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Real Estate 306 Exam 2 | Questions And Answers Latest {} A+ Graded | 100% Verified
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Real Estate 306 Exam 2 | Questions And Answers Latest {} A+ Graded | 100% Verified
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Real Estate 306 Exam 2 | Questions And Answers Latest {2024- 2025} A+ Graded | 100%Verified
The action of taking possession of a mortgaged property when the mortgagor fails to keep up their
payments - Foreclosure
A claim or legal right against assets that are typically used as collateral to satisfy a debt - Lien
a non-binding financing commitment - Term Sheet
A loan committee that consists of upper management of a lending institution with the authority to
approve loans that the initial loan officer does not have the authority to approve - Credit Committee
An entity created for a specific purpose such as a LLC or LP - Special Purpose Entity (SPE)
Part of the organizational documents that identifies the relationship between
investors/owners/developer is a deal and spells out their percentage ownership interests and any rights
responsibilities and profit splits - Operating Agreement
A type of loan used to purchase real estate, where the borrower agrees to pay the lender over time,
typically in a series of regular payments that are divided into principal and interest. The property serves
as collateral - Mortgage
Also known as a mortage _____, or promissory ______, is a legal document that binds the borrower to
repay the mortgage within an agreed period and outlines the terms of the loan - Note
Promise by a third-party entity, or individual, to pay or perform the obligations of the borrower -
Guaranty
The process of reducing or paying off the principal of the loan, typically in regular installments -
Amortization
, The amount of time during which a borrower repays a loan if fully amortizing, or until the outstanding
loan balance, or balloon payment, is due if non-amortizing (i.e. interest only) or partially amortizing -
Term
The amount of capital borrowed (the return OF capital for the bank) - Principal
The cost of debt, i.e., what the borrower pays the lender for using its funds (the return ON capital for
the bank) Typically made up of the index rate plus a margin - Interest Rate
Typically, a widely available quoted rate such as WSJ Prime Rate, LIBOR, SOFR which reflects the lender's
cost of capital and is used in determining a portion of the interest rate for a loan - Index
Also called a spread, is the portion of the interest rate for a commercial real estate loan that represents
the lender's premium for the risk they are taking loaning the money - Margin
The ratio of a loan to the value of the asset represented as a percentage - Loan to Value (LTV)
ratio of operating income available to debt servicing for principal and interest - Debt Service Coverage
Ratio (DSCR or DCR)
Payments, typically monthly, for the principal and interest owed on a loan for that period - Debt Service
The market where loans are created such as commercial banks, credit unions, mortgage banking
companies - Primary mortgage market
The markets where loans are resold to government sponsored entities such as Fannie Mae or Freddie
Mac, which creates liquidity in the primary mortgage market - Secondary mortgage market
A debt-based security (similar to a bond) backed by the interest paid on loans for residences -
Residential Mortgage Backed Securities (RMBS)
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