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Real Estate Fund. Table Review Verified and 100% Correct Q & A, Complete Document for Exam
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Real Estate Fund. Table Review Verified and 100% Correct Q & A, Complete Document for Exam
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Real Estate FundamentalsQuestion Answer
is not backed by a lien or an encumbrance on a specific property, and
Unsecured Loan if a borrow defaults, the lender's only recourse is to make a claim
against the borrower's general assets
The property being purchased is pledged as security for the debt, and
Secured Loan
a lien or other encumbrance is created on the title of the property
Mortgage A pledge of property to secure a debt. Widespread by the 11th century
The charge of interest to borrowers left in possession of their property.
Hypothecation
Became universal by the 14th century
Recognize that the mortgagee(lender) has the right to possession of
Title Theory the mortgaged property immediately on default by the
mortgagor(borrower)
If the mortgagor defaults, the lender must foreclose on the lien through
Lien Theory a court action to acquire possession, then offer the property for sale
and apply the funds received from the sale to extinguish debt
A written promise to pay money owed. Contains name of the borrower
and lender, the amount of the debt. The interest rate and repayment
Promissory note
terms, reference to the security instrument, and the other details of the
loan agreement.
The borrow in this note has the right to prepay any or all of the
principal any time before it is due without penalty. Most residential can't
Prepayment Clause
keep you from pre-paying. Commercial can and will or make you pay a
heavy penalty for paying early.
Specifies a late charge for overdue payments, classifies any late
Acceleration Clause payment as a default on terms of agreement and when in default
allows acceleration of full amount of principal and interest owed
Due-On-Sale Clause Makes all who sign this note "jointly and severely liable" for the debt
Assumption Clause lets someone else assume your debt
The process of seizing control of the collateral for a loan and using the
Foreclosure proceeds from its sale to satisfy a defaulted debt. Lenders can't make
money on foreclosure, only get back what they put in
The mortgagee must request a court ordered sale of the property after
Judicial Foreclosure
proving that the borrower has defaulted on the terms of the agreement
Non-Judicial (Texas is one) The security instrument (either a mortgage or deed of
Foreclosure trust) grants the power of sale to the lender should the borrower default
The lender receives title to the property immediately on default by the
Strict Foreclosure
borrower
Deficiency The borrower is held responsible for the remaining amount of debt
Judgement after the foreclosure sale
Deed of trust/ Trust Executed at the time the load is originated to convey title to a third
deed party. Only used during foreclosure
Establish an obligation to transfer title from a seller to a buyer at some
Land Contract future date based on an agreed on payment schedule. Seller financing,
normally rural. You don't own it until paid off
, Equitable Right of Up to sell date you can pay all due and get house back from
Redemption foreclosure
(Federal Housing Administration) Created in 1934 to, among other
things, restore confidence in the mortgage market. Has dramatic
FHA
impact on housing finance system. Over 50 types. 203B is the most
popular and get money the others loose money
The insurance premiums collected from borrowers are used to protect
FHA Insured Loan the lender from losses resulting from foreclosure. Can receive up to
97%
(Private Mortgage Insurance) Collapsed in 1929 because of
depression. Mortgage Guaranty insurance corp in 1957 make it
PMI
reappear. Cost less, covers more. Can cancel when you drop below
80%
(Federal National Mortgage Association) 1) Operate a secondary
market for FHA insured loans 2) Provide FHA insured loans to low
FNMA
income borrowers in remote areas who would not otherwise have
access to mortgage market. Established 1938. 1968 went private
Part of GI Bill of Rights. Up to $203,000 loan with no down payment.
VA Guaranteed Loan
2% funding fee (down payment of 5% reduces it to 1.25%)
(Government National Mortgage Association) Took over when Fannie
GNMA (Ginnie Mae) Mae went private. Provided subsidized loans through FHA programs.
Guarantees payments from borrowers would occur on time
Mortgage-backed Securities issued by mortgage holders to investors who wish to invest
Securities (MBS) indirectly in the mortgage market
(Federal Home Loan Mortgage Corp) Created in 1970. Operates a
Freddie Mac
secondary market for conventional loans similar to Fannie Mae and
(FHLMC)
Ginnie Mae for FHA and VA
Originate half of all residential mortgage loans in U.S. Borrow money
Mortgage Bankers from commercial banks, then use the funds to originate new loans to
mortgage borrowers
Act as brokers between loan applicants and lenders. Dependent on
Mortgage Brokers
origination fee.
Private financial institutions that are organized to accept deposits from
Commercial Banks individuals and businesses and to loan these funds to all types of
borrowers.
Savings Institutions Provide capital for housing purchases
Important source of consumer loans and a savings institution for many
Americans. Members of a specific industry or community can join a
Credit Unions
credit union and enjoy access to their deposits through checking or
savings accounts.
has influenced the mortgage lending industry since 1974. Applicants
Equal Credit
must be notified within 30 days if they are approved, denied or
Opportunity Act
incomplete. Can not discriminate
Referred to as Regulation Z or Truth-in-Lending. Lenders are required
Consumer Credit to disclose the full details of the loan to the applicant within three
Protection Act business days of application including exactly how much the loan will
cost
Real Estate Requires lenders provide borrowers with a copy of a special
Settlement information booklet prepared by (HUD). Requires lenders provide
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