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Chapter 7
Chapter 7 Mass Real Estate
| Term | Definition |
|---|---|
| Alienation Clause | The clause in a mortgage, that the balance becomes due in full if the property is sold, or otherwise transfers ownership (such as foreclosure) also known as Due-On-Sale clause. |
| Amortization | The process of repaying a loan, by making systematic payments of principal, and interest over time, until the balance is zero. |
| Balloon Mortgage | A mortgage, where one final payment, larger than any preceding payment pays off the debt. |
| Blanket Mortgage | A mortgage secured by two or more parcels of property. |
| Certificate of Reasonable Value | A document issued by the Veterans' Administration, which is based on an appraisal, and is intended to insure the veteran, that the price being paid for a piece of property is reasonable. |
| Construction Mortgage | A mortgage designed to finance the building of a new house, or other building. |
| Conventional Mortgage | A mortgage, that is not insured (F H A loan) or guaranteed (V A loan) by the federal government. Includes loans backed by Private Mortgage Companies (P M I). |
| Defeasance Clause | A clause, used in a lease or a mortgage to cancel a certain right, when a specific condition has been met. EXAMPLE: To cancel the granting clause to the bank, when the mortgage has been fully paid. |
| Demand Mortgage | Mortgage where the lender (mortgagee) has the right to call the note due at anytime. |
| Direct Reduction Mortgage | A mortgage, where the monthly payment remains the same. The amount, that goes towards interest decreases, and the amount, that goes towards principal increases over the life of the mortgage. |
| Disclosure Statement | Notification from a lender to a borrower of financing terms, and charges of a loan. Required by the Federal Truth-In-Lending Law. |
| Discount Point | An amount of money paid up front to reduce the rate on a loan. |
| Due-On-Sale Clause | Mortgage clause, that requires the mortgage balance to be paid in full when property is sold. |
| Duress | Force applied to make someone act against his or her will. |
| Equity | The value an owner has in property in excess of any mortgages, or other liens. |
| Federal Discount Rate | The interest rate the Federal Reserve Bank charges it’s member banks. |
| F H A Mortgage | A mortgage, where the Federal Housing Administration (F H A) insures the bank against loss. |
| Home Equity Loan | A loan secured by the equity in a piece of property. May be in addition to the existing first mortgage, and usually set up as a line credit. |
| Impound Account | A trust account established to collect funds, for the future needs of a parcel of real estate. Banks often establish impound accounts, for taxes and insurance fees. |
| Impound Payment | A periodic payment into an impound account. |
| Imputed Interest | Interest assigned by law, when a contract does not state a specific rate. |
| Junior Mortgage | Any mortgage, that takes second priority to another lien on the property. |
| Mortgage | A conditional conveyance of property as security for a loan (mortgage deed). |
| Mortgage Buydown | The lender will allow the borrower to pay one, or more points at closing in return, for a lower initial interest rate for one or more years. The borrower may then qualify for a larger mortgage loan. |
| Mortgage Deed | Conditional conveyance of the property, to the bank subject to the borrowers right of redemption. Referred to as the “mortgage”. |
| Mortgage Note | The written promise to pay money borrowed against real property as security. |
| Mortgagee | Party lending money with property as security. EXAMPLE: A bank. |
| Mortgagor | Party borrowing money with property as security. EXAMPLE: Buyer or borrower. |
| Negative Amortization | A mortgage, where the monthly payment agreed to does not cover the interest charged. The difference is then added to the principle balance. |
| Open-End Mortgage | A loan, that is expandable by increments, but with a total that does not exceed original limits. The total secured by one mortgage. |
| Package Mortgage | A mortgage loan, that finances personal property (such as furniture) as well as real estate. |
| Point | A onetime charge for loaning money equal to 1% of the amount borrowed. |
| Pre-Qualification | Process whereby a loan originator reviews a buyer's financial status, to determine in advance the amount of mortgage, that will be approved. |
| Primary Mortgage Market | The market, where banks or other lenders loan money directly to the borrowers. Those mortgages then may, or may not be sold to other investors through the secondary mortgage market. |
| Prime Rate | The rate, that banks charge their best customers with the highest credit rating on unsecured, and short-term loans. |
| Purchase Money Mortgage | A mortgage given by the buyer to the seller, as part of the consideration in buying the property. |
| Reverse Annuity Mortgage (R A M) | Mortgage structured to reverse the standard payment, to allow the bank to pay the borrower a fixed amount each month. Designed primarily for the elderly. |
| Right of Possession | The right of the leasee to occupy the leased property. |
| Right of Recission | The right of a borrower to cancel a financing agreement, within 3 days after receiving a disclosure statement from the lender. |
| Secondary Mortgage Market (1) | The market that purchases existing mortgages, that were originally established in the primary mortgage market. |
| Secondary Mortgage Market (2) | Some government involvement in this market, includes the Federal National Mortgage Association (FNMA), the Government National Mortgage Association (GNMA), and the Federal Home Loan Mortgage Corporation (FHLMC). |
| Shared Equity Mortgage | A mortgage, where the borrower, and lender agreed to share the increase in value of the property securing a loan. |
| Truth in Lending | A federal law known as Regulation Z, that regulates loans by professional lenders to private individuals. |
| Usury | Charging in unlawfully high rate of interest. |
| V A Mortgage | A mortgage loan to an eligible veteran, that is guaranteed by the Veteran’s Administration (V A). |
| Variable Rate Mortgage | A mortgage, where the interest rate changes over time based on some agreed upon index. Also known as an Adjustable Rate Mortgage (A R M). |
| Wraparound Mortgage | Financing where a new mortgage is placed in a junior position, to an existing mortgage. The new mortgage includes the existing first mortgage, which is not paid off plus any new funds loaned. |
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sunaecm4
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