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Real Estate Exam #5
Units 15 & 16
| Term | Definition |
|---|---|
| mortgage | voluntary lien on real estate |
| mortgagor | borrower |
| mortgagee | lender |
| promissory note | personal promise to pay & evidence of debt |
| mortgage loan | secured loans and contain the debt themselves and the security for the debt |
| hypothecation | the debtor (you) retains the right to possession & control, but the creditor (bank) received underlying equitable rights (if you default) |
| promissory note | borrowers personal promise to repay debt according to agreed terms. |
| negotiable instrument | whoever holds the note can transfer to a third party |
| interest | charge for the use of money |
| usury | charging interest in excess of the maximum rate allowed by law |
| loan origination fee | charged by lenders to cover the expenses involved in generating the loan |
| discount points | the difference between the interest rate that a lender charges and an investors (prepaying money to get a permanent discount) you give the bank a tip today so they charge you less interest every month for the next 15–30 years. On the loan amnt |
| prepayment penalty | if the borrower repays the loan before the end of the term, this is a penalty for the interest that was missed out on. |
| deed of trust (trust deed) | ILLINOIS IS A MORTGAGE STATE 3 person team: the borrower, the lender and the third party (title company). The third party holds the title until you fully pay off your balance & can easily get it back without going to court. |
| acceleration clause | if the borrower defaults the lender can declare the debt due immediately |
| release deed | debt paid and its all yours |
| alienation clause | you can not give or sell the loan without the lenders permission or you have to pay off the entirety right away, or they need a new loan |
| escrow account | putting money in an account to insurance you are paying taxes and insurance |
| Mortgage Tax Escrow Act | a lender may not require an escrow accumulation of more than 150% of the previous years real estate taxes |
| Mortgage Escrow Account Act | when the principal loan balance has been reduced to 65% of its original amount the borrower may terminate their escrow account |
| novation | makes the buyer solely responsible for any default on the loan if the loan is assumed |
| land contract | the buyer pays interest and principal directly to the seller, and once all paid the seller gives the title to the buyer. |
| title theory | mortgagor (borrower) gives legal title to the mortgagee and retains equitable title, which is then returned to the borrower when debt is fully paid. |
| lien theory | the borrower holds legal and equitable title, and the lender has a lien on the property as security (hold) |
| defeasance clause | the title must fully be reconveyed to the borrower at the time the debt is repaid in full |
| foreclosure | legal procedure where the property pledged as security for the loan is sold in order to satisfy the debt |
| nonjudicial foreclosure | no court action required |
| judicial foreclosure (illinois) | allows the property to be sold by the court once the mortgagee gives public notice. |
| strict foreclosure | borrower gets notice and when they must pay, if they dont then the lender gets legal title |
| deed in lieu of foreclosure | friendly foreclosure, and subject to all liens |
| equitable right of redemption | allows the borrower to pay the lender the amount in default plus costs and thereby get rid of the debt (7 months) |
| statutory right of reinstatement | stop a foreclosure and get your mortgage back by only paying what you and not the full balance (90days) |
| deficiency judgement | bank sues you for what you owed and what the actually got from the foreclosure sale (difference) |
| short sale | selling your house for less than you owe and walking away with no issues but have to prove the hardship |
| after a mortgagor makes final payment to the mortgage, the mortgagee would give the mortgagor a | satisfaction of mortgage |
| how long does a mortgagor in default have the right to exercise reinstatement? | up to 90 days after service of summons |
| after the mortgage or deed of trust is satisfied, when does it have to be delivered? | within one month after full payment and satisfaction |
Created by:
nicoletpapin