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F - Chapter 21
Mortgages
| Question | Answer |
|---|---|
| adjustable-rate mortgage | ARM - a type of flexible-rate mortgage (479) |
| annual cap | limits the amount of increase or decrease a rate could adjust in any one adjustment period - usually 2 percent (480) |
| annual percentage rate | APR - as defined by the Truth in lending Act, the percentage that the total finance charge calculated on an annual basis bears to the amount of the loan or credit (488) |
| assumption | a contract between a grantor/mortgagor and a grantee in which the grantee agrees to undertake responsibility for the mortgage debt (491) |
| construction mortgage | mortgage given to secure funds advanced to construct or improve a building (483) |
| deed in lieu of foreclosure | a deed in which a mortgagor conveys mortgaged real estate to the mortgagee, who promises in return not to foreclose on the mortgage debt, which is in default (477) |
| deed of trust | a legal instrument in which a borrower transfers real property to a trustee as security for a debt - the lender is the beneficiary of the trust (467) |
| default | nonperformance of a duty or obligation as part of the mortgage transaction (473) |
| due-on-sale clause | a provision found in some mortgages requiring the the mortgagor pay off the mortgage debt if he or she sells the property (491) |
| Equal Credit Opportunity Act | federal statute prohibiting discrimination in an applicant's credit transaction (489) |
| equity of redemption | the right of a mortgagor or another person with an interest in real estate to reclaim it after default but before foreclosure (475) |
| judicial foreclosure | a foreclosure ordered by a court (475) |
| lien theory | lien theory states that the mortgagee is is primarily interested in being able to sell the property and apply proceeds to debt if the mortgagor violates some mortgage provision - in reality the mortgage is a lien, a device used to secure a debt (466) |
| lifetime cap | the maximum a rate can adjust up or down over the life of a loan - usually 5-6 percent (480) |
| mortgage | a document that uses real property to secure payment of a debt (465) |
| nonjudicial foreclosure | also known as the power-of-sale foreclosure - Foreclosure based on terms in a mortgage giving a mortgagee or third party the power to sell the security if the borrower defaults (476) |
| note | the borrower's written promise to repay a loan according to its terms (466) |
| novation | agreement in which a creditor agrees to discharge an existing debt and to substitute a new obligation and a new debtor in its place (492) |
| open-end mortgage | mortgage that permits the mortgagor to borrow additional funds, usually up to the original amount of the debt (484) |
| package mortgage | a mortgage debt secured by both personal and real property (485) |
| purchase money mortgage | a mortgage given to a lender to secure part of the purchase price of real property, delivered contemporaneously with the transfer of title to the buyer (481) |
| secured debt | a loan that is secured by property - an automobile, real east or some other kind of valuable asset (465) |
| strict foreclosure | a judicial procedure that terminates the mortgagor's equity of redemption and establishes the mortgagee's absolute title to mortgaged real property (477) |
| title theory | theory that the mortgage conveys title to the mortgagee - the mortgagee does not get possession unless the mortgagor defaults (466) |
| Truth-in-Lending | federal statute that requires that lenders disclose the cost of consumer credit (487) |
| usury | the practice of charging interest on a loan in excess of a rate allowed by law (486) |
| satisfaction of mortgage | also known as release of mortgage - a written statement by the mortgagee that the debt secured by the mortgage has been paid (468) |
Created by:
rainesv