RE: Qualifying the Title

Schedule A

Provides information related to the transaction, including legal description and parties.

The power-of-sale clause

What clause protects a lender's right to foreclose?

referee's deed.

Foreclosed-on properties are conveyed using a judicial deed, commonly referred to as a what?

Seller

If a cloud on a title is discovered, which party is generally responsible for clearing the cloud?

Voluntary conveyance of deed

This helps the borrower avoid the stigma of foreclosure, but can still have a serious impact on credit. It is initiated by the borrower.

Bankruptcy

This is an option for a borrower who is in serious financial distress and is not to be taken lightly.

Short sale

This results in proceeds that aren't enough to cover what is owed and has to be negotiated with the lender.

Basic facts related to the transaction and property, including a legal description

What information does Schedule A of an ALTA title commitment provide?

Schedule B-2

Where can a party that's reviewing a title commitment find exceptions that aren't covered by the title insurance policy?

Chain of title

Which document is used to establish the path and proof of ownership?

It gives lenders the ability to recover losses due to a foreclosure sale from any current or future property the borrower owns

Which of the following best describes a blanket lien?

Petition to enter, repossession, notice of eviction

Which of the following best describes foreclosure by entry and possession?

That any issues that arose in the previous title search have been resolved

Which one of the following assumptions does the Torrens system make?

Non-Recourse Mortgage

contains a clause prohibiting the lender from suing the borrower for damages after foreclosure.

The right of redemption

means the soon-to-be-foreclosed-on property owner can redeem his right to the property by paying off all debts and foreclosure fees relating to the property, which can only be done prior to the foreclosure sale itself.

Vulnerable

A lapse in property insurance coverage can result in borrower default because it leaves the lender ______ should something happen to damage the property.

Non-recourse

A mortgage with a clause that prohibits the lender from suing the borrower for unpaid amounts if foreclosure occurs is called a ______ mortgage.

Repayment plan

If this can be arranged with the lender, it can help the borrower get caught up and avoid foreclosure.

Her property's title is free and clear of liens and is only subject to loan payoff and any taxes owed.

Janice is selling her five-bedroom, three-bath home. She has a marketable title. What does that mean?

Schedule B-1

Sally, Larry's appraiser, has provided her with a title commitment and indicated there's a problem with the title. Where can Larry find the requirements that must be met before a title insurance policy will be issued?

Moratorium (forbearance)

The lender agrees to temporarily suspend payments in an effort to help the borrower avoid default and foreclosure.

Recasting

The lender reconfigures the loan, including the term, to reduce the payment amount.

Requirements that must be met before a title policy will be issued

What information does Schedule B-1 of an ALTA title commitment provide?

Exceptions and flaws that the title insurance policy will not cover

What information does Schedule B-2 of an ALTA title commitment provide?

It gives buyers an idea of loan costs so they'll be able to make an informed decision about the loan.

What is the purpose of the Loan Estimate?

To notify the borrower that the loan is being resold on the secondary market, and how and where to make future payments

What is the purpose of the loan transfer disclosure?

A foreclosed-on property

What kind of property is sold at auction by a court-appointed representative and all lien holders are paid from the proceeds of the sale?

The FHA

What prohibits lenders from seeking deficiency judgments on loans it's insured?

The VA

What strongly discourages lenders from seeking deficiency judgment?

The state

When the Torrens system is used to perform a title search, who or what entity acts as title guarantor in case a claim is filed?

A recourse mortgage

allows the lender to sue the borrower for balances unpaid by a foreclosure sale.

The Torrens system

is a method of title verification used by a handful of states. With this method, the title search is completed only through the last owner. This method assumes the prior search was accurate and complete.