Chp 14 Real Estate Financing Principles

The clause in a mortgage or deed of trust that
can be enforced to make the entire debt due immediately if the borrower
defaults on an installment payment or other covenant.

The clause in a mortgage or deed of trust that
states that the balance of the secured debt becomes immediately due and payable
at the lender’s option if the property is sold by the borrower. In effect, this
clause prevents the borrower from assigning the debt without the lender’s
approval.

A buyer is personally obligated for the payment
of the entire debt of a seller, that is, the buyer assumes the debt. The
original seller is not liable for the debt if the property is foreclosed on.

(1) The person for whom a trust operates or in
whose behalf the income from a trust estate is drawn. (2) A lender in a deed of
trust loan transaction.

A deed given by the mortgagor to the mortgagee
when the mortgagor is in default under the terms of the mortgage. This is a way
for the mortgagor to avoid foreclosure.

A deed of trust (or deed in trust in some
states) is the means by which a trustor conveys real estate to a trustee for
the benefit of a beneficiary.

A clause used in leases and mortgages that
cancels a specified right upon the occurrence of a certain condition, such as
cancellation of a mortgage upon repayment of the mortgage loan.

A personal judgment levied against the borrower
when a foreclosure sale does not produce sufficient funds to pay the mortgage
debt in full

A unit of measurement used for various loan
charges; one point equals 1 percent of the amount of the loan.

The right of a defaulted property owner to
recover the property prior to its sale by paying the appropriate fees and
charges.

A legal procedure where by property used as
security for a debt is sold to satisfy the debt in the event of default in
payment of the mortgage note or default of other terms in the mortgage
document. The foreclosure procedure brings the rights of all parties to a
conclusion and passes the title in the mortgaged property to either the holder
of the mortgage or a third party who may purchase the realty at the foreclosure
sale, free of all encumbrances affecting the property subsequent to the
mortgage.

To Pledge property as security for an obligation
or loan without giving up possession of it

A charge made by a lender for the use of money.

A fee charged to the borrower by the lender for
making a mortgage loan. The fee is usually computed as a percentage of the loan
amount.

A lender in a mortgage loan transaction.

A borrower in a mortgage loan transaction.

A written promise or order to pay a specific sum
of money that may be transferred by endorsement or delivery. The transferee
then has the original payee’s right to payment.

Substituting a new obligation for an old one or
substituting new parties to an existing obligation.

The seller is the primary lender securing his or
her interest with the use of a deed. The buyer takes possession of the
property, but the seller retains legal title until paid in full.

A charge imposed on a borrower who pays off the
loan principal early. This penalty compensates the lender for interest and
other charges that would otherwise be lost.

A financing instrument that states the terms of
the underlying obligation, is signed by its maker, and is negotiable
(transferable to a third party).

A document, also known as a deed of
reconveyance, that transfers all rights given a trustee under a deed of trust
loan back to the grantor after the loan has been fully repaid.

Release or discharge of when a note has been
fully paid. This document returns to the borrower all interest in the real
estate originally conveyed to the lender. Entering this release in the public
record shows that the debt has been removed from the property.

The right of a defaulted property owner to
recover the property after its sale by paying the appropriate fees and charges.

Buyer takes title of property and makes payments
on the existing loan but is not personally obligated to pay the debt in full.
Original seller might continue to be liable for debt.

Some states interpret a mortgage to mean that
the lender is the owner of mortgaged land. Upon full payment of the mortgage
debt, the borrower becomes the landowner.

A borrower in a deed of trust loan transaction,
one who places property in a trust. Also called a grantor or settler.

Charging interest at a higher rate than the
maximum rate established by state law.