, note

if a note contains an acceleration clause (due on sale), the _________must also mention this clause or the acceleration clause in the ________ is not enforceable.

Hypothecation

is a legal arrangement that allows a borrower to remain in possession of a property secured by a loan.

security instrument

is a legal document given by the borrower to hypothecate (pledge) the property to the lender as collateral for the loan.

Mortgage insurance

is insurance that protects the lender against the nonpayment of, or default on, the loan.

statutory redemption

is the statutory right of a mortgagor to recover the property AFTER a foreclosure sale.

Bare legal title

is title that lacks the usual rights and privileges of ownership. It is held by the trustee and allows the trustee to do only two things: reconvey the property to the borrower upon final payment of the debt or foreclose if the borrower defaults on the loan.

promissory note

the ________ is the evidence of the debt. It can stand alone without the security instrument. It is a personal, unsecured note at that point. However, the security instrument needs the note to validate its existence.