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Mortgage is viewed as a lien on real property
Lien Theory
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lender is viewed as the conditional owner of mortgaged land
Title Theory
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Lender to take possession of the mortgaged real estate on default
Intermediate Theory
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Qualifies the borrower, orders the appraisal, FNMA application, origination fee
Mortgage Origination
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Mortgage required to execute the release or satisfaction of Mtg when note is fully paid
Defeasance Clause
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If borrower sells, lender has choice of either declaring the entire debt due & payable or allowing the buyer to assume the loan
Alienation (Due-on Sale) Clause
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Grants or permits a subsequent mortgagor to take priority in lien structure
Subordination Agreement
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Mortgagor gives deed to mortgage when mortgagor is in default; allows foreclosure
Deed in lieu of foreclosure
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A procedure to prevent foreclosure that a bank uses in an effort to minimize the financial loss
Short Sale
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Process by which borrower regains interest in the property
Redemption
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Property sold & proceeds are insufficient to pay the difference
Deficiency Judgement
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Given by the buyer to the seller as part of the purchase price
Purchase Money Mortgage
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Covers more than one property or lot, generally includes partial-release clause
Blanket Mortgage
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Includes real estate & all fixtures and appliances on the property
Package Mortgage
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Lender receives interest & an equity position in a project, known as equity kicker or a percentage of the income of the property
Participation Mortgage
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To help buyer qualify for the loan by subsidizing the buyers PI payment
buydown
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Originate loans for other lenders but do not service loan
Mortgage Brokers
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Market in which loans are bought & sold after they have been originated and funded
Secondary Mortgage Market
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Required to obtain mortgage, figured annually & often budgeted monthly
Property Insurance
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Charging a rate of interest in excess of the maximum rate allowed by state law
Usury
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Lenders experience a rapid withdrawl of funds into alternative investments which weakens the lender's position in the money market
Disintermediation
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Profitable difference between interest rates in financing arrangements such as wraparound mortgages
Arbitage
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Pledging property as security for the loan w/o losing possession of it
Hypothecation
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Trust account created to set aside funds for the future needs of the property
Impound Account
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Smaller payments in the early years and increased payments in the later years
Graduated Payment Mortgage
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Payments of interest only w/ a lump sum payment of principal at maturity
Balloon Payment
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Payment of debt based solely on the borrower's ability to pay, with security provided by the mortgage; (Not insured or guaranteed by gov't agency)
Conventional Loan
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Financed by a deed of trust, _______ holds title until paid off.
Trustee
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Market in which loans are bought & sold after they have been originated & funded
Secondary Mortgage Market
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FNMA purchase high risk , low-yield loans at full market rates while GNMA guarantees absorbs difference (Involves FNMA and GNMA)
Tandem Plan
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Higher yield is relized from the difference in interest rates charged for the same money a second time
Arbitrage
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Second mortgage wrapped around a first mortgage
Wraparound mortgage
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Allows for future advances of funds by the lender to the borrower
Open-end Mortgage
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Insurance report that tells about previous insurance claims is
(CLUE) Comprehensive Loss Underwriting Exchange report
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Due-on-Sale clause
alienation Clause
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