RE: Instruments used in Finance

mortgage; deed of trust

A ________ and a __________ are two types of security instrument that pledge property as collateral for a loan.

Note with deed of trust

A beneficiary, trustor, and trustee are the parties involved when the finance instrument is a ______.

mortgagor/borrower.

A mortgage creates a lien against a property where legal title is held by the _________/__________.

Voluntary and specific

A mortgage lien is a(n) ______ lien.

Release of liability

A signed agreement between the lender and the original borrower

Contract for deed

A vendor and vendee are the parties involved when the finance instrument is a ______.

Alienation Clause

Albert wants to sell his house to his cousin, who's willing to assume his FHA loan. What clause in Albert's mortgage requires him to obtain the lender's permission to do this?

Andrea can cure the default and reinstate the loan.

Andrea's lender has notified her of its intent to foreclose. Her loan is secured with a deed of trust. What rights does she have to redeem her property?

Mortgage or deed of trust

Beth needs help with the down payment to buy Mark's property. Mark is going to supplement Beth's bank loan with a second loan, allowing her to meet her lender's down payment requirements. What finance instruments may be used for this agreement?

The buyer and seller both sign an assumption agreement.

How is a loan assumption documented?

beneficiary/lender.

In general, a deed of trust allows a trustee to hold legal title on behalf of the _______/________.

Novation

It's a process that replaces the original borrower with the new borrower as the maker of the note.

Note with deed of trust

Lisa, a seller, is providing Darwin, a buyer, with a seller second on the purchase of her property. Darwin's conventional lender uses a note with deed of trust to secure the first loan. What instrument is Lisa most likely to use for her second loan with Darwin?

an involuntary, specific, statutory lien?

Materialman's lien is what type of lien?

Involuntary, general

Max has a dog that bit his neighbor. The neighbor sued Max, which resulted in a judgment against him. Max refused to pay the neighbor according to the judgment. The neighbor placed a lien against Max. How is this lien classified?

A Voluntary and specific

Rich wants to add a room to his house, so he takes out a home equity loan. This creates a(n) ______ lien.

The borrower is allowed to prepay the loan without penalty.

Select the choice that best translates this clause into plain English. "Any partial prepayment shall be applied against the principal amount outstanding and shall not postpone the due date of any subsequent monthly installments or change the amount of such installments, unless the Note holder shall otherwise agree in writing."

Power of sale

Standard in the deed of trust, but may be included in a mortgage.

Alienation

The ______ clause is also known as a due-on-sale clause.

contract for deed

The ____________ includes the promise to repay and the security instrument within one document.

Security instruments

The mortgage and the deed of trust are ______ that pledge property as collateral for a loan.

Reconveyance clause

This is used in the deed of trust to describe borrower's right to regain title when debt is repaid.

Defeasance clause

This is used in the mortgage to describe borrower's right to regain title when debt is repaid.

Late charge provision

This usually appears in the promissory note.

Liens

What are defined as voluntary, involuntary, general, and specific according to who creates them and the property to which it is attached?

Is usually used in a seller-financed transaction.

What describes a contract for deed?

A promissory note is similar to a contract.

What describes the use of a promissory note?

The borrower is required to maintain the property and pay property taxes and insurance.

What features are shared by the mortgage and the deed of trust?

A promissory note

What is attached to a security instrument describes the loan amount and terms, and references the security instrument? This is a contractual promise to repay that requires certain features to be valid.

Power of Sale

What is the name of the clause that's standard in a deed of trust and allows the lender to foreclose non-judicially? It can also be included in a mortgage if the state allows it.

The seller's credit score may improve although he's not making any mortgage payments.

What is true for a sale that's subject to an existing mortgage lien?

Equitable

What type of lien is placed on a property as a result of a court order?

Trustee

With a deed of trust, a ______ executes a deed of reconveyance when the loan has been paid in full.

Non-Judicial Foreclosure

With a deed of trust, a _______________ is typical, and a borrower has a right to cure the default prior to the auction. But the borrower has no statutory right of redemption after the sale.

Lender

With a mortgage, the ______ records a satisfaction of mortgage when the loan has been paid in full.

loan modification

may use just one or a combination of strategies, such as reduced monthly payments, a reduced interest rate, or an extended amortization schedule. are used when a borrower is having trouble making mortgage payments to help make the payments more affordable and avoid foreclosure

The Seller

retains legal title to the property while the buyer possesses the property, makes payments, and has equitable title.

Maggie will take over Jim's loan payments without telling his lender she's doing so.

Maggie has a neighbor, Jim, who is facing foreclosure. She likes Jim and wants to help him out, so they agree to do a "subject to" purchase. What does this mean?

Acceleration clause

What type of clause is this? "If any monthly installment under this Note is not paid when due and remains unpaid after a date specified by a notice to Mortgagor, the entire principal amount outstanding and accrued interest thereon shall at once become due and payable at the option of the Note holder."

Subject to existing financing

When a buyer takes over payments on a loan without telling the lender, this is called a purchase ______.

Endorsement of the note

When a promissory note is sold, how is ownership transferred?

Assignment of the security instrument the note is attached to

When a promissory note is sold, what is recorded in county land records?

When a borrower has missed payments but still has some financial security

When is a loan modification considered?

Power of sale

Which clause is standard in a deed of trust and affects the foreclosure process that can be used if the borrower defaults?

The borrower and the lender

Which parties must be identified on the promissory note?

Judicial Foreclosure

With a mortgage, a _____________ is typical, and a borrower has a right to cure the default, an equitable right of redemption prior to auction, and a statutory right of redemption after the auction.

borrower

With either the deed of trust or the mortgage, the ____________ is required to maintain the collateral by paying taxes and insurance and by maintaining the physical condition of the property.

assumption

usually requires the new borrower to meet qualification standards and to pay an assumption fee.